The fall market is now back in full swing and buyers appear to be more aggressive. Many of the listings I am following are getting multiple offers and/or selling with only 1 or 2 days on the market. I expect most new listings moving forward to start requesting bidding dates, instead of accepting offers anytime.
The change in attitude appears to be happening very quickly and I expect September’s sales numbers to spike up dramatically in comparison to the past three months. The appreciation year-over-year will be a statistic to watch. We will likely see a more positive media cycle in terms of Toronto real estate news in October. This will likely give buyers more confidence in a market rebound and continue the momentum the market it starting to see.
In the early stages, where I am not seeing more quality inventory is in the condo market. A few interesting lofts here and there, but overall units in quality buildings are few and far between. This may be because high rents are covering carrying costs and investors see no reason to sell. Also condo owners may now be more risk adverse and fine will living smaller.
Where is the market heading and is this a false bottom? In the short-term, the market is heading back up. What could head-off momentum is the government instituting new mortgage qualification parameters for uninsured mortgages (over 20% down). I don’t believe this is a false bottom, but more likely the beginning of a rebalancing.
Another interest rate hike in November would also take away some purchasing power. An interest rate hike this year is unlikely, while further tightening on mortgage qualification is a real possibility. There are many interest groups, including organizations I pay dues too, who are lobbying against tougher mortgage qualification. It is becoming a political football, but I expect the new ‘stress test’ for uninsured mortgages to be instituted at some point. The logic is sound during a period of advancing interest rates.
-Nick, Sept. 15/2017
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