Photo: credit to the owner
From the onset of pandemic in mid-March to easing restrictions on public safety in July, a lot of things have been happening in the housing market of Toronto and Canada in general. In our previous blog, we talked about how the Toronto housing market started off with a great start for the year but went on a significant decline in home sales and listings during the peak of coronavirus pandemic wherein April stats is the lowest point in the COVID-19 recession.
Starting May however, there has been a gradual recovery in housing market and continued to show remarkable improvements for succeeding months. July numbers set a record-breaking boost as new listings cannot keep up with the pent-up demand from homebuyers.
It seems like the lockdown gave the buyers some time to think about what they want for a home and where they want to relocate. It is also interesting to note how the changes in work and living conditions have an influence in Canadians showing more interest in detached homes in suburban and rural neighbourhoods.
Pandemic did not stop price increase for all real estate markets in Canada
Not only in large markets like Toronto and Montreal, but Canada in general continued to have price increase up to July 2020 compared to same month of the previous year. As of August 20, there is a 14.3% increase in average price from $500,164 to $571,471 for entire Canada.While in GTA, the benchmark price rose by 10% from $800,200 to $880,400. The fast home sales activity in Toronto might also be a factor in increasing home prices. July 2020 home sales in GTA increased by 49.5% compared the previous month. This is the highest monthly level ever recorded. (Source: CREA)
“What a difference three months makes, from some of the lowest housing numbers ever back in April to the multiple monthly records logged in July. A big part of what we’re seeing right now is the snap back in activity that would have otherwise happened earlier this year.” - Shaun Cathcart, CREA’s Senior Economist.
New adjustments and low offers in mortgage
To help spur the real estate market back on track, financial institutions have been offering low mortgage rates since June. HSBC Canada is now offering 1.89% rate for five-year fixed mortgage while other banks such as Royal Bank of Canada, CIBC and Scotia bank offer their lowest five-year rates at 2.19%. Tangerine Financial also lowered its 10-year fixed mortgage rate from 4.00% to 2.59%.Since the stress test or mortgage qualifying rate is affected by a drop in mortgage rates from big banks, experts say that the Bank of Canada will lower its qualifying rate from 4.94% to 4.79%, even lower from its 5.04% level last May.
Also, Canada Mortgage and Housing Corporation made changes to mortgage rules that might affect you. Starting July 1, some aspects of mortgage affected by the new rules include an increase in credit scores, decrease in borrowing limits, and restricted down payment for those with default insured mortgages.
For minimum credit scores, it went up from 600 to 680 points, while the borrowing limit has been reduced from 44% to 42% of your gross income. For those who buyers with default insurance, only down payments coming from savings or financial aid from relatives will be accepted, not from credit or other unsecured loans.
Still, people who are considering buying a home find that now is the best time to buy their new home. After all, low mortgage rates below 2% from banks is already a good deal that is hard to pass up.
If you have any question about Toronto housing market or need help buying your new home, contact me at 647-834-9928 or send an email to [email protected]