15 February 2012 ~ 0 Comments

My Thoughts and Predictions for the 2012 Toronto Housing Market

Here is what I think is in store for the Toronto Housing Market in 2012:

Let’s start with the good.

In centrally located neighbourhoods a continuation of the frantic multiple offer events that we have been exposed to pretty much over the past 7 sevens will continue through the spring and fall markets. Parents with school age children and young professionals want to raise their families in micro neighbourhoods where others share the same values, morals and interests. Nothing new here other than these micro hoods have a finite amount of homes available on a yearly basis and more people are looking to join than leave. Prices will continue to rise above city wide averages.

The income gap is widening these buyers will spend what it takes to house their kids in a hood that offers good schools, friendly neighbours, central locations to transit and transportation and a great place to park your money if the real estate market slows down.  Think of areas like Leaside, The Kingsway, The Beach, Roncesvalles, Denlow, Riverdale, Moore Park and others as like what gold is to investors when the stock markets are uncertain. Everyone seems to flock to it.

Downtown Toronto will continue to see increase in both demand and prices. Too many reasons to list why this is but all one has to reference is the recent crazy over paying for the city owned homes on Crawford street last month. One semi sold for $221,000 above the asking price and the other semi sold for $265,000 above the asking price. Really this is all you need to know about downtown. According to the land registry it says the city paid $2 bucks each. Not a bad return on it’s investment!

The resale condo market is continuing to soar with many downtown and trendy neighbourhoods experiencing increase in demand as buyers discover or (rediscover) fascinating hoods that bring them closer to work, where they play and just pretty much about where they really want to spend all of their time. It’s not in a car or subway commuting outside the core.  The key here will be in the second half of the year. Will the common run of the mill units in areas like cityplace continue to thrive? The investors have been leaving so it will be interesting to see how this plays out.

Now lets look at the not-so-good.

NEW CONSTRUCTION CONDOS! If you are an investor put your money somewhere else. Many of these projects make little sense with expected returns on investment. Unless rents increase by 30% in the next 3 years I think many of these buyers are going to be stung! And it will have an impact on all housing. Industry experts can’t even agree on how many of these projects are investor driven. Some say 30%-40%, with other saying as high as 60%. Funny it wasn’t too long ago where many were saying as high as 80% in many new developments. Personally I agree with the latter.

If you are purchasing new construction for owner occupied purposes then you should be careful on where you buy (I mean building and builder) because many builders will not tell you the truth on how many investors have purchased. And make no mistake, this matters.

The surrounding neighbourhoods from the core will most likely have a solid first half as inventory levels remain low and record low interest rates continue driving the herd. The  second half could play out the same as affordability in many high demand neighbourhoods push buyers outside their first choice areas. Many east and west end fringe neighbourhoods will probably see a cooling to more normal levels of appreciation. Which truthfully isn’t such a bad thing.

Overall I think 2012 will continue to be a good time for first time and move up buyers alike. Strong fundamentals such as low monthly carrying costs, pride in ownership, decent local economy and good equity appreciation in previously owned real estate  will make for a healthy housing market.

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