The price to live in this great city can be insurmountable. Without understanding the real estate market to identify the right time for purchase, you could end up paying hundreds of thousands more. Our team has analyzed the data and put together this Toronto real estate price guide to help you understand what affects the prices and how to save as much money as possible.
Toronto Real Estate Prices
The Toronto real estate prices for the last few years made owning your own home almost unattainable if you are not already of a certain age. Let’s take a look at some of the most important influencers.
Background on the Growth of Toronto Real Estate
The real estate market in Toronto has seen significant changes in the last decade. This was due to the influx of immigration and foreign buyers, but now the prices have also seen a dip due to the Covid-19 pandemic. As Toronto became the financial center of Canada, our experts also witnessed the real estate market climb over the years. At the height of the boom, it was difficult to find a decent abode in a coveted neighborhood that went for anything less than a million.
Effects on Real Estate Prices
With changes in the economy and society as a whole, the real estate prices in Toronto were greatly impacted. When foreign buyers came into the picture more than a decade ago, houses were being bought up quickly and driving up the real estate prices.
Luckily, the playing field seems to have evened itself out by dropping from 6% to 30% in the past year depending on the area.
In this section, our team will go into further detail about the primary driving factors that can influence housing price fluctuations.
Population Influx and Immigration
First and foremost, Toronto has a growing population and immigration. When the demographics of a country experiences a significant shift, the economy and housing prices could be affected for decades to come. As our experts have mentioned, Canada experienced an influx of foreign buyers , investors, and immigrants in the past decade or so. The sudden surge in housing prices can also be pinpointed to around the same time.
As luck would have it, the buyers were relatively unchecked and purchased a lot of property at over asking prices and some even bought out the owners with cash. As you can imagine, this greatly hiked up the housing prices.
Another driving factor is a domestic issue, which is higher mortgage interests. Our experts say the lower the interest, the lower the cost of the mortgage and vice versa. Since mortgage prices rose in some areas, we also saw a hike in property prices and less buying power for consumers.
Since it’s so difficult to save in a city that’s costly, not many people have the ability to purchase a house outright. Mortgages are inevitable for at least 90% of the domestic buyers, which can also put the people at a disadvantage. You are at the mercy of the mortgage interest deemed by the lenders. All a potential home buyer can do is try to maintain good credit.
Luckily, there are options for people in a difficult situation such as poor financial decisions, bad credit, and a sudden change in circumstances. People are able to look to B lenders for a way out.
These monthly fees contribute to maids, security guards, concierge, and anyone else the condo corporation has hired to maintain the property.
Shift in Market Value of Homes
Of course, there is also the affordability of the homes, which will again depend on the area in the city. Larger and more in-demand cities such as Toronto and Vancouver experienced the greatest shift in the market value of homes due to the factors our team mentioned above. Sadly, the average income in these two major cities didn’t synchronize with the surging housing prices.
What happens in situations such as these is lower buying power. The government has tried to compensate for this in certain areas by building more condos to try and saturate the market, but it will still take a few years to balance out.
New Types of Home
The type of home can also impact the Toronto real estate prices. We’re not talking about condos vs standalone detached homes, but our experts are referring to new and existing homes. Existing homes are ones that are already built, and have probably been around for a while, and new homes are newly-built.
As our team briefly mentioned above, new constructions are essential to fill in the price gap. As said, it will take a few years for this action to take effect because you need enough new homes being built to meet the demand for buyers.
You won’t see a significant decrease just yet in housing prices in major cities including Toronto, but with the new constructions being built, it’s hopefully just a matter of time.
Will House Prices Drop in Toronto?
Yes, house prices will drop in Toronto, just like they could rise. The housing market is cyclical, and can be influenced by a number of factors. Just as there are housing price surges, there are also declines. For example, the global pandemic that has affected the world’s economy has caused Toronto housing to drop 6%-30% depending on the area.
Is Toronto real estate overpriced?
Yes, Toronto real estate is overpriced. The pricing is not just a little over the top, but the city makes the top 10 most unaffordable cities in the world year after year. For the same value, if you look in other parts of the world, you could be getting a home in a nice area with much more square footage.
The Toronto real estate prices are indubitably high, as proven by the city landing a spot on the top 10 most unaffordable lists time and time again. However, with the help of our experts, understanding the influential factors that can drive or decrease the prices can help potential buyers make more informed decisions. With knowledge of the above, it’s easier for buyers to make strategic moves.