2016 proved to be another record setting year in the real estate market with particular sales growth being experienced for condominium apartments followed by detached homes.
Toronto Real Estate Board (TREB) President Larry Cerqua attributed the record home sales and accelerated annual sales growth to a fairly strong regional economy, paired with low unemployment rates and low borrowing costs, which in turn kept the demand for home ownership strong in the GTA.
Despite reports of foreign investors accounting for the healthy activity in the housing market, the results of an Ipsos survey prove otherwise. The study commissioned by TREB indicated that the strong demand experienced in 2016 was very much domestic in nature, with foreign buyers only accounting for 4.9% of the annual transactions.
The Home Price Index (HPI) continued to accelerate throughout the year seeing an increase in the overall average selling price of homes, with many months showing prices increasing over 20% year over year. As more end users turned to the condo market for their housing needs, the limited availability of listings in the condo market also led to accelerated price growth of 15.2% year over year according to the MLS® HPI.
The outlook for 2017 looks very promising still. The Canadian Real Estate Association (CREA) is forecasting an increase of 0.2 per cent for 2017 and TREB is forecasting another strong year through its MLS® System, with between 104,500 and 115,500 sales.
A positive shift comes in the condo market, which is moving away from investors and toward buyers who are interested in living in their units. The share of likely buyers looking to purchase a condominium apartment in 2017 is also up according to the results of the Ipsos poll.
First-time buyers will continue to account for a significant portion of likely home purchasers in the City of Toronto with 64% of the Ipsos poll indicating they were first-timers. This concentration of first-timers in the ‘416’ area code is likely due to the concentration of condominium projects in the city over the past decade, and their lower price point to home ownership.
Double-digit annual rates of price growth are expected to remain in place for the majority of home types across the GTA, between 10% and 16%. This has also led to a decline in prospective buyers searching for single detached homes and increased activity in the condominium market when compared to survey results from a year ago.