In the month of December 2017, sales in the GTA were down compared to December 2016, with sales for all of 2017 down 18.3% compared to 2016. The average selling price for the GTA in 2017 was up 12.7% compared to 2016, due in large part to very strong growth in Q1 and part of Q2 and reduced growth throughout the remainder of the year. The second half of 2017 was characterized by differing price growth outcomes depending on location and asset class. The condominium market segment continues to show the most strength moving into 2018 due in large part to affordability issues in the detached market segment and new OSFI mortgage regulations.
Toronto Real Estate Board (TREB) Market Watch Report
As mentioned previous notes, the Office of the Superintendent of Financial Institutions (OSFI) announced new mortgage rules on October 25, 2017coming into force for January 1, 2018. New mortgage rules under Guideline B20 - Residential Mortgages Underwriting Practices and Procedures will require buyers to qualify for a mortgage or Home Equity Line of Credit at the five-year benchmark rate or the customer's discounted contractual rate +2%, whichever is greater, regardless of the chosen contractual mortgage term.
The OSFI is implementing these changes for all federally regulated banks to follow due diligence in mortgage underwriting practices. Buyers may experience a reduction in the total amount they qualify to borrow as result of the changes. These changes may result in a further increase in subprime mortgage financing or a decline in market demand in early 2018, especially in the detached market segment.
Here is key information related to financing pre-approvals and purchase transactions under the new mortgage rules:
Pre-Approvals Obtained Before January 1, 2018: Will remain valid up to 120 days following the initial credit decision.
Pre-Approvals Obtained On and After January 1, 2018: Any material changes to the request post January 1st may require re-adjudication using updated qualifying rates.
Purchase Transactions Before January 1, 2018: Approved applications closing beyond January 1st will remain valid; no re-adjudication is required as a result of the qualifying rate update.
Purchase Transactions On and After January 1, 2018: Material changes to the request post January 1st may require re-adjudication using updated qualifying rate rules.
Below is a market snapshot for single family and condominium apartment price growth by municipalities of December 31, 2017.
The figures cited in this note are an average. Please contact us for neighbourhood specific information so you can make an informed decision if you are thinking about making a move.
To request neighbourhood information or Home Price Index (HPI) price growth for any neighbourhood in the GTA click here.
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Single Family Home Price Index
Brampton: -0.38% (1 Month), -0.59% (3 Month), -8.48% (6 Month), +6.47% (1 Year)
Mississauga: +0.41% (1 Month), +0.08% (3 Month), -7.10% (6 Month), +3.71% (1 Year)
Toronto: -0.32% (1 Month), -0.48% (3 Month), -9.34% (6 Month), +2.57% (1 Year)
Markham: -0.83% (1 Month), -1.98% (3 Month), -15.03% (6 Month), -2.41% (1 Year)
Richmond Hill: -2.09% (1 Month), -5.05% (3 Month), -18.33% (6 Month), -4.10% (1 Year)
Vaughan: +0.23% (1 Month), -0.76% (3 Month), -13.20% (6 Month), +1.37% (1 Year)
Condominium Apartment Home Price Index
Brampton: +0.14% (1 Month), +1.47% (3 Month), -4.59% (6 Month), +17.63% (1 Year)
Mississauga: +0.80% (1 Month), +1.57% (3 Month), -0.75% (6 Month), +19.54% (1 Year)
Toronto: +0.89% (1 Month), +2.23% (3 Month), +1.10% (6 Month), +23.34% (1 Year)
Markham: -1.63% (1 Month), -0.94% (3 Month), -6.35% (6 Month), +18.78% (1 Year)
Richmond Hill: 0.00% (1 Month), -1.55% (3 Month), -5.57% (6 Month), +16.61% (1 Year)
Vaughan: -0.09% (1 Month), +0.51% (3 Month), +2.81% (6 Month), +22.06% (1 Year)
*How to use these numbers: If on December 1, 2017the price of a condo in Toronto was $500,000, it would be worth $504,450 on December 31, 2017 based on the home price index (HPI). That $500,000 condo in Toronto appreciated $4,450 in December or $143.55 per day.
Prepared by Michael De Luca, Real Estate Sales Representative at Private Service Realty (PSR), Brokerage
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