CREA Housing Predictions for 2016 and Federal Government Minimum Increases

Canada CREA Housing Predictions 2016

What are the Housing Predictions for 2016 in Toronto and Beyond?

In the New Year, the Canadian federal government will hike the minimum down payment on the portion of new insured mortgages above $500,000 from five to ten per cent, starting Feb. 15 The portion that’s less than $500,000 will stay at five per cent.

Minister of Finance Bill Morneau says the change addresses “vulnerabilities in certain housing markets, while not overburdening other regions.” Changes in the minimum down payment was previously a concern for buyers in Provinces such as Alberta, where local economies heavily rely on resources. With the change only affecting property over $500,000 affordability would not be a primary concern, as the cost of housing in these regions (Alberta) pales in comparison to Toronto and Vancouver. Furthermore, a buyer living in a city outside of the GTA or Vancouver who has the financial means to afford a home over half a million dollars isn’t worried about an additional five per cent down on the purchase of a home.

The goal of raising the minimum down payment is to stabilize owner’s equity in a home, in the event there is a sudden increase in mortgage rates. It’s also intended to cool hot markets like Toronto and Vancouver, without a severe correction or crash. If we consider the average amount of debt a household in Canada carries, this move can act as a safety net for the country’s economy and would be in the best interest of homebuyers.
Interest rates are predicted to rise according to the CREA. However, the increase will occur in late 2016. With the mortgage rates remaining low, sales are expected to stay healthy throughout early to mid-2016.

The CREA announced that national sales are expected to reach 498,600 in 2016; a 1.1 per cent drop from 2015, as sales activity in British Columbia and Ontario is expected to moderate and housing market conditions slow in Alberta due to changes in minimum down payment
The national average price is predicted to increase by 1.4 per cent to $448,700 in 2016. Price gains next year are expected to be strongest in Ontario due to an ongoing shortage of listings for single-family homes, along with high demand for them, in and around the GTA.

By |2015-12-22T16:31:46+00:00December 22nd, 2015|Toronto Tenant/Landlord Relations|Comments Off on CREA Housing Predictions for 2016 and Federal Government Minimum Increases
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