Despite ongoing predictions of impending doom for the Toronto real estate market the price of houses continued a slow rise through the fall of 2018. Yet questions remain about the ongoing effects of rising interest rates and the willingness of buyers to pay more. Foreign investors appear to be less of a factor than expected. In addition, a growing tech industry may well feed rising prices even if first time buyers opt out.
15 key factors affecting Toronto’s housing market
Over the course of 2018 a series of housing sales predictions from Gord Collins has at times, pointed to various signs that the Toronto housing market could collapse. Yet, even with some Toronto neighborhoods going through periods of major drops, the overall tendency has been to slowly rise. The most recent prediction from Collins is that “housing prices in Toronto will keep rising past the Federal election on October 21, 2019.”
Looking more closely at Collins’ thinking one releases that the future of Toronto real estate is based on a series of interlocking possibilities that could affect future sales. These include Canadian concerns such as whether or not interest rates will rise and what happens in the regional job market. They also include international issues especially the outcome of the 2019 U.S. elections and future economic and housing growth in the U.S. Such issues are on the minds of all those considering Toronto real estate’s future but Collins goes even deeper with “15 Key Factors Driving Toronto Housing Market.”
Collins’ 15 factors affecting Toronto include increasing numbers of millennials seeking homes, consumer debt, federal restrictions working against first time home buyers, the fate of the auto industry and the shortage of housing stock in the region. Interestingly enough Collins leaves out the effects of a growing regional tech industry discussed in a recent real estate market report.
Will the tech industry push prices even higher?
A housing forecast from Engel & Völkers predicts that the tech industry will keep the housing boom going. With Microsoft opening a new headquarters and Intel planning a new engineering plant, Toronto seems destined to grow as a tech hub. In fact Toronto is already ranked as the “fourth most important tech hub in North America” and similar status has driven up real estate prices in every major city seeing such tech growth.
Engel & Völkers president and CEO Anthony Hitt pointed out that condo sales should see an effect and that many such sales may be to foreign buyers. However these are not the speculators that have concerned some observers and that have been a driving force in Vancouver. Tech booms bring an international workforce to the surrounding region and so these buyers will become part of the city rather than absentee landlords with empty properties.
Some skepticism remains regarding the larger market
Despite many positive sentiments regarding the growth of Toronto’s housing market, skeptics remain concerned as shown by the annual report of the Canada Mortgage and Housing Corporation. This report predicts an overall decline in the Canadian housing market as a whole for both 2019 and 2029 but also points to possibilities that might moderate that decline.
Yet the outlook for Toronto is presented as more positive than the nation overall with the possibility that slowing growth in 2018 could be followed by a “partial recovery” in 2019 if “job growth and migration levels also continue to rise.” Given the previous predictions such a perspective actually bodes well for Toronto.
Hesitant predictions suggest moderate growth
If a recovery is dependent on job and migration growth, as the Canada Mortgage and Housing Corporation maintain, then Engel & Völkers’ stance that tech growth will lead to both more jobs and more migration is strong support for continued growth in housing. And if Collins’ 15 key factors are aligned, then his prediction for growth adds further support. Despite a general hesitation to predict strong growth, moderate growth in Toronto’s housing market seems likely to continue in 2019.