By: Ingrid Menninga

Toronto Real Estate Report October 2017

Tags: real estate market, housing market, toronto real estate, housing market reaction

Toronto real estate market report October 2017 by Ingrid Menninga
A lot happened in the past month -- more available homes for sale, increasing number of home transactions, strong growth in condo markets, and the introduction of the new mortgage rules.

Not sure how the new policies and the changes on the market will affect your home purchasing process? Here are some highlights for you to consider.

Not sure whether you should buy or sell before or after the new mortgage rules take effect? Keep on reading or >>>click here to discuss.

1. Roaring inventory
If you've been shopping for houses recently, you may have noticed that inventory has gone up, meaning you will have more options on the market. Compared to October 2016, available listings rose 78% last month, resulting in 18,859 properties to be sold. 

GTA average housing prices up from year ago by Ingrid Menninga

2. The impact of the mortgage stress-testing rules
The Office of the Superintendent of Financial Institutions (OSFI) introduced new guidelines for the mortgage industry earlier last month. According to OSFI, new rules, taking effect on January 1, 2018 now require a minimum qualifying rate for uninsured mortgages to be the greater of the five-year benchmark rate published by the Bank of Canada or the contractual mortgage rate +2%.

Let's see how the rules would play out for a family with $100,000 in annual income. There are two scenarios based on the mortgage rate offered. Assume in both scenarios, the family would apply for a mortgage in a five-year fixed term and amortized in 25 years, with a 20% down payment, and that the current benchmark rate is 4.99%.

Scenario 1
If the family is offered a mortgage rate of 2.80% today, they would be able to afford a home valued at $719,997. Since 2.80% plus 2% is smaller than the benchmark rate (4.99%), so the qualifying rate, starting from Jan. 1, is 4.99%, which means the family could only afford a home worth $573,248 in two months.

Scenario 2
Let's say the current mortgage rate offered to this family is 3.01%. They could buy a home valued at $703,660. On Jan. 1, with the qualifying rate of 5.01% (i.e. 3.01% + 2%), the maximum value of the house they would be able to afford is approximately $575,000. According to industry group Mortgage Professionals Canada, this requirement would disqualify about one in five potential home buyers.
the max values of home a family with $100k annual income can afford (scenario 1) by Ingrid Menningathe max values of home a family with $100k annual income can afford (scenario 2) by Ingrid Menninga
Want to take advantage of this changing market? >>> Click here to ask how.

Here's an example of one area in Toronto showing varying changes in home values.
Toronto W04 area map real estate houses Got more questions?

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Buying or selling a property can seem overwhemling and stressful in this shifting market. We're here to help and answer any questions you may have. Send us an email or call 416-572-1016.

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