In the November edition of GTA Real Estate news, we cover the impact of new government measures, increasing interest rates and tightening mortgage rules.
http://frugalmommas.com/?attachment_id=2795 Changes Triggered by Government Measures
Since the Ontario government announced the Fair Housing Plan, the hot Toronto real estate market has seen a few changes.
The Teranet–National Bank national composite house price index posted its first monthly decline since January of last year due to Toronto’s declining prices. Sales in mid-October compared to mid-September have fallen 33%. The greatest decline is seen within the Toronto townhome market, experiencing about a 48% drop in sales. The GTA seen a 62% decline. However, a BuzzBuzzHome article speculates this could be due to a shorter supply. There were 15% fewer listings this mid-October compared to last year.
The site BuzzBuzzHome identified two major changes: disappearing demand and possible oversupply problems.
Fewer condo investors are interested in the Toronto area after Ontario’s new foreign buyer’s tax was announced. According to a report from BuzzBuzzHome, investor inquiries fell by 52% compared to last September.
Despite this, 168,000 homes are being constructed, planned or sold. The majority of these homes are condos, with roughly 36,000 being detached, semi-detached or townhouses. According to BuzzBuzzHomes, Peel Region has constructed the most single-family homes in the third quarter at about 1,700. This is compared to only 175 in Toronto. The city has been focusing on condos with roughly 7,400 for sale in the third quarter and over 100,000 in proposal stages.
go to link Interest Rates on Rise
Another notable change is that the Bank of Canada announced in September that the interest rates will increase. The cost of variable-rate mortgages and new fixed-rate mortgages are set to rise.
Usually higher interest rates cause a decline in housing prices, meaning bad news for investors. However, according to data scientists at HouseSigma, interest rate increases aren’t actually slowing down sales of GTA homes. In fact, data shows the housing market hasn’t been very affected by it.
buy fluoxetine online Tighter Mortgage Rules
The tightening of mortgage rules may also shake up the market. New tests are designed to ensure that buyers with a down payment of 20% or more can afford homes at higher interest rates. Since these changes come into effect on Jan. 1, 2018, there may be a short-term rush as buyers rush to purchase before new rules are put in place. Some experts are predicting a short end-of-the-year 2-month rush before the spring market cools down.
Some experts predict that stricter mortgage financing rules and rising interest rates will make for a steeper fall and a cooler real estate market. But, according to BuzzBuzzHomes, although sales have slowed down due to government measures, a big crash isn’t expected.
“Once again, rumors of the Great Toronto Housing Crash have been greatly exaggerated,” the report reads.
Re-sale prices were still up 6% in September. The report concludes that the GTA new construction market may need to slightly adjust prices to offset changes caused by government measures.