Rising interest rates are hitting Canada’s largest city, Toronto.
Greater Toronto Area One of Most Expensive Markets in Canada
According to Brendan Powell, the broker of record for the BREL Team/Bspoke Realty, “If somebody comes to us with a million-dollar budget for a detached house, it is very hard to find them something.”
The high immigration rate into Ontario and Toronto specifically has driven “extraordinary” price growth, according to Jason Mercer, the chief market analyst for the Toronto Regional Real Estate Board. Nearly 50% of Canada’s new permanent residents came to the greater Toronto area during the first 10 months of 2021.
An important question for you. Spring 2022 is here…have you completed your 2022 Real Estate Business and Lead Generation Plan? If not, no worries. We have done the hard work for you. Download your 2022 REAL ESTATE TREASURE MAP! Text HARRIS to 47372. It’s that simple and takes 3 seconds. Text HARRIS to 47372 and when you do we will instantly text you back with a link to download. BONUS: For a limited time when you text HARRIS to 47372 you will also receive a Coaching Call!
4 Msgs/Month. Reply STOP to cancel, HELP for help. Msg&data rates may apply. Terms & Privacy: slkt.io/JWQt
Market Now “Pausing” Due to Higher Interest Rates
The Bank of Canada raised its policy interest rate by 175 basis points, or 1.75%, in March of 2022 in efforts to curb inflation.
The effect? Mercer said, “We’re in a pause – things have changed a lot in the last month…and households are repositioning themselves in the market… ” by either looking for a less expensive home or location or taking a break from the market altogether to save up more of a down payment.
In May, Toronto’s real estate board reported that sales in the greater Toronto area fell -39% y/y and -9% m/m. Average selling prices dropped -7% to an average of 1.21M Canadian dollars ($962,000) over the previous two months.
Trends Pointing to More Balanced Market
Prime Canadian neighborhoods such as Rosedale, Lawrence Park and Forest High continue to remain competitive by reason of a chronic lack of supply. Prospective buyers still active in the market have a bit of negotiating power with prices continuing to stay within averages just under 2M Canadian ($1.59M) for detached homes in the city while condo prices continue to hover around 800,000 Canadian ($635,00).
Simultaneously, the luxury market continues to perform “exceptionally well,” according to Cailey Heaps, president and CEO of the Heaps Estrin Team. “Buyers understand the scarcity of the product they’re looking for.”
One such luxury enclave in Port Hope had a flat average selling price in April and May of 909,000 Canadian ($723,00), an increase of +28% y/y, according to Zolo, a market listing site.
Who’s Buying in Toronto?
Despite the region’s high rate of immigration, Powell said that less than 4% of properties in the greater Toronto area are owned by non-Canadians.
Foreign buyers come from the US, China, India, Europe and the Middle East.
Currently, there are no restrictions on foreign buyers however, the government has proposed a two-year moratorium on foreign buyers that is likely to pass.
Foreign buyers anywhere in Ontario pay a “speculation tax” of 20% on top of the provincial transfer tax. Buyers in the city of Toronto pay a municipal transfer tax as well. Powell said that the biggest cost when buying is having to pay both the provincial and municipal transfer taxes.
Both buyers and sellers hire their own lawyers to handle transactional details.
URGENT! Exclusive Invite: Join Premier Coaching for FREE! You read that correctly, Premier Coaching for the first 30 days is 100%, no strings attached FREE. Here is what you get: DISC Personality Test, Seller and Buyer Scripts, Presentations, Lead Generation Systems, Market Shift Plan, Real Estate Treasure Map, Members Only Community Groups (and a ton more). The best part is you will have a DAILY Live Coaching Call with a Harris Certified Coach. Yep, you read that correctly….every weekday you will attend a semi-private coaching session with your coach. All of this is 100% FREE. Of course, you want to join Premier Coaching. There is Zero Risk and joining costs you nothing. This is the Real Estate Success system you need in this quickly changing market. Join Premier Coaching NOW.
Thanks to The New York Times.