The continued ripples of the effects of COVID-19 are still evident in economies and housing markets all around the world. While these market fluctuations have not always been predictable, there are some observable trends that are important to take into consideration as you determine whether 2024 is the year you should build your custom home in Toronto. Today we’ll highlight a handful of these trends and takeaways to help you make an informed decision. In addition, we’ll provide a brief checklist to help you assess your personal readiness to invest in a custom home.
Ontario's Luxury Home Are in Short Supply
Ontario saw luxury home sales decrease at the end of 2022, as a result of limited market supply. This issue is expected to continue in the near future. The lack of suitable homes over $4 million on today's real estate market means that building a custom home could be your best option to ensure your next home features everything you envision without committing to immediate renovation.
Toronto Boasts a Robust Economy
Toronto boasts a “more robust and diverse economy” as compared to the rest of Ontario. Toronto makes up 20% of Canada’s GDP. Toronto’s economic health is, no doubt, bolstered by a diverse array of industries and relatively low unemployment. Given that home investment generally corresponds to a region’s economic health, Toronto may still be a good place to invest despite the global economic challenges in recent years.
Material Prices are Leveling Out; Labour Trouble Looms
The cost of materials and labour is a significant factor in the construction industry, and the Toronto market is no exception. Lumber prices were volatile a couple of years ago but have since stabilized, with a new normal price being realized. Although lumber is only about 5% of the cost of a home, the pressure from both supply and demand sides is expected to continue. While the breakdown between labour and materials varies, it is generally believed to be around 50/50 for custom construction projects. However, with labour prices increasing at a quicker rate than materials, the proportion may shift to 55% labour and 45% materials in the near future. The shortage of skilled tradespeople is a challenge facing the construction industry in Toronto and North America. While some companies may struggle to attract highly qualified tradespeople, established relationships like those SevernWoods maintains are increasingly vital. This shortage will require more people to enter the trades, and their work will likely be incentivized with higher wages. With these realities unlikely to resolve soon, now may be a less-expensive time to build than in the future.
The Toronto luxury construction market is showing no signs of slowing down in the short or long-term future. Although interest rates may have cooled off the housing bubble in Toronto, the economy is still strong, and unemployment rates remain low. Luxury custom homes in Toronto are generally not being built with borrowed money, so higher interest rates are not as much of a concern. However, the cost of construction is a more pressing issue. The demand for luxury homes and condos in Toronto is expected to continue as the city's population is growing at a rate of over 150,000 people per year. While some may hold off on construction in the short term due to the increased construction cost, the overall outlook for the luxury construction market in Toronto is optimistic.
Is It the Right Time for You to Build a Custom Home?
Regardless of the movements of the wider Toronto economy and housing market, it’s important to remember that the most important question a prospective homebuyer should ask is, “Is it the right time for me to build my custom home?” To answer this questions, let’s look at the following considerations:
Is Your Financial Situation Stable?
Before you invest in a custom home, you should be reasonably confident that your current financial circumstances are likely to remain stable.
What Are Your Long-Term Goals?
A custom home allows you to infuse your unique personality into a home that is tailor-made for your needs and preferences. If you can’t find a home on the market that suits your vision, then it’s wise to consider building a custom home.
How Does Location Play Into These Goals?
As a general rule of thumb, if you know you’re going to remain in the area for the foreseeable future, it’s a good idea to build a custom home. Assuming you know that Toronto is home, that you desire custom home amenities, and that your resources are in order, then it’s smart to begin investing in your future now.
Is Your Builder of Choice Available?
Most importantly, building a custom home is an incredible journey with an exquisite outcome, but it’s important to remember that your travelling companions make all the difference when it comes to your satisfaction with both the process and the end result. Consider that you have a unique opportunity that should not be discarded when you’re fortunate enough to find alignment with a particular local builder.
Putting it All Together
If building a custom home in Toronto with a respected building partner is your goal, and if you have the resources to invest, then it is the right time for you to build. Markets come and go, and at the end of the day, your decision should be influenced by your personal circumstances and objectives. In other words, now is always the right time to move toward your goals, and if you have the ability to do so, you should. SevernWoods would love to help you make your luxury custom home real.Reach out to tell us about your project.