Toronto Real Estate Market outlook for 2012 – The Addy Report

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Following are a few thoughts that I had shared on an online forum and thought I share it with you too.

Recent stats I saw regarding condos show that there is a vacancy rate of less than 1% for downtown condos. I’ve personally listed new condos in downtown and been bombarded by Renters who want to rent the condo instead of the seller selling it. There is a lot of demand for properties in downtown and there’s no denying it. There is an issue though…
People who have bought condos right now that haven’t closed stand on the fringe… If you are self employed, i.e. investor, who has more than one property, we might see tightening in the mortgage rules which could leave you without a mortgage and your deposit on the line. This is relating to recent talks in the media regarding CMHC and how it should be pulling out of the insurance business for banks. Genworth is the secondary supplier for non-conventional mortgages (less than 20% down payment) and has been taking steps to aggressively market it’s services. The final changes are yet to be seen and will dictate if there is a fall out from this.

Another issue to note is our incomes haven’t been increase at the same rate as our mortgages. There has been a change in demographic that is feeding this… We are living longer, having less kids, spending more on our self, and baby boomers are opting to move closer to cities rather than out in the country to retire which is putting an upward pressure on prices.

There was a recent report from CMHC showing there are almost 25% condos that are currently empty in Toronto which isn’t entirely accurate. These units are actually already sold to end users/investors and are awaiting occupancy. There is also left over inventory that enters the resale market through MLS and is captured through the MLS stats where we have 21 DOM as standard and 53 days of supply as per the April TREB Stats.

The market is hot… Which way it’s going to go is to be seen… In my opinion, there won’t be a wide spread market crash that we’ve seen in the US. If there is a correction, it will depend on the following three factors:

1. Interest Rate Hike
2. CMHC/mortgage tightening
3. Foreign investment gets dried up (this would effect the sales of pre-con condos causing a ripple)

I’m not an economist nor do I predict future for a living and the above is based on my observations and should be taken as my opinion as an observer.