With house prices skyrocketing, people are changing their buying patterns and looking for alternative and more affordable housing solutions. Also, fearing they will be wiped out of the market completely, they are thinking ahead more than they ever did before. Buying patterns are changing and people are adjusting their expectations to align with their affordability.
I thought I would share some noticeable trends that are changing the way buyers view real estate and that are driving the market.
- Multiple family dwellings are more popular than ever. Buyer motivation for buying this type of property used to be more about return on investment and equity building. Today they have become popular for other reasons:
- Foreign investors are moving their money to more stable countries to preserve their capital and driving up prices regardless of the lower returns at the current sale prices.
- Multiple generations are choosing to live together for affordability reasons or to be available to aging parents.
- Empty nesters are choosing to buy a multiple family dwelling and living on the main floor giving them the patch of grass on the ground instead of buying a condo.
- Parents buying real estate for their young children and renting them out concerned their children won't be able to afford a house when they are older. This could be a multiple family dwelling, a condominium or a single family home with a basement apartment.
- Buyers are more open to the idea of living on high trafficked streets. Houses on busy streets used to be a hard sell. With house prices being so high, buyers are very open and competing heavily for more affordable houses on Vaughan Road, Oakwood, Caledonia, Lansdowne, Dufferin and busy streets all across the city. The same is true for houses beside laneways, across from schools and next to apartment buildings. These houses are attracting multiple bidders too.
- Outskirt areas are more acceptable. We used to have a hard time convincing buyers to buy properties outside of prime boundaries. Now prime areas have become so expensive that buyers are very willing to live in outskirt areas driving up prices in these areas as well gentrifying communities across the city.
- Buying that bigger house now so as not to be wiped out of the market. We have had a few clients who live in spaces that are perfectly suitable for their current lifestyle who have opted to buy that bigger house now fearing that rising prices will increase the spread to buy a bigger house in the future.
- Thinking ahead for tomorrow and buying more house than they can afford. This concept has gained popularity even with escalating house prices. The cost to move is so exorbitant, considering that real estate commissions and land transfer taxes eat such a huge portion of the down payment, that buyers have opted to buy the bigger house now so as to avoid this huge moving expense again in the near future.
- Basement apartments are more desirable than ever. Considering the cost to carry the big mortgages and the increased utility costs to maintain our houses, buyers are giving lots of weight to houses with basement apartments. This trend is common place in cities like Vancouver where many homeowners have tenants to help pay for the mortgage. This trend will become more and more popular in Toronto as well even with move up buyers.
- Bigger condominiums are very desirable. Builders have acknowledged this and are building larger units to accommodate this trend. They appeal to:
- People who want to stay in the city but cannot afford the price of houses and are opting to buy condominiums that are large enough for their families.
- Immigrants already used to living in the sky are also opting for this type of dwelling.
- Parking is more coveted than ever. The city of Toronto has clamped down on approving front pad parking in order to protect green spaces and street parking so houses that have legal parking spots are given lots of weight by buyers.
- Eco friendly and low cost maintenance homes and condos are getting more attention. With constant increases to our property taxes as well as personal taxes and utility costs, now more than ever buyers are giving lots of weight to houses that are built and renovated efficiently and cost less to run.
We get asked every day "do you think this market can sustain itself?" Nobody knows what will happen next. It's safe to say, though, that we will have dips and pauses in the market as we have had many times since 1996. Nobody knows, though, when it will happen. In the meantime, I think we have enough pent up demand, enough immigration, enough migration from other provinces, enough creative and more affordable solutions to home ownership, enough inheritance money and enough steam to keep this going for awhile longer still, in this low supply, low interest rate environment.