The Toronto real estate market is without a doubt seeing an impressive rise in sales when compared to last year. We’ve witnessed a 10.6 percent increase in sales for the month of May 2016 versus May, 2015. The Toronto real estate board has gone on record saying that this increase in sales has created a shortage of certain listings. Low-rise types of single family homes are becoming increasingly difficult to find.
Because of this, competition among-st buyers has become incredibly strong, and as a result, Toronto real estate prices have climbed substantially. It is up 15 percent on the price index compared to last year for the month of May 2016. With an influx of buyers and seemingly shrinking amount of listings, Toronto real estate prices are in an upward trend that has caught the attention of officials in Ottawa.
The OECD (Organization for Economic Co-operation and Development) has warned of the increasing financial stability risks link to that accompany soaring prices and increased household debt. These warnings are being headed by some, specifically within Canada’s banking sector.
“We’re a little concerned about housing prices in the greater Vancouver area and Toronto,” said Brian Porter, chief executive of the Bank of Nova Scotia. “We just took our foot off the gas the last couple quarters in terms of mortgage growth… in terms of Vancouver and Toronto.”
This wouldn’t be the first time the OCED has reported warnings about the listing price increase within the Toronto real estate market. Last December they made a similar claim saying that measures need to be taken to cool down this increased price trend.
The bank of Canada has a similar stand-point on the Toronto real estate price boom. The head of the bank has stated that this upward price trend cannot sustain itself within the confines of a healthy and growing economy.
“Prospective homebuyers and their lenders should not extrapolate recent real estate performance into the future when contemplating a transaction,” Stephen Poloz said Thursday with the release of the bank’s semi-annual financial system review.
Finance Minister Bill Morneau has stated that Ottawa was going ahead with an in-depth look into Canada’s real estate markets. The purpose is to determine whether or not measures are to be put in place to help protect and safeguard Canadians in the event on an interest rate rise and or severe economic developments and changes. Making sure Canadians can still afford to live in their homes in the event such swift changed were to take place is the priority of the in-depth study.
According to the Globe and Mail, Finance Minister Bill Morneau could be just what Parliament needs.
Whether or not Ottawa will act and what exact measures will be taken were not mentioned by Morneau. He did however promise that a “deep-dive” into such areas would help figure out if certain changes to Canada’s mortgage and amortization rules were necessary. A move the Canadian real estate Association believes is in the right direction.
“Having evidence-based policies and policy measures is the way to go,” said Gregory Klump, the association’s chief economist. “There are lots of anecdotes out there but if they were drops of water we’d all be drowning in them at this point,” he said.
In February 2016, Ottawa imposed some interesting changes to mortgage regulations. A down payment of 10 percent is now required on homes over $500,000. This is up from 5 percent prior to February of this year. Even with said change, the impact on the pricing boom was minor if anything.
“With the government’s efforts to get to the bottom of that we’ll have some better information on that toward the end of the year we hope,” said Klump.
Investing in Real Estate
As proven above, the real estate market is and will continue to soar. The average MLS listing is worth hundreds of thousands of dollars alone. Investing in real estate is a great idea, so long as you have experts by your side. Your real estate agent will give you advice that will result in a huge return on your initial investment. It has been proven that buying a property is by far the best investment out there today. The return is very quick and each year, you see your profit double – even triple! Simple renovations can increase your property’s value by thousands. Please check out the new Toronto real estate listings today and figure out how you can benefit from purchasing a property in the Greater Toronto and surrounding areas. You can use our Professional Finder tool to find a local expert real estate agent.