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President's Toronto Star Column

TREB President's Column as it appears in the Toronto Star.


New mortgage rules have affected home sales

December 14, 2012 -- A moderate number of resale home transactions took place throughout the Greater Toronto Area (GTA) in November, with 5,793 homes changing hands. This represented a 16 per cent decrease from 6,908 sales in November 2011.

In Toronto 2,308 transactions took place last month compared to 2,952 sales a year ago - a decline of nearly 28 per cent. Meanwhile 3,485 homes changed hands in the 905 Regions, a decrease of more than 13 per cent from 3,956 sales in November 2011.

A key factor that has influenced the dip in sales experienced in recent months relates to the changes in mortgage lending guidelines that came into effect in July. The changes reduced the maximum amortization period from 30 years to 25 years and set a purchase price ceiling for government backed insured mortgages at one million dollars. These regulations have resulted in some households putting their decision to purchase on hold while they save up more money for a down payment and/or experience an increase in their income. Adding to this situation in the City of Toronto is the additional upfront Land Transfer Tax, which takes money from home buyers that could otherwise be used to offset the high costs of home ownership.

While sales decreased year-over-year in November, a modest overall price increase was reported, with the average price of a GTA home reaching $485,328. This represented an increase of 1.6 per cent compared to a year ago.

The 905 Region, with an average price of $463,779, showed a price increase of four per cent compared to a half-percent decrease in the City of Toronto average home price, which was $517,866.

The pace of average price growth in November was slower than what was experienced for much of 2012, especially in the low-rise segment of the market. This was largely due to the fact that the mix of single detached homes sold in the City of Toronto this past November changed relative to last year. Specifically, the share of homes that sold for over one million dollars was down considerably.

While the mix of home types sold may have changed, market conditions remained tight for low-rise home types. This is evident when we consider the MLS® Home Price Index (HPI) for the GTA. The MLS® HPI tracks the price change for benchmark homes – in other words: a home with the same attributes over time. When we look at price through this lens, we find that the benchmark price for major home types was up by 4.6 per cent in the GTA as a whole and 3.9 per cent for the City of Toronto.

News on the employment front was positive in November, as the Toronto seasonally adjusted unemployment rate decreased to 8.2 per cent, from 8.6 per cent the previous month. Interest rates remain largely unchanged, with a five year fixed mortgage rate of just over three per cent continuing to be available.

At this time of year I am often asked whether it is prudent to list one’s home for sale over the holidays, and there are in fact, many benefits to doing so. Consider that those viewing homes at this time of year are more likely to be serious buyers. As well, homes often look their best when they are decorated for the holidays, and a favourable emotional response to a property often prompts an offer.

I encourage you to talk to a Greater Toronto REALTOR® about the many other factors you should consider before choosing to make your next move and in the meantime, be sure to visit www.TorontoRealEstateBoard.com for all of the latest updates on the market.

Ann Hannah is President of the Toronto Real Estate Board, a professional association that represents 35,000 REALTORS® in the Greater Toronto Area.

Follow TREB on www.twitter.com/TREBhome, www.Facebook.com/TorontoRealEstateBoard and www.youtube.com/TREBChannel

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Archive
Note: All links are PDF files

 2012
October 19 REALTORS® Strongly Dedicated To Continuing Education
September 26 REALTORS® Help Consumers Find Great Places To Live
September 7 Continue Education Equals Professional REALTORS®
August 31 Building A Better City
August 2 REALTORS® Really Know How To Help
July 9 TREB Committed to Community Building
June 18 TREB Recognizes Commercial Builders
June 6 Home Ownership Can Be A Formidable Challenge
May 25 TREB Is Standing Up For The Privacy Rights Of Homeowners
 2011
October 4 Realtors Care Foundation supports shelter-based organizations
September 16 Buyers beware in real estate purchases, too
August 20 Termites are a hidden problem
June 17 Ford Needs to Follow Through on Election Promise
June 12 TREB Moving Ahead With New Technology
June 1 Realtor Quest Was Huge Success
April 30 Buying a Condo Posses Some Unique Queries
April 8 Search for a Home Can Be Challenging
March 25 Parking red tape should be streamlined
March 4 Toronto needed to clarify parking rules
February 26 Some home improvements will pay off big
February 11 Taking steps towards homeownership
January 28 Taking steps towards the repeal of the land transfer tax
 2010
December 3 Misconceptions about the HST
October 2 Clearing up HST confusion
September 10 TREB: Energy efficiency for all homes, new and old
August 13 Making sense of housing statistics
August 6 TREB: Save HST with re-sale housing
July 30 TREB: Housing options are as diverse as the city we live in
July 23 TREB: Realtor's access to databases can assist with home search
July 16 There's no Investment Like a Home
July 9 HST will not affect resale homes
July 2 TREB: HST will not affect resale homes
Jun. 25 Celebrate Diversity during Pride Week
Jun. 4 Mayoral debate highlight of realtor conference
May 21 Set budget for moving expenses
May 14 Spring buyers boost GTA home sales
Apr. 23 Each local market has distinct character
Apr. 9 Important to understand terminology
Mar. 26 REALTORS® continue to educate themselves
Mar. 12 Housing sales typically heat up in spring market
Mar. 5 Careful renos can increase home value
Feb. 26 Some simple steps to energy efficiency
Feb. 19 REALTORS® step up to help Haiti
Feb. 12 Some encouraging news and numbers
Feb. 5 Action on Land Transfer Tax could offset the HST
Jan. 22 Year will see listings rise, price growth moderate
Jan. 8 Number of benefits to LEED-certified condos
 2009
December 18
Jan. 1, 2010
Steady flow of newcomers buoys demand for sales / Immigration helps drive housing market
December 11 REALTORS® routinely give back to their community
December 4 REALTORS® have skills to help with Rental Needs
November 27 REALTORS® have many resources
November 20 Sales still hot despite cooler weather
November 13 HST will raise cost of living, buying homes
November 9 GTA Real Estate Market Soaring