Property Price Inflation in the GTA
#housepricesslowing
Hot off the press – another of Kevin’s FAQs, this time about House Price Inflation in the GTA.
- What’s happening with GTA residential property prices?
House Price Inflation in the GTA starting to slow, mostly in the 905 region. My realtor colleagues in Durham, Peel and York Regions are reporting a slowing of house price appreciation. Nothing similar being seen in 416-land yet, but that may change quickly.
- Are prices actually moving down?
Hard to tell, but sellers listing at $700K and expecting to get $1MM+ (as an example) are seeing fewer showings, fewer offers and ultimately lower bids. The trend seems to have started, with selling prices moving closer to the asking price.
- Possible reasons for this?
- Recent Prime Rate hike is pushing up the cost of variable rate mortgages;
- Increased inventory i.e. more sellers choosing to list as we’re leaving winter behind and the pandemic is somewhat under control;
- Buyer fatigue i.e. many buyers sick and tired of being outbid so they’re sitting on the sidelines;
- Increasing fixed rates. Economic factors in Canada and the US are prompting fixed rates to increase, making mortgages less affordable for new buyers.
- Will this continue?
My colleagues and I think so. The 4 factors above (even without any potential government action) will combine to limit the 20-30% house price inflation we’ve seen in the last 2 years. The market mechanism works, and hopefully we can move towards a more balanced market this year.
- How will the market look going forward?
If this trend continues, listing agents will start setting prices at more reasonable levels. This will stop properties being brought to market way below the expected selling price, leading to fewer offers but more realistic expectations for both buyers and sellers.
- You mean first-time home buyers actually have a chance?
Hopefully, yes. Wanna-be buyers will high credit scores, provable income, minimal debts and a down-payment may have options. Best call your favourite broker/banker and see what’s possible.