Why are people not listing?
Toronto, December 18, 2019
By Ivan Kalinin
There was definitely pent-up demand leftover from 2018 that was unleashed by the drop of mortgage rates and the absorption of the new mortgage stress-test introduced by both the Federal and Provincial governments. This resulted in higher sale prices as the year wore on, particularly as new listings did not match the pace of purchases. This made the market hotter, as people had to pay more for better listings in good neighbourhoods. Because they were scarce – and they sold quickly.
On the investment front, recent Municipal legislation for short term rentals is trying to curb the activity of platforms like Airbnb, which potentially may result in 2 things:
- Reduced supply of short term rentals that may drive up prices, to just below hotel rates. It may mean lower vacancy rates for continuing Airbnb operators, and
- Depressed investor interest who wanted to base their investment finances on Airbnb rental, which may force them to look for alternatives such as renting via corporate housing or on longer-than-28-days terms to avoid the coverage of the legislation.
All in all, when you look back on 2019 and think about the stresses on the market, it makes sense, both in terms of demand picking up, prices going up, supply being lower, thus pushing up prices, and it all contributing to a bit of a vicious circle. Let’s see what 2020 does in terms of how people react.