How is that impacting the Durham Region and Kawartha Lakes housing market?
August 29, 2017
We have been seen a lot of changes in the housing market in the Greater Toronto Area, since the Bank of Canada interest rate change (July 12, 2017) . There’s been a lot of buzz around the most recent interest rate increase, and it’s no surprise the housing market is definitely cooled down in July and August compared to the Hot sellers market of spring 2017.
So, what’s happening in the Eastern Greater Toronto Area, specifically the Durham Region/Kawartha Lakes? Well, there are a large number of listings and certainly we are seeing fewer buyers than the hot housing market of February to May.
Interest rates and other changes
With the Bank of Canada raising its key interest rate to .75% from .50%, it’s the largest increase in the last 7 years. (July 12, 2017) Many banks are following suit and raising their rates as well. Most borrowers shouldn’t worry just yet – the increased interest rates are still quite small. For example, RBC set their rates .2% higher, which in reality only adds $13 to every $100,000 of a mortgage. [ refer to: RateHub.ca ]
Right now, the interest hike isn’t going to make-or-break most buyers. That being said, this interest rate rise will likely continue to deflate the confidence of the buyers’ market. We are already able to see the impact on the market with fewer buyers for each new home listed on the market.
What to watch:
The biggest impact could be the implementation of the regulation for buyers who are applying for a mortgage. Buyers may have to qualify for 2% higher than the discounted rate, which had already been instituted on insured mortgages (mortgages that have more than 80% loan to value ratio). This rule may impact all mortgages and is being reviewed by the office of the Superintendent of Financial Institutions.
Are we in trouble?
Not exactly. Buyers will qualify for less than the purchase price, which could affect the market value on homes – and we may see a decrease in prices. Yes, buyers are already feeling the changes in the market as we realize that the ship has sailed on the hot prices of spring.
The Greater Toronto Area real estate market, including our area of Durham Region, experienced a non-traditional “normal” Spring market, meaning it was a seller’s market that only had 30 days of inventory. This meant there was practically NO inventory to be sold and the laws of supply and demand were in effect. This lasted from mid January to the first week of May this year and then it ended abruptly.
A balanced market
Now, we are experiencing a happy medium. The market shifted from a seller’s market to a buyer’s market. The days where there were 10 buyers for every house are gone and we are noticing a larger inventory of homes with lower price tags ( but still fair market value.) The average time of a home on the market in the Durham Region is now increasing.
This is not a bad thing. We’re getting back to a normal market where buyers have more choices and negotiation leverage. It makes for a much healthier market. Some sellers are expecting the high prices of the spring, but we are seeing prices come down moderately. This makes it more affordable for prospective buyers.
Durham Region & Kawartha Lakes still a good investment
One thing is for sure, despite all of these changes in the housing market, Durham Region remains a great place to invest if you are looking to live in the GTA and get out of the city. North Durham and the Durham Region as a whole, Kawartha Lakes and Northumberland are still some of the most affordable places to live just outside of the GTA, and many buyers are choosing to buy a home in these locations.
Whether or not the market changes, Durham Region and Kawartha Lakes are still great places to live, work, and play. It’s a great place to invest and raise a family. If you’re thinking of coming to the area, there is no better time to buy than now!
Brett Puckrin, AACI, P.App, Sales Representative Team Leader, Puckrin & Latreille Real Estate Group Re/Max All-Stars Realty Inc. Brokerage 144 Queen St. Port Perry www.puckrinlatreille.com call/text: 905.985.7300