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TREB Market Watch, October 2015 — Are Mortgage Rates on the Rise?

Are Mortgage Rates in Canada on the Rise?

In an announcement made last week by Toronto Real Estate Board President Mark McClean, GTA home sales showed the best results on record to date. With 8,804 home sales reported through TREB’s MLS® system, October was a favourable month for Greater Toronto Area REALTORS®.


Additionally, The MLS® Home Price Index (HPI) Composite Benchmark was up by 10.3 per cent year over year in October. Over the same period, the average selling price for all home types combined was up by 7.3 per cent to $630,876. Price growth continued to be driven by the low-rise market segments.

Source: Toronto Real Estate Board

Although sales are robust and predicted to climb in the upcoming year, some believe that the province-wide municipal land transfer tax that the Wynne government plans to introduce could affect the market. When asked their opinions on the new tax, the vast majority of Ontario residents surveyed opposed it.

In mortgage-related news, Stats Canada released new data on the labour force, which showed improvement during the month of October. A total of 44,000 new jobs were created, the majority of which, however, were part-time. There was also a substantial increase in employment in the manufacturing sector, which shows hope for the state of our Loonie. If this trend continues, we could head toward a more sustainable economy. How does this all affect mortgage rates? It is predicted it is less likely that we will experience another cut in the Bank of Canada’s lending rate, and mortgage rates will eventually rise. Last week, five-year fixed mortgage rates increased across the board and range between 2.54% to 2.69%. There is no need to worry, as there is no sign of a significant spike, just a more optimistic outlook for our economy. Another contributing factor to a change in rates is what our neighbours to the south are planning—it’s a matter of time before their rates go up, and inevitably, we must follow suit.

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Election Day 2015


Election Day 2015–Who will win?



Canada Federal Election 2015

Photo Credit: Mike Sturk, Reuters

After a 78-day-long campaign, Election Day 2015 is finally here and registered voters from all over Canada are heading to the polls to take part in one of the most significant federal elections our Country has seen. It all comes down to today—Elections are historic, but they are also symbolic. They represent the importance of leadership, economic health, and foreign policy to Canadians. The primary question on everyone’s minds today, however, is “Will our country still be governed by a Harper Government? If not, who will take over?”

This is the first time in history that three major parties have been in the lead at some point during the seemingly gruelling campaign. At the local level, however, it is difficult to predict who will come out on top. The popularity of a candidate in one particular riding can distort our perception of what the actual outcome will be.

Throughout the federal electoral campaign, a major topic of discussion was the federal budget and the future of the economy. What was interesting, however, was the role the housing sector played in the campaign. Although there were discussions of about affordable housing and both Liberals and Conservatives vowed to boost RRSP withdrawal limits for new homebuyers, real estate could have received more coverage. Furthermore, having access to more RRSP funds isn’t guaranteed to solve affordability—the program could merely increase the number of people bidding on the same million dollar homes, creating a higher demand while decreasing supply. To add to that, the if Bank of Canada stays true to its word of not drastically increasing the key lending rate, it’s difficult to picture the housing market cooling down.  Just about anything is possible, though.

Considering the Canadian real estate market is not only a popular discussion at dinner tables and around water coolers, it has also seen historical moments throughout the campaign, especially in cities such as Vancouver and Toronto. The Canadian housing sector amounts to $4 trillion of Canadians’ wealth, which equates to around seven per cent of the GDP. As a cornerstone of our economy’s health, and a leading driver for growth over the past several years, it not only kept us afloat during the Great Recession, it literally pulled us out of it, while other sectors such as energy, manufacturing and exports deteriorated.

As real estate professionals, we need to remember that home ownership remains a reliable investment, not only financially, but for our family and future generations of Canadians. Even amid turbulence in other sectors, it’s a critical foundation that Canadians can build their savings upon.

So who will win the Canadian Federal Election?  Canadians will.  The past 78 days have been intense, and ultimately it is up to us to decide what vision of Canada has been the most convincing. If you have not already done so, please head to your polling station and make your vote count. Be prepared, as there are reports of very long lines and also remember to bring appropriate ID and proof of address. For more information on how to vote, visit the Elections Canada website.

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6 Facts About the Toronto Real Estate Market

Photo Credit:  Kevin Van Paassen

Photo Credit: Kevin Van Paassen

  1. 56,000 condos
    At the end of 2014, there were more than 56,000 condos under construction in Toronto. That’s far more than what’s being built in other cities with a greater population like Chicago, Los Angeles, or New York. As a comparison, during most of the 1990s the city hovered around 10,000 condo starts.
  2. Almost 3,000 unsold condo units
    In May, CMHC reported 2,837 unsold condo units. An all-time high, the closest we’ve come to that number was in the early 90’s when the condo market was out of control. Despite the high number of unsold units, sales for the fancy high-rise units continue to increase. Condo sales also help stabilize the market by offering an affordable entry point for first-time buyers.
  3. $1 million average price
    In February Toronto reached a milestone that had previously only been reserved for some of the most expensive cities on the planet. The average price for a detached home in the city limits surpassed $1 million. In June, that number increased to $1.052 million. The increase in demand for luxury homes, namely houses sold at $3 million or more has contributed to this number. Buyers have not been discouraged by this, as bidding wars are still very common.
  4. 50% in five years
    In 2010 the average price for a Toronto property (including condos) was hovering around $430,000. In just five years, that average has rocketed up more than 50%, recently almost hitting $650,000.The last time the market moved that quickly was back in the late 1980s, with the average price hitting a peak of $273,000 in 1989. The average value didn’t top $270,000 again until 2004.
  5. 39,000
    The number of sales in the Toronto market has more than tripled since hitting a low of 26,700 transactions in 1990, right after the 1989 bubble popped.That’s created a lot of jobs selling houses. According to the Toronto Real Estate Board, there are currently more than 39,000 realtors currently working in the city. That’s one realtor for every 140 residents.
  6. 8.9 times
    According to Statistics Canada, the average Toronto family earned $72,830 in 2013, the most recent year for which statistics are available. During May 2015, the average price of real estate in the city was $649,599. That puts the price-to-income ratio at an eye-popping 8.9 times, which is a record high.


Canadian Mortgage and Housing Corporation
Canadian Newswire:
The Motley Fool:
Toronto Real Estate Board:

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Bank of Canada Rate Cut and Loonie at 5-Year Low — What’s in Store for Toronto’s Housing Market?

Last week the Bank of Canada reduced its Key Lending Rate for the second time this year. Down to 0.5 per cent from .75 per cent, this move was in response to our ailing economy along with the slump in oil prices. With large banks and lenders preparing to follow suit, this leaves us to wonder what effects this will have on Canadian Housing Markets—particularly red-hot markets located in prime cities such as Vancouver and Toronto. The rate cut has prompted mixed opinions from industry professionals, with some saying that this move is merely adding fuel to the fire while others believe that it will contribute to the healthy expansion of markets.

Lower interest rates will inevitably boost bidding wars in Toronto, with buyers now having access to additional funds. The city’s population will continue to grow along with the demand for real estate and, in theory, all the factors mentioned will cause housing prices to increase, resulting in a strong real estate market.


It can be, depending on who you ask. Lower interest rates could also mean a flurry of borrowing, driving consumers further into debt. The price to income ratio of housing might reach a point that no longer makes sense and the only thing in sight will be a correction.

Perhaps … Just about anything is possible.

property-management-toronto-mortgage rates

No matter how you slice it, what goes up must come down, or at least stop—“How hard or soft of a landing are we in for and when will it occur?” Are the questions. We can follow reports and predictions from the top economists, however, we will never know for certain. What we do know is that Toronto and Vancouver didn’t magically fall into the spotlight. Although housing markets in both cities have been scrutinized by economists from across the globe and regarded to be overvalued by up to 20 per cent, both Toronto and Vancouver are supported by strong economic conditions, cultural diversity and population growth. Additionally, the Loonie being at a 5-year low will boost tourism–an industry which provides a significant amount of fuel for local economies in both cities. Assuming that none of the aforementioned will come to screeching halt, it safe to say that the prices of real estate in Toronto and Vancouver aren’t going to decline anytime soon and the likelihood of a crash or even a moderate correction is slim to none.

On a national basis, however, we can expect declines in the real estate markets located in cities where local economies were highly dependent on specific sectors, such as oil or even construction. While those cities are under pressure, the Canadian real estate market has been in great shape so far this year and is expected to stay on track.

No matter what city you’re located in, if you are considering taking advantage of ultra-low mortgage rates, it’s best to remember to calculate an additional 2—2.5 per cent into your monthly housing budget. This will act as a safety net and protect you against radical changes, especially for fixed term borrowers when renewal time rolls around.



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Toronto’s Hot Real Estate Market Expected to Surge if Bank of Canada Cuts Rates Again

bank of canada lower interestIf you think housing prices in Toronto are high now, brace yourselves.  Industry experts and economists expect them to surge as Canada’s biggest city saw another record month in June. Last week, newly appointed Toronto Real Estate Board President Mark McLean announced that GTA REALTORS® reported 11,992 sales through TREB’s MLS® System in June 2015.  This number represents an increase of 18.4 per cent compared to the result for June 2014—which paled at only 10,132 sales.

Overall, selling prices for all home types across the city were significantly higher when compared to the numbers for June 2014.  Last month, the MLS® Home Price Index (HPI) Composite Benchmark was up by 8.9 per for the same period in 2014, while the average selling price was up by 12.3 per cent in a year-by-year comparison, to $639,184.


According GTA REALTORS®, “High-end homes have accounted for a greater share of overall transactions this year compared to last year.”  This is a key factor in the rate difference between the average price and the HPI composite benchmark, which is regarded to be a more accurate system of measuring Toronto Real Estate Market conditions.

Following its upward trend, the average price of a detached home in Toronto was at an astounding $1.05 million, a 14.2 surge over June of 2014.  The surrounding 905 area also saw an increase of 15 per cent to $738,000.

Toronto and Vancouver represent Canada’s strongest markets, and if the Bank of Canada cuts its rates again, we can definitely expect another boost in sales.  Despite low mortgage rates, the affordability of housing, particularly detached homes remains out of reach for many in these cities.  As active listings are still far and few in between, bidding wars for determined buyers show no sign of stopping—nor does the strong upward climb of our robust market.

Mr. McLean could not have started his new career at a better time.  With the Pan Am Games in full swing and our city receiving international recognition and accolades, it is clear to local residents that Toronto and its surrounding area is home to a wealth of culture and an economy with a very promising future.


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