As homeowners in the Greater Toronto Area, keeping up with the latest trends and statistics can be challenging. The good news is that we’ve put together a list of 8 disturbing trends that every homeowner should know about. And how they might affect your home’s value. Take a look below to see if any of these are currently affecting your neighbourhood. And how you can protect yourself against further decline.
8 Disturbing Trends Facing Toronto Homeowners in 2023
Disturbing Trends Facing Toronto Homeowners
1. Rising Interest Rates Trend
The Bank of Canada raised rates seven times this year, 2022 to try to slow down inflation. It raised its benchmark interest rate by 50 basis points, bringing it to 4.25 percent this month (December).
By doing this, the bank raised its interest rate from almost nothing to its highest level since 2008. This was the bank’s fastest rate of rate increase since inflation targeting was put in place in the 1990s.
The interest rates that Canadians and businesses get from their banks, for example, on savings accounts and mortgages, have changed a lot because of these rate hikes.
As mortgage rates go up, so does the amount you’ll pay if you decide to sell your home. What’s more, increasing interest rates will make it harder for new buyers to get approved for mortgages, which means fewer potential buyers for your home!
How Do You Prepare For Rising Interest Rates?
- • The first thing you should do is talk with your financial advisor or mortgage broker. He or she can help you figure out what steps to take next.
- • It’s also a good idea to review your current financial situation and make sure it’s still the right one for you. If things have changed since you got your mortgage, then it might be time to talk about refinancing.
- • Start saving now so that if interest rates go up, you’ll be able to afford the higher monthly payments.
2. Home Insurance Prices Increasing
If you are a homeowner, you may have noticed that your home insurance bill has gone up as well. And now you are wondering: “Why does my home insurance keep going up?” This is because, like banks and other lenders, insurance companies are also affected by rising interest rates.
In order to protect themselves against the risk of bad loans, they need more money to pay out if something happens. That means they’ll pass this increase on to you! According to RATESDOTCA, the average home insurance cost in Ontario in 2022 is $1,342. Using this price as a starting point, the website said that a 5% increase would mean a $67 per year increase.
What Can You Do To Decrease Your Home Insurance Rates in Canada?
- • Get a good insurance company and policy.
- • Make sure you have all the coverage options.
- • Ask for discounts on home insurance.
- • Check your credit score, it may lower your premium by 20%.
- • Choose a lower deductible.
- • Reduce the amount of coverage on your home
- • Install a security system. Make sure to have smoke detectors and carbon monoxide detectors in your home. Get fire extinguishers and make sure they are working.
3. Rising Taxes Trend
Taxes have also been rising steadily over the past year. The average budgetary tax rate go up by 2.11 percent in 2022. This includes a 2.90 percent increase for residential properties due to inflation, a 1.45 percent increase for commercial properties, and a 0.97 percent increase for industrial properties.
For 2023, the federal tax brackets and personal tax credit amounts will go up by 1.063, which is a 6.3% increase.
This means that the average homeowner will have to pay more in taxes each year. And as a result, buyers will be less able to afford a home, and sellers will have fewer potential buyers!
What Can You Do to Avoid Getting Hit By This Tax Increase Trend?
- • First of all, make sure that you are aware of the current tax laws. This will give you a good idea of what to expect in the future and how to plan accordingly.
- • Increase the price of your home by 2.11 percent. This will ensure that the amount you pay in taxes stays the same.
- • Another option is to increase your income, which would allow you to pay for more of your housing costs with after-tax dollars.
- • If you are planning on buying a home in the next year or two, it might be a good idea to consider moving sooner rather than later.
4. Lack of Affordable Housing
Toronto’s housing prices have become so expensive that they are now considered to be one of the most unaffordable cities in Canada.
The Toronto Regional Real Estate Board reports that the value of single-family houses in Greater Toronto exceeds $1 million at the end of 2022.
This means that the average household would need to spend more than half of its income on mortgage payments alone!
Because of this, many buyers are being forced to look outside the city for affordable housing.
In fact, about 75,000 people moved out of Toronto, York Region, and Peel Region to other parts of the province in the last year alone.
What Can You Do About the Affordability of Housing in Canada?
- • Lower household debt as much as possible
- • If you have debt, consolidate it
- • Get a line of credit against the house to get the lowest interest rate possible
- • Get rid of credit card debt at all costs as they carry the highest interest rate costs
5. High Demand for Housing
In addition to the increase in housing prices, there has also been an increase in the demand for housing.
The population of Toronto continues to grow rapidly. Greater Toronto’s population in 2022 is 6,313,000, up 0.93 percent from the previous year. From 2016 to 2021, the population of Toronto increased by 2.3% or 62,785 people. This increase in demand has led to a shortage of housing, which has driven up the price of homes. As such, more people are renting instead of buying homes, which drives up prices even further.
What Can You Do As A Homebuyer?
- • The housing market in Toronto is very competitive and there is a shortage of available homes. As such, finding a home that meets your needs can be challenging, especially if you are looking for something specific such as a detached house or condo in an established neighbourhood. If you have the opportunity to rent or lease an apartment or house before buying one, this will help you get acquainted with different areas and determine which one best suits your lifestyle.
- • It’s important to start searching early and be flexible with your preferences. The earlier you start looking, the more likely you are to find something that meets all of your requirements. You can do this by researching the local market in order to learn more about what is available and when properties come up for sale. As well as using an agent who has experience in buying and selling real estate, as they will be able to guide you through the process of finding a home that meets your needs.
6. Rental Market Trend Is Booming
The increase in housing prices has led to a boom in the rental market. The price of rental units continues to increase as landlords are able to charge more for their properties than ever before.
The average condo rental price reached $3.57 per square foot in the second quarter of this year (2022), according to Urbanation Inc. Condos with one bedroom cost an average of $2,182 per month to rent in the Greater Toronto Area.
Aside from condos, Airbnb is also a growing trend in the rental market. With the rise in demand, more landlords are becoming interested in renting out their properties instead of selling them.
As more people choose to rent instead of buy homes, there is an increased demand for short-term rentals such as Airbnb. This has led to an increase in rental prices across all types of properties, including condos and single-family homes. As more and more people use this service, it could mean that there is less demand for new homes in Toronto. Which could lead to higher prices in the long run!
What Can You Do In This Market?
- • If you are looking to buy a home, now is the time.
- • You may want to consider selling your current property first, as it will allow you to get more for your money.
- • If you are looking for investment opportunities, this could be a good time to invest in rental properties.
7. Environmental Concerns Are Rising
Environmental concerns are becoming increasingly important as people start to realize how much they’re affecting their own lives and those of their neighbours by living in an unsustainable way.
These trends are especially powerful when it comes to real estate transactions. Buyers want to know what is an energy-efficient home and what kind of impact their purchase will have on the environment. As such, environmental concerns have become a major factor in determining whether or not someone will buy a particular home (or even invest in any real estate at all). If a home is found to have an environmental concern that’s not being addressed, it can seriously affect the value of that property.
Toronto has been making buildings more and more friendly to the environment, with the goal of making them net zero. This means that they can produce as much energy as they consume. Many buildings are also starting to use solar panels for their electricity, and this is expected to increase in the future. This trend could have an impact on the housing market in Toronto since it could make new homes more expensive and reduce demand for them.
What Can You Do To Prepare Energy-efficient Home Designs?
- • Hire companies and contractors that are schooled in Eco friendly, energy-efficient products and green homes.
- • Always look for the energy star label when buying windows, doors etc. Be conscious whenever you buy any home improvement products making sure they are Eco friendly whenever possible.
- • Educate yourself on what is considered energy efficient and what isn’t.
8. Dramatic Increase in the Number of Contractor Scams
Over the past two decades, the home remodelling market has grown exponentially. But so has the number of scams and bad business practices involving contractors. This, coupled with the recession, leads to an increase in lawsuits and contractor fraud. This trend has been seen in the past, and it is expected to continue into the future.
The construction industry is notorious for being unregulated, which makes it ripe for scams. Contractors who might have been honest in the past are now taking advantage of homeowners by offering poor workmanship or charging more than the quoted price. The recession has made it difficult for homeowners to find good contractors, and this only makes matters worse.
How to Avoid Contractor Scams?
- • Make sure they are a reputable company in business for 10 years or more.
- • Check if they have credible references. Preferably from 3rd party sources such as www.HomeStars.com, Google reviews, etc
- • Put everything in writing, including approximate start and finish times, payment terms, warranty terms, products being used, and details of the job to be completed.
- • Make sure they have a valid BIN#, business address, and website.
- • Worker’s Compensation is a must. Liability Insurance of over 1 million is a must. Any company without both of these necessities doesn’t even deal with them. Million-dollar lawsuits aren’t worth the risk.
- • Any credible memberships such as Better Business Bureau are a bonus.
- Give higher credibility to companies that take the time to affiliate with credible organizations such as these.
- • Crime is on the rise, especially during recessions. If they are doing work inside your house, make sure they are bonded and have criminal background checks. If they aren’t bonded yet, it isn’t a deal-breaker. But if they are criminals, it will be a deal-breaker. So make sure they get a background check prior to starting the job and letting them into your house. It only takes 2 days for homeowners to get this background check. Www.backcheck.ca can do this for you.
You can also learn about the latest scams in the industry by reading this blog: Homeowners Beware: The Biggest Contractor Scams in 2022.
It’s Clear That Toronto Homeowners Face Disturbing Trends. But Don’t Despair!
This doesn’t mean you should be selling your home for rock-bottom prices and moving away. There are ways to combat these. Whether by staying put and seeking out a buyer or by finding a way to boost the value of your own home. To learn more about what you can do to make your home appealing to buyers, read this blog: Preparing Your Home For Sale – Creating Curb Appeal.
Either way, if you really want your Toronto home to perform well in the next few years or even decades, it’s time to take a step back. And review all of the discussed above—then make a plan moving forward.
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