January 2019

By: Gavin Chen

January 2019

Tags: 2019 NEWSLETTER, Royal LePage Terrequity Bespoke Realty, GAVIN CHEN, THE GAVIN CHEN TEAM, TORONTO REAL ESTATE, OAKVILLE REAL ESTATE, MISSISSAUGA REAL ESTATE

 

As we begin another year, everyone wants to know: “Where is the housing market headed in 2019?”

The Canadian real estate market experienced a cooldown in 2018 following years of rapid growth. This left many homeowners and potential buyers feeling skittish. Fortunately, economists expect the market to stabilize in 2019 and continue to appreciate at a more sustainable rate. To help guide you through this shifting landscape, we’ve summarized some of the expert predictions and key factors expected to shape the housing market in 2019 and beyond.

 

SALES LEVELS WILL STABILIZE

A combination of rising interest rates, provincial policy changes, and a newly-implemented “stress test” requirement for mortgages pushed sales activity to a five-year low in 2018. However, economists expect the impact to taper off over time due to positive economic fundamentals: a strong economy, low unemployment, rising incomes, and rapid population growth. The Canadian Real Estate Association predicts sales will remain “little changed” in 2019, while the Royal Bank of Canada expects to see a “modest recovery.”

What does it mean for you?

If you’ve been scared off by reports of a market slowdown, it’s important to keep things in perspective. Policy changes were put in place to cool down an overheated market that had led to increased debt levels, decreased affordability, and historically-low inventory levels. A gradual and sustainable pace of growth is preferable for long-term economic stability.

PRICES WILL HOLD STEADY

Economists expect prices to hold steady this year, rising slightly to keep pace with inflation. While the national average price declined by 4.2 percent in 2018, the Canadian Real Estate Association predicts it will rebound slightly this year by 1.7 percent. The Royal Bank of Canada cautions that “would-be buyers hoping for a meaningful [price] break will likely be disappointed—we don’t expect aggregate prices to fall on an annual basis either this year or next.” 

What does it mean for you?

If you’re a buyer waiting on the sidelines for prices to drop, you may want to reconsider. The current sales slowdown has made many sellers more willing to negotiate. Don’t miss out on the most favourable market we’ve seen for buyers in years.

NEW CONSTRUCTION WILL SLOW

The Canada Mortgage and Housing Corporation predicts new home construction will trend down gradually over the next two years from a 10-year high in 2017. “Single-detached housing starts are anticipated to decrease over the forecast horizon. Construction of this housing type will continue to be limited by residential lot availability, but also by elevated price and borrowing costs in some major CMAs that represent an important portion of national starts.” 

What does it mean for you?

Buyers will continue to have options in new construction. But the decreased rate of supply should help prop up the resale market, which is good news for sellers.

INTEREST RATE HIKES WILL TAKE A BREATHER … FOR NOW

After a prolonged series of interest rate hikes, the Bank of Canada announced in December that it will likely slow its pace of rate increases. “We no longer expect the Bank of Canada to hike its policy interest rate in January. Spring 2019 now appears to be the more likely timing, allowing for the bank to ensure that the growth narrative is back on track,” commented Brian DePratto, a senior economist with TD Bank. 

What does it mean for you?

If you have a variable rate mortgage, the bank’s revised policy should offer some welcome relief. There’s good news for buyers interested in a fixed-rate mortgage, too. The British Columbia Real Estate Association predicts that the 5-year mortgage rate will hold steady this year—and may even decline in the first quarter.

 

WE’RE HERE TO GUIDE YOU

While national real estate numbers and predictions can provide a “big picture” outlook for the year, real estate is local. We can guide you through the ins and outs of our market and the local issues that are likely to drive home values in your particular neighbourhood. If you’re considering buying or selling a home in 2019, contact us now to schedule a free consultation. 

 

START PREPARING TODAY

If you plan to BUY this year:
 
  1. Get pre-approved for a mortgage. If you plan to finance part of your home purchase, getting pre-approved for a mortgage will give you a jump-start on the paperwork and provide an advantage over other buyers in a competitive market. The added bonus: you will find out how much you can afford to borrow and budget accordingly.
  2. Create your wish list. How many bedrooms and bathrooms do you need? How far are you willing to commute to work? What’s most important to you in a home? We can set up a customized search that meets your criteria to help you find the perfect home for you.
  3. Come to our office. The buying process can be tricky. We’d love to guide you through it. We can help you find a home that fits your needs and budget, all at no cost to you. Give us a call to schedule an appointment today!
 
If you plan to SELL this year:
 
  1. Call us for a FREE Comparative Market Analysis. A CMA not only gives you the current market value of your home, it will also show how your home compares to others in the area. This will help us determine which repairs and upgrades may be required to get top dollar for your property, and it will help us price your home correctly once you’re ready to list.
  2. Prep your home for the market. Most buyers want a home they can move into right away, without having to make extensive repairs and upgrades. We can help you determine which ones are worth the time and expense to deliver maximum results.
  3. Start decluttering. Help your buyers see themselves in your home by packing up personal items and things you don’t use regularly and storing them in an attic or storage locker. This will make your home appear larger, make it easier to stage ... and get you one step closer to moving when the time comes!