The Greater Toronto Area (GTA) housing market is finally starting to look more optimistic in pricing relief going into 2022 and 2023. That said, challenges like inflation and a low inventory will throw their respective wrenches into buying plans. Countering this with knowledge about exactly what the upcoming home price vulnerabilities are, and how to navigate them, is what can make your dream come true of buying a house in Toronto.
Buying a House In Toronto - The GoodThe crazy high prices of 2021 are expected to slow way down in early 2022 and into 2023, which is a good thing. The Canadian Real Estate Association (CREA) is optimistic that prices for homes for sale will not rise drastically in 2022. Whereas house prices rose by a whopping 19.9% in 2021, the housing cost increase in 2022 is forecast at 5.6%.
So the overall result is that the ceiling on sky-rocketing Toronto house prices has been reached for now. Real Property Solutions (RPS) asserts that Canada's housing market will calm down in prices for most of 2022. The reason is a gradual increase in interest rates expected from 2022 and beyond that will help pressure sellers to ease up on asking costs.
Inflation and Overvaluation - The BadThe GTA won't have as strong pressure to lower housing costs as some other Canadian real estate markets though, due to Toronto homes being so overvalued. On top of that, the inflation rate at 4.1% is the highest in Canada since 2003. Inflation eats into income needed for mortgage payments and in 2021 the typical Toronto home cost 10 times more than the average family's annual salary.
But don't despair as the news is far from all bleak for Toronto home buyers! The positive here is that the GTA's economy has largely bounced back after the COVID-19 lockdowns. There are indeed many buyers looking for Toronto area houses.
Supply and Demand - The UglyToronto currently suffers from a low housing inventory, and it's a major element that drives prices upward. Moody's Analytics recently reported that new construction is expected to help Ontario's housing shortage and estimates that a million homes are needed in the province over the next decade. That's welcome news as the buyers' demand for Toronto homes isn't expected to lessen anytime soon.
Also, the competition for buying average houses is likely to increase as the demand for luxury homes decreases, so choosing the right neighbourhood is crucial as the area can make a difference as it did in pricey 2021. House costs overall were highest in Brampton, King, Markham, Toronto Central, and Whitchurch/Stouffville. Lower home costs were generally seen in Bradford, Brock, Burlington, Halton Hills, Innisfil, and Milton.