Last year’s real estate market was a wild ride for buyers and sellers across Canada. The country saw a fair number of bidding wars, bully offers, and quick sales. Though these buying and selling tactics will rise again in yet another hot real estate market, a few things have changed from last year. As we quickly roll into 2017, the forecast predicts an even more competitive market than the last.
Here are 5 real estate market changes to look out for in 2017:
New Mortgage Rule in Full Effect
October 17, 2016, was a game changer for the Toronto real estate market, as mortgage applicants will now face the “stress test”. Mortgage lenders will now evaluate if borrowers can handle the potential for higher interest rates should they rise. The changes are affecting the market as a whole, however, first-time home buyers will feel it the most.
It will be harder for people with less than a 20% downpayment to get a mortgage as the eligibility of lending has dropped 18%. These changes will likely result in an increasing demand for Toronto’s property rental units and more affordable housing. If you could qualify for 500k before, you’re now at 410k. Prospective buyers in the 800,000k+ seem to be less affected.
The Canadian Real Estate Association (CREA) releases quarterly housing market forecasts for all to see. In the most recent report, CREA estimates that Toronto’s housing prices will increase 8% yet inventory will decrease by 5%. So yet again, all signs pointing to a more competitive market. If you have your eye on a pre-construction building – inquire yesterday! Because there’s a good chance the units are already purchased. Our company, Royal Lepage Signature, has amazing relationships with builders city wide – we have exclusive access to pre-sales and unit grabs before the public.
Cool Front in Vancouver
Vancouver’s market continues to freeze due to low supply; however, the high price tag remains the same. So what does this mean for Toronto? There is a potential for the foreign investment market to shift east.
“The “cool down” period was inevitable but was initiated by the 15% Foreign Buyers Tax, which has had slight impacts on foreign buying. In terms of affordability, we are still seeing a high demand for resale and pre-sale condos, as well as townhouse units,” says Vancouver-based real estate agent, Krystal Kaju.
So how is the cool down period affecting Vancouver’s rental market? Krystal adds, “we also now have an Empty Homes Tax which promotes the renting out of vacant units. Vancouver is in dire need of rental units and affordable housing, but with nowhere left to build in the city, it is becoming increasingly difficult to find affordable options. There is also an increasing number of restrictions for AirBnB units, since we have almost a zero vacancy rate in the City of Vancouver.”
Be War Ready
Bidding wars are here to stay. On Condo sales, bidding wars have become a common event. The first day a property goes on sale it’s important to be offer and counter-offer ready. Buying tactics must continue to evolve to ensure clients still get what they’re looking for without paying way over asking price.
nd with the Vancouver market on hold, bidding wars could become more competitive for local buyers that have to beat out higher price offers from foreign investors.
Mo Conditions Mo Problems
Agents are moving away from demanding that the status certificate review condition is included as an offer statement clause, in order to make offers more appealing to the seller – even if the certification review has yet to be provided.
Gone are the days where reassurance is essential to closing the deal. A good, long-standing Toronto agent will know the building and its financial position before even entering into a contract. So make sure you trust your agent before you sign an offer without the typical clauses instated.