Decoding The 2017 Toronto Market Cool-Down. What Is Causing It?
As we have seen in the June and July 2017, average property prices in Toronto have began to decline. While, this can be attributed to the types of properties being sold, primarily, this signals a slowdown in the market.
We can look to the fact that a lot of properties being listed today are not being sold because the sellers are looking for above their listing price and buyers are opting for caution. This has led to a cycle that nets in less properties being sold overall, more houses on the market at a given time and mostly condos being sold.
While this is the case, the general statistics tend to strike fear in people looking to purchase homes and sell their homes. This trend tends to result in the market looking like it is stagnant when in reality, the demand is still there.
Similarly, in the city of Vancouver only a few months ago, they experienced a nearly identical set of housing trends. While it appeared that a foreign buyers tax had created a market cooldown, within a matter of months the prices have continued again to rise.
The city of Vancouver is comparable to Toronto in the sense that these are Canada’s two largest housing markets and urban centres. It is hard to determine what actually caused the price lapse in Vancouver, but all signs point to speculation.
Toronto real estate, while reported to be in a cool down might actually just be experiencing a temporary lapse– the Bank of Canada lending rate has thrown another curveball to buyers. The lending rate increase refers to the daily lending rate between banks in Canada. What this means for mortgage borrowers is that their rates will likely increase.
The question is: are buyers who are capable of driving the prices up in both Toronto and Vancouver deterred by higher rates?
It seems as though, additional taxes and fees and regulations have not stopped properties from changing hands in either city. They tend to slump for just a short period of time.
If we can rely on the case of Vancouver: can we expect Toronto real estate to bounce back as quickly?
The answer depends on a slew of factors:
Who is buying property, actually?
- Are the buyers people who might be affected by new FINTRAC regulations that identify their income source?
- Are the buyers people that can afford a mortgage rate increase?
- Will sellers begin to part with their properties at the market rates, rather than continue to speculate on growth?
There are a lot of factors here that might influence the outcome of Toronto real estate markets. Some that might not have even been touched on here. We will likely see which direction the Toronto market is headed in, in coming months more clearly. However, it seems as though the causal reasons will forever be unconfirmed.
How Can You Take Advantage of This Temporary Cool Down in Toronto?
If this market is anything like Vancouver, the market rates will shoot back up almost immediately on any property that you buy right now. However, in the case that prices in Toronto flatline, you may be stuck with a large mortgage that you cannot keep up with.
The solution to the latter case can be investing in pre-construction real estate. By buying a pre-construction property today, you are paying TODAY’S projected market price for the completion date of the property. This eliminates the need to settle on a mortgage or begin paying down a downpayment on a property that is already built.
Surely, in two to three years, when your pre-construction property is built you will have something that is considerably more valuable. Even if the market price for Toronto real estate is unlike Vancouver.
How Can You Find A Pre-Construction Property?
Angelika Bekman, Broker of Record of Superior Realty Point is an expert in pre-construction sales in Toronto. In this time of market uncertainty, she can help guide you with purchasing the best bang for your buck in Toronto.
Even in this market, pre-construction is a wise way to build future equity in booming urban centres. Call Angelika Bekman today for more information on how to invest!