The CREA, or the Canadian Real Estate Association is raising annual home prices in Ontario’s housing markets, which includes the region of Toronto. The association predicted that prices will inflate a negligible 0.5% in Canada which is higher than the 0.6% decline of June forecast. A 5% increase in home sales after a 5 year slump is also expected. The home sales in Toronto jumped about 13% year over year in August with a 4.9% benchmark price. The figures stand at $ 802,400. The condos sold like hot cakes.
CREA reported that the home sales fared better in most markets of countries, like British Columbia’s Lower Mainland, Calgary, Winnipeg, Montreal and the GTA. The sales have shown considerable signs of improvement all over Ontario, including Toronto. According to CREA senior economist, lower mortgage rate was one of the reasons.
Market trends as observed in reports
Toronto and Vancouver are driving the upgraded forecast in sales, but B.C and other areas of Ontario look equally promising. Recovery is soon expected and 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 pegged properties just below $ 1 million happened to sell them for $1.1 million in regions of Danforth, Riverdale, Leslieville and the Beaches. Only one sale closer to the $2 million mark has been recorded on 1st September and a prime Beaches property was 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 looking for buyers for months without any luck.
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% in 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.