Learning from recent changes in property values
With Toronto real estate prices being so hard to predict, what should commuter students expect when looking for places to stay?
Toronto’s housing market has taken multiple unexpected turns in the past few years. In the early days of the COVID-19 pandemic, the demand for new real estate increased drastically largely because people were spending more time in their homes. Following this jump, property values were stable for most of 2021.
Towards the start of 2022, housing prices accelerated rapidly, causing record highs. In March of 2022, the Canadian Real Estate Association (CREA) benchmark price for a place in Ontario peaked at $1.08 million which was 64 percent higher than before the pandemic. The prices then started falling due to increased interest rates and buyer fatigue. The CREA benchmark piece has fallen about 20 percent since then, bringing the prices back to what they were in September 2021. The number of new home sales within the GTA was at its lowest since 2018. None of these changes were expected within the market. Meanwhile, in 2023 the GTA is expected to see a record number of new condo units, despite the Royal Bank of Canada’s (RBC) prediction that the housing market will crash.
The RBC’s Monthly Housing Update predicts that there will be price corrections all across Canada. The report states that for the housing market in Ontario, “a cyclical bottom is approaching—likely in early 2023.” According to the RBC, the decline will continue until spring at the earliest.
Although the GTA had been expecting to see a record number of condos entering the housing market, the Canada Mortgage and Housing Corporation (CMHC) warned that the increased building costs, drop in condo reconstruction sales, and increased interest rates will possibly “lead to project cancellations or delays in project launches.” Due to the current uncertainty within the market, real estate analysts expect the number of sales and listings to remain low for the upcoming months. The CMHC foresees that the price decline will continue until the year’s second quarter.
The housing supply crunch has put Premier Doug Ford and his promise to have 1.5 million homes built in Ontario in the following decade in a difficult position. Ford has been using the province’s perceived lack of housing to justify cutting into the greenbelt for new housing and overpowering conservation authorities.
Commuter students should expect housing prices to continue to fall until the end of the winter semester, with limited housing options to choose from at the end of the cycle. Those looking for places at the moment can be advised to wait while prices continue to fall.
