Buy­ing a home still a lofty goal in T.O. mar­ket

CMHC fore­sees lit­tle change in next two years to high prices, short sup­ply

Toronto Star - - NEWS - TESS KALINOWSKI REAL ES­TATE RE­PORTER

There is lit­tle re­lief on the hori­zon for Toronto-area ten­ants or for home buy­ers seek­ing a house with a yard for cook­outs and kids, ac­cord­ing to the coun­try’s na­tional hous­ing agency.

In fact, de­spite the po­lit­i­cal teeth gnash­ing about the high price and short sup­ply of hous­ing, the re­gion’s shel­ter sit­u­a­tion isn’t ex­pected to change much in the com­ing two years, says the Canada Mort­gage and Hous­ing Corp. in its two-year Hous­ing Mar­ket Out­look.

The re­port re­leased Tues­day sug­gests only sub­tle shifts in both the home own­er­ship and rental hous­ing mar­kets.

Toronto-area va­cancy rates could wob­ble up­ward slightly from about 0.8 per cent to1.1per cent by the fall of 2020. But that won’t make a ma­te­rial dif­fer­ence to apart­ment hunters, said Dana Se­nagama, CMHC man­ager, mar­ket anal­y­sis for the Greater Toronto Area.

Al­though there are en­cour­ag­ing signs that there are more rentals com­ing, in­clud­ing con­dos, land­lords will still have the up­per hand when it comes to price be­cause the de­mand will con­tinue to out­strip sup­ply, says CMHC.

“Ev­ery­body talks about own­er­ship and if we’re talk­ing about af­ford­abil­ity in this mar­ket, we also have to see more ac­tiv­ity tak­ing place in the rental mar­ket and that mar­ket not be as tight. You’re see­ing that in the va­cancy rate, you’re see­ing that in rent growth,” said Se­nagama. “Ideally, you want more sup­ply com­ing on board.”

When it comes to own­ing a home, buy­ers and sell­ers can ex­pect less tur­moil than the Toronto area has ex­pe­ri­enced re­cently, she said. CMHC pre­dicts Toronto home prices will rise at the rate of in­fla­tion in the next two years with the re­sale mar­ket re­cov­ery con­tin­u­ing into 2019.

But as the cost of bor­row­ing con­tin­ues to grow and em­ploy­ment lev­els off, those sales will also mod­er­ate into 2020, says the re­port.

On the new con­struc­tion side of the Toronto hous­ing mar­ket, “the push re­ally is go­ing to be for high­rise more and more,” said Se­nagama.

“Where we’re go­ing to see even less ac­tiv­ity is in lowrise, par­tic­u­larly for sin­gle, de­tached homes — and not be­cause the de­mand is wan­ing — but sim­ply be­cause there’s not enough space out there to build these types of homes,” she said.

“Also, the cost as­so­ci­ated with buy­ing any sin­gle, de­tached home right now is av­er­ag­ing over $1mil­lion,” Se­nagama added. “That’s not an amount any buyer — whether you’re a first­time or a re­peat buyer — that you want to en­ter into.” CMHC pre­dicts be­tween 25,200 and 31,200 hous­ing starts by fall 2020 — 7,300 to 11,100 fewer than this fall. About 85 per cent of those would be multi-fam­ily homes.

Na­tion­ally, CMHC is pre­dict­ing hous­ing starts and sales will de­cline in 2019 and 2020. Prices across Canada are ex­pected to av­er­age in the range of $501,400 to $521,600. Al­though in­come and em­ploy­ment lev­els are ex­pected to con­tinue to sup­port de­mand for new hous­ing, those un­der­ly­ing fac­tors are an­tic­i­pated to slow.

In Oc­to­ber, the av­er­age Toronto area home cost $807,340, in­clud­ing all lowrise and high­rise hous­ing forms, ac­cord­ing to the Toronto Real Es­tate Board.

“The con­do­minium mar­ket, which is cur­rently in sell­ers’ mar­ket ter­ri­tory, is likely to ex­pe­ri­ence above av­er­age price growth,” ac­cord­ing to the fore­cast. That means down­town Toronto and the grow­ing condo hubs in the 905 ar­eas such as Markham and Mis­sis­sauga, will con­tinue to see above-av­er­age price ap­pre­ci­a­tion.

Be­cause it is the eco­nomic hub of the coun­try with an in­flux of tech­nol­ogy jobs that at­tract im­mi­grants, par­tic­u­larly skilled labour, Toronto’s “up­side risk is higher,” than the na­tional, said Se­nagama.

“(Work­ers) are com­ing in and their start­ing salaries are sig­nif­i­cantly higher than what you would (get) in any other pro­fes­sion and that in it­self al­lows this group of peo­ple to en­ter home own­er­ship and not hav­ing to wait that long in rental and af­ford higher priced homes and even more ex­pen­sive rentals,” said Se­nagama. Cana­di­ans from western prov­inces, many of them re­turn­ing On­tario res­i­dents, are also strength­en­ing de­mand for hous­ing in the Toronto area, she said.

The mil­len­nial co­hort, a de­mo­graphic that is slow­ing na­tion­ally, is still grow­ing in the job-rich Toronto re­gion. At the other end of the home-buy­ing age spec­trum, the pop­u­la­tion of se­niors is also grow­ing, fu­elling de­mand for apart­ments and smaller homes.

RENÉ JOHN­STON TORONTO STAR FILE PHOTO

Na­tion­ally, CMHC pre­dicts hous­ing starts and sales will de­cline in 2019 and 2020, with av­er­age prices in the low $500,000s.

Newspapers in English

Newspapers from Canada

© PressReader. All rights reserved.