Among the report’s findings, affordability and home features are among the drivers impelling house hunters to look to Toronto’s suburbs. Additionally, Guideline B-20, the mortgage stress testing coming into effect next year, will reduce purchasing power by as much as 20%, which will force people to lower their expectations and move farther from the downtown core.
Millennials are an aging demographic that’s as partial towards low-rise housing with yard space as previous generations. Elton Ash, REMAX’s regional executive vice president, says millennials were already flocking to the 905—a trend that B-20 will exacerbate.
“There was a strong belief three to four years ago that millennials were purely interested in the downtown condo lifestyle, didn’t drive cars, and wanted to be near subway lines,” said Ash. “What we found is millennials are as interested in having the home and the yard to raise children in as any previous generation. This cohort are aging and are now in their prime, and are starting to raise their families, looking out to suburbia.”
Ash says investors are on the sidelines awaiting B-20’s initiation to see how the market reacts, but the prevailing expectation is that there will be downward pressure on prices in the new year and that better returns could be had by being patient.
“I think overall, when we look at the GTA, the trend of waiting and seeing has spread throughout, whether it’s Mississauga or Toronto or Oshawa,” he said. “This is a bit anecdotal, but from our research talking to our membership, we’re seeing this kind of wait-and-see approach spreading.”
Sunny Sharma, president and co-owner of Leading Edge VIP, says the 905 could be lucrative for both short- and long-term investors in 2018. House flippers could seize upon the demand for low-rise housing in Toronto’s suburbs, which will increase because of B-20, however, they’ll have to be very discerning. For starters, investors should only flip to end-users.
“Being a house flipper in the 905 is lucrative if you do your research well,” he said. “Hold it for a year, but anything freehold detached is good. It’s extra profit in your pockets.”
He also said veteran investors with large portfolios should also think about long-term investing in low-rise homes in the 905, as well. While less-established investors will have difficulty paying an $800,000 mortgage with renters, investors with deep pockets can absorb the impact and profit in the long run.
Toronto home segment booms
In 2018, these homes will sell the fastest
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According to the 2018 REMAX Market Outlook report, many purchasers will set their sights on Toronto’s suburbs in 2018, and that could be especially beneficial for house flippers.