I recently attended a presentation by a representative from CMHC (Canada Mortgage and Housing Corporation) – probably the most respected and reliable source of data regarding home ownership and issues that affect the real estate market in Canada.
For myself, as an active real estate professional working in the GTA, I was not surprised with the revelations provided by CMHC. In fact, I am pleased to say the information matches pretty well what I already have surmised about the market here in Toronto and the GTA. This is not to say I have any criticism of CMHC, on the contrary, I am very appreciative of the enormous volume of information, data and expertise CMHC provides us professionals and the general public.
Here is a synopsis of the CMHC presentation pertaining to current and future Market conditions in Toronto.
2016/2017 Outlook GTA
CMHC sees the number of sales reducing. If interest rates go up, we will see a further reduction in the number of sales.
Demand: current low interest rates support home buying but as prices continue to rise, affordability levels reduce. We now see required income is higher than actual income in the GTA at 115%.
Price: CMHC see more listings in the future. Price growth will slow but levels will stay high. Sale prices still strong in Low Rise units. There has been less price growth in condos but CMHC is seeing prices starting to rise (5%)- also, the number of sales is expected to rise, especially north of the city.
Condos: as many as 20,000 units are coming on line in 2016/17. 2014 saw the peak of condo units in Toronto. The number of new units coming on line is down from 2014- but still strong.
International Migration Return to GTA will get stronger.
Low Canadian dollar will continue to support strong foreign investment and ownership.
There are still strong fundamentals in Toronto.
4 Risk factors according to CMHC:
With regard to #2: as stated above, price growth outpaces income growth which has a negative impact on affordability
With regard to #3: Condos- inventory is high but number of new units under construction is reducing. Expect more rental starts but with continued low vacancy rates (2015-1.8%). Higher long term investor activity- buying to rent units for the long term.. Slower price appreciation. Still strong demographic support for hi-rise homes: millennials without cars – more units being built in downtown core and/or in close proximity to subways. Expect to see more seniors downsizing – baby boomers are now at the age where they are empty nesters and looking to downsize.
Ok, there it is. For what it’s worth.
As an active real estate professional slugging it out in the GTA over the past decade and more, I’ve seen this trend materializing for some time now. Institutions have to wait for their data to accumulate, be processed and then conclusions determined and posted. Real estate professionals are in the trenches every day and we see this activity in real time. So, if you want immediate market information, speak to a trusted real estate professional. We can tell you what’s going on from first hand experience.
When you need real estate advice, save yourself the headache and just call me.