Housing Toronto 2010

By: Vanessa Manno, FW Writer

With a bustling population of 2.5 million in Toronto and growing, the real estate market deserves a closer look. From current trends to future developments, the market this year has turned up some favourable surprises for buyers looking to purchase their own dwellings, as well as some government taxes that may slow the market growth in the summer of 2010. It’s important to understand the current state of the market and the upcoming turns it may take if you are planning to make an investment soon.

Current Trends
Hot Market
Despite the same old recession talk, the real estate market is hot and shows definite signs of flourishing. Winter is usually downtime for the market because it’s hard to see the visual characteristics of the house that would make buyers consider the house because of snow and slush. But not this year!

“Real estate agents and those selling their houses usually shy away from the winter season to put their houses up; houses in the winter don’t look too inviting – there are no flowers or warming elements. This year is a different story,” says Real estate agent, Nick Manno. Since the prices are so great, there are a lot of multiple offers homes. The fair priced homes have a lot of potential buyers bidding.

Calm Before the Storm
This winter season is seeing a lot of market action because the new HST mortgage rates the government will be implementing on July 1, 2010. HST which stands for the Harmonized Sales Tax will add five percent federal Goods and Services Tax, creating a 13% tax increase. This tax hike will apply to the purchase of newly constructed homes over $400 000. This is what is making the market so hot now. Manno said, “Even though the prices of houses have gone up, seeing entry level houses from $350 000 to $ 400 000, interest rates right now before the HST are so cheap that people can afford to purchase now.”

City Living
The core of megacities, cities such as Toronto, Vancouver and Montreal have always had a booming condominium market. Condominiums in these highly concentrated cities are a lot more affordable than a house in the same area. The condo market has historically been good because they are a lot more manageable and a lot less maintenance. In addition to purchasing condos, it is popular to buy a condominium in the city and rent it out to in turn make a profit.
Not only are condos being valued for their desirable prices, but the artistic design is another asset. Developments in Toronto condos are starting to look like New York and London based flats in their luxurious design and rising prices. From $500/sq. ft. to $1500 sq. ft, these homes are fitting the lavish lifestyle that city dwellers crave.

Interest rates today are the lowest the real estate market has seen in a long time. Today, according to FiscalAgents.com, interest rates range from 2.5% – 4% for a first mortgage. These rates are partially why the market is doing so well right now. Comparing today’s mortgage interest rates to twenty years ago when the interest rates were 16%, if purchasing a 100 000, buyers would have to pay $16 000 in interest alone, aside from bills, living expenses and personal costs. Now, with interest rates being so low, first payments would start around $3 500. These lower rates make it easier for younger buyers to afford a house.
Future Evaluations
Take advantage of the market while you can, folks. With the HST increase this summer, it is expected that the market will slow down. “It’s hard to pinpoint what the average price of a house will be because the HST will affect market prices and takes drastically,”
Manno says. Homebuilders and purchasers are hurrying to build and purchase houses before the HST hits in order to save as much money as possible. The uncertainty of how the real estate market will react once the HST comes into play is making the real estate market an ideal place for first time buyers right now.