Toronto’s housing market is in for another red-hot year, the area’s real estate board said in a new forecast.
The Toronto Real Estate Board predicted 110,000 resale homes would change hands in 2017 – the third straight year with sales above 100,000 – while average resale home prices would rise between 10 and 16 per cent to $825,000 in 2017.
The TREB forecast calls for the Greater Toronto Area market to experience only a minor cooldown compared to last year, when resale activity jumped 11.8 per cent to 113,133 transactions and average prices soared 17.3 per cent to $729,922.
Higher mortgage rates and stricter federal rules to qualify for insured mortgages are expected to curb sales slightly in the region, the board said. However, many buyers are preparing for the tougher mortgage rules by amassing hefty down payments, averaging 23.9 per cent for first-time buyers, according to a consumer survey conducted by Ipsos for the real estate board.
But TREB expects the biggest factor that could rein in the market in 2017 will be a severe lack of homes for sale in the region. Active resale listings fell to their lowest level in 16 years in December, the board reported. The lack of inventory is expected to help push up prices of both single-family homes and condos once again this year even if it means the market is likely to see slightly fewer sales compared to 2016, the board said.
“It is unlikely that the shortage of listings will improve to any great degree over the course of the next year,” Jason Mercer, the board’s director of market analysis, said in a press release. “This will put a ceiling on sales growth.”
Toronto has remained Canada’s last scorching-hot market heading into 2017 after British Columbia’s 15 per cent tax on foreign buyers in Metro Vancouver cooled home sales in the second half of the year.
But despite mounting concerns that international investors may be contributing to the soaring prices and a shortage of homes for sale in Toronto, TREB said any plans by policymakers to introduce a foreign-buyers' tax in the GTA would be “misguided.”
Last year, the board commissioned Ipsos to poll local realtors about foreign-buying activity. Realtors told the polling firm that fewer than 5 per cent of home sales involved international buyers, and just 2 per cent of realtors said they had acted for clients who disclosed that they were buying property in the Toronto area because of B.C.’s tax on foreign buyers in the Metro Vancouver area.
The board warned that a new land transfer tax on foreign buyers “could have unintended consequences,” such as pushing international investors into neighbouring regions not subject to the tax, reducing the pool of rental properties, or making the GTA less attractive to the immigrants who account for the majority of the region’s population growth.
~Courtesy of the Globe and Mail