This article was written by Richard Stewart, LLB, LLM, Vice President, Legal Counsel, Sales Representative of Chestnut Park. This article was originally published in the Invest In Style Cottage Life Issue, 2018.

 

It is by no means an overstatement to say that the Ontario real estate market has experienced a wild ride over the last year. Throughout the tail end of 2016 and the first part of 2017 demand for property seemed positively unquenchable, creating almost a frenzied delirium. Multiple offers across a broad range of markets became increasingly the norm, and extended for the first time in earnest into Ontario’s cottage country, pushing property prices to ever higher and record-breaking heights. Supply could not keep up with demand, with sellers often reluctant to put their properties on the market without first securing another property to buy. The effect of this, mixed with a steady stream of immigration into the province, as well as foreign buyers taking advantage of what they perceived to be excellent investment opportunities, particularly in the larger urban centres, created a further imbalance between supply and demand. This resulted in significant strains on affordability, with many buyers coping with increasingly high debt loads being priced out of the market. With so much chatter in the press regarding skyrocketing housing prices and the unsustainability of market conditions, the provincial vernment intervened in April with the Ontario Fair Housing Plan which included a variety of measures intended to pour water on the overheated market and address challenges to affordability. Amongst these provisions was the introduction of the speculation tax on foreign buyers in the Greater Golden Horseshoe. Combined with a series of interest rate hikes as well as increasingly stringent lending qualification requirements, the real estate market experienced a correction with housing prices across the Greater Toronto Area (“the GTA”) dropping approximately 20% by the end of summer, and sales volume following the same trend, lagging behind the pace set the year previous in August and September by approximately 35%. It is worth noting that many commentators were of the view that at its peak, the market was already starting to be weighed down by the unsustainable price points that market forces had created, and that some sort of correction was inevitable in any event as affordability was becoming increasingly out of reach for a growing portion of society.

 

 

 

While the cooling trend in the market has not been unique to the GTA, it is worth noting that the decline in sales and price moderation has not been as significant in cottage country and many of the communities surrounding the GTA. In fact, many have shown remarkable stability in that regard. And in some cases, as the market appeared to digest and recover from some of the initial psychological impacts of the correction, statistics reflected that the trajectory to stabilization and recovery was even more pronounced in some of the surrounding communities. Affordability is definitely one factor, but a number of other issues appear to be at play, including technological advances which allow an increasing number of people to adopt more flexible work arrangements by working remotely, as well as the trend towards less traditional living and vacation/recreational options which see millennials embracing more innovative lifestyles incorporating sharing and creative use of resources. In particular and as recently reported in the Globe and Mail (Jan 11/18, Matthew Hague), younger buyers are increasingly choosing cottage country, or markets outside of the GTA as the location for their first real estate investments, while renting their home in the city. As indicated, more accessible price points are an obvious attraction where buyers feel that they can get a foothold in the market and get more for their money. But another factor is that these same buyers, more familiar with the sharing economy and lifestyle, put their property investments to work by renting them out or putting them on Airbnb thereby generating revenue to finance their mortgage, while still getting use from them as vacation properties when they are available, and as their schedules permit. Many, for lifestyle reasons, and because technology and more flexible work arrangements allow them to, are simply buying recreational properties as their primary homes and taking advantage of rentals or the very same temporary lodging options such as Airbnb on the flipside when work or other demands take them to the city.

 

 

 

 Current trends show no sign of letting up in this regard. Based on its attributes, and its comparatively enviable position in the world in relation to a wide variety of factors including health, safety, security, education, as well as a stable political and banking system, Ontario will in all likelihood continue to attract a steady stream of newcomers forming families and needing a place to live. Competition for affordable and accessible housing options will continue into the future, and buyers will have to be increasingly creative, flexible and adventurous regarding their living options, all of which is likely to shine an increasing spotlight on alternative rural and recreational markets. As society and technology continue to evolve, lifestyle patterns and choices will inevitably follow suit with cottage country buyers constituting and coming from an ever wider and diverse community. Moreover, the ever-increasing awareness of, and priority on lifestyle by both millennials and retirees will only reinforce this trend.

This article was written by Richard Stewart, LLB, LLM, Vice President, Legal Counsel, Sales Representative of Chestnut Park. This article was originally published in the Invest In Style Cottage Life Issue, 2018.

 

It is by no means an overstatement to say that the Ontario real estate market has experienced a wild ride over the last year. Throughout the tail end of 2016 and the first part of 2017 demand for property seemed positively unquenchable, creating almost a frenzied delirium. Multiple offers across a broad range of markets became increasingly the norm, and extended for the first time in earnest into Ontario’s cottage country, pushing property prices to ever higher and record-breaking heights. Supply could not keep up with demand, with sellers often reluctant to put their properties on the market without first securing another property to buy. The effect of this, mixed with a steady stream of immigration into the province, as well as foreign buyers taking advantage of what they perceived to be excellent investment opportunities, particularly in the larger urban centres, created a further imbalance between supply and demand. This resulted in significant strains on affordability, with many buyers coping with increasingly high debt loads being priced out of the market. With so much chatter in the press regarding skyrocketing housing prices and the unsustainability of market conditions, the provincial vernment intervened in April with the Ontario Fair Housing Plan which included a variety of measures intended to pour water on the overheated market and address challenges to affordability. Amongst these provisions was the introduction of the speculation tax on foreign buyers in the Greater Golden Horseshoe. Combined with a series of interest rate hikes as well as increasingly stringent lending qualification requirements, the real estate market experienced a correction with housing prices across the Greater Toronto Area (“the GTA”) dropping approximately 20% by the end of summer, and sales volume following the same trend, lagging behind the pace set the year previous in August and September by approximately 35%. It is worth noting that many commentators were of the view that at its peak, the market was already starting to be weighed down by the unsustainable price points that market forces had created, and that some sort of correction was inevitable in any event as affordability was becoming increasingly out of reach for a growing portion of society.

 

 

 

While the cooling trend in the market has not been unique to the GTA, it is worth noting that the decline in sales and price moderation has not been as significant in cottage country and many of the communities surrounding the GTA. In fact, many have shown remarkable stability in that regard. And in some cases, as the market appeared to digest and recover from some of the initial psychological impacts of the correction, statistics reflected that the trajectory to stabilization and recovery was even more pronounced in some of the surrounding communities. Affordability is definitely one factor, but a number of other issues appear to be at play, including technological advances which allow an increasing number of people to adopt more flexible work arrangements by working remotely, as well as the trend towards less traditional living and vacation/recreational options which see millennials embracing more innovative lifestyles incorporating sharing and creative use of resources. In particular and as recently reported in the Globe and Mail (Jan 11/18, Matthew Hague), younger buyers are increasingly choosing cottage country, or markets outside of the GTA as the location for their first real estate investments, while renting their home in the city. As indicated, more accessible price points are an obvious attraction where buyers feel that they can get a foothold in the market and get more for their money. But another factor is that these same buyers, more familiar with the sharing economy and lifestyle, put their property investments to work by renting them out or putting them on Airbnb thereby generating revenue to finance their mortgage, while still getting use from them as vacation properties when they are available, and as their schedules permit. Many, for lifestyle reasons, and because technology and more flexible work arrangements allow them to, are simply buying recreational properties as their primary homes and taking advantage of rentals or the very same temporary lodging options such as Airbnb on the flipside when work or other demands take them to the city.

 

 

 

 Current trends show no sign of letting up in this regard. Based on its attributes, and its comparatively enviable position in the world in relation to a wide variety of factors including health, safety, security, education, as well as a stable political and banking system, Ontario will in all likelihood continue to attract a steady stream of newcomers forming families and needing a place to live. Competition for affordable and accessible housing options will continue into the future, and buyers will have to be increasingly creative, flexible and adventurous regarding their living options, all of which is likely to shine an increasing spotlight on alternative rural and recreational markets. As society and technology continue to evolve, lifestyle patterns and choices will inevitably follow suit with cottage country buyers constituting and coming from an ever wider and diverse community. Moreover, the ever-increasing awareness of, and priority on lifestyle by both millennials and retirees will only reinforce this trend.

This article was written by Richard Stewart, LLB, LLM, Vice President, Legal Counsel, Sales Representative of Chestnut Park. This article was originally published in the Invest In Style Cottage Life Issue, 2018.

 

It is by no means an overstatement to say that the Ontario real estate market has experienced a wild ride over the last year. Throughout the tail end of 2016 and the first part of 2017 demand for property seemed positively unquenchable, creating almost a frenzied delirium. Multiple offers across a broad range of markets became increasingly the norm, and extended for the first time in earnest into Ontario’s cottage country, pushing property prices to ever higher and record-breaking heights. Supply could not keep up with demand, with sellers often reluctant to put their properties on the market without first securing another property to buy. The effect of this, mixed with a steady stream of immigration into the province, as well as foreign buyers taking advantage of what they perceived to be excellent investment opportunities, particularly in the larger urban centres, created a further imbalance between supply and demand. This resulted in significant strains on affordability, with many buyers coping with increasingly high debt loads being priced out of the market. With so much chatter in the press regarding skyrocketing housing prices and the unsustainability of market conditions, the provincial vernment intervened in April with the Ontario Fair Housing Plan which included a variety of measures intended to pour water on the overheated market and address challenges to affordability. Amongst these provisions was the introduction of the speculation tax on foreign buyers in the Greater Golden Horseshoe. Combined with a series of interest rate hikes as well as increasingly stringent lending qualification requirements, the real estate market experienced a correction with housing prices across the Greater Toronto Area (“the GTA”) dropping approximately 20% by the end of summer, and sales volume following the same trend, lagging behind the pace set the year previous in August and September by approximately 35%. It is worth noting that many commentators were of the view that at its peak, the market was already starting to be weighed down by the unsustainable price points that market forces had created, and that some sort of correction was inevitable in any event as affordability was becoming increasingly out of reach for a growing portion of society.

 

 

 

While the cooling trend in the market has not been unique to the GTA, it is worth noting that the decline in sales and price moderation has not been as significant in cottage country and many of the communities surrounding the GTA. In fact, many have shown remarkable stability in that regard. And in some cases, as the market appeared to digest and recover from some of the initial psychological impacts of the correction, statistics reflected that the trajectory to stabilization and recovery was even more pronounced in some of the surrounding communities. Affordability is definitely one factor, but a number of other issues appear to be at play, including technological advances which allow an increasing number of people to adopt more flexible work arrangements by working remotely, as well as the trend towards less traditional living and vacation/recreational options which see millennials embracing more innovative lifestyles incorporating sharing and creative use of resources. In particular and as recently reported in the Globe and Mail (Jan 11/18, Matthew Hague), younger buyers are increasingly choosing cottage country, or markets outside of the GTA as the location for their first real estate investments, while renting their home in the city. As indicated, more accessible price points are an obvious attraction where buyers feel that they can get a foothold in the market and get more for their money. But another factor is that these same buyers, more familiar with the sharing economy and lifestyle, put their property investments to work by renting them out or putting them on Airbnb thereby generating revenue to finance their mortgage, while still getting use from them as vacation properties when they are available, and as their schedules permit. Many, for lifestyle reasons, and because technology and more flexible work arrangements allow them to, are simply buying recreational properties as their primary homes and taking advantage of rentals or the very same temporary lodging options such as Airbnb on the flipside when work or other demands take them to the city.

 

 

 

 Current trends show no sign of letting up in this regard. Based on its attributes, and its comparatively enviable position in the world in relation to a wide variety of factors including health, safety, security, education, as well as a stable political and banking system, Ontario will in all likelihood continue to attract a steady stream of newcomers forming families and needing a place to live. Competition for affordable and accessible housing options will continue into the future, and buyers will have to be increasingly creative, flexible and adventurous regarding their living options, all of which is likely to shine an increasing spotlight on alternative rural and recreational markets. As society and technology continue to evolve, lifestyle patterns and choices will inevitably follow suit with cottage country buyers constituting and coming from an ever wider and diverse community. Moreover, the ever-increasing awareness of, and priority on lifestyle by both millennials and retirees will only reinforce this trend.

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