The Toronto Real Estate Market for 2017: What To Expect
This will be the prevailing factor in both the Single Family and the Condo Market this year so expect 15% price gains in the single family market once again and 10% price gains in the Condo sector much like the last half of 2016. The last six months were as “frothy” as it gets in any real estate market with multiple offers occurring regularly in the Single Family and Condo markets and as well in the Condo Rental Sector.
Downtown Toronto is finally becoming a mature real estate market with very little land left to develop in the core. Gone are the big development sites like Liberty Village, The Molson site on Lakeshore at Bathurst and the bulk of Cityplace. The upshot – land is scarce and very expensive to purchase. The Single Family Home supply is static and the condo sector has historically low inventory levels. Developers are paying much more for land and that translates into higher prices. The City is taking longer to approve projects and the OMB is backed up for 12-18 months so the pipeline of new condos coming to the market place is severely choked. All of this means supply will be low and prices will rise. Toronto is growing. Aside from the usual 100,000+ new residents which come to Toronto each year there is also a shift happening moving jobs from the (905) into the downtown core. The truth is, young people do not want to live in Mississauga, Vaughan or Oshawa. They want to be downtown. Corporations are realizing that in order to attract the brightest and best of young talent you have to be “geographically desirable”. So, we now have 10 million square feet of office space being built downtown to accommodate the shift. This equates to approx. 70,000 new jobs. The challenge is where are all of these people going to live.
Further slowing the pace of new supply into the marketplace is the concept of “Land Banking”. The money is in the land and developers are realizing that they can make $15 million by developing a site over a period of 5 years with a lot of stress and headache or they can do nothing and flip the site in 5 years and make the same profit. This is a new concept and likely something we will see more of in the future. The impact will be much higher prices in the resale condominium market which will extend to the single family house market as condo sellers will have more money to purchase a home.
The good news – interest rates will remain low in the years to come. For those that own property 2017 will provide the greatest overall price increases since the “red hot” 2005 and 2006 markets. For those who do not, prices are moving up at a fast pace and will be out of reach for many if not now then in the very near future. If you do not own your home, now is a good time to buy as prices will rise dramatically over the next 12 months. If you own your home, now is the time to consider an investment property. With such low rental vacancy rates contributing to multiple offers and much higher rents, return on investment is quickly increasing. Toronto is rated as one of the top 5 cities in the world to live. Healthy demand for property from both domestic and foreign buyers will continue to drive the market moving forward. In short, there is no better real estate market in the world to buy in right now.
I wish you all the best for 2017,
Brad J. Lamb Realty Inc.