TORONTO, Dec. 04, 2019 (GLOBE NEWSWIRE) -- Real Estate Analyst and Vice President of PPS Realty Brokerage, Ali Salarian, explains why Toronto and surrounding real estate markets are still growing while the mortgage stress test remains constant.
Since the introduction of new mortgage stress test back in Oct. 2016 and 2017, the real estate market in Ontario and in particular, GTA & GTHA has seen a dramatic change to slow down due to affordability issues for most of its segments. However, 2019 has been the other way around with higher price growth. Also, inventory level has decreased drastically from 3.0 times in Jan. to 2.2 times in May and to 1.8 times in Oct. of 2019, indicating the relationship between the number of active listings and sold properties of the same month. This reflects a strong seller market.
When the number of sales increased in Oct 2019 by 14% from 7,448 in Oct. 2018 to 8,491, the number of active listings also decreased from 14,435 in Oct. 2018 to 13,050 in Oct. 2019 (-9.6%) Market Watch TREB Oct 2019. The number of available listings decreased against the number of active buyers; this pushed the price upward. The stringent mortgage qualifications have led to this, by making existing homeowners hesitate selling their properties and upgrade as the qualification for higher mortgage loans became more difficult than before, while the buyers and in particular, first-time buyers are still out there looking for the first property to buy.
“Mortgage stress test to be blamed,” said Ali Salarian, and needs to be updated to lower basis points in order to provide elasticity in the market and maintain a balance in all segments as the price growth has benefited properties worth below one million-dollar only.
Ali Salarian
ali@ppsrealty.ca