23 Jul 2016

Best Time Of Year To Buy a Property In Toronto

RBC economics reports that housing prices are stable or improving in most markets, except for Toronto or Vancouver, where markets are labeled as “dangerously unaffordable.” Essentially, this is occurring because housing costs more than the average income. This can be harmful for Canadian real estate listings MLS.

Single-family homes in Vancouver and Toronto Real Estate are astronomically higher than surrounding areas. Those in Vancouver who sign up for a 25-year mortgage are going to pay 109 percent of their pre-tax income. St. John’s, Regina, on the other hand, sit at one-third of that amount, at approximately 30 percent.

According to Craig Wright, Chief Economist of Royal Bank of Canada (RBC), “I think what we saw in the data is similar to what we’re seeing in the housing market in general. In most markets, housing is still quite affordable, but when we look at the exceptions, it’s Ontario Toronto and BC Vancouver,” that it’s mainly detached homes rather than condos.

Canada’s largest bank, RBC gathers their real estate information off of market capitalization. Their measure for housing affordability increased from 0.8 percent to 47.1 percent, which is the highest increase since 2010. The condo market is slightly less but still staggering, rising from 0.4 percent to 35.4 percent.

In addition, when configuring the data for the study of Toronto Real Estate, they dive into various cities across Canada to determine the figures in small and large geographies. Of the fourteen markets, the majority of the figures remain below average, but for those in the Toronto and Vancouver, trouble awaits.

What is “Affordable”?

When prompted about the definition of affordability in a recent newscast, Wright adds, “We look at the amount of pre-tax income for principal interest. We’re comparing average income to the average price of an existing or resale condos in toronto.” In Wright’s world, this forecasting has occurred the same way for thirty years, so the high figures are somewhat alarming knowing the formula hasn’t changed.

According to homula real estate news at high levels of evaluation, the housing market shock will often relate to interest rates. But, as long as consumers are working and earning regularly, the housing economy will continue to strive. The current job gains exist in British Columbia and Ontario, which are both low-oil price environments for real estate Ontario MLS.

Case Study: Kitsilano Record Home

Amidst the chaos, one particular home stands out. A home in Kitsilano sold for $735,000 over its asking price. Built in 1912, the 3,400 square foot house sits on a standard lot with a listed price of $4.23 million, which was already $1.6 million above the lot’s assessed value as an MLS listing.

Real Estate Agent Brandan Price had five offers on the house, commenting, “These are local Canadian buyers looking to make a shift who wanted to move into this area. These good citizens were willing to make sacrifices with their property size to move.” It is very important to note that a lot of home staging and renovation done to property, but the multiple offers are still quite remarkable.

Average Earnings in Canada

Within the other areas, the markets are reported to be stable, if not improving. One reason behind this is that interest rates are remaining steady overall and they have been for years now. With low interest rates, either the price drops or the income increases in a way that a sale is made, somewhere in the middle.

According to Pay Scale, the average salaries in Toronto swing between $30,000 and $55,000 overall. Specifically, the July 2016 data lists Executive Assistants as earning $54,021, Software Developers as earning $65,077, Law Clerks as earning $50,786, and Administrative Assistants as earning $39,797 per year.

On the upper end of the scale, according to Workopolis, the higher end jobs include Senior Managers who are earning $205,000, Physicians are earning $180,000, Dentists are earning $175,000, Real Estate Lawyers are earning $165,000, Property Managers Link are earning $137,000 and Pilots around $138,000.

Employment Versus Inflation

On a global scale, the most concern is deflation rather than market inflation, so while other areas are having increasing issues, Canada remains to have low interest rates overall. “If rates do rise,” adds Wright. “It’s because the economy is strong. You usually get that in stronger gains of employment.”

Income growth will always be the greatest benefit for the housing market. Whenever a large company comes to a small town, there’s a possibility of the entire town growing, especially in terms of the local housing market. Therefore, even with modest gains in pricing, as long as income continues to build, housing will stand.

The only true negative affect within the data is the handful of markets where the property values are actually trending down. These falling markets generally exist within cities that are under pressure economically. According to the report, Calgary and Saskatoon are examples of weak spots at the lower end of the market.

What Does this Mean for Buyers?

In addition to the report, the overall income of a nation includes individuals outside of the housing market as well. For example, there are those who do not own a home and others who do not have a mortgage because they already own. With those numbers altering the data, there’s room for leverage in the report.

From a governmental point of view, there are common rounds of mortgage tightening and macroprudential regulations, which can slow the increase and keep the incline rate in a crawl. With this in mind, salaried employees do have a fighting chance, but it’s possible their goals timeline will be much longer than they imagined.

The main idea behind Wright’s report was the slow increase of potential interest rates. MLS Listings may seem high, but for those who wish to find a home in Richmond Hill, the odds are positive, while those who seek shelter in Vancouver or Toronto may be playing a waiting game for something affordable.

1 Comments

  1. […] The final moments of Tryon’s report are perhaps the most influential of the entire piece: Those who forecast the future of the market are predicting that this trend will only continue to increase, meaning it’s actually the best time to buy. […]

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