First of all, we hope you and your family and friends are enjoying the holiday season.
As we all get together to celebrate, it’s also a time to look forward to the New Year and wonder what it will bring.
Needless to say, 2015 was a very good year for Markham’s homeowners. The Toronto Real Estate Board’s Market Watch report for November shows a 9.23% increase in the price of Markham homes of all types in versus November 2014. That translates to a $62,517 increase in the price of an average home so far in 2015.
The number of homes sold in the GTA to date in 2015 has already set a new all-time record, up 9% to 96,401 units across the region.
The combination of record high prices and record numbers of sales tells us that demand to get into the real estate market remains high.
Regardless of how good the news was in 2015, no one can say for sure which way the real estate winds will blow in 2016.
Never-the-less, the predictions have begun to roll in and here are just a few.
1. New Mortgage Rules
OK, this isn’t a prediction, but a new rule that will come into force in the 2016. But there are varying predictions about how the new rules will affect the real estate market.
Among other changes, the new requirements mean that buyers of homes worth more than $500,000 will have to make a larger down payment. Starting February 16th, 2016, CMHC will require a 10 per cent down payment on the portion of a home’s price over $500,000. The five per cent rule remains the same for the portion up to $500,000.
The minimum down payment of a $750,000 home is now 5% of the home’s price, or $37,500. Under the new rules, the down payment would be 5% of the home’s price up to $500,000 plus 10% of the home’s price over $500,000, increasing the down payment on the $750,000 home by $12,500 to $50,000.
It’s generally felt that the new mortgage guidelines will have little impact on home sales and prices. Federal Finance Minister Bill Morneau said that the new measures are designed to protect “the people buying homes so they have sufficient equity in their home.”
Robert Kavcic of BMO Capital Markets added “Rather than a blunt instrument to cool the market, this is a targeted measure designed to deter a very small segment of buyers from stretching into the market with a very low equity position.”
2. CREA Says House Prices Will Continue to Rise in 2016
The Canadian Real Estate Association expects Canada’s national average house price to increase 1.4% in 2016.
However, with markets expected to fall in Alberta, Saskatchewan and Newfoundland and Labrador, a large part of the national increase in prices will be due to the real estate markets in and around Toronto and Vancouver.
To give you an idea of the impact of Toronto and Vancouver prices on national averages, in November, 2015, the national average sale price was up 10.2% to $456,186 versus a year ago. Excluding the Greater Vancouver and Greater Toronto areas, the national average price would have been $338,969 in November, up only 3.4% from a year earlier.
3. Housing Starts Will Slow Down
The Canadian Mortgage & Housing Corporation (CMHC) predicts that Toronto and GTA housing starts and existing home sales will edge lower in 2016 and 2017. Considering the continued record sales prices and steep increase in numbers of units sold in 2015, the prediction isn’t much of a shocker.
As with everything to do with real estate, results are expected to vary depending on location. The prediction for markets close to the edge of the GTA, which would include parts of York Region, is that they will do better than others due to more affordable prices.
Whatever the New Year brings, we hope that it is a safe, happy and healthy one for you and your family.