The Canadian government expected a cool down on the housing market after Premier Kathleen Wynne announced new housing rules earlier this year. The new package of measures includes imposing a 15% speculators tax on non-resident buyers.
With the package, the government also seeks to erase the loophole that made it possible for landlords to increase rent on units constructed after 1991.
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Strong Economic Fundamentals For The Housing Market
The housing market remains solid. This is backed by favorable mortgage rates and job outlook.
In the first quarter of the year, the number of unemployed individuals fell. This is the lowest recorded rate for unemployment since the economic recession.
Mortgage rates are set to increase in the next two or three years. The forecast is an increase of 2%. But as of the moment, mortgage rates are still favorable to buyers.
Despite government efforts to curb speculations, industry stakeholders are still optimistic that it will not have a significant effect on prices. Data gathered from Canada’s largest housing markets show that there seems to be only a little deviation. Normalization and growth in these markets are expected in the near future.
In Toronto, prices are expected to increase with houses worth more than $1 million to lead housing units in sales. Vancouver’s upscale homes will keep on recovering until the market normalizes. Cautious recovery is expected for the market in Calgary, while modest growth is forecast for Montreal.
Real Estate Sales Growth
Home values in Canada are still posting positive growth. Values rose in April, marking fifteen consecutive months of positive growth. When compared to last year’s records, home prices have risen by about 10%. That places the average for current prices at about $560,000. Data are sourced from the Canadian Real Estate Association.
No More New Policies
It isn’t uncommon for an experienced mortgage broker to persuade homeowners to stick to their current housing situation. This is because prices continue to go up. In Toronto proper, sales for houses priced at $1 million or higher rose by 44% compared to last year. Houses valued at $4 million went up by about 147 percent over the same period.
Industry experts predict that strong sales will continue as the country approaches the spring buying season. For as long as the government will not intervene by introducing additional policies, the trend will continue, according to them. Government interventions often result to unintended consequences, they added.
High Prices Force Many To Strategize
Recent purchasers have one advice: get to buy with a little help from friends. Experts say that the number of first-time homebuyers doing this approach is increasing. This is after sky-high prices have already eroded affordability.
Those who have bought houses via this approach say that their goal is just enter into the market and build some equity in the short term. But since prices are also soaring high elsewhere, most of them are changing plans. It is better to stay put, according to them.
Friends can stay in one home long-term and expand the house or renovate it to accommodate their growing families.
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