The Mississauga real estate market changed significantly in many ways in 2016. So, what predictions for Mississauga real estate are in store for 2017? Let’s take a closer look and answer the age-old question: Should I Buy/Sell this year?
But, first, if you missed the extremely popular prediction post for 2016, please have a look back and see how things turned out!
A Quick Look at the Numbers
As we can see, there are three main trends to take away from last year:
- Prices Are Way Up
The 14.6% Year-to-Date increase INCLUDES condos! Isolating for detached homes alone, the increase has been a whopping 17.7% compared to this time last year (end of November 2015). The average price for a detached home in Mississauga, to date, now stands at $973,190 compared to $826,347 last year.
- Sales Are Up
November 2016 saw a slight drop in sales, but overall the amount of listings sold is up 9.9% on the year. This might seem a bit strange at first as people see the lack of listings on the market causing upward pressure on prices. Well, that’s true, so what’s carrying the bulk of the increase in the number of sales? Condos. Sales are up an incredible 13% year over year as people turn to the condo market as a more affordable alternative.
- Active Listings are Down
There are a couple of reasons for this. First, many people are choosing to stay and renovate their homes with the built-in equity they’ve accrued. And, second, homes are selling quicker due to the lack of inventory. A home that might not have sold in years past is now in huge demand as buyers are just looking to break into the market/neighbourhood.
Now that we have time to reflect on 2016, suffice to say it’s been a crazy year. Home prices have shot up when everyone thought the market would yet again crash. Donald Trump is the President-elect and every beloved celebrity imaginable passed away.
So, where does that leave us going into 2017?
3 Predictions for Mississauga Real Estate Market in 2017
1) Prices Will Go UP…Again
Yes, I’m sorry to report for some, but prices will be rising again. For those waiting for the market to crash…you’ll be waiting on the sidelines yet again. In fact, get comfortable, as I believe we’ve reached a point of no return in that regard.
The Mississauga real estate market won’t be coming back to a point where the average household making less than $100K per year can afford a detached home. Those days are behind us. Even in a worst case scenario where home prices fall by let’s say 30%, that only brings us back to 2013 prices which for most was already a point of unaffordability.
Prices Up, But By How Much?
I believe that prices will not rise as sharply as they did in 2016 thanks to some efforts by the federal government (which I will discuss below). Right now, I’m pegging price growth to be in the 9%-11% region. That would bring the average cost of a home in Mississauga (including condos) up from ~$627,500 to $690,500.
2) Mortgage Rule Changes are Coming
There was one minor mortgage rule change in 2015 and one slightly more significant rule change in 2016. The latter, coined the “Stress Test”, is now applied to all high-ratio mortgages (any purchase with less than 20% down). This means that anyone with less than 20% down HAS to qualify at the benchmark interest rate (currently 4.64%) versus just the rate their lender offers them (which could be in the 2.4%-2.6% range).
This latest change I think is a precursor to further, more significant changes coming in 2017. At the end of 2016, TD and RBC both slightly raised their fixed-rate interest rates in what I believe is a foreshadowing to a bigger move to help slow rising prices.
What exactly will that entail? I’m not sure just yet, but my money would be on a significant downpayment rule change and a further increase in the “Stress Test” applied to any kind of mortgage (including those with more than 20% down). The change might not be easily visible to the public (i.e. internal protocols for lending will tighten), but my feeling is that private lenders are going to be squeezed and banks will be free to slowly but surely modestly increase their rates as private lending competition decreases.
3) There Will No Changes to the Benchmark Interest Rate
At the beginning of December 2016, the Bank of Canada once again left the prime interest rate unchanged at 0.5%. And, in my opinion, they will leave it untouched in 2017.
There is just far too much uncertainty surrounding the first half of 2017 in terms of Canada’s economy, unemployment, dollar and the potential effects relating to trade with Canada’s biggest trading partner. I think those fears will subside as we get into the latter part of 2017, but by that time it will be a bit too late to significantly change anything. However, October has historically been a time the federal government will test the waters with changes, so I’ll leave that possibility open.
For now though, expect more of the same in terms of the Mississauga real estate market in 2017. That means low inventory, multiple offers and robust price growth. Either way my advice has not wavered in a very long time. If you’re thinking of buying now, don’t put it off. We’re not going backwards anymore.