The following article was written by RateHub.ca.
Home sales in Toronto continued their downward spiral, to close out 2012. The Toronto Real Estate Board recently reported that November 2012 home sales fell by 16 per cent versus where they were a year ago. While sales may be down, that isn’t the case with home prices – the average selling price is up 1.6 per cent to $485,328, while the MLS Home Price Index is up 4.6 per cent year over year.
While winter tends to put a chill on resale activity, the fourth round of mortgage rule changes that came into effect July 2012 seems to have brought Toronto’s once red-hot housing market to a halt. It’s hard to deny the market has changed – houses that were once under priced to encourage multiple offers now sit with a “for sale” sign. And the Toronto housing market seems to have stabilized, as the days of robust price increases of 10 per cent or more are long gone. Houses that used to sell for 105 per cent of their listing price are now selling at 95 per cent or less. Sellers actually have to negotiate with buyers, as Toronto’s market edges towards a balanced market.
Sales in Toronto have been trending downward since June, when the new mortgage rules were announced. It’s important to note that 2011 and 2012 were two banner years for the Toronto real estate market. The new mortgage rules, which reduced the maximum mortgage amortization period from 30 years to 25 years, have made it more difficult for first-time home buyers to qualify for a mortgage. As a result, many first-time buyers have decided to sit on the sidelines and save up a larger down payment, in hopes that housing prices will fall by the time they are ready to buy.
Toronto’s housing market is much rosier than Vancouver’s, where housing sales and prices fell sharply in the latter part of 2012. With housing sales plummeting in Toronto, are prices likely to follow in 2013? Don’t count on it. Although we shouldn’t expect January 2013 to be any different from last year, prices are expected to increase slightly. The real estate market usually doesn’t pick up until the spring, but last year’s bidding wars started in January, as home buyers ventured into the cold.
Winter is an excellent time for home buyers to start looking around. Although there are fewer houses on the market, there are also fewer sellers. Winter isn’t a desirable time to sell, so you might be able to get a good deal on a house, if you find the right home with the right seller.