2018 Update and Outlook
At the beginning of this year, we posted a blog article focusing on expected trends for 2018 by the CBC and Royal LePage. The predictions focused on increasing demand for, and gradually rising value in, the condo market sector, and Ontario’s strong economy both attracting newcomers as well as prompting millennials to become first-time home buyers. Second quarter market results support those early forecasts.
TREB’s Condo Market Report shows that the average selling price for condo apartments sold through TREB was up by 5.4% year-over-year to $561, 338. The highest average selling price was in the City of Toronto, at $603,480 (up by 6.5% over Q2 2017). The actual number of sales was down by roughly the same percentage as the decrease in available listings. The high demand and low supply equals greater competition, and increasing sale prices.
TREB’s Rental Market Report shows a sharp 10.4% increase in rental costs for an average one-bedroom condo to $2,055, and an 8.8% increase in rental costs for an average two-bedroom condo to $2,755, compared to Q2 2017. Rent control efforts by the government have not been effective in reducing the continuing double-digit rent increases. There is still too short a supply of new units to provide the needed balance. We had a 2 + 1-bedroom condo on the lease market for a client earlier this month, and received 4 offers over the first weekend! The demand appears to just be getting stronger.
The key indicators released by Stats Can show the national unemployment rate has remained at a near-record low rate of 6.0%, with Ontario trending at 5.9%. The Consumer Price Index (Stats Can offers a helpful video if economics class was a favourite one to skip!) experienced an inflation rate of 2.5% in June, which will likely result in further interest rate increases this year from the Bank of Canada.
For an optimistic perspective on that, check out the recent editorial contribution to the Globe and Mail by senior economist Frances Donald, which began: “Canadians have had too much fun at the cheap credit buffet, and it’s time for the country to eat its vegetables.” She goes on to explain why we can handle the interest rate hikes.
Phil Soper, President of Royal LePage, shared in the Q2 survey earlier this month that despite the cloud of uncertainty caused by difficult American trade negotiations, the national housing market is expected to remain in a long-term expansionary cycle, albeit at a slower pace than the last couple of years.
In the GTA, the condo and rental markets are booming, and home prices are appreciating at significant rates in surrounding Golden Horseshoe cities and beyond. As retirees sell their GTA homes, and younger buyers seeking more affordable detached homes decide to say goodbye to the big city, home price appreciation rates in Windsor, Belleville, Niagara, and Kingston are among the highest in the country.
It’s a great time to invest in real estate!