Condo Chicks from Stomp Realty Inc., (www.CondoChicks.com), a — team of realtors behind some of Toronto’s most prestigious condominium sales, is weighing in on new changes from the federal government that will require homebuyers to put down a larger down payment.
In February 2016, Canada will raise the minimum down payment to 10% for homes over $500,000. Homes that are $500,000 or less will still require a 5% down payment on mortgages. (Source: “Bill Morneau tightens mortgage rules on homes over $500K,” CBC News, December 11, 2015; http://www.cbc.ca/news/politics/morneau-home-ownership-finance-1.3360610)
“These changes will have a big effect on homebuyers in Toronto and throughout the GTA,” says Erica Smith, Co-founder and Broker of Record at Condo Chicks. “Most homes and condos in Toronto are above $500,000, so homebuyers can now expect that almost any home they are interested in will require a larger down payment. A lot of people may have to revise their plans for buying a home.”
The average price of a detached home in Toronto is now $1.0 million, and home prices have risen 7.5% from last year. Toronto is also experiencing a condo boom, with condo construction hitting a 25-year high and many luxury condominiums in development.
“These changes are really a sign of a healthy real estate market,” notes Smith. “It means that demand for homes is very high in Toronto, which is a good thing. While the higher down payment may not seem like a good thing to some people looking for homes, it’s really being put in place to protect them.”
Finance Minister Bill Morneau spoke to reporters about the changes, saying that they were being put in place to protect homebuyers and ensure they have adequate equity in their homes. He said that the changes do not reflect any fear from the Canadian government on the housing market.
“With high real estate prices, low interest rates, and low down payments, some people can end up buying homes that they cannot afford,” says Smith. “These new rules are really directed towards this small segment of the population. It’s a way to ensure that homebuyers are making purchases that they will be able to afford.”
According to Robert Kavcic, a senior economist with BMO, the changes do not reflect any uncertainty in the market. He says that demographics, low relative supply, and foreign investment will continue to drive Toronto’s real estate market.
“Certainly, every indication we’ve seen is that the Toronto real estate market is only going to continue to grow,” says Smith. “Toronto is the biggest real estate market in Canada and a destination for homebuyers all over the world. With luxury developments being built, demand is only going to grow.”
While the change in rules is being celebrated by political parties across the board, homebuyers may not understand how they will be affected. Smiith says that the changes actually benefit homebuyers who are looking to make responsible decisions.
“Homebuyers will have to put a little more money down when they buy a home but they end up saving money in the end” says Smith. “It’s a way of making sure they are ready and prepared for the financial commitment of buying their home, and that they have a bit more equity to start with. They’ll end up paying less interest in the long-run. For people who are ready to buy their own home or condo, now is still as good a time as any.”
Condo Chicks from Stomp Realty Inc. is a dedicated team of realtors who are behind some of the most prestigious and prominent condominium sales in the Greater Toronto Area. They take pride in negotiating on clients’ behalf to represent their best interest. For more information, please visit the company website at www.CondoChicks.com.
Name: Erica Mary Smith, Broker of Record and Co-Founder of Stomp Realty Inc., Brokerage
Email: Send Email
Organization: Condo Chicks Inc.
Address: 163 Sterling Rd #10 Toronto, Ontario M6K 2B2
Release ID: 99494