If you live in or around Toronto, you’ve no doubt heard about prices rising higher and higher in the housing market. Homes are becoming more and more expensive all around the city, and for those looking to buy, each day is filled with uncertainty as to whether or not the prices will rise again. But what exactly is causing this sudden spike in the price of Toronto homes? Here’s a quick look at some of the biggest contributing factors.
Population Growth- Toronto and the GTA are growing rapidly, and with rapid population growth comes an increased demand for homes, obviously. The more people there are looking for homes, the more expensive homes become, so we should not be surprised to see prices remain high as Toronto and the GTA become more and more populated. Despite rising home prices, the current low-interest rates and new policies by Ontario government such as the increase to the Land Transfer Tax refund are only making it easier to enter the housing market if you’re a first-time buyer.
First-time Buyers- first-time buyers have recently been making a significant portion of home purchases, and if favorable conditions such as low-interest rates continue, this trend is not likely to change. There are a number of reasons so many people may be looking to buy their first home; fear of missing out, eagerness to break into the market, and the desire to start a family are all contributing factors. No matter what their motivation, first-time buyers are here to stay and are a group that cannot be ignored. They are vastly contributing to the present day housing trends and will continue to do so in the future.
Lack of Quality Homes- with the previously mentioned factors causing the housing market to be as hot as it is, the number of quality homes actually available has been declining. The demand in and around Toronto has simply become too high, reducing many buyers’ options. With fewer homes available, the competition to buy increases dramatically. Bidding wars between two or more buyers are starting to become the norm in Toronto and the GTA, and prices are continuing to inflate.
Foreign Buyers- as time goes on Toronto and other major Canadian cities are continuing to see an increased number of foreign buyers in the housing market. These buyers are purchasing homes and in many cases not living in them, instead of selling them for a profit as the housing prices increase. This creates an obvious problem for Canadian buyers who are looking for a permanent home in which to live. This trend further contributes to the diminishing supply of quality homes available to buyers and in turn, increases the prices of homes even more. A foreign buyers tax has helped alleviate this problem in other cities such as Vancouver, and a similar tax has been placed in Toronto with the hopes of decreasing price inflation.
The housing market does not seem to be showing any signs of losing steam, so if you are a first-time buyer, you will hopefully now have a better idea of what to expect when you choose to enter the market.