What will the 2016 Real Estate Market look like? With the spring market just around the corner, this is a question being asked ALOT. With Toronto housing prices up roughly 10% in 2015 and the average price of a detached home now up over the $1 Million mark, its hard to believe that prices and demand will continue to climb into 2016.
I recently attended a presentation on the future of the US and Canadian economy by Matthew Barasch, RBC’s head of Canadian Equities. In his words, “Canada has had it good”. Canada has seen a ton of job creation since 2002; more steady full time jobs and less part time positions. The economy is stable, money has been cheap, bank credit standards have remained reasonable and the banks are well insulated.
For years we’ve been warned of a looming housing crash and that we’re in a bubble ready to burst at the seams. 2015 was not one of those years. According to TREB, last year saw over 101K real estate transactions- up a whopping 9.8% from 2014.* As it looks so far, 2016 should be no different.
According to a survey done by TREB, about 12% of households plan to buy a property over the next year, with those under the age of 34 making up about half of these buyers. First time buyers accounted for 60% of sales in Toronto in 2015.*
As of February 15th, a new downpayment policy initiated by the government will be set into place. This new policy states that a 10% downpayment would be required for properties purchased over $500,000 (instead of the previous 5%) and for homes over the $1M mark, a 20% downpayment would be required. The impact of this new policy on the real estate market seems like it will be minimal seeing as in 2015, only about 6% of homes between $500,000 to $700,000 and 3% between $700,000 and $1M had less than 10% down.
Each year, the looming fear of a housing crash actually resulted in an increase in transactions and prices. 2016 will continue to see low interest rates and first time buyers remain optimistic about home ownership. Many people say that Toronto housing prices are approaching an unsustainable level. What are your thoughts and predictions about the upcoming year?
* TREB, January 18, 2016