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Predicting any housing market is difficult. Predicting Toronto’s housing market requires almost Nostradamus-like abilities.  The Toronto market has held strong for several years now, but the recent dip has led many prognosticators to wage a bet that another spike is looming.

Where will Toronto’s housing market end up a decade from now?

Long-term Growth

There are signs that Toronto will come out of the recent market lull and enter a period of growth that will send housing prices soaring. It might take another year for this to happen, but the market is expected to increase in value. This could create some negative scenarios for those dreaming of homeownership.

Once the demand races beyond the supply and people adjust to new policies and regulations, the market will turn.

Housing Will be Less Affordable

For years, there’s been discussion about Toronto’s housing being unaffordable, especially for young professionals and the middle class.  With the housing market bound to rise in value, there’s a chance that affordable housing will become more challenging.

The condo market should continue to hold strong for the next few years but the housing market should outpace it at some point.

Remember, once the market starts to heat up, there will be a rush to buy including speculators looking to make a buck on an investment. This could speed up the market and inflate it to unsustainable levels.

A Good Time to Enter the Market

Now is a good time to enter the market as prices are relatively low. There are some obstacles—high interest rate, stress test, lack of supply—but if a person can get approved, there’s a window where aggressive bidding could pay off in the future.

A Decade Later

It might seem futile to try to predict the future of a volatile housing market but it’s a worthy exercise. The current state of Toronto’s housing market is temporary and the future will affect tens of thousands of households throughout the GTA.

Researching what will happen in a year or two or ten can help someone make more informed decisions as to when to buy, when to wait and when to invest.

Many Canadians use debt to purchase their homes, start a business or to receive a post-secondary education. The total household debt statistic takes an accumulative approach to see what households owe in relation to disposable income. Trouble can be brewing on a national level when debt greatly outweighs income.

A recent report by the Organization for Economic Co-operation and Development (OECD) claims that Canada’s household debt levels are higher than other countries. This report acts as a warning sign to our national economy. 

OECD’s Report

This economic report frames the current economic situation through the lens of the 2007 credit crisis. A reason for that crisis was the increase in household debt across the board. Since that time, most nations have lowered their debt load, yet for some reason, Canada has not followed this trend. In fact, it’s done the opposite.

At 101%, Canada’s household debt to gross domestic product ratio ranks last. To compare, the U.S’ ratio is 80%. Italy is barely scratching 40%.

Why are Canadians Relying on Debt?

The easy culprit to pin Canada’s debt crisis on is real estate. As housing prices increase in value, Canadians must borrow more to be homeowners. Borrowing doesn’t end with mortgages, though. From heat to furniture to maintenance, Canadians use debt to keep their homes running.

In places like Vancouver and Toronto, thriving housing markets impacts the rental market, forcing many renters to live off debt. As Canada’s population grows, the debt load per household for both homeowners and renters will rise.

Possible Solutions

Household debt is a problem that has surfaced for most western countries. The simple solution (if there is one) is for Canadians to spend more within their means, curbing their reliance on debt. It could be as straightforward as families getting by on one car instead of two, but in fairness, this is always easier said than done.

Measures to protect borrowers and lenders from skyrocketing prices is the most immediate way to reduce debt load. The Government has taken steps through implementing a stress test and a recent interest rate hike by the Bank of Canada could provide some relief.

The data provided by this report should be taken very seriously by Canadians and policy makers. It’s a situation that needs to be monitored and handled before the ratio becomes even more out of whack.

The GTA housing market has been interpreted many ways by experts and homeowners. Some see potential in the market while others are expecting a decline to occur before the market gradually gets stronger. Overall, a positive market view has surfaced leaving the fear of the bubble in the rearview mirror.

There is a sense of optimism, which began in late 2017 and could carry throughout the year. What is causing this optimism and is it founded?

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National Housing Market

Confidence in Canada’s housing market is gaining, fueling a renewed optimism for the GTA. Homes in Toronto and its surrounding areas, which are experiencing constant development and enhanced infrastructure, could increase in value. This does come with a shift to long-term thinking and less concern with short-term gains.

Supply vs. Demand 

Toronto is still experiencing a shortage of supply, which will drive the market. The optimism is due in part to demand leading to higher sale prices which will increase the average house cost.

There also doesn’t seem to be a lot of public backlash towards the new stress test. This could present a small speedbump but it shouldn’t curb the market. It is designed to protect lenders, which can help the market by vetting borrowers. This could improve the market without slowing it down.

Suburbia

Areas like Thornhill, Oakville, Richmond Hill and Aurora have been attractive to homeowners for a long time. Their continued investment in infrastructure, evidenced by the York University subway line, and fair pricing will drive more people to suburbia. This will sustain the peripheral markets if central Toronto experiences any dips.

A Healthy Economy

In the broadest sense, there’s no bigger reason for optimism than the economy. The economy is expected to grow 2% in 2018 and further growth is forecasted for 2019. Unexpected downturns can be expected and there are variables—the minimum wage increase, inflation and the growing tech sector—but the economy is headed in the right direction for now.

There are legitimate reasons to be optimistic about the GTA’s housing market in the near term. All Canadians are hoping that it proves to be true.

Purchasing a home is an expensive undertaking. By the time you’ve forked over the down payment, legal fees, and moving costs, you will be financially and emotionally drained. Before deciding to buy a home, you must think beyond the purchase price because those costs, while substantial, are a one-time thing.

Maintaining a home is costly and every homeowner needs to understand what they’re getting into before their mortgage is approved.

Property Costs

In the GTA, each homeowner must pay property taxes every year. The cost is devised by multiplying a property’s assessed value by the tax rate. There is flexibility with respect to the payment schedule, meaning homeowners can pay monthly, annually or make six equal payments a year.

Exterior Costs

If you own a house, you will have monthly costs to care for the exterior of your property.  Some of these are discretionary whereas others are required for the health of the house. These costs include:

• Cleaning the gutters
• Lawn care and gardening
• Roof Care
• Snow removal for driveway
• Window washing

Remember, some of these tasks can be performed by the homeowner, assuming they know what they’re doing and have the time. Doing a lackluster job could cost you more money in the future as you’ll have to pay someone to undo your work and then complete the job.

The Guts of the Home

There’s a lot of essential equipment and technologies that need regular upkeep in your house. Furnaces and hot water heaters need regular inspection and maintenance. You will also have to pay for general repairs and some opt to pay for housekeeping.

A good rule is that the annual maintenance of a home will cost one percent of the purchase price. If your home costs $500,000, then you should budget $5000 for ongoing maintenance. Anything left over can just roll into the budget for the following year. Some prefer to calculate maintenance costs per square foot. The rule here is to budget $1 per square foot. A 1,000 square foot home would conceivably cost $1,000 in maintenance.

For maintenance, repairs, and upgrades cash flow is essential. A home equity loan is a proven way to leverage your equity into maintaining or increasing the value of your property. If cash flow isn’t an issue, then be sure to properly budget.