FALL REAL ESTATE ROUNDTABLE
Our panel of experts share their predictions and insights as we head into the fall market and touch upon everything from the return of bidding wars to the growth of rent strikes
Why experts Danielle Bryk and Brad Lamb are bullish on the fall housing market
BRAD LAMB: Prices have risen fast, and there is currently some price resistance. In the current economic environment, I foresee these increases being more easily absorbed. In strong economies, it’s hard not to see prices rising.
TIM HUDAK: Any time you see more and more people chasing fewer and fewer homes, the cost of home ownership is going to in-
crease. Sure, you may have short-term fluctuations, but you just cannot argue with the basic economics over the medium and long term. We have more people coming to the Greater Toronto and Hamilton Area (GTHA) housing market as a result of millennials getting promoted and starting families; a stronger economy relative to the rest of Canada; enhanced immigration; historically relatively low mortgage rates; and a wealthy boomer generation helping their kids get into the market, via the Bank of Mom and Dad.
JANICE RENNIE: The real estate market continues to experience demand pressure under $2,000,000, with not enough supply and multiple offers. The difference I am seeing now is that buyers are putting more reasonable ceilings on their purchases as to how much over the asking they will pay (note, still going over the asking, though), and sellers seem to be the side with unreasonable expectations. The result is either sales at more reasonable prices or sellers taking the property off the market, relisting at higher price and then not selling.
BARRY COHEN: While I believe that TREB statistics released for the remainder of the year will show marked improvement over 2017, certain segments of the market will perform better than others. We are seeing good demand for affordably priced single detached homes close to the city core, but neighbourhoods further afield and in the 905 area code are still struggling. The average price of a detached home in the GTA is down about 11 per cent overall.
Upscale homes over the $2 million price point remain well off last year’s pace. However, July was somewhat of a turning point, with sales posting a year-over-year increase of 21 per cent. As stability returns to the market, home buying activity at this price point and higher is expected to climb. The stress test for mortgages that was implemented this past January dampened the market. How much of an impact has it had, and is it time to revisit? LAMB: The stress test is bad for young people and punishes them unfairly. This is a terrible requirement that must be reversed. In light of the higher rate environment, this test is becoming redundant.
HUDAK: Eight months later, it’s clear the stress test is a case study in government regulatory overkill. We all want to incentivize responsible and sustainable borrowing, but governments should take a more thoughtful approach. Estimates suggest that the stress test prevented 50,000 to 100,000 people from across Canada from buying a home. Think for a moment who those people are: young families, new Canadians and entrepreneurs. The rate of home ownership is actually in decline, down from 69 per cent in 2011 despite record low interest rates.
When did the public decide that we wanted to make homes harder to buy for the aspiring middle class?
All levels of government need to pump the brakes on regulatory interventions and start looking out for the middle class and the hard-working people who want to join it. The stress test is too arbitrary, too harsh and needs to be replaced with a more balanced approach. What are the two biggest impacts Doug Ford and the new Ontario provincial leadership could and should have on the Toronto and area real estate market? LAMB: Reverse the madness initiated by the previous administration.
COHEN: New provincial leadership certainly has a different take on business, and real estate is expected to benefit from the change. Doug Ford’s pre-election platform included revisiting the legitimacy of the foreign tax, which has sparked an upswing in buyers returning to the market. However, given past performance of government overall, it’s un-