Despite the strong trends in recent home sales, new predictions say next year’s market may not be so hot. The Canadian Real Estate Association foresees a decline in transactions by about 2.7 percent in Ontario. Other provinces may see a larger drop, while some may see an increase even higher than this year’s record-breaking rate.
Several factors account for the reasoning behind the prediction, not the least of which are the changes made in mortgage rules. This past fall, a new regulation passed requiring that all insured mortgages go through a stress test, not just fixed-rate mortgages of less than five years. The test determines an applicant’s future ability to make mortgage payments if financial circumstances changes, for example rising interest rates or lower income.
The stress test regulation eliminates the ability for some to negotiate their rates and makes it more difficult for others to qualify at all. In addition, interest rates have climbed, and the prices of single-family homes is still on the rise. Those factors may already be affecting home sales, since October to November saw the largest single-month decline in sales – at 5.3 percent – since 2012.
The outlook is far from grim, however. Despite the slight declines, the real estate market in Ontario remains strong. CREA expects more than 518,900 units to be sold in 2017. Those who are hoping to invest in a home would benefit from consulting a lawyer who can walk them through the complex process. Having an advocate by one’s side will ensure that every detail is carefully handled and one’s transaction is as stress-free as possible.
Source: torontosun.com, “CREA expects home sales to dip in 2017“, Alexandra Posadzki, Dec. 15, 2016