We are starting to hear that the big banks and other financial institutions are calling for government intervention in the very active Ontario real estate market. This last year has seen multiple offers and record pricing although under the rules of Covid no one is to engage in visiting listed properties unless a move is essential. What is driving the activity? The most obvious reason is the low-interest rates but there is also a mass rethinking, driven by Covid, about how and where we want to live our lives. And, also, activity drives activity - potential sellers see the price their neighbour got and they too jump into the market.
Does the market require an intervention? I worry about affordability and I think of what an increase in mortgage rates will do to homeowners who stretched a bit too much to make that purchase. I think a move to taxing capital gains on residential properties will only penalize seniors who have already been hurt by low-interest rates on their retirement savings. I also don't think that approach will help this market. I suspect we will see increased testing of a new buyers' ability to purchase and maintain their mortgage commitment. I welcome that approach.
So this spring I expect to see a continued low inventory of properties available to purchase and continued multiple offers. I also think that we will see the banks being even more careful about extending mortgages and buyers (and their Realtors) should absolutely ensure their financing is solid and offers will line up with appraisals.
If you are planning to purchase this spring speak to a very good mortgage broker and take their advice. Prepare!
If you are planning to sell, ask questions when those offers come in - how is your buyer financed?
As always, I am here to help.