As fewer homes become listed for sale, Toronto’s real estate market is looking like it did in 2016. The low inventory paired with low mortgage rates, make it the perfect climate for bidding wars and purchasers paying over asking prices.
According to Royal Bank of Canada, the real estate supply in Toronto is falling rapidly, which makes things very uncomfortable for aspiring purchasers and could signal another major “market heat-up.” The main concern with limited inventory is it pushes real estate prices up, which is one of the main reasons the Government introduced the Mortgage Stress Test two years ago, which qualifies borrowers at 2 percent higher than the contract rate. However, because of the stagnant global economy and its troublesome trade issues - and now, the coronavirus, which is on the verge of becoming a pandemic, mortgage rates have been plummeting with pressure on regulators to scale back the mortgage stress test. TD Bank was recently the first bank to cut its benchmark rate from 5.19% to 4.99%, with the likelihood of all other lenders to follow suit. There has also been public criticism of the Federal Government’s Shared Equity Program, which highlights how the program’s soft second mortgage is encouraging more bidding wars, and more debt, which ultimately does not make housing more affordable. Some argue the program is now exasperating the housing crisis, and real estate ownership being out of reach for many Canadians. In January of this year, residential property in Toronto rose in price by 8.7% and if supply becomes even more limited, we can expect the prices to increase beyond this percentage. Have a mortgage question? Feel free to call (647) 773-4849 Sarah A. Colucci, Mortgage Agent Lic. M14000929 Mortgage Edge, Broker 10680 Email: sarah.colucci@coluccimortgage.com
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By: Sarah ColucciSenior Mortgage Agent, Lic. M14000929 Archives
April 2023
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