A recap of January 2019
The big news this month is that the market is doing even better than anticipated. Last year, UrbanNation forecasted that freehold prices and activity would pick up in mid-2019, but that upturn started in January, much earlier than expected, which is great news (if you’re a Seller).
House buyers are BACK
There’s increased activity in markets and neighbourhoods around the city – including the 905, which has been slower in coming back than core areas. Of course, it may take a little longer for certain parts of the 905 to feel that upswing, but most areas are definitely getting rumblings of it now.
TREB’s market outlook is showing that potential homebuyers are more likely to buy this year, but there are still people sitting on the sidelines. But there’s something in the works that may help them get back in the game: in the last two weeks, bodies like TREB and affordable housing groups have started putting pressure on the government to reintroduce a 30-year amortization period for buyers with down payments of less than 20%, which would open up the market to more first-time buyers.
Condo prices: up, up and away
We know that the condo market didn’t take the same hit as the house market did – and it keeps going strong, with an 8.8% year-over-year increase from last January. However, the actual number of condo sales in the 416 is down by 6.3%, a drop that’s due to a significant lack of quality inventory.
That lack of inventory is happening for a couple of reasons., and it’s posing a real challenge for first-time buyers. Traditionally, condos have been a “foot in the door” purchase, and people tended to move up to houses relatively quickly. However, because house prices have increased so much, condo owners are staying in their condos longer. And even those who are moving out are holding on to them as investment properties – a high demand for rentals means there’s value in keeping those properties and renting them out.
Because the rental market is so tight, rents have shot up, making it even more attractive to hold on to properties. A one-bedroom in the city can easily go for $2100+. We have clients who have bought detached homes and held onto their condos to rent them out – it’s becoming a much more common trend. And while that’s a great financial choice for current owners, it’s directly impacting inventory levels and pushing new buyers out of the market.
As a result of soaring condo prices, freehold towns, semis and detached homes, which haven’t seen the same kinds of price increases, are becoming an option again – one people may have previously overlooked under the assumption that condos were all they can afford. The price gap between condos and houses is shrinking fast – it’s the smallest we’ve seen in recent memory. And that pricing has started another trend – if you own a condo and are looking to buy a house, there’s never been a better time to move up.
A number of our clients are selling their units and purchasing detached homes for a difference in price that makes sense.
Coming up: a lot of people have been asking about buying properties with basement apartments and in-law suites that can be rented out. It’s a great way to offset mortgage payments, but buyers need to be aware of the risks before diving in to the landlord business. Finding the right tenant, complying with zoning bylaws and fire codes, making sure you have the right insurance coverage – those are all things to think about before looking for a renter. Stay tuned for a post that dives into the rental world.
Got questions about neighbourhoods, market trends, investment options or anything else real estate related, Let’s talk.
