It won’t get any easier to buy a home in the Toronto region next year, as the area’s housing prices are expected to rise by another 8 per cent in 2017.
That’s lower than this year’s 17 per cent increase but significantly higher than the 2 per cent national average Re/Max is forecasting for next year, according to the company’s Market Outlook Report being released Friday.
In the Toronto area, “we do see decreased affordability next year,” said Cam Forbes, general manager Re/Max Realtron Realty, which has offices through the Toronto area.
“We’re predicting unit sales will go down (by about 5 per cent), but prices still to go up,” he said.
“We’re not predicting a correction next year, but we are predicting a reduction in unit sales and still an increase in price,” said Forbes.
Even in big corrections, however, real estate prices resist going down.
Move-up buyers searching for detached houses, which cost about $1.3 million in Toronto and $1 million in the surrounding communities, are expected to continue driving the market in 2017, says Re/Max.
The Re/Max report averages home prices this year to date rather than the year-over-year monthly statistics published by the Toronto Real Estate Board. That avoids monthly fluctuations that can occur due to an above-average number of luxury home sales or other short-term variations, said Forbes.
The average home price, including all types of homes this year to date in the Toronto region was $725,857. An 8 per cent increase would see that rise to $783,926 next year.
Forbes described this year’s market, which saw a 17 per cent price growth, as “extremely tight.” While the economy remained strong, the inventory of detached, semi-detached and townhomes on the market hit historic lows.
“Ten years ago it was about 40,000 townhouses, semis and singles that were being built. Now it’s about 20,000,” he said.
With the population growing by about 100,000 a year and the economy strong with low interest rates, the strong price growth “is pretty explainable,” said Forbes.
But he doesn’t expect the government will allow it to continue.
“All the changes they have made to underwriting mortgage criteria now is not going to have a major impact on first-time buyers or any other segments, but we anticipate further measures by the government to tighten lending requirements,” said Forbes.
“Over the long run you just don’t have 20 per cent year over year price increases in the market, so there’s just no way they’re going to allow that sort of price increase to continue.”
In the Toronto Region, Re/Max is predicting the strongest 2017 price growth in Durham Region where “move-on buyers” buyers from Toronto are looking for relative affordability, particularly on larger homes.
The extension of Highway 407 is helping drive buyers willing to commute to jobs in the city and other parts of the Toronto region.
Oakville, which saw the highest hike in prices this year at about 25 per cent to an average cost of $1.1 million, is expected to climb 5 per cent in 2017.
A shortage of homes for sale there is expected to continue as foreign, move-up and move-over buyers from other parts of the region compete for the town’s high-end, lakefront homes.
Brampton, on the other hand, is expected to see a 2.5 per cent decline in 2017 prices that rose about 19 per cent this year. Re/Max expects homes there could remain listed for more than a month, “signalling a return to a more balanced market.”
Neighbouring Mississauga saw an average sale price up 14 per cent from 2015, but the number of sales dropped about 3 per cent year-over-year, a trend that will carry into next year, says Re/Max.
“Buyers remain shielded from double land transfer taxes in Mississauga, and find the market more accessible than Toronto,” according to the report.