2013 is coming to a close, and I can tell based on the lack of comments on last week’s blog that most of you are mentally checking out from anything and everything that doesn’t involve shortbread cookies.
I’d like to thank all of my regular readers, and especially those who comment on a regular basis: JC, Horrido, Huuk, Paully, Phillip, Floom, Ian, ScottyP, Chuck, Kyle, AndrewB, BillyO, Jeff316, Darren, Joe Q., Phil, Rob Fjord, Mooj, Frances, Jonathan, Geoff, Moonbeam, Mike, Sam, Jeremy, IanC, Frosty Johansen, Long Time Realtor, Jen, Dave, RPG, Becca, Johnny Chase, Potato, Graham, Lui, Jason H, George, DavidP, Asian Sensation, JG, and anybody else I may have accidentally missed, which I apologize for!
Let’s take a quick look at where 2013 took us, and where 2014 is headed…
I don’t have the December numbers yet, but the average price of a Toronto home went up 11.2% from November 2012 to November 2013.
Is this good?
Is this bad?
Or can we draw any conclusions from this whatsoever?
I’ve been in real estate for coming up on ten years, and every year, without failure, somebody (or several people) have predicted the demise of the Toronto real estate market. I can’t say it will be 2014, but at the same time, I can’t say it won’t be either…
2013 showed us a lot more of the same as in the last few years: rising prices, lack of inventory in many pockets, and multiple offer situations on quality homes.
2014 is going to produce over 40,000 condominium completions, according to Realnet, whereas 2013 saw only 20,000, and 2015 is forecasted for the same. If 2014 can withstand this influx of condominium units, then I’ll have no choice to agree with all the real-estate-boosters and say, “This baby is heading for infinity and beyond.”
Brad J. Lamb wrote in his December 2013 newsletter, “For Canada to fall into negative growth, we will need to see Europe exit their recession and expand into robust growth for several years. We will need the U.S. to do the same. This is perhaps 8-12 years away.”
I can’t go on record and make an insane prediction that a decrease in the Toronto real estate market is 8-12 years away, especially after a 17-year increase. That would be, in a word, insane.
But I do agree that so long as interest rates remain low, there won’t be a substantial decrease in the value of Toronto real estate. Toronto has become a safe-haven for International investors from Asia whose banking systems restrict how much money they can take out of the country, and who, when allowed to actually take money out – are putting it into Toronto real estate. Combine this with the fact that everybody wants a house in Toronto, and those who can’t afford houses choose to live downtown near work, and I can see why the real estate market seems to defy all logic, and continues to rise.
I feel like we all want the real estate market to decrease. For some of us, it’s so we can stop banging our heads against the wall, trying to understand the world once again. And for others, it’s out of frustration, since we can’t afford that which we really want!
But wanting the market to decrease isn’t enough to make it so.
I can make a great argument that the Toronto market is overpriced and overheated, but at the same time, I can argue against that.
I can’t predict the future. So I’m not going to try.
I tell my clients, “I work in today’s market. Not tomorrow’s, and not yesterday’s.” I can’t predict what is going to happen, but I also can’t look backwards, and consider, “What if?”
Let me just say that I wouldn’t be surprised to see the Toronto real estate market lose 2-3% in 2014, but I also wouldn’t be surprised to see it gain that same amount……or more…
As for major changes in the 2014 real estate industry, I don’t see any on the horizon.
As I wrote in a blog post last week, the real estate regulatory boards are very slow to address issues, and those “new measures” they do implement are often designed to tackle problems that first cropped up 5-6 years ago.
I wonder what will become of business models like Zoocasa, which seems to get a lot of traffic on the website, but not so much actual business.
I’ve long-maintained then when the market does drop, it will spell the end for discount brokerages and similar business models. In a time when sellers are having difficulty selling their properties, they’ll lean heavily on successful brokerages, with proven track records, great brand names, and above all, experience.
Having said that, we aren’t in a cool market, and thus I can see the discount models gaining momentum into 2014, at least for the time being. I still believe that it’s the lower-end of the real estate market that chooses to use these brokerages (I mean, how many ComFree signs to you see on lawns in Forest Hill or Rosedale?), and I also believe that paying 1-1.5% more for a full-service brokerage with an experienced agent will pay off, but I guess there’s only one way for the seller to find out…
In January of 2014, we’ll find out if the Mirvish-Gehry project on King Street West is going to hit another speed bump, or move full-steam-ahead. The Mirvish mogul wants to build towers of 82, 84, and 86 storeys, whereas city councilor, Adam Vaughan, is countering with heights closer to 55-storeys. Mr. Vaughan will chair a 14-member committee to try and reach an agreement with Mirvish before this heads to the OMB.
I know I’ve made a lot of this story, but I think the outcome will help shape Toronto’s downtown for decades to come. If the project goes ahead as planned, then developers will finally prove, one and for all, that they run the city – not city council. If the project heads to the OMB, then at least city council will have shown they have a backbone, but it’s not out of the question for the OMB to approve the project, and open the door for 100-storey condominiums later this decade.
What other hot topics are on the real estate horizon for 2014?
Well, I’m wondering if I should have a child, and buy a house. Maybe build a man-cave in the basement, and work-shop in the garage, which I’ll never use.
Any pointers on this? 🙂
I’m also wondering where the next “hot pocket” will be.
I have to think it’s Bloor & Islington, where bungalows are being torn down and monster homes are being constructed, somewhat reminiscent of Leaside and Lawrence Park ten years ago. This area has great schools, parks, and access to TTC.
I also think Sunnylea (just east of Bloor & Islington) will continue to out-appreciate the market, and I have to believe that Scarborough is going to get some love. Sooner or later, buyers will see the value in 50 x 130 foot lots for mid-$400’s, when that same price point buys you a 1-bedroom condo in the downtown core.
I’m open to suggestion on where you think the next sought-after neighbourhood will be; let the debate begin!
Or, maybe we just relax for the time being…
So whether you celebrate Christmas, Hanukkah, Kwanzaa, or Festivus, have a great “holiday season,” as it’s become known, and take some time off from the grind.
I’ll be back in January with new posts, 4-5 times per week as you’ve grown accustomed to over the last seven years.
Enjoy the holiday, folks!
And thanks for all the love for Toronto Realty Blog in 2013.