Stress-Test Mortgage Regulations

Toronto and Vancouver See Home Sale Increase Due to Recent Stress-Test Mortgage Regulations

The real estate market is seeing a dramatic upswing in purchasing enlight of upcoming mortgage regulations. October saw an increase in the number of homes sold in both Vancouver and Toronto. The shift in the Toronto market is tied directly to new mortgage rules taking effect this January.

According to the Toronto Real Estate Board (TREB), real estate purchases increased by a staggering 12 percent in October, marking the most significant spike in sales since the previous peak in March. The October increase was an estimated 27 percent lower than last year at the same time, during this time Toronto experienced record real estate sales.

The average price of a Toronto region home also increased during this most recent spike. The TREB found that the average Toronto home sold for $780,104, that’s 0.6 percent higher than the average selling price in September and an additional 2.3 percent increase from the same time in 2016.

2017 has been an unusual year for the Toronto region’s real estate market. The local market displayed signs of slight recovery in September, and this trend continued into the month October. During May the market saw a sharp downturn due to the announcement of the Fair Housing Plan changes, a Wynn-government plan that includes a new foreign-buyer tax.

Canada’s other most expensive real estate market carved out a different path than its Eastern counterpart. Vancouver essentially avoided the same market downturn that Toronto experienced. Real estate sales in Vancouver sailed by 35 percent during the month October when compared to the same time last year and increased by seven percent when compared to September. 2017 is especially noteworthy due to the Real Estate Board of Greater Vancouver’s findings that the region experienced 15 percent higher sales than the historical ten year average for October.

The Real Estate Board of Greater Vancouver found that the average home in the region sold for $1,042,300 during October, this is up 12 percent from the previous year and 0.5 percent over September this year.

Both Toronto and Vancouver have experienced significant shifts in their real estate markets brought on by provincial government regulation shifts. Vancouver’s housing marketing experienced sales decreases after the British Columbia introduced foreign-buyer taxes, similar to the one currently impacting the Toronto market back in 2016. Toronto’s current recovery path very much mirrors that of Vancouver’s. Many local realtors in Toronto are seeing more buyer confidence and less concern about bubble-bursting.

The Office of the Superintendent of Financial Institutions (OSFI), Canada’s banking regulator, announced new mortgage-stress testing rules on October 17th. The shifting regulations are resulting in many buyers attempting to purchase before the rules take effect on January 1st. Many experts suggest that the recent spike in Toronto real estate sales is a direct result of the upcoming mortgage regulations.

Upcoming policy changes from the OSFI would require home buyers making a down payment greater than 20 percent to prove they have the income to maintain mortgage payments if interest rates were to increase by two points than the initially agreed-upon rate.

Toronto’s real estate market differs in many ways from other large North American urban areas. Overall, the economy is sturdy, and the region experiences consistent population growth. These factors could contribute to another housing price increase.

A recent study by the Toronto Real Estate Board found there’s been an increase in the number of homes listed for sale in the Toronto region. The report found 18,859 homes for sale as of October 31st; this is an increase of 78.5 percent from only one year ago. This increase in homes on the market will most likely translate into increased sales for November and December.

Since 1999 our team of mortgage professionals has been there to help Toronto home buyers navigate through the real estate market. Recent provincial government changes to mortgage regulations may have an impact on your home buying experience. We take a lot of pride in our team’s ability to navigate through the mortgage application process. Learn more about how our experienced team can help yourĀ mortgage needs by contacting us today.

Comments are closed here.