The Current State of the Real Estate Market

Since the announcement in May 2017 regarding the implementation of the 15% foreign buyers tax, the real estate market has come to a screeching halt. The market was on fire for the previous 18 months with multiple offers and escalating prices fueled by many foreign buyers and domestic and international investors.

While the most affordable real estate still frequently sells (properties below $600k), properties above this mark are selling at a very slow pace. In the last 18 months prior to the announcement prices have risen by about 25% making affordability not a reality for many local buyers. Since the announcement we have seen a decline of about 10-15% in prices but that still has not had much of an effect on the current slowdown of the market.

We do anticipate that prices will probably have to fall an additional 10% to bring prices back to where they were 2 years ago for the market to get back into full swing as it was before. The other factor to consider is the rising rates in the market which is also having an effect on the current situation.

We do not see anything changing come this spring unless prices continue to fall. Further to all this is Immigration Canada has stated that they aggressively want to add an additional 1 million people into Canada over the next 3 years. That's an average of 333,000 people each year. With an average of 4 people per family that equates to an additional 83,250 homes needed annually which will keep a high demand on low inventory which will further fuel the rise in prices. Its great for the economy but not good for housing.

It has been stated that Toronto is the 3rd or 4th largest city in North America. With many of the immigrants coming to this great city, time will tell what happens to this great city of ours. Unfortunately, it looks like more traffic, higher real estate prices and higher demand on housing.