House prices are soaring with no signs of abating. That’s the condition that’s seen in all fronts of Canada’s real estate market. Whether it’s about detached, semi detached, residential, rental or condo housing units, prices are going up and buyers are showing no signs of hesitance to purchase.
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Housing is rosy, but the government is biting its nails over it. A bubble burst is expected to take place any time soon. New rules had to be put in place to curb strong demand. The government was able to come up with some which they announced in April. Specific goals for implementing these rules include:
As soon as the government made the announcement, prices started dipping. Can the immediate response be sustained? The housing market condition prior to the announcement was extremely strong. Here’s a quick look on how strong it was in March and in the months before it.
Prices were, as anybody would describe them, staggering and setting new record highs.
In January, detached houses sold in GTA averaged $1.07 million. About one and a half months later, it soared to $1.21 million. The climb was 32.5 percent compared to the price set a year earlier.
It was far higher in areas within the city of Toronto. The average price for detached houses within the city limits was placed at $1.57 million prior to the announcement. In November last year, that was only $1.35 million. Everybody was saying those figures only reflect a market that is by far not normal.
In suburban Toronto, prices were also recording new highs. Just before the announcement was made, a new high of $1.1 million for detached houses in the area was set. It was the first time that detached house prices there went over the $1 million threshold.
Any mortgage broker who wants to make quick money knows the places to avoid. He must avoid these places if his client is looking for a detached home in the GTA. In some of these places, detached home prices increased by 40 or even 80 percent over the past year.
For example, in Barrie, where selling prices are averaging around $605,000, the increase over a year ago was put at 42%.
Specific districts in Barrie recorded different percentages. Essa Township saw a 49% increase compared to last year’s prices. Innisfil residents recorded a 55% increase. In Oro-Medonte, detached homes sold for $812,200 in March this year, an 80% increase from prices set in March last year.
Low supply inventory for detached homes is the culprit. This year, there were only 233 detached houses up for grabs. Compare that to the 11,802 that were available to buyers 10 years ago – a 98% drop.
The government is allocating $125 million for building new home units to accommodate increasing demand and to cool down prices.
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