2007 Toronto Real Estate Market Forecast
By Andrei Zaretski – New Dream Homes and Condos Magazine
With 2007 finally through the front door and 2006 put away in the basement storage room, it seems like the perfect time to take a look at what the Toronto real estate market will have to offer in the coming year.
The Canada Mortgage and Housing Corporation (CMHC) forecast states that Toronto has reached the mature stage of the real estate cycle, bringing balance to a more stable market.
Although the total number of new homes built in the Toronto Census Metropolitan Area is projected to continue last year’s decline, with a forecasted drop of 11% in 2007, the expected 36,400 new housing projects are another step towards the 30,000 long-term average observed in the last 25 years.
Jason Mercer, senior market analyst for the CMHC, said that single-detached, semi-detached, and townhouses will see a significant decline because the price of building these homes is continuing to increase.
“We saw people first move out of singles and into more semis and towns and now that shift is more and more focused on condos,” he said.
Karen Kessel, vice president of marketing at Empire Communities, said that Toronto condos have become the first option for new buyers because of their affordability.
“The price of new homes has escalated in price so much over the last couple of years that it’s almost untouchable for a lot of people to even acquire home ownership,” she said. “That’s why you see that shift of people buying condos.”
Mercer predicted that 2007 will still record above-average demand for ownership housing, but said the growth stage seen between 2001 and 2004 â€” where sales increased by 10% each year â€” has come to an end.
“Prices and mortgage rates are up over the last few years on average, and the cost of home ownership has increased,” he explained, adding that prices will continue to grow. “So you’ve got fewer people interested in moving from renting to home ownership, and that’s also reflected when you look at first-time buyer intentions, which are much lower today than what we saw three or four years ago.”
Kessel agreed with Mercer, saying that the average price of a house in the core of the GTA is considerably higher than the price most first-time buyers are able to pay.
She said people set on purchasing a house seek out into the urban areas outside of the city in search of single and semi-detached homes and townhouses. Those who wish to stay in the city turn to the vast selection of condos.
“We’re going to see a little less for new home construction,” Mercer predicted. “Particularly on the more expensive side of the market.”
“I think that there are a lot of builders who will have to work a little harder to get that traffic,” Kessel said. “(They must) offer something attractive to the consumer because it will be a buyer’s market in 2007.”
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