A year of opportunity for home buyers
By Bob Finnigan - New Dream Homes and Condos Magazine
If I had to choose one word to describe the Toronto real estate market in 2007, it would be “opportunity.” The year ahead will be one of opportunity for homebuyers based on strong competition among home builders, mortgage lenders and mortgage insurers, combined with the wildcard factor inherent in a pre-election environment.
The real estate market (new, resale and renovation) is coming off yet another excellent year and we have no reason to expect any dramatic differences in 2007. Housing in Toronto remains relatively affordable, certainly compared to the late 1980s and with markets like Calgary and Vancouver.
In its December, 2006 quarterly report, RBC Royal Bank noted that “affordability is likely to improve across a number of markets in 2007 as the lagged effects of mortgage rate declines, easing energy prices and a topping-out of home price appreciation have positive effects for home buyers.”
As for mortgage rates, a key component of housing affordability, the expert consensus is that rates will remain in their current extremely low range, if not decline a bit further, throughout 2007. Even if rates don’t decline (how low can you go?), intense competition among lenders means homebuyers will continue to benefit from rate discounting.
We have seen forecasts for the coming year range between 33,000 and 38,000 new home and condo sales. I am confident that in 12 months time, the optimists will prevail and new home sales for 2007 will be closer to the top of this range – I am predicting 37,500 sales.
A couple of sub-trends I foresee include a rebalancing of the low-rise/high-rise market share ratio closer to 60/40 than to 55/45 witnessed this past year. Of the 40% of high-rise condo sales, I expect to see as many as one-third of those being recorded in the 905 regions, particularly Mississauga and Markham, but increasingly in other suburban communities. As always, time will tell.
My forecast for the renovation sector is just as bullish. The renovation market in the GTA has grown exponentially over the last several years based on several factors including the red-hot resale market, the access to low cost home equity loans, the explosion of renovating and decorating television shows, and overall lifestyle trends and preferences.
Frank Cohn is a professional renovator member of the GTHBA-UDI and host of CFRBs Home Improvement Show. He describes the renovation market as “crazy” and agrees that the television programs are a big factor. “My phone is ringing non-stop – I got two calls on Christmas day,” Cohn remarked this week.
“I’m talking to people that work extremely hard, they have a whack of cash, they are in their final home and they want to realize their dreams, NOW” said Cohn.
“Right now, I’m booking for the fall and my advice to homeowners is not to wait to the last minute before picking up the phone,” he added.
Toronto’s resale housing market has been performing at peak capacity throughout the GTA, with homeowners either fixing up their existing home to sell, or renovating their resale purchase to suit their taste. Their lifestyle preferences reflect the trend toward in-home entertaining and/or the notion of home as the family retreat.
According to economic impact statistics compiled by the Canadian Home Builders’ Association and Will Dunning Inc., the renovation industry in the GTA is a $5 billion business generating more than 64,000 jobs and almost $3 billion in wages paid. I frankly expect those numbers to grow this year.
———————————————————————————
Contact the Jeffrey Team for more information
