With another year over and a new one beginning, there are questions about what will happen with the Toronto housing market. A lot of predictions are making the rounds, including some that are contradictory. What can potential homeowners or even those who want to find a nice place to rent or lease expect during 2019? Here are some examples of what people are saying and why you should consider their thoughts carefully in the months to come.
Plenty of Predictions of a Market Crash
Just as people were asking at the beginning of this year, the same question is back again: when will the Toronto real estate market crash? Some professionals like David Madden are sure that the boom cannot last much longer. Madden among others points to data that indicates housing prices and purchase are predicted to decrease slightly during the final quarter of 2018. That and a few other random bits of data point to a crash, proponent say.
Others look at the same data and see what’s happening in the market now as being the logical and incremental slowing that always happens after a real estate boom peaks. For them, the data is not a sign that there is about to be a severe change. Rather, the market will slow at a safe pace and still remain stable.
If there is to be any type of housing market crash, there are those who say it won’t happen in 2019. Depending on what the year brings, it may never happen. Instead, the market will continue to slow but remain stable throughout the year and possibly well into 2020. That doesn’t mean sellers will stop selling or buyers will stop buying. It just means that much will remain the same with a few changes here and there.
What People are Saying about Home Equity
The opinions about home equity in the GTA also tend to follow along the lines of whether or not a market crash will occur in 2019. Those who say it’s inevitable believe that residential properties will drop, resulting in a lost of home equity. Experts who see the market slowing but remaining strong believe that the shifts will have little to no effect on property values. That would mean homeowners can expect the equity in their homes to increase slightly as they continue to make their mortgage payments on time.
For those who think a crash will not occur, it only makes sense for homeowners to put their home equity to good use. In other words, go ahead and use your home’s equity to get the funds needed to make renovations or necessary repairs to the property. The terms will still be reasonable, and you will likely not have to use all of the allowed percentage of the equity to fund those upgrades. What you will do is increase the market value of your home and make it more comfortable for as long as you choose to own the property.
It will Remain a Seller’s Market
While the debate over a possible housing market crash in the GTA continues, there is one point that people on both sides of the question seem to consider valid. Whatever happens, most of 2018 will remain a seller’s market. That’s because the demand for housing in Toronto and the cities nearby remains high.
The question is whether or not sellers will be able to move their properties faster than they do today. At present, the turnaround in the more desirable areas of the city is fast. Even in outlying areas, selling a home is not that difficult in terms of having interested buyers submit bids.
There is some concern that while sellers will still find it easier to command the prices they want, it may take a little longer for buyers to agree to the terms. In general, the consensus is that the shift will be gradual and most likely not be that noticeable until the final quarter of 2019. As with all housing market predictions, that is predicated on a series of events happening in the first three quarters. Should any of those events fail to happen, the market a year from now could look quite a bit like the market of today.
But Expect some Leveling off in Home Prices
One of the events that is expected to happen in the housing market Toronto is that prices on average will begin to level off. That’s in contrast to the last few years when it seems as if residential property prices were on a steady increase. Much of that had to do with the general increase in the cost of living as well as the increased demand as more people moved into condos in Toronto.
Why do some people think that the prices will level off? One has to do with demand. Some people feel priced out of the market but still want to live in the general area. They may begin to consider renting a viable option for housing. Others will seek out properties that are close enough to Toronto to make an easy commute to work. There they can take advantage of prices that are slightly lower.
Even so, the demand for homes in Toronto proper will remain high. Sellers may have to compete a little more in order to capture attention from buyers, but they will still be able to command excellent prices and not be short of people who really want to buy their homes.
Buyers will Continue to Deal with Rising Interest Rates
One part of the forecast for 2019 that does indicate business as usual has to do with the interest rates on mortgages. Those rates have risen on a more or less consistent basis for some time now. There is every reason to believe that the trend will continue. What is at issue is how much they will increase as the year progresses.
Those who believe the pace of rate increases is about to pick up tend to urge buyers to lock in terms now and find a place as quickly as possible. The idea is that getting a fixed rate mortgage before the rates go up will ensure the buyer has a better rate for the duration of the loan period. Even choosing to go with a floating or variable mortgage with a fixed term of seven to ten years would be a good idea.
In general, it’s always a good idea to shop around and find out who is offering the most competitive mortgage rates on fixed and variable mortgages. Whether you believe rates will continue to increase during and beyond 2019 or think that something may cause them to drop in a few years, it never hurts to see what terms you can receive right now. That’s especially true if you’ve already found a property that you would like to call home.
Landlords can cheer Thanks to Continuing Demand
People need somewhere to live while they look for homes to purchase. With so many people moving into the area, landlords have certainly enjoyed the benefits of filling all their available units. In addition, the increase in demand makes it possible to rent those units for slightly higher prices and still have waiting lists of prospective tenants.
Whether the market continues more or less in the same direction as 2018 or if a crash takes place, landlords are positioned to enjoy a good year in 2019. Demand for leased or rented housing will remain high and they will have no problem finding qualified tenants.
But Renters will Find it Hard Going
People seeking to lease apartments or houses have already found that qualifying for a rental is more difficult than in years past. That’s because most landlords don’t have units that stand vacant for more than a few weeks. In most cases, losing one tenant simply means calling whoever is in the number one spot on the waiting list and asking if they are still interested. There’s not even much of a need to advertise the upcoming vacancy.
Renters are likely to face qualifications that are more rigorous than in years past. Expect for more emphasis to be placed on the length of your current employment, your monthly gross salary or wages, your credit history, and even whether or not you own pets.
If you have an opinion on what will happen with the Toronto housing market during the next twelve months, rest assured there is someone in the real estate or financial industry who shares it. Historical data and the projection of trends based on history or even current data is often helpful in determining what could happen, but not necessarily an accurate description of what will happen.
Your best approach is to consider the differing opinions of industry experts carefully, look closely at the facts and figures supporting each of those diverse predictions, and then deciding what you would do if certain events do come to pass. Being prepared for as many contingencies as possible will help you be in a position to weather whatever happens and maybe even provide you with some ideas on how to make the most of whatever Toronto real estate forecast actually does come to pass.