Some Bad News for Homebuyers in Mississauga
Published December 19, 2018 at 9:10 pm
There’s never a dull say in real estate.
In winter 2017, the market became startlingly overheated. Prices–which were high to begin with–started to skyrocket and desperate buyers began bidding excessive amounts of money to ensure they could call a precious house (inventory was very low) home.
After a few difficult months, the provincial and federal governments started to intervene to cool the market. The federal government passed the OSFI stress test (which requires borrowers to qualify at higher rates than they’ll ultimately be paying) and the province passed the Fair Housing Plan (which requires foreign buyers and speculators to pay a 15 per cent tax).
And while intervention has cooled the market, it has also had a noticeable impact on sales.
According to a recent Zoocasa blog post, Canadian home sales slowed yet again in November due to the stress test, resulting in a forecasted five-year low in activity for 2018.
The Canadian Real Estate Association (CREA) reports the number of homes exchanging hands remains below the 10-year average, down 2.3 per cent on a monthly basis and -12.6 per cent from 2017, compounding the 1.7 per cent decline recorded in October.
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CREA says sales were down annually in three quarters of all markets, though most pronounced in the Greater Toronto Area, BC’s Lower Mainland, Calgary, and the Hamilton-Burlington region.
The average home price has also contracted 2.9% year over year, hitting an average of $488,000, though would be only $378,000 if Toronto and Vancouver were removed from the equation (naturally, homes in those areas remain quite costly).
Gregory Klump, CREA’s chief economist, puts the blame for slower activity squarely on the national mortgage stress test, which requires borrowers of new mortgages to prove they can qualify at a rate roughly 2 per cent higher than the one they’ll actually receive from their lender.
He says the test has slashed purchasing power, despite strong employment and migration fundamentals that would otherwise support the market.
“The decline in homeownership affordability caused by this year’s new mortgage stress test remains very much in evidence,” he says in a news release.
“Despite supportive economic and demographic fundamentals, national home sales have begun trending lower. While national home sales were anticipated to recover in the wake of a large drop in activity earlier this year due to the introduction of the stress test, the rebound appears to have run its course.”
Here’s a look at home prices across Canada, courtesy of Zoocasa.
Because there are fewer new listings, buyers have to compete more for houses. In Mississauga, the market is officially in sellers’ territory.
Persistently low inventory has put tighter pressure on buying conditions; shorter supply in 70 per cent of all markets has pushed the national sales-to-new-listings ratio up slightly to 54.8 per cent, from 54.2 per cent in October – still balanced (in most of the GTA, at least), but leaning more-so toward a sellers’ market.
According to the November report, 60 per cent of all markets remain in balanced territory, with the total months of inventory – the amount of time it would take to sell all available homes – coming in at 5.4 per cent.
The market is tight in parts of Ontario.
Zoocasa points out that the Greater Golden Horseshoe continues to see steady price gains, up 9.3 per cent in Guelph, 7.2 per cent in Niagara Region, 6.3 per cent in Hamilton-Burlington, 3.4 per cent in Oakville Milton, and 2.7% for MLS listings in Toronto and the GTA.
Barrie and District was the only region to post a decrease, at 2.1 per cent.
The Ottawa market continues to boom, with prices up 6.6 per cent, led by a 7.3 per cent uptick in two-storey home prices.
Some homes are also gaining value more quickly.
As expected, apartments/condos continue to lead the market in terms of price gains, with values up an average of 6 per cent, followed by townhouses at 4 per cent. Single-detached home prices remained flat, up 0.4 per cent and 0.1 per cent among one- and two-storey houses.
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