GTA Real Estate News Highlights #23

GTA Real Estate News Highlights #23

The beginning of 2018 was full of real estate news, especially ones concerning the newly introduced mortgage stress tests and the increasing popularity of condos in Toronto. While some a predicting the bright future for the Toronto's condominium segment, others are warning about the risk of condo bubble. Let's look into the situation in this week's real estate news roundup:

Torontoism: Toronto December 2017 Market Report and Predictions for 2018

2017 marked a roller coaster ride for most housing segments except for the condos, which experienced steady growth throughout the year. Skyrocketing prices in the first quarter, a slump after government's intervention in spring (foreign buyers' tax) and a slow growth towards the end of the year - this is how 2017 looked like in Toronto real estate.

After a shaky year in GTA Toronto real estate, Torontoism team shared some of their predictions for 2018 to help you navigate the market this upcoming year. Richard Silver noted that the supply will continue to be an issue in 2018. Just like in 2017, the well-priced properties will get multiple offers, while the overpriced ones will lag on the market.

Rizwan Malik suggested that the year will be strong with a short cooldown in the middle, as the effect of the new mortgage rules will probably be felt in spring. Just like Rizwan Malik, Jim Burtnick expects an active start of 2018, as the pre-approved buyers will be looking to capitalize on their mortgage commitments received before the newly introduced stress test.

The Star: 'Year of the condo' dominates 2017 Toronto luxury market

Despite some tough ups and downs in Toronto's real estate market in 2017, the luxury real estate seems to be doing just fine. The sales of top-tier properties in the Toronto area were up by 5 per cent in 2017 compared to 2016, reports the Sotheby's. However, the 5 per cent growth is nothing compared to the 59 per cent increase in sales of the $1-million-plus condominiums. Due to this insane growth speed, the 2017 was proclaimed by many real estate experts as the 'Year of the condo' in luxury segment.

According to the CEO of Sotheby's International Realty Canada, Brad Henderson, condos are increasingly becoming a choice in terms of where people want to live. In the top-tier segment, choosing to live in a condo is hardly dictated by affordability, but rather by a lifestyle choice and the opportunity to live right in the downtown. Moreover, the wealthy buyers are largely immune to various government interventions like mortgage stress tests or interest rates hikes, which makes the luxury segment go its own way.

The Star: Scooch over: Toronto has room for more density, study says

Some are hating it, some are welcoming it, but the Toronto's growing density is a fact. However, the Fraser Institute study released this week says there is still plenty of room in Toronto to fit even more newcomers. Compared to other big international cities, Toronto still looks quite spacious: there are 4,457 inhabitants per square kilometre in Toronto, compared to over 11,000 in London and New York.

Toronto is also not the densest city in Canada, it takes the third place in the country after Vancouver and Montreal. The senior policy analyst Josef Filipowicz commented on the current situation saying that Toronto has a plenty of room to grow, especially upwards. In a city like Toronto, with its growing population, limited supply and affordability issues, it is particularly important to use the available space wisely.

Better Dwelling: Over 81,000 Canadian Real Estate Buyers Would Have Failed The New Stress Test

One more alarming article on the new mortgage stress test rules which took effect on January, 1st. There is no doubt in that the new mortgage rules will have a significant effect on the real estate on the market, but what kind of effect are we talking about exactly? Better Dwelling blog suggests that it might make housing less affordable in the short term.

Although by implementing a stress test the banks will ensure that you will be able to pay your mortgage even if the mortgage rates get higher, it also reduces your buying power by more than 20 per cent. The Bank of Canada estimates that 12.37 per cent of mortgages approved in 2017 wouldn't pass the stress test in 2018.

The effect of the new mortgage stress tests are likely to influence cities with low affordability like Toronto and Vancouver the most. This could result in either of two decisions made by the potential buyers: they could decide to postpone the buying or they could still enter the housing market by buying a cheaper property. While the first scenario would cool down the prices, the second one might backfire by creating a condo-bubble.

Toronto Storeys: Which Toronto Condos Appreciated Most in 2017? Here Are The Top 10…

As it has been said above, the 2017 was truly the "Year of the condo". According to the latest TREB statistics, condo prices in the GTA increased by 23 per cent over 2017 and reached an average price of $512,478. Although the housing market was a lot slower in 2017 than it was in 2016, the condo segment experienced the least significant drop in sales of only 9.6 per cent. The condo boom is expected to continue in the year 2018 as the new mortgage stress tests will push buyers to choose more affordable housing options.

However, not every condo development was equally successful with the buyers. According to the analysis presented by Zoocasa, the condos south of Queen Street West saw the most significant growth in prices by more than 30 per cent. Other most popular and pricey developments in 2017 were Tableau Condominiums, Library District and Canary District.

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