Three months into 2017 it looks like predictions made in a study conducted by the Urban Land Institute and PwC are pretty much on track.
Canadians need no reminder of the crazy real estate ride of the past few years: Prices of homes skyrocketed, particular in Vancouver and Toronto; foreign investment surged; and governments tried to dampen housing demand with stress tests to ensure buyers could afford their homes should interest rates rise.
Lack of affordable housing: Housing prices were all over the map in 2016. (They ranged from +15.5% in Toronto to -2.8% in Saskatoon, with the Canadian average totalling a 10.6% change). The key issue was and is lack of affordable housing: All signs point to a continuation of this trend throughout 2017.
Slow sales: High prices, low inventory and new regulations are expected to dampen sales. We’re about to find out whether that will hold true in the spring months, which is traditionally a time for a boost in home sales.
Rentals – the new normal: It won’t happen overnight, but 2017 just could be the year of the rental home, especially in expensive urban centres. Thanks to expected high immigration over the next five years, as well as downsizing boomers and millennial urbanites, demand will grow for long-term rentals, once considered a short-term housing solution.
Challenges: There are challenges aplenty ahead in 2017 – both globally and domestically – that will impact Canada. Ultimately, our housing market will respond. However, in this first quarter of the year, how remains the question.