How is the market?
Yes!!! I ‘ve got this question a lot lately, especially in condominium segment of the market in downtown core area. I would say, it depends…. It all comes down to a basic economic law; supply and demand and we will see it in months to follow, when we get into more active fall market.
It is not a secret that summer months are the slowest months in real estate market and this year it is even slower than usual due to implementation of new financing rules. For those who don’t know I would like to summarize;
Amortization period for a high risk mortgages (less than 20% down payment) changed from 30 years to 25 causing an increase in monthly payments.
30 years amortization period will remain for the conventional mortgages( 20% down)
CMHC will no longer insure mortgages $1M and up meaning the purchaser has to come up with at least 20% down in order to qualify for the mortgage.
This is all for the mortgages, the rest of the rules applies to the amount of equity you can take out of the property.
Because of these rules, lots of buyers have to step back and review their budget.
According to Toronto Real Estate Board (TREB) President Ann Hannah “Very strong annual sales growth in the first half of 2012 and an earlier peak in sales this spring compared to 2011 help explain more moderate sales this summer. New mortgage lending guidelines and the additional upfront cost of the City of Toronto land transfer tax also prompted some households to put their buying decision on hold,”
As for the rest of the year;“Canada’s housing markets are expected to moderate over the rest of 2012 and into 2013 after showing sustained activity levels, specifically in the multiples segment, over the first half of 2012. Balanced market conditions in most local housing markets will result in a slowing in house price growth as well,” said Mathieu Laberge, Deputy Chief Economist for CMHC.