The 2018 GTA Real Estate Market

For anyone who follows the news, you know that 2017 was a whirlwind year for Real Estate in the GTA. Winter and early spring saw a red hot housing market. Houses were literally flying off the market with multiple offers and astronomically high sold prices. Then, BOOM, in the end of April, the government implemented the Foreign Buyers Tax and the residential market virtually froze. After a very quiet summer and early fall, we ended the year with plenty of inventory on the market and a small upswing in sales as buyers rushed to purchase prior to the new mortgage rules being implemented

What 2018 will bring has been a topic of hot speculation and recently, the Toronto Real Estate Board (TREB) released its Market Outlook for the year. Based on their analysis, we will see the influence of several factors affecting the market in different ways.

Most notably, the OSFI Mortgage Stress test will put a significant strain on the market. Under the Stress Test, borrowers will need to qualify for their mortgage at the greater of their contract interest rate + 2% or the posted 5 year rate, which is currently 5.14%.  According to TREBs findings, 26% of buyers will have difficulty qualifying for a mortgage on their preferred home, based on this new Stress Test. It is uncertain whether these buyers will choose not to buy at this time, or decide to change their requirements or area of purchase. 

Another big factor that will be a drag on the Real Estate market is the cost of borrowing. We have seen several interest rate hikes in the past few months, and expectations are that the rates will continue to go up in the coming year. 

On the flip side, the GTA population will continue to grow in 2018, largely fueled by new immigrants to Canada. With continued emphasis by the Federal Government on increased immigration, the GTA will continue to experience strong population growth. This combined with job creation and low unemployment, will drive the demand for housing. 

So, where does this lead us? According to TREBs research, the number of homes sold in the GTA in 2018 will range between 85,000 to 95,000, relative to 92,394 transaction in 2017, fairly flat. The forecast range for the average selling price is between $800K to $850K. It is likely that the the average price will be flat or down in the first two quarters of the year, and then pick up in the second half. The average selling price was $822,681 in 2017.

According to TREB's outlook, it certainly doesn’t seem like a Doom and Gloom story for the GTA Real Estate Market. Will we see the crazy bidding wars and sold prices hundreds of thousands over asking? Probably not this year. It sounds like we will see the GTA return to a more “balanced” market in 2018. Beyond that, is anyones guess!

Have more questions? Feel free to get in touch with me and I’d be happy to chat!