Yeah, we know you’re busy. That’s why we’ve assembled this cheat cheat of this week’s top real estate stories.
Canadian Real Estate
Mortgage stress tests roll out on all segments on January 1, making it harder to move to a new bank. The stress test won’t be required if you’re renewing at your current bank, but if you move to a new one you’ll be tested. While this won’t really impact the wealthy, it will reduce the highly indebted borrower’s ability to shop around for the best rate. That doesn’t seem so bad, until you run some numbers. The inability to shop around could add up to tens of thousands more paid in interest over just five years.
Canadian real estate is a brand, and massification is being deployed to stop dilution. Massification is when everyday consumers pay sticker price, but product is discount elsewhere. This strategy allows developers to maximize revenues by capturing two distinct consumers.
The lower price point is sold to investors, who get an increasing discount as they buy more units. The higher price point is the public one, sold to people who might actually want to live in the unit. The increase in volume allows faster financing for projects. It also leads end consumers to believe Canadian real estate will never be discounted. Well, maybe not discounted for you.
Stress testing insured mortgages may have led to huge growth for uninsured ones. Insured mortgages tallied up to $508 billion in October, a 6.24% increase from the same time last year. Uninsured mortgages hit $611 billion, a 17.46% increase from the same month last year. Both segments showed huge growth, but uninsured mortgages were booming.
Mortgage Pros Canada, the industry group representing Canadian mortgage brokers, expects big changes from OSFI’s B-20 regulations. The organizations estimates 50,000 buyers per year, could skip looking for homeownership. Another 21% will have to lower the price they were expecting to pay by 10% or more. Whether this means anything for pricing is up for debate. However, homebuyers are definitely going to have to adjust what they were hoping to buy.
Toronto Real Estate
There was a lot more Toronto real estate for sale in November. TREB reported 18,197 active listings at month end, a 110% increase compared to the same time last year. The inventory rise may be relieving pricing pressure, as the average sale price dropped. The average sale price across TREB was $761,757, a 1.92% decline compared to last year. This is the first decline for the annual average since 2009.
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