With the end of the year approaching, pundits are offering their predictions for what’s to come with Toronto real estate market for 2014.
It’s difficult to find consensus on what 2014 will bring. Most, however, agree real estate sale volume and prices will continue to be stable and experience modest growth in the short term.
Robert Kavcic, BMO’s Capital Markets senior economist, has called the Canadian real estate market “balanced and well-behaved”. Douglas Porter, chief economist at BMO has called it “incredibly calm, cool, and collected”.
But not all markets seem to be on an upwards trend. The Toronto condo market has already seen a slump in sales. A recent article for the Huffington Post Canada reports an overbuilding in the Toronto market. However, according to Shaun Hildebrand, Urbanation’s senior vice president, there is no need to panic. “The softer numbers this year should be viewed in the context of the exceptional strength that preceded them. While the recovery towards more normal volumes has been gradual, the industry continues to make the necessary adjustments required to maintain stability in the market”.
Also possibly affecting the Toronto real estate market in 2014 are potential changes to Canada’s mortgage rules. Finance Minister Jim Flaherty announced earlier this month that the rules may be tightened by the government if deemed necessary. This would be the fifth time the Federal governments tightens Canadian mortgage rules since 2008.
The Bank of Canada’s latest report stated there would be no increase in the interest rate, which has been locked-in at one per cent since September 2010. This will continue to encourage home buyers to enter the market or upgrade their homes in 2014 due to easier access to low and stable interest rates. The Canadian housing market has remained stronger than expected according to the Bank of Canada.
CMHC’s forecast for 2014 is for a stable level of sales. They are predicting sale numbers to be similar to those of 2013. Their forecast includes a modest housing price increase in 2014, around 1.9 per cent. CMHC’s latest Housing Market Outlook is available here.
The Organisation for Economic Co-operation and Development (OECD) issued a report that was less optimistic. They say we should face a decline in home construction as the demand is lower than what the market is supplying. They also believe real estate prices in Canada “appear overvalued” and a correction is looming.
Toronto real estate sales typically slump in December and January, most likely due to the holiday season and the harsh winter weather. But the city is currently experiencing a housing sale boom, with current November sales up by 21 per cent. With so many different predictions for 2014 and current unexpected sale numbers, it will be interesting to see what lies ahead.