Toronto Loft Conversions

Toronto Loft Conversions

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Modern Toronto Lofts

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Unique Toronto Homes

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Condos in Toronto

Condos in Toronto

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Toronto Real Estate

Toronto Real Estate

For all of your Toronto real estate needs, contact Laurin. I am dedicated to helping you find that perfect and unique new home to call your own.


Tag Archives: cmhc

Housing to stabilize in 2015 as rates rise

Suzanne Sharma –

There were no double-digit price gains in the country’s hottest real estate markets this year. Instead, Calgary, Toronto and Vancouver saw prices increase between 5% and 7%, according to each city’s real estate board.

Comment: Toronto has been in the 8-9% range pretty much every month…

And as Sal Guatieri predicted, interest rates held steady.

Comment: I also predicted that.

But that will change in 2015, says the senior economist at BMO Capital Markets. Rates will go up, but slowly.

Comment: I guess we shall see.

Canadian housing

“We don’t expect the Bank of Canada to begin raising rates until October 2015,” says Guatieri. “The overnight lending rate, currently at 1%, likely won’t reach a more neutral level of 3.3% for another three years. Longer-term mortgage rates will also rise gradually.”

Comment: Only if the economy improves in the US and in Europe. And with oil prices falling and the Russian currency collapse, I don’t think that is going to happen next year.

As a result, home prices and sales will stabilize next year. “The ‘Hot 3 cities’ should see much slower price appreciation next year, while most other regions will see modest price gains,” he says, adding Toronto and Vancouver could even see prices decline in the next three years.

Comment: No. That will not happen. Not in Toronto. I am on the record saying that.

Nationally, the average home will cost $404,800 by year-end. That figure will rise to $410,600 in 2015, and $417,300 in 2016, notes MLS.

Comment: And Toronto will break $600,000 on average next year, 2016 at the latest. Detached homes will be in the $1,000,000 range as well.

Meanwhile, about 189,500 housing starts are expected, according to CMHC. This is in line with 2014, which should see 189,000 units by year-end.

“[There will be] a slight moderation in multi-unit starts during 2015, which will be offset by an increase in single-detached starts,” says Bob Dugan, chief economist for CMHC. “Looking ahead to 2016, expectations are for total starts to moderate, as builders focus on reducing their inventories.”

Comment: Builders aren’t that concerned with inventory, as there is a low level of unsold units. It might come down to difficulty finding land, as well as issues with cities as they evolve and react to their new development realities.

So where’s the opportunity for real estate investors?

Guatieri warns about investing in detached property in Vancouver or Toronto, “as lofty valuations suggest the returns will be low and prices are at risk of falling when interest rates rise.” Condos and townhouses will offer better value.

Comment: Anything you can rent out for neutral or positive cash flow is a good idea. Prices simply are not going to fall. And if you can cover your bills with rental income, you can simply sit on the property for years and ride out any unlikely bumps in the market. Flipping is always dangerous. Buy, hold and prosper… right?

Also, keep an eye on demographics and economic activity. “Housing markets are much weaker in eastern Canada due to [slower growth], older populations and weaker economies than in Ontario and western Canada. Cities such as Calgary [and] Montreal, which attract a relatively larger share of the one-quarter million international migrants to Canada will see stronger housing markets.”

Regional breakdown – Toronto

Sales are expected to increase, before moderating in 2016, notes Dana Senagama, CMHC’s senior market analyst for the Greater Toronto Area.

“An increasing desire among millennial and baby boomer populations to live an urban life will also fuel higher demand for condominium apartments over the next two years,” she says.

Guatieri adds steady buying from immigrants and echo boomers will support the market, cushioning any price declines.

Comment: Exactly what I have been saying for years.

Contact Laurin Jeffrey for more information – 416-388-1960

Laurin Jeffrey is a Toronto real estate agent with Century 21 Regal Realty.
He did not write these articles, he just reproduces them here for people who
are interested in Toronto real estate. He does not work for any builders.