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What’s driving real estate demand as we start 2022?
The GTA market continues to be affected by a housing supply crunch and an ongoing demand. While 2021 was the best year for new housing starts in Ontario since 1977 buyers won’t likely see the benefit from added inventory for at least a couple of years. Across the province, we have a long way to go in terms of adding housing inventory to meet demand. Currently, a large number of buyers from 2021 are still trying to make a purchase in 2022 and that will keep demand high to kick start 2022.
Expect to see a very strong return of international immigration further increasing demand for housing in the GTA throughout 2022. Canada reached its 2021 target adding 401,000 new permanent residents and plans on adding 411,000 new immigrants in 2022 to support economic growth and shore up labour shortages across the country. The influx of new residents will keep the housing market competitive.
So what’s the bottom line? 2022 will continue to be a good year to sell with high demand and prices forecast to increase.
What could slow the housing market in 2022?
The obvious answer is an increase in lending rates. Mortgage interest rates have already seen slight increases in 2021 and the Bank of Canada has hinted that it will be tightening its policies in 2022. In 2021 we saw changes to the mortgage stress test moving from 4.79% qualifying rate to 5.25% and a 0.5% increase in mortgage rates, in 2022 we may see more increases.
“Doug Porter, chief economist and managing director at BMO Financial Group, says financial markets are bracing for as many as five 25-basis point increases in the Bank of Canada’s lending rate next year, which would take it to 1.5 percent from 0.25 percent today.” - Financial Post
The key factors impacting potential rate increases could be the impact of inflation on the economy, the impact of COVID-19 variants like Omicrom as well as the US Federal Reserve who have already positioned themselves for a rate hike in 2022. As a general rule of thumb, US interest rate changes tend to have an impact on longer-term loans like mortgages in Canada.
Look for mortgage rates to increase throughout the year. As prices rise and borrowing costs grow we could see a slow down in sales volume and there is potential prices level off but even a 1.5% bump in interest rates would still be below the qualifying rate for mortgages. With inventory so low it may not have a huge impact on prices.
So, what’s the bottom line? Mortgage rates will affect borrowing costs but not necessarily impact pricing and there will still be lots of buyers competing for a limited supply. If you’re thinking of making a move start preparing now. Talk with your lender about how rising rates could impact your actual borrowing costs as the year unfolds and start looking for available homes in your desired areas. It may take time to find what you’re looking for so being proactive will put you in a more favourable position.
Need a reliable contact to discuss your mortgage needs? Message us and we can provide some excellent options.
What else could impact the market in 2022?
There are a few unknowns that may have an impact on the GTA real estate market in 2022. Government intervention into the housing market is always a cause for concern and the mortgage stress test is also being revisited in 2022. In 2021 the housing market was front and centre during the federal election and it will be a defining issue in this year’s provincial election but regardless of the outcome, we’re not likely to see the effects of federal and provincial elections in the form of intervention in 2022.
Covid-19 and the uncertainty surrounding the Omicron variant is also an unknown factor. Although if history is any sort of predictor COVID-19 should have little impact on the trend in real estate prices. Recall in 2020 when the CMHC predicted a 9-18% drop in housing prices at the beginning of the pandemic and since that time the market has been on fire with the average price for a home in Ontario increasing by 44% (CREA). In Durham Region, the average sold price of a detached home in December was $1.178MM and in Toronto $1.69MM.
So, what’s the bottom line? If you’re planning on buying in 2022 a change to the mortgage stress test could impact what you can afford so getting out ahead of any changes could help. So far COVID-19 has not had a negative impact on real estate prices and we’re not seeing policy changes impacting housing yet, but these are factors to watch.
TRREB Market Watch December 2021
Most experts agree that the GTA real estate market cannot continue on its current trajectory forever and feel 2022 should start off strong with similar sales numbers to 2021 yet they expect the market to slow as we move into the second half of the year and rising interest rates take effect. That may be true but don’t expect a reverse in pricing trends. As per Clayton Jarvis of Financial Post’s Moneywise column “People have been calling Canadian real estate’s upward trajectory ‘unsustainable’ for almost a decade now.”
So, what’s the bottom line?
You decide what’s best for you. If you’re waiting for the perfect timing to make your move you could be waiting a while. The reality is that there is never a perfect time to move. It’s about what’s right for you and your goals for homeownership. If you’re thinking about making a move in 2022 your best bet is to speak to a Realtor® and get the lay of the land in your community. We can help you with 40+ combined years of experience helping people just like you buy and sell in the GTA. We can connect you with trusted lenders and support you through the process from start to finish.
Contact us at: P: 416-571-5272 E: email@example.com S: @sellwithstanton
It can take lots of planning before you are ready to move. Now is the perfect time to start preparing by tackling the "to do" list. Here are 4 tips to help you prepare for selling your home in the new year.
1. Organize your paperwork and finances
You will need your property tax information, a property survey (if you have one), appliance manuals, receipts and warranty documentation for any renovating and updating that has been done to the house. You will also want to organize all of the necessary paperwork for applying for a mortgage if you are planning on obtaining financing to purchase your new home.
2. Make a list of repairs that will need to be done.
Go from room to room and see what needs to be painted, touched up, cleaned, repaired or replaced. These minor repairs will help show your home in its best light, leading to more interested buyers and ultimately more money in your pocket. Once you've compiled a list, make a plan to tackle these jobs.
3. Complete routine home maintenance.
Similarily to completing minor repairs, by taking care of general home maintenance the potential buyers will see that your home has been well maintained and looked after. This will give them more confidence in bringing forth an offer. Simple maintenance should include replacing all air filters. Checking smoke and carbon monoxide detectors. Having your heating system professionally serviced and cleaned. Remove window screens and check for drafts around doors and windows.
4. Start decluttering.
This may be the most important task when preparing your home to sell. It can also be the most overwhelming. You can reduce a lot of stress by giving yourself ample time to declutter. Start in one space at a time and consider tossing or donating anything that you do not use anymore. It is so important to show your home as spacious as possible. Clear counter space, organized closets and storage spaces are more appealing to potential buyers.
Still not sure where to start... No worries! We have you covered. As part of our services, we offer a free no obligation home selling consultation. Call today and leverage Jim Stanton and Associates proven home selling system and get the best return on your biggest investment.
October Market Stats are in and here is what the headlines are saying....
October home sales down 7%, new listings fell by 34% from last year: Toronto board - Global News
Toronto's housing market shows no signs of cooling down - City News
Another record-setting month n October for Toronto region as average home price surges to $1.2 million - The Star
Toronto home prices soar al,ost 20% as sales near record - Financial Post
Understanding that these stats and headlines are taking a broad look at the overall market, it is important to seek professional guidance when looking at specific areas and neighbourhoods. We have helped many clients navigate this market and acheive their real estate goals. If you have been thinking about making a move and would like a professional to guide you through the process, give us a call.
The housing market has remained hot and with a lack of inventory and new buyers entering the market every day, it's showing no signs of slowing down. It's with that in mind that we wanted to share these 4 keys to success when buying a home in a competitive market.
If you're considering buying a home right now here are 4 things you must do to have success.
1. Get properly Pre-qualified.
You've heard this a thousand times for a reason. Meet with your #mortgagebroker or bank and get properly prequalified so you can buy with confidence. Knowing what you can afford is critical with housing prices rising as they have over the past 2 years. Looking for an option? Try our friend Barry at completemortgages.ca.
2. Don't get caught in the trap of evaluating homes based on List Price.
These days List Price is every bit a marketing tool as social media is. In the Durham Region homes often sell for between 10-30% over the list price. This is why you need a qualified Realtor© to help you properly evaluate homes you're interested in.
This segues nicely to our next point.
3. Set your expectations
Set your expectations by evaluating what homes like the ones you're interested in have already sold for recently. Your Realtor© can help a lot here by providing a reliable list of previous sales and advising you on how to focus your search to get the best results. Sites like HouseSigma also provide sold prices. Just don't confuse their estimates for sold prices.
4. Understand the risks.
We never advise our clients to buy without conditions. Having the ability to add financing or inspections conditions can be invaluable when buying a resale home. At the same time, many if not most homes are selling firm in this market (meaning no conditions in a buyer's offer). This puts more pressure on you as the buyer to go in firm to be more competitive. You need to be comfortable with the risks if you choose to go that route. Speak to your Reator© and your lender before you make the decision to go in firm so you understand the risks involved and you can make an informed decision.
Bonus Tips - Deposits are key
5. Increase your deposit
These days with so many buyers competing for homes a deposit that is 5% of the purchase price is fairly standard and in fact expected by most sellers. One way to stand out with a prospective seller is to increase your deposit beyond that 5%. Your deposit is collateral on the deal so having a larger deposit shows the seller you're committed to closing. That can make all the difference when a seller is evaluating close offers. Keep in mind if you can't close the transaction you could lose your deposit. Like we mentioned in point number 4, understanding the risks is critical.
6. Make your deposit Herewith
When you submit your offer you can include your deposit "Upon Acceptance" (delivered within 24 hours of acceptance) or "Herewith" (presented with your offer). Including your deposit with your offer can make your offer stand out and show the seller you're committed to closing the deal. That said if your offer is not accepted you just went to the effort and cost of getting a bank draft for nothing.
Have a question about buying in the current market? Connect with us by calling 905-434-2022 or email us at firstname.lastname@example.org.
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This month Brian connected with Barry Baboolal, Mortgage Broker & Owner of Dominion Lending to discuss the critical do's and don'ts when applying for a mortgage.
Watch the full in-depth interview.