Now, onto the good stuff. Can the 2018 Mississauga real estate market live up to its predecessor? Is it even possible to experience the highs and lows of 2017? I’m not really sure, but let’s quickly go over what happened over the past year.
Year in Review
What’s the best word to describe the Mississauga real estate market in 2017? Insanity. Complete insanity. If anyone told you they could predict that happening then ask them for next week’s Lotto 6/49 numbers.
While in the 2nd half of the year cooler heads prevailed, the first six months were unparalleled. January to April were some of the craziest months I’ve experienced as an agent.
The Turning Point
Without a doubt, the Fair Housing Plan introduced in April by the Wynne government had its intended immediate effect. Despite people not really understanding the true impact of the foreign buyer, many assumed this was the end of the line and began to cash their chips out. Listings flooded the market, buyers decided to sit back and wait, and prices followed.
The government got what they wanted in the short term, but were and still are unclear of any long-term ramifications specifically regarding rent control which, as many pointed out, has worsened the condition of the rental market in the GTA.
The Second Half
As the summer progressed, listings continued to go up and prices continued to fall. However, at one point from September to October we did see a month-over-month increase in both sales and average price. However, from the peak in April to this past December, the average price of all homes has fallen 15%.
However, there’s one big caveat to that…
The Red Hot Condo Market
Everything you’ve heard in the news regarding the downfall of the GTA market has unequivocally been about the freehold market. The condo market has continued to defy expectations and at the end of 2017 was up 15% on average!
The surge started around the same time as the freehold market and just never stopped. It’s been fueled largely by the price gap between freehold homes and condos. Younger buyers or couples with small children wanting to get into the market were sick of waiting for the bubble to burst enough for them to afford it. Realizing even a 15% decrease in prices from the peak of the market wouldn’t help them at all, they jumped on the chance to own a home and looked at the condo market.
So, How Did We End 2017?
- Prices Are Up
Yes, despite everything the market did eventually stabilize and we’re now at appreciation levels that are much more sustainable moving forward.
- Sales Are Flat, Listings are Up
I’m not ready to say we’re officially in a buyer’s market just yet, but we’ve definitely returned to a place of balance and normalcy. There are still multiple offers in the condo market and on lower ends of the freehold market, but they’re generally not as hotly contested. You can now feel confident that you can purchase a home with conditions.
- Average Days on Market are UP
The fly-by-night agents with their terrible iPhone photos cannot just stick the place up on MLS and cross their fingers for a sale $150K over asking. Those days are gone. We’re now back to a point where you shouldn’t expect your home to sell in a weekend. However, that’s not to say that with the right pricing, marketing and experience that you can’t still sell your home quickly. It’s just going to take a little more work and patience than before.
3 Predictions for Mississauga Real Estate Market in 2018
1) Prices Will Go UP…Again
Economists all over Canada feel that the early part of 2018 will see marginal increases in price or for them to be flat. But, things will pick up in the second half of the year and that we should expect home prices to be up about 5-6%.
While I don’t often agree with the economists, I think the reasoning is logical. With the new “stress test” now being put on uninsured mortgages, there is a marked reduction in buyer’s affordability level. Whereas before those buyers could afford 7x (x being their family income) they now can only afford 5x. That reduction is going to have a real affect on the market all the way down the line.
However, I don’t think it will be as impactful as others believe it will be. By the Spring I believe things will heat up again a bit and by year’s end I think the GTA will be a little ahead of expectations. I’m forecasting 7-8% in increases year over year on the average home price.
2) No More Government Intervention in 2018
I believe the government feels they have set in motion the rules which will appropriately curb appreciation. I don’t believe there will be any more mortgage rule changes or anything else that will be added to the Fair Housing Plan.
There is a lot of fallout from the changes in 2017, but now the government will want to sit back and see how things play out this year. With an election on the horizon, there are currently other focuses as well.
3) At Least Two Increases to the Benchmark Interest Rate Coming
The first one will happen on January 17th and banks are already raising their rates in preparation. I believe a second will follow on March 7th. Beyond that, I’m not certain what will happen but I’m leaning towards it being left untouched the remainder of the year.
With unemployment at its lowest levels in years and the Canadian economy overperforming its expectations as of late, the BoC has the confidence to raise rates now. Along with the new stress tests, homeowners are slowly becoming accustomed to higher interest rates. A lot of people will be renewing their mortgages this year and opting for fixed 5-year terms in preparation for that.
The Wrap Up
2017 was an interesting year to put it mildly, but now the craziness is hopefully over and I think that’s a good thing for the majority of both buyers and sellers. I think we’ll see things ultimately stabilize this year and pick up a bit as the year closes, but I don’t see a return to the madness that was the early part of 2017 in the near future. So, if you’ve been sitting on the sidelines waiting for a chance to buy a home without having to waive a home inspection, then now is your chance. You’ll also save about 15-20% on the purchase of a freehold home compared to last year.
For sellers, you might have missed the peak of selling, but it doesn’t matter much if you’re still buying. And if you’re just selling, prices are still up nearly 5% year over year from 2016 so you’re still getting an incredible amount for your home.
There will be updates like this quarterly throughout the year so either check back here or you can sign up for Mississauga Market Updates to receive them directly to your email.