Re/Max predicts 0% price change
There will be a 17.5-per-cent decline early next year before levelling off in the spring, market outlook says
Buyers and sellers are going to be spooked by his company’s forecast of a flat 2018 housing market in the Toronto area, says Cam Forbes, general manager and broker with Re/Max Realtron Realty.
Re/Max is predicting a 0-per-cent price increase next year over 2017 and a 17.5-per-cent year-overyear average price decline in the first four months of 2018.
“January and February are traditionally slow, but I see it slower than normal. Then I see the market really reassessing and coming back to life strongly in May. I see a late spring market and very cautious buyers in the first four months,” he said.
The Re/Max Housing Market Outlook, published Thursday, is more conservative than its competitor Royal LePage, which on Wednesday predicted a 6.8-percent rise in Toronto area home prices next year.
The difference comes down to math. To recover from a predicted 17.5-per-cent drop in the first four months would require a high double-digit increase for the balance of the year, which isn’t necessarily realistic, Forbes said.
The Re/Max forecast anticipates the average Canadian home price will rise 2.5 per cent next year.
New mortgage stress-test rules taking effect Jan. 1 requiring buyers to qualify at a higher interest rate will hamper affordability in the early part of the year, the report says.
The market also is still recovering from the Ontario Fair Housing Policy launched in April, including a foreign buyers tax and other cooling measures, Forbes said.
It shouldn’t, but that combination of factors will make buyers more cautious before jumping into the market in the first four months.
Forbes puts it down to math. This year’s frenzied price growth of more than 20 per cent in the first four months was never sustainable.
Meantime, he said, there are two markets in the Toronto area — the 416 and the 905.
“The 416 is quite hot because you have a lot of buyers trying to get in before the market changes. But that’s not the case the further you get out of the core into the 905 where homes are taking three months to sell,” Forbes said.
Price will always matter and condos, which accounted for 36 per cent of resale homes on the Toronto Real Estate Board (TREB) this year, will continue to gain ground as the affordable alternative to detached and attached ground-level homes.
“The more affordable the home, the greater demand. Condos in the 905 will have stronger demand from investors and users,” he said. Semidetached houses and town homes in the $600,000 range in the 905 will also continue to attract buyers.
Re/Max sees some Toronto area markets doing better than others.
It expects a 7.5-per-cent increase in Oakville next year to an average price of about $1.34 million, while Mississauga is expected to decline 2.5 per cent to $711,322 on average.
The hot market in Hamilton and Burlington is also expected to grow 4 per cent to $596,538 on average. Brampton and Durham Region are expected to see price increases of 3.5 per cent and 3 per cent, respectively.
Based on a national survey by Leger, Re/Max says home buyers are balancing affordability and the features they want in a home by moving outside large cities.
“These move-over buyers leaving the GTA and Greater Vancouver have contributed to increased demand and considerable year-overyear average price increases,” it said, citing 15-per-cent increases in Hamilton-Burlington; 19 per cent in Durham Region and Barrie; and 23 per cent in Niagara.