Where will the market head after this summer’s slump?
Our panel of experts share their predictions for the fall market and weigh in on why some pockets of Midtown remain white-hot while other areas, such as York Mills, have seen a noticeable decline in sales
ROUNDTABLE PARTICIPANTS: BRAD LAMB
Developer, Lamb Development Corp.
CEO, Ontario Real Estate Association
The #1 Re/Max salesperson in Canada
Principal of GlucksteinDesign
Chief Planner & Executive Director, Planning,City of Toronto
The GTA’s housing market is expected to show signs of improvement come fall. Listings are forecast to match or fall short of last year’s levels as some sellers continue to hold back, if only initially. The new buyers are and will remain cautious, especially after a particularly challenging summer. However, once inventory levels come down and those who have been sitting on the fence make their moves, the market should firm up.
While prices may continue to correct in the short term, prices should level out and stabilize in months to come, and I wouldn’t be surprised to see a slight uptick in average in the fall. One should keep in mind that values traditionally fall during the summer months, and the 33 per cent gain reported in the spring was unsustainable and had nowhere to go but decline.
From an economic perspective, the fundamentals are strong. Unemployment rates are low, and job security is good, which was not the case during the ’89 correction.
Making predictions about the direction of the market in the short term is always challenging. But I do agree with Barry that the fundamentals for Toronto remain very strong. Unemployment is low, and [the city’s] annual Toronto Employment Survey identified a new record in terms of the number of jobs within Toronto. We can also consider other factors that underpin the city — a continuing influx of prominent international companies, high rankings on livability indexes and a growing global awareness of Toronto. Toronto in 2017 is a different city than it was when it entered the last major market downturn in the 1990s. So while we may see (and even welcome) short-term corrections in the real estate market, I am positive about the long-term trajectory for Toronto. With that said, it is paramount that we plan and invest for this future to ensure that the city achieves its full potential in the coming decades.
I believe that the Toronto real estate market will continue to see price increases and volume increases over the fall; however, the zaniness from October 2016 to March 2017 is over. We’re back to a more sane marketplace where price increases will likely be five to eight per cent per year. There is absolutely no reason why average prices will fall going forward. The spring 2017 shock took place after the premier made moves to cool exploding demand. Those policy moves will be measured and absorbed by buyers. They will realize that fundamentally nothing has changed, real estate prices will once again march forward. As long as the economy is expanding, jobs are being formed, the unemployment rate remains low, vacancy rates remain low, commercial vacancy rates stay low and interest rates stay low, not much can cause prices to fall. People don’t stop buying goods and services (including homes) during times when the overall economy is good.
to the government’s introduction of the Fair Housing Plan, real estate prices were rising. The government launched a couple initiatives, for instance a foreign buyers tax, that had a psychological impact and has homebuyers on the sidelines watching what’s happening.
But despite the decline in sales, many Toronto brokers I’ve spoken with are seeing a comeback in sales and multiple offers on properties. It would not surprise me if Toronto’s market took a similar trajectory to Vancouver’s after a foreign buyers tax was implemented there. There were a few months of slower sales, followed by a return to a robust market.
The 33 per cent gain reported in the spring was unsustainable and had nowhere to go but decline.
I think the market will be steady and purchasers will be thoughtful in their buying. There won’t be that same frenzy. I don’t see any major downturn this fall.
POST: Why are some pockets of Midtown, such as Casa Loma and Forest Hill, still white-hot while others, such as York Mills and the 905, have experienced a noticeable sales slump?