3 minute read. 

It likely doesn’t come as a surprise to you when you find out that the real estate market here in Ontario, and across Canada, continues to thrive despite prices in the GTA being what some (especially first-time buyers) may dub as unaffordable.
 
Being your Knowledge Broker means that I want to give you the information you need to become an informed buyer, seller, or investor in our real estate market.
 
With that in mind, here are a few things you need to know as you enter the market this coming year:
 
Interest Rates and High Ratio Mortgages
The government of Canada has been taking some steps towards protecting the market by increasing interest rates and premiums on high ratio mortgages.  This is making it more difficult to purchase for buyers or refinance for homeowners.  This is playing a role in tempering sales in the hot Toronto region market. For example, these new rates could mean the difference between a couple or family buying a home in Toronto and looking elsewhere in one of the surrounding cities or towns.
 
Supply and Demand
It’s still hard to point fingers at a “bubble effect” when the population increases are matching the housing demand. The government of Canada has been taking steps toward curtailing problems before they come to fruition. The focus needs to shift away from foreign investment and more closely towards general affordability.
 
Condos
High housing prices are bringing condo living to the forefront, especially for young families just entering the market. In past, the record number of condos under construction and the completions coming down the pipe might have raised concerns about inventory, but if there were fewer units on the market, the Toronto region might have pushed the high-rise segment to be as tight as the market for detached, semis and townhomes.

Price growth in the condo field also speaks to the strong first-time buyer activity we continue to see in the city of Toronto and the surrounding region, so with that in mind, a smart move for the government would be to reduce the red tape and development costs on condo building in areas outside of the GTA so that affordability issues can be reduced.

Competition for Homes
The lending rules that came into effect recently have slowed things down, but competition is still alive and well for homes that are in particularly high demand. The difference now however is that instead of 10 offers, the seller might be looking at two or three.

We’re now also seeing a trend of more conditional offers being accepted and some properties are sitting on the market a bit longer.

First-Time Buyers
With the new mortgage "stress tests" introduced this year, we’re seeing less of the first-time buyers hitting the market.

Before the new legislation was implemented, someone that qualified for a $650,000 mortgage now only qualifies for a $500,000 mortgage. This is now creating a growing understanding that as a first-time buyer, you must be realistic. Some are even looking at income-producing properties to help them carry the mortgage.

Even with the help of government initiatives such as the doubling of the provincial land transfer tax rebate for first-time buyers, it’s still a tough entry-level market.

A starter home isn't necessarily going to be your dream home, but it’s something to get you in the market. Try looking outside of your preferred neighbourhoods to find something in your price range that perhaps offers more space or potential for improvement so you can increase your return on investment when it comes time to sell.
 
Are you looking to get active in the real estate market this upcoming year either by buying, selling or investing? I’d love to hear from you in the comments.

At Knowledge Broker, our goal is to create an open-source of information for all our clients. We want to ensure that, at the end of the day, they get exactly what they want and what they need. If you know someone who could use our help or services please put them in touch with us or send us their details using the contact information below. And before you go, click here to take the Knowledge Broker Quiz and see exactly what we can do for you!

JOSHUA CAMPBELL (@knowledgebrkr)
Real Estate Broker
Coldwell Banker The Real Estate Centre, Brokerage
joshua@knowledgebroker.ca
249 Avenue Road • Newmarket, ON L3Y 1N8
289.231.0001