Will the Greater Toronto Area’s housing market keep defying the odds?

It’s the time of year when thoughts turn not just to turkey and cranberry sauce, but also to looking back at the market and prognosticating about what we’ll see in the year to come. What exactly does 2017 have in store for the Greater Toronto Area’s housing market?

The GTA’s housing market continued to defy expectations (and, possibly, logic itself) to stay strong into November, with a 16.5% sales jump over November 2015, and while it will surprise a few crystal-ball wielders, with the Bank of Canada benchmark interest remaining unchanged for now, it looks like we’re going to head into 2017 with the same dizzying prices — and same level of demand.

One real estate agent recently quoted in the Globe and Mail said he expected next year’s market to be “thoughtful” and “realistic,” and not quite as “unruly” as this year. I think realistic would make a welcome change of pace. I don’t think the demand will change, and time will tell if supply can keep up (it already isn’t).

I suspect that while we won’t see a major price “correction” (as the pundits call it, although a correction would imply that there’s an inherent value to real estate that, frankly, there isn’t), we may see less frenzied action as buyers put down some roots and stop moving as often.

I had a conversation recently with a condo developer who said his team was seeing a trend towards larger suites, which likely means a trend towards buying to stay rather than to rent; his hunch is propped up by the Globe’s expert, who said investors were starting to favour low-rise properties over condo projects as income purchases.

We’re approaching the tipping point where family buyers embrace condo living, I think, and we’ll see the paradigm shift in the next few years — which means I think condo prices may be in for a bigger jump than in past years, as they begin to keep pace with low-rise options.

With recent changes to mortgage legislation requiring lenders to stress-test insured mortgages, buyers will have to put down larger amounts, which, combined with the unknown President Trump factor south of the border, will create just enough uncertainty on the stability of the market to keep residents in place longer, which will in term stabilize prices somewhat.  

Indeed, Re/Max’s 2017 Housing Market Outlook is predicting price increases of about 8% next year, compared to the 17% increase seen in average GTA home prices in 2016. In Vancouver, they’re predicting a 2% climb compared to the 13% the market saw from January to October 2016.

I think we’ll see even greater growth in the 905, as first-time buyers especially head further afield to get more of what they want for the price they can afford. As their respective city officials continue the debate about commuter tolls for the DVP and Gardiner, people will look for employment alternatives that will let them stay closer to home, so I hope we’ll see an increase in commercial construction (or at least a decrease in vacancy rates) to accommodate them as well.

On the environmental side, I think soaring hydro prices combined with rapidly emerging technologies are going to make many homeowners as well as builders take a good long look at alternatives, such as solar roof tiles. We may even start to see personal, small wind turbines pop up on a few roofs. The proliferation of online options continues to affect the retail sector, but with more and more developers looking to mixed-use projects to help build dynamic, 24/7 communities, I think we’re in pretty good shape.

The economy in the GTA will continue to be healthy and the GDP steady in the coming year, according to my own crystal ball. I don’t think 2017 will be the most exciting year we’ve seen recently in the housing market, but I suspect that’s just fine by most — a little less excitement and a little more predictability might make 2017 the perfect year to dive in.

Whatever happens in the marketplace, please remember that your health, your loved ones, and your quality of life matters more than real estate ever will. Take good care of yourself, and may we all look forward to a happy, prosperous year.