Get ready for a hot market in the GTA this spring
From the economy to interest rates, to government involvement and the mortgage stress test, to new home supply and affordability, there’s a lot to pay attention to this year as you go through the new-home buying experience. But, for all the challenges that these topics represent, know this: The Ontario housing market, and especially the GTA, is once again positioned for another strong year.
According to the latest Royal LePage House Price Survey, the aggregate price of a home in Canada increased 2.2 per cent year-over-year to $648,544 in the fourth quarter of 2019. And for this year, the realty firm is forecasting 3.2-per-cent price growth to $669,800. For the GTA, the news is even better, and homeowners and homebuyers can expect a hot market this spring.
Greater Toronto Area
Low supply, population growth and increased consumer confidence continue to fuel home prices in the GTA. In the fourth quarter last year, the aggregate price of a home in the region increased 4.8 per cent year-over-year, rising to $843,609. During the same period, the median price of a standard two-storey home rose 4.4 per cent to $982,944, bungalows 2.4 per cent to $806,977, and condominiums increased 7.8 per cent to $565,919.
“The Greater Toronto Area is at a pivot point where we are seeing signs that prices could begin to rapidly increase,” says Kevin Somers, chief operating officer, Royal LePage Real Estate Services Ltd. “The region has a very low supply of listings while we are seeing more potential buyers trying to enter the market.”
Home price growth varied significantly across the region in 2019. While some areas showed stabilizing prices and healthy price growth, many regions, including the city centre, showed the potential for rapidly accelerating appreciation rates driven by high demand and low inventory. Significant price gains were seen in Pickering and Mississauga, where the aggregate price increased 9.7 per cent and 7.9 per cent year-over-year, respectively. The aggregate price of a home in the City of Toronto increased 6.6 per cent year-over-year.
Ajax and Oshawa were the only two areas to show a year-over-year decline in aggregate price. The aggregate price of a home in Ajax and Oshawa decreased 1.2 per cent and 1.8 per cent to $661,049 and $524,423, respectively.
Changes to the stress test?
In the first half of 2019, some buyers remained on the sidelines waiting to gauge the potential impact of the federal mortgage stress test, but began to return to the market in the third quarter.
“The federal government has signaled that changes could come to the mortgage stress test mechanism in 2020,” says Phil Soper, president and CEO, Royal LePage. “The stress test pushed people out of real estate markets across Canada temporarily. For the most part, buyers have adjusted, yet it still represents a significant hurdle as families pursue the dream of owning their own home.”
Soper adds that the impact of the regulations-driven drop in demand is felt very differently in different parts of the country.
“We believe policy makers have the necessary experience to modify the tool to meet the reality of today’s Canada – that we have very different and varied economies, and by extension housing policy needs, from region to region.”