FEBRUARY 2020 MARKET REPORT (26 February 2020 )
2020 has started where 2019 left off with strong sales growth against a continued decline in the number of new listings. This has resulted in a 12 percent year-over-year average selling price increase in January in the GTA. Low borrowing costs and low unemployment continue to fuel the housing market and combined with new changes to the stress test rules, we don’t expect things to change.
New stress test rules:
Starting on April 6th, a new and improved benchmark rate will be used to calculate the stress test affordability. It will be based on the country’s median five-year fixed insured-mortgage rate, plus two percentage points. If that rate were in existence today, it would be about 4.89 per cent, says the Department of Finance. That’s 30 basis points less than the current (minimum) stress-test rate of 5.19%. This new benchmark rate will offer more flexibility- as economic prospects dim and rates decline, more people will qualify for a mortgage.
That gives our housing-dependent economy a boost when it needs it most and slows economic growth when it gets too hot. Makes sense.
Assuming rates stay the same by April, calculations on a 30 basis point reduction in the stress test would give most borrowers upward of 3 per cent more buying power. This should help buyers trying to qualify for just a bit more than they would have, particularly heading into the high season for home buying.
Greater Toronto Area REALTORS® reported 4,581 home sales through TRREB’s MLS® System in January 2020 – up by 15.4 per cent compared to January 2019. On a preliminary seasonally adjusted basis, sales were up by 4.8 per cent compared to December 2019. The detached market is strong with a lack of inventory driving price growth. We are seeing multiple offers again in this area as we move into spring. “We can’t get new properties listed quickly enough and have an extensive list of buyers looking to buy in these areas”.
Many properties are selling in multiple offers right now and the ‘fear of missing out’ which fuelled the market in the spring of 2017 seems to be the cause.
If you are are planning to be out in the market for that dream house it is a good idea to get a firm pre-approval from the bank before putting an offer and a hefty deposit towards the purchase of your house.
With access to a number of financing and banking partners we can guide you through the process of obtaining suitable financing and pre-approval.
For seller's there never been a better time to put your house in the market as there's very less inventory which will come back to its normal levels in the coming months.
If you are looking to move this season, contact us and we will provide a professional, confidential market evaluation and help prepare the property so you get top dollars.
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