It’s the first week of 2016 and everyone wants to know – what the heck is going to happen in the GTA real estate market this year?
I took a stab at predicting what will happen specifically in the Mississauga real estate market over the next two years in a recent blogpost, but today I wanted to talk more about what happened in 2015 and what you’ll likely hear in the next couple of weeks from the major media outlets and why it’s a good idea to just ignore it all.
2015 GTA Real Estate Market Year in Review
It was a busy year. In fact, it was the best year for sales in GTA history with 101,299 sales – an increase of 9.2% from 2014.
That’s likely one of three numbers that you’re going to read headlines about when The Toronto Star, Globe and Mail or any variety of news outlets updates their FB business page in the next week. The others are these:
- The average price of a home in the GTA rose to $622,217 – up 9.8% compared to $566,624 in 2014.
and the one likely to get the most attention…
- The average price of a detached home in the 416 increased to $1,047,483 – a 12.6% increase from 2014.
And that brings me to today’s rant (of sorts)…
The media is going to write things that are going to get clicks and nothing draws more attention than the average price of a detached home in Toronto.
Yes, it’s expensive. No, you don’t have to buy one.
Yes, it was a banner year for real estate in the GTA, but not all of these sales are detached homes over $1 million. In fact, detached sales only rose 1.7% in 2015.
It was actually the condo market that had the biggest influence on sales. There were 20% more sales in 2015 than 2014 and the condo market accounts for 54% of all home sales in Toronto.
So, take anything the media says with a grain of salt and remember that there are affordable options for housing in the GTA. It’s just now become a lifestyle decision.
The Lifestyle Choice – Condo or Burbs
For most people, the dream of owning a detached home in the core of Toronto is dead. But, you need to also look beyond the average selling price of a home to determine what the market is like. The average selling price is so insanely misleading, that you very well might be able to afford a detached home in Toronto and not even know it.
You have to look neighbourhood by neighbourhood and determine how much space you really need, how much of a commute you ideally want and balance that with what you can really afford.
And if you determine that you can’t, then it might be time for a condo or the burbs (and you have that debate all over again).
We live in the biggest metropolitan area of the country and Toronto is the financial hub of Canada. People are immigrating in great numbers every year and young people have gravitated towards city life moreso than their parent’s generation.
We’re going to be witnessing a lifestyle change over the next 10-15 years and people are going to accept/embrace life in smaller spaces. People will have to get used to the commute or they will have to find a job that lets them work remotely or even start their own business.
The point is, don’t get caught up in the sensationalism that is the detached Toronto home price. It’s not an all encompassing number that reflects the reality of real estate all over the GTA.
The Condo Crash
On that note I just wanted to point out one more thing. The great condo crash that every “expert” predicted hasn’t come and has in fact helped alleviate the pain of the detached market. Condo sales now account for 54% of all home sales in Toronto and 46% of all home sales in the entire GTA.
Rental demand has been satisfied and vacancy rates still sit at historically low rates. Which leads me to the next thing you’re probably going to hear a lot about in the next month: the devalued loonie and the Chinese stock market.
The loonie sits at a 12-year low at the same time that China’s market is getting hammered, bringing speculation that foreign money is going to want a safe place to land. And what place is more perfect than stable, boring Canada?
We always hear about how the overseas investor is ruining the real estate market and making things unaffordable for the average joe, but at the same time the Canadian economy is always going to welcome people investing in it.
But, the influence that foreign money has had on the real estate market in the GTA has always, in my opinion, been overblown. I think people that live and work here continue to account for the vast majority of purchases. We’re just more educated, financially capable, and still maintain that Canadian desire for homeownership.
My point is, don’t be fooled by the reports that tell you that every new condo buyer is straight off the plane from Shanghai or Hong Kong. The condo market has shown it’s been reliable and steady over the past couple of years and is allowing people an affordable alternative to the now unattainable dream of owning a detached home. And, you know what, that’s okay because big cities…proper ones that we want to be like, all have thriving communities of people that are close together in apartments and condos. It’s now Toronto’s time to step up and try to become that next great city people flock to for anything and everything.