February 22, 2017 - Toronto realtor Franco Dinatale a condo specialist with Right At Home Realty Brokerage Inc.’s Toronto Condo Team, explains why, in spite of recent and upcoming government interventions, the Toronto condominium market is still going strong, and GTA condos remain an affordable option for most first-time home buyers.
Toronto, Ontario: According to Franco Dinatale Toronto condo and loft specialist with Right at Home Realty Brokerage Inc.’s Toronto Condo Team (www.TorontoCondoTeam.ca), recent government tax and mortgage measures that were introduced to take pressure off Toronto’s red-hot housing market have had little effect on Toronto condominium sales. “To date, we have seen little to indicate that recent government interventions have caused condo sales to slow or prices to drop. If anything, there has been a jump in Toronto condominium sales, as many non-residents condo buyers are now investing in Toronto instead of Vancouver due to B.C.’s 15% foreign buyers tax. While there may be some first time buyers who will be turned down for a mortgage or only receive approval for a lesser amount because of more stringent stress testing, there are plenty of other buyers out there to fill the gap. Toronto condos are still an affordable option for first-time home buyers,” reports Dinatale.
In addition to the new mortgage rules, which came into effect on Oct 17, 2016, the Federal government has also closed a tax loophole that some non-resident buyers had been using to avoid paying capital gains on properties they had sold in Canada by claiming that the property was their primary residence. The last measure to be introduced by the government to help slow down the housing market comes into effect on November 30, 2016. On that date, eligibility requirements for low and high ratio insured mortgages will be streamlined. Mortgage loans that lenders insure using portfolio insurance and other discretionary low loan-to-value ratio mortgage insurance must meet stricter criteria previously only applied to high-ratio insured mortgages. Both high and low-ratio insured mortgages now must have a minimum qualifying credit score of 600 and a maximum amortization period of 25 years. The new rules will also apply to mortgage renewals.
“Canada’s Finance Minister Bill Morneau has stated that the federal government will continue to monitor the housing market but has no plans to introduce any further measures. We’ll just have to wait and see whether the new stricter mortgage requirements coming in at the end of the month will have any effect on the Toronto condominium market. Personally, I don’t think we will see any downward pressure on condo sales because of these measures. There are just too many buyers in the city, and I don’t see that changing in the foreseeable future. Every month, thousands of new people move into Toronto needing a place to live, and there is a shortage of all types of housing. And, although interest rates are low, the average price of a detached home in Toronto is now well over $1M and out of reach for many buyers. As detached home prices continue to rise, Toronto condominiums will remain an affordable alternative for those who want to own a home in the city and a sound investment,” explains Dinatale.