The Toronto real estate market is off to a crazy start in 2017. The new mortgage rules and double digit appreciation have not slowed down demand. Here are 3 things you need to know:
1. Condo Market on Fire
With many buyers priced out of the low rise market (average detached in the 416 is $1.336 million and semi-detached at $902k per TREB) and wanting to live close to work, demand will shift to larger unit condos. Look out for condos to experience very strong appreciation this year.
2. Listing Price is Meaningless
A month and half into the new year and some properties are selling over asking by 15-50%. It sounds crazy but the there 3 factors why listing price is meaningless: 1. Marketing: listing price is used to attract as many potential buyers as possible, it is a marketing tool and is not an indicator of market value. 2. Supply: When active listings are down by over 50% from January 2016, the number of potential buyers increases significantly. 3. Frustration: Many buyers experience losing bidding wars. After a few losses, frustration sets in and some buyers resort to pre-emptive offers to end the misery of losing more bidding wars. It is emotionally taxing.
3. Rental Rates Up
With move up buyers priced out of the market, they are staying put in their rental units which is reducing supply of available rentals in the marketplace. Potential tenants are now in bidding wars for rental properties. For real estate investors, this is great news since cash flow will increase. Note: if a rental unit did not exist prior to November 1, 1991, the Ontario rent increase guideline does not apply. Investors can increase rent using the N1 form with 90 days minimum notice as long as market rates support the increase. Looking to invest in Toronto’s real estate market, we can help.