Happy New Year from the Spracklin and Manneh’s families. We want to wish you all the best in 2014!
It is now time for our fearless crystal ball real estate predictions for 2014 for Toronto and most areas in the GTA.
Real estate prices should continue to increase for four main reasons:
- Interest rates are still very low and likely will not increase for the next year and in fact could even decrease. Currently you can get a 5 year fixed mortgage for 3.5% and a 5 year variable mortgage for 2.5%. There will also be buyers who may be more motivated to buy this year and want to purchase before rates start to increase in a year or so.
- Going back to our first year University Economics curses, the main factors that affect price are supply and demand. Right now the house market is experiencing a strong seller’s market due to the very low supply and pent up demand. In the city of Toronto there is no more land to build on and Toronto is now the 4th largest city in North America, so demand will typically always be higher than supply.
- People right now in general are feeling better about the economy compared to last year at this time, where we had heard about the Fiscall Cliff for months. The US stock market is also at a 3 year high.
- Many businesses are relocating from the 905 to the 416 area and the terrible commuting times to the 905 areas continue to drive demand for centrally located neighbourhoods.
As for the condo market, prices should increase at a more modest rate compared to the house market as there is much more supply for condos than there are houses. But the reason that condos are still doing well is because condos have taken over the rental market especially downtown where there are very few apartment buildings. The vacancy rate is about 1%. Also, people who work downtown like to be close to work and the surrounding neighbourhoods such as King West and the St. Lawrence Market area are thriving. Of course Midtown Toronto is thriving as well.
Our opinion is based on what is happening in the market today and of course swings in interest rates or the stock market have major impacts. With interest rates projected not to increase in 2014 and assuming that the stock market remains okay, real estate prices in Toronto will continue to increase by 5-7% for houses and 1-3% for condos.
If you have any friends or family who you know are planning to make a move in 2014 then please have them give us a call and we would look forward to helping them.