Real Estate Cheat Sheet: will house and condo prices ever fall?
All the laws of Newtonian physics suggest that a thing simply can’t go up and up forever. And yet, Toronto’s real-estate market seems to exist in a universe where “down” isn’t even a concept. Everything goes up—the buildings, the prices, the population—and it can start to seem as though there’s no other way. It can’t always be like this, but, for now, the numbers indicate that things will remain as they are. Here, four reasons Toronto’s real estate is safe—for the moment.
1. Home prices are up, year over year
According to numbers from the Toronto Real Estate Board, there was no point during 2013 when Toronto home prices weren’t higher than they were during the same period in 2012. What’s more, the end of the year was particularly strong. In December, average sale prices were up 8.9 per cent over 2012. TREB expects average prices to continue to rise in 2014, faster than the rate of inflation, in part because city’s inventory of available low-rise housing is still considered low. In other words, supply shows no signs of catching up with demand.
2. First-time buyers will still get a rebate on the Land Transfer Tax
During his mayoral campaign, Rob Ford promised to repeal the Land Transfer Tax (LTT), a municipal levy on a property’s sale price. Ford was eventually forced to abandon his promise, because the LTT is a fantastic moneymaker. It’s a way for the city to capture some of the value of its thriving real-estate market, and its continual surpluses have been instrumental in balancing Ford’s budgets. Real-estate agents hate it, but it’s here to stay.
In 2013, Frank DiGiorgio, Ford’s budget chief, was openly musing about cutting the LTT. The way he proposed to do it was by eliminating a rebate program for first-time home buyers, so that their payments could be used to offset an across-the-board reduction. Fortunately for young couples and families, it’s looking as though the idea doesn’t have the votes it needs to become a reality. And so, if starter homes are still too expensive for some, at least the city won’t be exacerbating the problem.
3. The condo market is still chugging along
Now is an interesting time for Toronto’s condo market. A record number of new units are scheduled for completion this year. It won’t be long before we know whether there are enough buyers to absorb the supply. Even so, Urbanation, a market research firm, thinks demand is likely to remain high throughout 2014, though sale prices are expected to remain stagnant.
4. Rich people are still rich
A report by Sotheby’s International Realty reinforces a somewhat obvious truth: the rich are still rich, and they’re still acting like rich people. About 600 more Toronto homes and condos sold for over $1 million in 2013 than in 2012. It’s still a fairly rarefied market, though. There were just under 5,500 sales in that price range last year, and Sotheby’s says only 270 of them were condos. Maybe people still expect palatial estates in return for their multi-million-dollar investments. For them, there’s always Mississauga.