Toronto, Canada’s largest city, has been notorious over the years from being the country’s most expensive real estate market, in close competition with Vancouver. But with Canada’s slowly mellowing housing market, it has been predicted that the city could see some changes. One thing is for sure: the Toronto real estate market is not going to be experiencing a significant decline anytime soon. So, what factors are at play and what can sellers and buyers in this market expect in the year to come? Read on for our market insights.

The Greater Toronto Area’s Market: Better for Buyers or Sellers?

According to the RE/MAX 2020 Housing Market Outlook Report, 2020 will bring good news for those looking to list their property. More specifically in Southern Ontario real estate markets, where Toronto has a significant influence, a strong price appreciation has been seen and is expected to continue this upcoming year. Conversely, though, this means that homebuyers will be looking at an even more competitive market than what was generally seen in 2019.

Why is this the case? As Canada’s largest city, Toronto and the greater area continues to see significant population growth. This fact, coupled with a trend in lowered mortgage rates means that there are many buyers competing for a much smaller number of properties in the area. The result is declining availability and increasing prices.

Who Benefits from Toronto’s Strong and Competitive Market?

The benefits of living in a vibrant city such as Toronto includes access to endless amenities, both essential and non-essential, as well as ample job opportunity and culture make it unsurprising that the demand for real estate is great, especially in comparison to the supply. This makes the market particularly advantageous for some, while others will continually struggle to make the leap into property ownership in the Greater Toronto Area.

BNN Bloomberg is very forthright with who benefits and who, quite frankly, doesn’t from this Canadian city’s current housing market: the baby boomer generation. With the shift in the homebuyer generation changing to millennials while the sellers remain to be an older and much more wealthy population, the housing market will become increasingly unaffordable as a result of reduced supply.

A Hot Market Without Signs of Cooling

Unless there is an increase in housing supply which, as mentioned above, is not likely given the current population demographics, the Toronto Real Estate Board (TREB) expects that prices will continue to increase throughout the year 2020. Our own report indicates that housing prices in the Toronto market are expected to increase by six per cent in 2020.

Despite the effects of the foreign buyer tax of 15 per cent on any property sales to those who are not Canadian residents or citizens, the market still remains strong. That said, CBC reported that the market did see a slight slowdown in the number of properties purchased by foreign nationals buying homes in the Greater Toronto Area. The “slow down” didn’t mean that foreign property ownership in Toronto stopped altogether. As reported by CBC, $1.47 billion worth of real estate in the province of Ontario was purchased by foreign buyers. Another statistic from CBC in regards to real estate sales to foreign buyers in the Greater Toronto Area is estimated to be five to 10 per cent of all home purchasers in Toronto.

In terms of growth over the past year, referencing the Canadian Real Estate Association’s MLS® Home Price Index Composite Benchmark can be a useful tool. According to this benchmark, housing prices were up by 7.3 per cent on a year-over-year basis in December 2019, the result of a steady increase throughout the year, with the most dramatic increase occurring between June 2019 and December 2019.

How The Stress Test Affects Canadian Real Estate

As of 2016, Canada implemented a mortgage stress test that every homebuyer is required to pass before a mortgage can be officially secured. This test is part of a mortgage qualifier test that evaluates whether a homebuyer will be able to consistently make their mortgage payments even with changes in interest rates.

So what exactly is a stress test? A stress test is a way to prove that a homebuyer can afford to pay the mortgage payments with the agreed and slightly increased interest rate as a way to plan for any significant changes in the country’s real estate market. All bank lenders will have their prospective homebuyers complete this stress test before officially offering a mortgage. A stress test asks you to detail the following information:

  • Your prospective property value and related property taxes
  • Your down payment
  • Your mortgage’s annual interest rate
  • Mortgage term and the amortization period
  • Payment frequency
  • Your household gross income and other debts

This stress test is a precaution and a reaction to the housing market crash that happened several years in the United States, which occurred as a result of mortgages freely given to those who were borrowing far beyond their means. However, the stress test is arguably an extreme demonstration of what were to happen should interest rates increase, making it difficult for many homebuyers to even think about a mortgage that would otherwise be attainable.

How does this translate to the growth of the Canadian real estate market? Since implementation, the stress test has correlated to a slower real estate market in Toronto, as reported by the city’s CityNews network video report.

Buying or Selling Your Canadian Home in Toronto

While the outlook for buyers and sellers in Toronto isn’t as equally positive for both parties, the lower mortgage rates that have been seen and that are expected to remain, for the most part, steady throughout 2020 make the idea of purchasing property in the Greater Toronto Area more manageable

The best way to make the most of your next foray into the Toronto real estate market is to be aware of the trends and what changes are expected between seasons in the upcoming years. Stay updated on Toronto’s dynamic housing market trends and news by visiting You can also view the RE/MAX 2020 Housing Market Outlook Report here.