Market trends in 2019
In 2019, affordability will drive the activity in the Toronto real estate market. With rising interest rates, tighter mortgage rules and stress tests, buyers will look for more affordable ways to address their housing needs. As the new year looms on the horizon, here are the most significant trends, we believe, will impact the real estate market.
Rental rates will continue to climb
Toronto is experiencing the highest level of immigration in decades and unfortunately supply is not keeping up with demand for rental housing. The cost to rent has increased by about 40% since 2016. The median price for a one-bedroom rental in downtown Toronto was about $1,550 in 2016 and it has now reached about $2,200 in the downtown core.
Rental rates remain high because of a number of factors; two of the most significant contributors are increased immigration levels which increases demand and constantly escalating real estate prices which makes moving out of a rental (thereby causing a vacancy) that much more difficult.
Multiplexes will be in demand
The sale of multiple family dwellings softened after the Fair Housing Plan was announced especially because governance of these units leans heavily in the tenant’s favor. Nevertheless, rental rates have risen so rapidly that these types of dwellings can deliver a decent return if a buyer can get vacant possession allowing for the rents to be set at market value. Add to this the fact that the stock market is volatile, investors will look for stable investments to park their money and real estate is a historically solid, long term alternative.
Large condos will be in demand
Lead by soaring immigration levels and the high cost of owning a single-family dwelling, more and more families will look to larger condos to address their housing needs. Many builders have already adapted to this demand and have changed course to build larger condo units.
Entry level properties with basement income will rule
Rising interest rates and mortgage stress tests lower a buyer’s buying power. In order for some entry level buyers to stay in the city, they will now, more than ever, have to look for properties that provide rentable basement units to supplement their mortgage.
We sold one such property in November with an asking price of $799,000. It sold for $970,000 with six buyers vying for this property. It had a fabulous basement apartment with over seven foot ceiling height that is easily rentable hence the strong competition to own this property.
Laneway housing will be the flavor of the year
The city of Toronto is engaged in approving laneway housing in 2019. The objective is to use all possible means to attempt to address the severe lack of housing shortage. This type of housing can be very beneficial to:
- homeowners who want to build laneway housing for their grown children
- adult children who want to build one to have their elderly parents close by
- elderly people who find a large house too much to maintain
- homeowners who want more livable space
- homeowners who want a rental income to supplement their expenses to carry the cost of their large home
If you have any questions about your future plans, and would like an opinion from an expert, we are happy to oblige in 2019.