Toronto area housing prices expected to remain flat in 2018: Report
Re/Max expects prices to be down 17.5 per cent year-over-year through April, with a rebound coming in May.
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Buyers and sellers are going to be spooked by his company's forecast of a flat 2018 housing market in the Toronto area, says Cam Forbes, general manager and broker with Re/Max Realtron Realty.
Re/Max is predicting a 0 per cent price increase next year over 2017, and a 17.5 per cent year-over-year average price decline in the first four months of 2018.
"January and February are traditionally slow, but I see it slower than normal. Then I see the market really reassessing and coming back to life strongly in May. I see a late spring market and very cautious buyers in the first four months," he said.
The Re/Max Housing Market Outlook, published Thursday, is more conservative than its competitor Royal LePage, which on Wednesday predicted a 6.8 per cent rise in Toronto area home prices next year.
The difference comes down to math. To recover from a predicted 17.5 per cent drop in the first four months would require a high double-digit increase for the balance of the year, which isn't necessarily realistic, says Forbes.
The Re/Max forecast anticipates the average Canadian home price will rise 2.5 per cent next year.
New mortgage stress test rules taking effect Jan. 1 requiring buyers to qualify at a higher interest rate, will hamper affordability in the early part of the year, says the report.
The market also is still recovering from the Ontario Fair Housing Policy launched in April, including a foreign buyers tax and other cooling measures, said Forbes.
It shouldn't, but that combination of factors will make buyers more cautious before jumping into the market in the first four months.
Forbes puts it down to math. This year's frenzied price growth of more than 20 per cent in the first four months was never sustainable.
Meantime, he said, there are two markets in the Toronto area — the 416 and the 905.
"The 416 is quite hot because you have a lot of buyers trying to get in before the market changes. But that's not the case the further you get out of the core into the 905 where homes are taking three months to sell," said Forbes.
Price will always matter and condos, which accounted for 36 per cent of re-sale homes on the Toronto Real Estate Board (TREB) this year, will continue to gain ground as the affordable alternative to detached and attached ground-level homes.
"The more affordable the home, the greater demand. Condos in the 905 will have stronger demand from investors and users," he said.
Semi-detached houses and town homes in the $600,000 range in the 905 will also continue to attract buyers.
Re/Max sees some Toronto area markets doing better than others.
It expects a 7.5 per cent increase in Oakville next year to an average price of about $1.34 million, while Mississauga is expected to decline 2.5 per cent to $711,322 on average.
The hot market in Hamilton and Burlington is also expected to grow 4 per cent to $596,538 on average.
Brampton and Durham Region are expected to see price increases of 3.5 per cent and 3 per cent, respectively.
Based on a national survey by Leger, Re/Max says home buyers are balancing affordability and the features they want in a home by moving outside large cities.
"These move-over buyers leaving the GTA and Greater Vancouver have contributed to increased demand and considerable year-over-year average price increases," it said, citing 15 per cent increases in Hamilton-Burlington; 19 per cent in Durham Region and Barrie and 23 per cent in Niagara.
Home buyer attitudes
Canadians considering a home purchase in the next 5 years
Canadians unaware of the changes to mortgage stress tests in January
Of those aware of the new rules believe they will impact their purchase
Ontarians considering a home purchase in the next five years with 36 per cent looking to move up and 28 per cent downsizing
Source: Leger survey for Re/Max. Online survey of 1,560 Canadians was conducted Nov. 13 to Nov. 16 andi s considered accurate within 2.5 per cent 19 times out of 20
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