“I would expect a flattening in terms of prices and volumes for April this year compared to last,” Joe Walsh, a broker with The Mortgage Centre - Mortgage Professionals Inc. “Given rates and the election, Toronto in April is more of a regular market -- still a good market, but more like a regular one.”
March numbers from Toronto Real Estate Board (TREB) may be providing a glimpse into that future.
While the average selling price rose 5% in March to $456,147 from a year earlier, the number of sales fell 11 from record high recording in 2010.
Volume sales for detached and semi-detached homes both in Toronto and the 905 fell even further, dropping between 13% and 16% when compared to March 2010.
Walsh and other brokers working the market anticipate a similar performance this month given the federal government’s attempts to ratchet down on consumer debt by tightening mortgage rules. The collective move, including axing CMHC insurance for 35-year mortgages, will likely reduce the number of Toronto first-time buyers entering the market.
Many of those buyers may increasingly be shut out of the GTA given the 20 to 35 basis point rise in fixed rate mortgages ushered in earlier this week. Walsh predicts their absence will be reflected in April’s housing stats.
The federal election is just as likely to slow sales in Toronto, but also the rest of the country, argue brokers.
“Elections usually prove to be a distraction for buyers,” Chad Robinson, president of Best Interest Mortgages, told MortgageBrokerNews.ca. “The campaign rhetoric tends to breed uncertainty and potential buyers tend to adopt a wait-and-see approach because of it. That’s especially true in my market, Ottawa.”
More than 20% of Capital voters are directly employed by the government, with another 25 % dependent on federal contracts. Robinson and other Ottawa brokers are now bracing for a possible slowdown as the country shifts into election mode.
In Toronto, all those factors suggest brokers will increasingly have to grapple with a slowing market, although pegging demand for their services may be harder as it becomes harder for the average buyer to qualify for a mortgage.
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