Leading brokerages expect higher home prices in Toronto next year

Ever since the peak of the housing market in April 2017, house sales in the Toronto real estate market have been considerably lower than last year. In November 2017, they were 13% lower than in November 2016. However, as compared to the previous month, sales have been rising over the past two months.

This could be attributed to the fact that, starting January 2018, every home buyer who needs a mortgage will have to undergo a stress test which will show whether the buyer can service their mortgage at a rate which is 2% higher than what they get offered from their lender.

The other major reason for the uptick in sales may be that the effect of the foreign buyer tax, introduced in April 2017, has started to fade. But price-wise, this effect seems to have caught up with the market as November became the first month this year when the average home price was lower than the year before.

The question now is where will home prices in Toronto go from here? The answer lies in the combination of several factors, which not all agree on, as evidenced by two leading brokerages in the Toronto market, Re/Max and Royal LePage, who see things a little differently (via thestar.com). 

Re/Max expects that the effect of the stress test rules will be quite profound and will help drive housing prices down by 17.5% in the first four months of 2018. For the whole of 2018, Re/Max expects that the prices will rise a moderate 2.5%. Royal LePage is more optimistic and expects that the prices will rise by 6.8% in 2018.

 
It is noteworthy though that very few people are currently expecting that home prices in Toronto will go down from the current high levels any time soon.

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