The past couple of years have been very dynamic for the Ontario housing market with the many changes that affected the pace of the real estate market in the given timespan. The year 2017 saw a distinctive disbalance of supply and demand resulting in bidding wars over the limited inventory, and of course, record-high prices as demand grew stronger. Subsequently, the government stepped in with a number of measures to stop the haze and prevent a market crash. The Fair Housing Plan was amended, stricter mortgage tests were introduced and the interest rates started gradually to increase. Luckily, all these measures normalized the market in 2018, restoring the balance to some extent, but at the same time, they have taken their toll on homebuyers who now have to pay more in interest when getting a mortgage and qualify under a tougher procedure. After all these novelties in the market, people and experts are curious how the market will behave in 2019 and what homebuyers and sellers can expect. Here are some predictions that can be used as guidelines to get an idea of how the real estate market will evolve in the following year.
Home Prices in 2019
One of the major questions that concern buyers and sellers is if prices will go up again. While this may be hard to predict as the market is full of surprises, some analysts have an idea of what we can expect. According to CREA’s (the Canadian Real Estate Association) calculations, prices will slightly increase in 2019, i.e., by almost 3% nationwide, while in Ontario (the hottest real estate market), the percentage will be over 3%. Higher home prices automatically mean higher rents, so renters can expect the rental prices to go up as well.
Interest rate increases are slowly becoming a strategic and long-term part of the home buying process. Ever since the BoC (Bank of Canada’s) started to have regular quarterly meetings to discuss whether the rates should go up or not in the upcoming quarter, the Canadian homebuyers have become more aware of the entire situation and are getting used to new increases every here and then. Since the economy grew stronger this year and the market is still prone to fluctuations, Canadians can expect renewed interest rate increases in 2019, i.e., somewhere between 2.25 and 2.75. The market is still volatile and needs further oversight. According to RE/MAX’ survey, over 80% of homebuyers could be affected by the interest rate hikes.
Affordability will probably continue to be an issue in cities like Toronto and Vancouver, but the majority of buyers should be able to find an affordable home in smaller cities and communities. The average home price in the Peel Region, which is currently ca. $712,600, will probably remain below the GTA average just like in 2018. The percentage of Canadians who want to buy a home in the next 5 years has come down to 36% from last year’s almost 50% due to affordability reasons.
According to forecasts, national sales will have decreased by almost 10% by the end of this year already. This trend will continue into 2019 and perhaps 2020, too. 2019 and 2020 are also seen as a period of moderate and stable prices with fewer price fluctuations. This is a good sign for all the coming years in the real estate market.
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