#GoodReads – Will Home prices drop in Ontario?
“…The last year has been unpredictable in many ways and that’s never good for investments. After years of a real estate frenzy in Ontario, many are worrying that the high house prices can’t hold and a housing crash is on the horizon.
Housing prices continue a years-long trend upwards
Besides the usual peaks and dips that real estate markets are subject to, the prices of homes in Ontario have been on an upwards trend for over ten years now. In the last two years, the rate of price increases has shot up even more drastically.
According to the Ontario Real Estate Association (OREA), year-over-year prices in Ontario are up almost 20% in 2021. 2020 saw similarly large increases in prices. The average sale price of a residential home in Ontario in September of 2021 was nearly $890,000. In the Greater Toronto Area specifically, the average is even higher at around $1,155,000.
Why are housing prices so high?
There are many interacting factors that work together to influence the average price of homes in Ontario. The most commonly cited cause for the current price trends comes down to lack of supply and consistently high demand.
The demand for houses in Ontario is huge. As Canada’s most populated province and the location of many of Canada’s largest cities, Ontario has no shortage of interested home buyers. And, every year more Ontarians are coming of age and looking to buy. Young families of millennials now make up the largest percentage of first-time homebuyers by a large margin. In addition, Ontario is the country’s most popular destination for immigrants, fueling population growth with over 100,000 newcomers every year, many of whom are going to be looking to buy real estate as well.
What Ontario does have a shortage of is homes. The supply of homes in the province has not been able to keep up with the massive demands, leading to an increase in prices as the seller’s market drives competition among buyers…
The final outlook
Overall, real estate prices in Ontario seem to be safe from a major downturn anytime soon. While the state of things is certainly far from ideal, Ontario is also the largest market in Canadian real estate and has immense momentum behind it. For now it seems the most likely scenario is a continued gradual increase in prices for the next few years.
If you are already invested in real estate, you can sleep a little easier at night knowing a crash is unlikely. If you are holding out on a crash for an opportunity to get into real estate, you may be waiting for a while longer yet.”
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