Is The 2018 Market Just Starting?
When I think of Toronto real estate and 2018.. I tend to think that we are only NOW entering the 2018 market. With new mortgage regulations implemented as of January 1, we saw a influx in buyer activity in early 2018, as buyers rushed to get into the market before their pre-approvals from 2017 (no stress test) lapsed..
I watched as the free-hold market in areas such as East York, Danforth, Corktown, Leslieville and the Beaches ended up in multiple offers conistently. This was mostly in the $700,000 – $999,000 market which is small free-hold or 2 bed/2 bath condos. I want to emphasize the $999,000 number as this is where the cut off is for first time home-buyers… CMHC (Canada Mortgage Housing Corporation) which provides high interest insurance on mortgages where the borrower puts less than 20% down. This means that if you sell for $1,001,000 you miss the entire First Time Home Buyer Market…
We also saw the 1 bedroom condo market go absolutely ballistic… I wont dive to deep into this segment of the market as 1 bedroom condos will always get a very high level of attention for obvious reasons.
Normally when you get a pre-approval from a mortgage broker, you are able to lock in a rate and the structure of the mortgage for a 3 month period…. So if you were approved in December with 2017’s mortgage regulations (no stress test for 20% or more) than your pre-approval is likely ending this month, or already ended.
We began 2018 with ridiculously low level’s of inventory… pile on a segment of the market scrambling to purchase before their pre-approval lapses, and you have the early 2018 market. Well…. There’s a pile of new inventory coming out daily and each individual segment of the market is beginning to become friendlier for buyers. Conditions are creeping back in and we are heading toward a more balanced market (especially in the 905).
I’ve had a number of clients as of recent who have taken full advantage of the current state of the market.. Now is a great time to sell your downtown 1 bedroom condo (likely for $900 – $1,000 per sq/ft) and transition to a freehold house in the 905.
905 Freehold has taken the biggest hit in the GTA and the condo market in the 416 has continued to appreciate…
This is where the opportunity lies..
With the exception of the foreign investors 15% tax we saw last year… The market generally does not have a massive knee-jerk reaction when new regulations are put in place… It always takes a 3-6 months for the market to really absorb new regulations and we are now entering that period.
I strongly believe that in the next couple of weeks, we are going to see tremendous (flails arms like Donald Trump) amounts of new inventory…. dont believe the hype of BUY NOW!… Things are going to level off a little.
The days on market will increase and the cream will rise to the top. Properties listed professionally with staging/photography/videography/marketing materials will sell… and the iPhone picture’d listings will marinate on the market and become victim to investors for a discount.
Buyer’s beware!! If you purchased in early 2018 you’ll need to keep an eye on your segment of the market to ensure you didn’t overpay by competing with buyers scrambling to meet their pre-approval deadline.