Toronto Housing Market Forecasting

How to forecast Toronto housing?

To forecast house prices in Toronto, one needs to know the main parameters affecting this market. Just like any other commodity, home prices follow the supply and demand equation. Therefore to predict the prices, both in the near and long term, one should know the main factors affecting the supply and demand of GTA housing market. Here, we name some of the main causes for consideration:

Supply parameters:

  1. Number of high-rise development
  2. Available lands for detached or townhouse developments (e.g. green belt regulation)
  3. Access to other close markets (e.g. commuting options to nearby cities)
  4. Provincial and municipal rental regulations

Demand parameters:

Local Demand:

  1. Borrowing cost:
    1. Mortgage rate
    2. Mortgage regulation
  2. Economy:
    1. Employment rate
    2. Median household income to median home prices
    3. Business cycles
  3. Population growth:
    1. Number of permanent residents landing in Toronto
    2. Birth and death rate
    3. Immigration from Canada to other countries such as USA
    4. Increase or decrease in the temporary visas such as student and work visa

Global Demand (Investment):

  1. Global economy (mainly large Asian countries)
  2. Global housing markets: Typically foreign investors would sell a property in another country to transfer the funds.
  3. Capital controls by other countries such as China
  4. FX: Cheaper Canadian dollar may attract more investment
    1. Impact of oil price on FX
    2. Impact of bank of Canada benchmark rates on FX
    3. Impact of FED rate on the strength of US dollar
  5. Rental income

In the next articles we will try to explain in more details the above parameters and their impact on the future prices.

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