The Biggest Real Estate Lesson from 2019? It’s Time to Sell! - Bosley Real Estate Ltd. Brokerage - Homes and houses for sale in Toronto including Cabbagetown, The Annex, Danforth Village, Lawrence Park and Riverdale

As Real Estate professionals, we are pleased to share our knowledge in an effort to further educate and inform on the ins and outs of the Real Estate Transaction. At the end of the day, Real Estate is a people business. Our Realtors have the resources, the knowledge and the expertise to assist with all of your Real Estate needs. Don't forget to reach out if we can assist in any way. Happy Reading!

04 March 2020
Bosley Real Estate

The Biggest Real Estate Lesson from 2019? It’s Time to Sell!

If you’re thinking about buying or selling a home in 2020, it may be helpful to put 2019 into perspective first. A few weeks ago, on February 6th, 2020, Bosley attended the  Toronto Regional Real Estate Board Annual Market Review  where we were enlightened - and a little intrigued - at the growth facing our city. 

Here’s the big takeaway: Based on the following market trends of 2019, in 2020, the time to get in the game isnow.

Home sales in the Greater Toronto and Hamilton Area (GTHA) were up 12.6 percent for the entire year, climbing from around 78,000 in 2018 to nearly 88,000 in 2019.

What’s remarkable is that sales went up  even though the number of new listings was actually  down  2.4 percent. In plain terms, this means that the number of people trying to buy new homes exceeded the number of available homes and that basic supply and demand dynamic drove the average sale price up to $819,319 as people outbid one another in an effort to secure a deal.

That speaks to a truly stunning lack of inventory, and the early evidence suggests that the trend is likely to continue into 2020. The sales results were particularly strong in the last six months of the year, and have already gone up another 4.8 percent in January.  

It’s a limited sample size, but it is something to consider if you are in the market for a home (or if you’re looking to put one on the market). 

Home Prices Will Continue to Rise

While there is always a degree of economic uncertainty, the factors driving the market in the GTHA are unlikely to change anytime soon. Most notably, the unemployment rate in Toronto is expected to remain low, drawing more people to the city in search of better jobs. The newcomers will all need a place to live, creating even more competition in the buyer’s market.

That added pressure will drive home prices upwards for the foreseeable future.

The Available Inventory is Likely to Remain Low

In normal circumstances, a hot real estate market would prompt more potential home sellers to list their homes in an effort to capitalize on the buying frenzy. The increased inventory would eventually drive prices back down once supply catches up to demand.

However, the GTHA has not behaved like a typical market. There are several reasons for that state of affairs. For example, the City of Toronto has passed a Municipal Land Transfer Tax that forces sellers to pay a large upfront fee for selling their home, which may encourage many homeowners to renovate rather than sell.

That’s especially true if people can’t find the type of home they’d like to buy. Low-rise housing is one of the most desirable types of residences, but the supply of such homes is particularly low because the Toronto market has focused primarily on detached homes and condominiums for the past few years.

Mortgages are Hard to Come By

The reasons people are unlikely to sell are compounded by one factor that makes it more difficult to buy - mortgages are hard to come by. The Office of the Superintendent of Financial Institutions has imposed a 2 percent stress test on insured mortgages. That places financing out of reach for many households that would have received a mortgage in the past.   

As it stands, the people who do receive mortgages tend to have a considerable amount of equity saved up before they try to buy a home. The vast majority (86 percent) of buyers made a down payment that was greater than 20 percent, and a whopping 27 percent did not require any mortgage at all (most down payments were between 20 and 25 percent).

People without that kind of capital are essentially frozen out of the market. On the one hand, that decreases the number of buyers, but it also decreases the available inventory since people will not list their homes if they don’t have enough funding to relocate.

If You Do Have Equity, 2020 is the Perfect Time to Make an Upgrade

While the average sale price is up for all homes, the price of detached houses has not risen at the same rate as condominiums. In fact, the gap between the two is actually quite low. That makes 2020 a good time to scale up from a condo to a full-sized house.

Condos are Becoming Scarce

It may seem like new condos are going up on every block, but the current supply will only be enough to meet the expected demand for the first six months of the year. After that, people looking to buy condos may find that they are unable to do so, putting even more pressure on people looking to enter the real estate market.

 Transportation Will Be Vital

Given the limited amount of space in the downtown core, residences with ready access to public transit will be increasingly desirable (and increasingly valuable) in the coming years. However, many people already have long commutes, so new development will be necessary to keep up with the needs of a growing population.

With that in mind, urban planners need to find a way to develop new sites (some of which would ideally offer affordable housing) or to make existing sites more accessible for commuters. If they fail to act, housing prices will continue to rise as the population of the Toronto Metro Area grows to an anticipated 10.1 million people by 2041.

It Won’t Pay to Wait

Taken together, the evidence from 2019 points to one simple conclusion: GTHA home prices are going up, and they’re not going to slow down anytime soon. Anyone looking to buy a home will probably want to enter the market sooner rather than later.

Of course, that doesn’t mean that finding a home will be any easier. That’s where we can help. At Bosley, we can answer any questions you may have about the market, so you can find a home that makes the most sense for you!