The March 2018 resale housing figures from the Toronto Real Estate Board show that sales were down 40 per cent year-over-year. Scary, right? Meanwhile, condominium apartment prices were up six per cent annually. On the other hand, single-detached prices were down 17 per cent. Looking at the numbers another way, month-over-month prices are up 2.2 per cent to slightly more than $784,000. So, are you perfectly clear about market conditions now?
It’s clearly a strange time in the GTA housing market. For new condos, units are still selling like crazy as investors snap up suites across the region; they’re bullish on values in 2022 and 2023 when these highrise towers are expected to complete. On the flip side, suburban single-family home sales have slumped, resulting in a few developers lowering prices, some by as much as 20 per cent. There appears to be a drop in values from the market peak of 15 to 20 per cent. However, prices for new lowrise housing increased by 45 per cent annually in early 2017. So, even with a market correction, new homes are still out of reach for many prospective homebuyers.
The question now becomes, should you wait? Is a 20-per-cent price decline on the horizon for new condominiums, too? Will new home builders continue to lower the prices of single-detached and townhouse product?
Developers have previously been reluctant to lower prices due to backlash from past purchasers – the fact that a couple already have is shocking – so further reductions are unlikely. You may, however, be able to negotiate some free upgrades.
People have been calling for a crash in values in the new condo market for more than a decade. It hasn’t occurred, and likely won’t any time soon. Costs are going up across the board: Land prices, Development Charges, labour and construction costs, and financing costs via higher interest rates. Add the uncertainty of getting planning approvals with the implementation of a new land appeals process, and prices are much more likely to go up.
Prices may be down in some areas from 2017, but they’re still way up compared to 2016. Buy for the long term and ignore the “paper value” of your home over the next five years. You’ll be happy you did.