TREB Predicts Housing Market Will Remain Flat in 2018


TREB Predicts Housing Market Will Remain Flat in 2018

Following a couple hot years, Toronto’s housing market is expected to slow down in 2018. The Toronto Real Estate Board (TREB) released its annual forecast last Tuesday, predicting the number of home sales will remain flat or potentially drop this year.

Photo Source: Unsplash / Ariel Domenden

According to the forecast, in 2016 the number of residential sales in Toronto reached a record high with 113,000 transactions. In 2017, that number declined by 18% annually to 92,394. The decline was noticed during the second and third quarter of last year, partially due to the introduction of Ontario’s Fair Housing Plan that was implemented in April 2017. The report also states that sales increased during the last quarter of 2017 in response to the new OSFI stress test guidelines that took effect January 1, 2018. Average sales price in Toronto in 2017, however, rose 12.7% annually to C$822,681.

This year, the TREB expects to see the number of residential sales between 85,000 and 95,000, down from 92,394 from the year prior. Average sale prices are expected to be within the range of $800,000 – $850,000, across all home types, with the midpoint being slightly higher from the $822,681 average in 2017. They are anticipating that, due to the new mortgage lending guidelines that took effect January 1, 2018, year-over-year declines will be more pronounced in the first four months of 2018 in comparison to what we saw at the beginning of 2017, but sales will be back up during the third and fourth quarters.  “Changes to mortgage lending guidelines, including the OSFI-mandated stress test, will affect home buyers,” the report states. A recent Ipsos survey of intended buyers found that nearly 30% felt that they would not qualify for a mortgage two points higher than the current market rate on their home of choice. Buying intentions are lower than they were a year ago due to the degree of uncertainty in the marketplace. The report says that buyers will not completely shy away from buying their dream home, but rather change the location of the home to something that better fits their wallet.

Overall, Toronto’s housing demand will remain stagnant throughout 2018, driven by job creation, low unemployment rate, and an immigration-driven population growth, says Jason Mercer, director of market analysis at TREB. Short term, however, “the higher borrowing costs and the effects of federal and provincial policy decisions will act as a drag on demand for ownership housing.”

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