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Kat’s Blog
Toronto Real Estate 2017 Year in Review

Last year brought a lot of tension to the GTA real estate market. Record sales in the first quarter of the year were followed by a sharp decline in second and third quarters after the introduction of the Ontario Fair Housing Plan (FHP). Sales picked up in the last quarter with buyers advancing their purchases in the wake of the new OSFI stress test effective January 1, 2018.

Toronto Real Estate Board President Tim Syrianos announced that Greater Toronto Area REALTORS® reported 92,394 sales through TREB’s MLS® System in 2017. This total was down 18.3 per cent compared to the record set in 2016. The average selling price for 2017 as a whole was $822,681 – up 12.7 per cent compared to 2016.

Price growth and decline depended on the market segments and locations. Buyers were looking into less expensive and affordable options. As a result, detached home segment was the slowest growing, while condo market out-performed with double-digit growth.

The forecast for 2018 sales remains cautious with affordability remaining the biggest factor in demand for homes. Some markets such as Oakville, Hamilton-Burlington, Brampton and Durham are looking to grow more dynamically than others. Condos will also continue with stronger demand from investors and end-users alike. Although analysts forecast a slow start of the year, overall we can expect an above 6.5 per cent increase in Toronto housing market this year.

New Mortgage OSFI Stress Test

Last month the Office of the Superintendent of Financial Institutions (OSFI) announced a new nation-wide stress test for uninsured mortgages with deposits of 20 percent or more. Applicants will have to qualify for a minimum rate equal or greater than the five-year benchmark rate published by the Bank of Canada or their contractual mortgage rate PLUS two percentage points.

According to OSFI, this is intended to to reduce the risks associated with high household debt across the country because of “frothy housing markets” in Vancouver and Toronto.

For an average household making $150,000/year this could mean a drop in mortgage limit from $850,000 to $650,000 based on new guidelines (with 20% deposit and a new qualifying mortgage rate of 4.89 per cent).

Obviously, the government is using it as another measure to slow down the Toronto and Vancouver housing markets. The result is yet to be seen, but this new policy will definitely have a direct impact on the Toronto market.

Unfortunately, our “zero percent vacancy” rental market will be affected negatively, because new investors will have a harder time qualifying for a loan. And of course the homes over $1 million to $2 million range can expect a much softer market next spring.

Toronto Real Estate Market Update – Summer 2017

The Toronto real estate market is always a popular topic of conversations. But recent developments have more people asking what direction the market is headed. Unfortunately the media has been adding fuel to the fire with headlines such as: “Toronto sales tank…” (The Toronto Star) and “Toronto home prices plunge as buyers retreat…” (The Globe and Mail). It’s clear no one can predict the future, so in the absence of a crystal ball it’s best to rely on statistics, industry forecasts and common sense.

Although the Toronto real estate market is experiencing somewhat of a stagnant summer, in my opinion it will bounce back to a “sellers market” at the beginning of next year. For buyers out there, now is definitely the best time to take advantage of the “buyers market” when you still can negotiate better price and terms.

“Summer market statistics are often not the best indicators of housing market conditions. We generally see an uptick in sales following Labour Day, as a greater cross-section of would-be buyers and sellers start to consider listing and/or purchasing a home. As we move through the fall, we should start to get a better sense of the impacts of the Fair Housing Plan and higher borrowing costs,” said TREB CEO John DiMichele.

The MLS® Home Price Index (HPI) Composite Benchmark price was up by 18 per cent on a year-over-year basis. However, the Composite Benchmark was down by 4.6 per cent relative to June. Monthly MLS® HPI declines were driven more so by single-family home types. The average selling price for all home types combined was up by five per cent year-over-year to $746,218.

Guide to Buying a Cottage

Everyone loves a cottage getaway during the summer months in Canada. But before heading out with your chequebook to scoop up a country dream home, you should keep in mind that recreational properties have specific features and unique characteristics. Here’s a short list of things to keep in mind when considering a cottage purchase:

1. Zoning: check with the municipality to make sure thre are no surprises regarding your property; for instance is your access road a municipal road that is ploughed in the winter?

2. Survey: it’s good to get it from the sellers, but if it’s not available, you might want to look into having one done. This can prevent potential headaches with neighbours in the future if you plan to build.

3. Access and easements: check if there are any agreements to access your property through the neighbour’s lot and vice versa. These agreements need to extend to the new owner. Also, beach or water access rights should be well defined, including residential community beaches.

4. Sanitation: hire a specialized inspector to examine the septic system. Also, ask the sellers for their service records.

5. Water: Never access someone’s well! To avoid contamination, a water quality test should be ordered and performed by a qualified water inspector.

6. Plumbing, heating, cooling and electrical systems: always hire a home inspector specializing in recreational properties; they are best qualified to check on the functionality and compliance of these systems.

7. Carrying costs: It’s a good idea to factor in property taxes, insurance, utilities, winter maintenance and repairs for the months when you are not using the cottage in the winter.

Finally, it’s alway best to hire a real estate professional who specializes in the area and who can guide you through the unique features of your cottage.

Spring market 2017 update

Spring is the most active time in real estate markets. This spring Toronto and GTA markets experienced an unexpected increase in listings. In April listings were up 33% compared to last year according to Toronto Real Estate Board statistics. Buyers started looking at more choices, hence it was taking longer for homes to sell. This May sales were down 20.3% compared to May 2016. Sales of detached homes were down 26.3%, meanwhile sales of condos were down only 6.4% year over year. Active listings were up 49.9% in May compared to last year.

Last month the introduction of new listings outpaced sales, and market conditions became more favourable for buyers. “However, even with the robust increase in active listings, inventory levels remain low. At the end of May, we had less than two months of inventory. This is why we continued to see very strong annual rates of price growth,” commented Toronto Real Estate Board President Larry Cerqua. Selling prices continued to grow and the average selling price for all homes combined for the TREB Market was up by 14.9% compared to same time last year.

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