The real estate market is never static, always moving. I’m always looking for real estate market trends. I think I’ve found them.
Interesting is never a good word in real estate. 2016. It was an interesting year. I know the year is not quite over yet but a lot of sales have happened and the real estate market trends are pretty clear. Most of these trends will also likely continue into 2017. The real estate market in big. It does not change overnight. Let’s talk about trends.
1. Not Vancouver and Toronto but Victoria and Kitchener
The big cities are famously expensive and inconveniently overcrowded. There is a big move to the ‘near cities’. In Vancouver that would be Victoria, Nanaimo and Abbottsford. In Toronto, we are talking Whitby, Barrie, and KW and Hamilton. These cities are already established mini-metropolises with nightlife and restaurants. They have lower costs of living, more affordable housing and offer better lifestyles. These qualities make them attractive to both young first time homebuyers and real estate investors.
2. Real estate market trends and the suburban boom
Although young homebuyers have long been portrayed as wanting an urban lifestyle, the reality is that they want a modern single family home in a neighbourhood with a good school. The majority of those are being built in the suburbs. Of course the new suburbs often come with a mini town centre attached, adapting to the needs and wants of young homebuyers.
3. First time home buyers dominate the market
Somewhere between 30-40% of all homes sold are to first time homebuyers. They are the single biggest group of home buyers.
4. The issue of affordability
Low interest rates, world economic, immigration and a host of other influences has negatively impacted the affordability of homes. There are rumblings that interest rates will finally start to rise. But wages need to rise too. Essentially there is too much money now sitting around in real estate not being productive.
5. House prices will continue to rise.
At the end of the year, we are going to find that house prices in Waterloo Region rose by 10% in 2016. They will continue to rise next year but more moderately as we swing back toward a more balanced market
6. Rates will rise
The powers that be have been tinkering with the rules around lending, trying in vain mostly to cool things down without crashing the economy. They have been letting the air out slowly, careful not to pop the bubble. Rates will rise.
7. Rents will rise
They already have. Paying over $2000 for a two bedroom apartment would be unheard of a few years ago. Not anymore.
8. It remains a seller’s market
The lack of inventory persists. Demand is high. Prices rise. Sellers are in the catbird seat, an enviable position.