The CREA, or the Canadian Real Estate Association is raising annual home prices and sales forecast for the year which is in part because of the rising prices in Ontario’s housing markets, which includes the region of Toronto. The association would predict that prices are going to rise a negligible 0.5% in Canada that is higher than the 0.6% decline of June forecast. A 5% increase in home sales from the slump of the last five years is also expected. The home sales in Toronto jumped about 13% year over year in August with a 4.9% benchmark price that has been increased to $ 802,400. The condos were the most popular sellers.
CREA reported that the home sales were better in most of the large markets of the countries, like British Columbia’s Lower Mainland, Calgary, Winnipeg, Montreal and the GTA. The sales were improving all over Ontario, Toronto included and they were stronger than was expected in recent months, according to CREA senior economist. Lower mortgage rate was another reason.
Market trends as observed in reports
Toronto and Vancouver were driving the upgraded forecast but B.C and other areas of Ontario equally look promising. Recovery is soon expected and the listings well above the average on the Prairies and in Newfoundland were noted. The listings were low in Quebec, Maritimes and Ontario and that resulted in greater competition among the buyers.
The price point of the property is the main concern when the competition becomes high in Toronto. Hence, properties costing less than $ 1 million attract multiple offers in the east and sellers who price properties just below $ 1 million tend to sell it for $1.1 million in regions of Danforth, Riverdale, Leslieville and the Beaches. Only one sale closer to the $2 million mark had been recorded on 1st September and was a prime Beaches property also sold for about $3 million. Things are looking up for properties that are priced upwards of $1.5 million but some properties have still been on the market for months without any offers.
Other trends worth noting
The Fall season had been a little slower for the $1.5 million range and with prices being good for a family sized home, most families have already settled in for the school year. The mortgage stress test will be a reason why some of the buyers will continue to be out of the market. It was introduced by Canada’s banks last year to determine if one is perfectly capable of paying off his or her mortgages. However, its impact had been reduced because of the decline in Bank of Canada’s five year benchmark. The stress test sees buyers qualify for a loan at 2% higher than the rate their banks are offering or the Bank of Canada’s five year benchmark, whichever is higher. The real estate sector is trying to get the political parties to loosen the stress test that is applying to home buyers with even 20% down payment.
CREA had also not factored in the federal government’s First Time Home Buyer Incentive and the program offers home buyers who have a household income of up to $120,000 to apply for up to 10% non-federal funding towards a mortgage and was eligible for loan amounts up to $560,000 that was much below the GTA average.
However, an announcement was made by PM Trudeau in his campaign that this limit would be raised to $800, 000 in the most expensive markets in Toronto, Vancouver and Victoria. The actual national home price for a home that was sold in August was around $ 493,500 and it was up by almost 4% compared to last year.