The biggest danger to the real estate market would be rising interest rates. And even then, many homeowners can tolerate some increase after being spoiled for so many years. The challenge will be for first time home buyers or those who have over leveraged and cannot tolerate an increase in monthly expenses.
We will also see a slow down in those communities who have not yet had the pleasure of double land transfer taxes. When Toronto faced the same, there was a short term slow down but we would argue that the mobility of homeowners has certainly been dampened long term due to the large outlay of expenses when buying, accounted for primarily by land transfer taxes.
There is also the consideration of looking at our market at a hyper-local level. Communities that have close proximity to downtown or key locations like the lake will always have more insulation from market fluctuations.
The biggest impact on the number of homes sales this year was the lack of inventory. That same imbalance also accounted for the increase in home prices.
At the end of the day, if you are currently a homeowner and do not have to sell during a market or interest correction, then you can confidently take the media’s flurry with a big grain of salt.
For the full Toronto Real Estate Board Market Watch, click here.
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