Sunday Dock Read – Condo Update, Liberals Legislation, Indigenous People Lead Out West
Condo Update!
A condo buying frenzy swept most major Canadian cities during the peak of the pandemic around 2022. It was a huge seller’s market in most places with a population over 500,000, most notably Toronto. Simply not enough inventory to keep up with buyer demand sent prices to the moon.
Now, the situation has flipped, with sales slowing down across the board.
Condo sales have cooled in the Greater Toronto Area, with new listings soaring 39.5 per cent in the third quarter compared to last year, while sales dropped nearly 15 per cent over the same period, according to the Toronto Regional Real Estate Board.
Multiple luxury Toronto condos have sold at losses in well into the 6 figures. My industry contacts call me daily with units they are looking to sell at discounts I’ve never seen in my 18-year career
So, the entrepreneur in me must ask. Is it better to Buy or Rent right now?
With increased supply outpacing demand, prices are drastically lower in all markets, which gives buyers a massive edge.
It could be time to take advantage of the buyer’s market. Let’s be honest with rates where they are and you’re looking at real estate from a long-term time horizon, it’s a phenomenal investment.
Currently Buyers don’t have to rush into snapping up property, unlike a few years ago, when real estate prices and demand skyrocketed. Buyers have time and options and you’ve lots of product to shop.
With Access to Over 100 Lenders. Regardless of the Type of Property.
We Tailor Financing To Your Needs and Lifestyle.
Let’s chat – Matt@huronmortgages.ca
Guelph News!
Check out this beautiful home built in 1827! Sold for just over $3.5 million.
https://www.theglobeandmail.com/real-estate/gallery-log-home-built-in-1827-with-70-acres-of-land-near-guelph-ont/ or here
Liberals Legislation – New Home Buyers – More Changes
Canadians will soon have more options for mortgage insurance, making it easier for first-time buyers to enter the housing market. Starting December 15, the price cap for insured mortgages will rise from $1 million to $1.5 million. First-time buyers can also get insured mortgages with a 30-year repayment period for any type of home, including preconstruction homes. However, not all investors will qualify.
This change comes as the federal government aims to make housing more affordable for younger Canadians. Following the announcement on September 16, mortgage brokers and realtors have reported a surge in inquiries from potential buyers. While home sales have been slow due to rising interest rates since early 2022, recent rate cuts by the Bank of Canada haven’t significantly boosted activity, as mortgage rates remain high.
The new mortgage rules will help reduce down payment and cash flow challenges—but there’s a catch.
The new federal mortgage rules could help homebuyers access lower rates and make smaller payments over a longer period, but they also allow borrowers to take on more debt and pay more interest.
For example, if a buyer purchases a home for $649,096—the average price in Canada as of August—with a 10% down payment and a competitive fixed rate of 4.09%, their monthly payment would be $3,198 on a 25-year amortization. However, if they choose a 30-year amortization, their payment would drop to $2,895, saving them $303 a month. The downside is that by extending the mortgage term, they’d end up paying significantly more in interest. With a 30-year term, the total interest would amount to $439,827, which is nearly $83,000 more than a 25-year mortgage.
Taking 30 years instead of 25 years to pay off an average mortgage can have a significant impact. The calculations are based on a home price of $649,096 (the national average in Canada as of August 2024), with a 10% down payment and a five-year fixed mortgage rate of 4.09% (the best rate I have available). Keep in mind that these calculations assume borrowers keep the same interest rate for the entire mortgage term, rather than renegotiating it every few years, as would typically happen in reality.
Instead of paying $357,000 of interest over the life of the mortgage, the new guidelines have the borrower paying $429,000 or just over $82,000 difference.
Let’s compare that with what’s currently happening in Vancouver
2,600 new homes in Vancouver will be sold at 60% of their market value.
Up to 2,600 new housing units at the Heather Lands in Vancouver will be sold at 60% of market value, as announced by the province, the city, and the Musqueam, Squamish, and Tsleil-Waututh First Nations.
This 8.5-hectare site is located on Heather Street between West 33rd and West 37th Avenue, just west of Queen Elizabeth Park.
The project is being promoted as an “attainable housing initiative,” where the province will provide 40% of the financing for the units, while buyers will cover the remaining 60%. The units will be sold under a 99-year strata leasehold from the First Nations.
The Heather Lands initiative is designed for middle-income homebuyers who meet the following criteria:
- Must be citizens or permanent residents of Canada. At least one buyer in the household must have lived in the province for the 24 months before the purchase.
- Must be at least 18 years old.
- Buyers cannot have any ownership interest in other properties worldwide at the time of closing.
- Must have a pre-qualified mortgage and a minimum deposit of 5% of the 60% purchase price.
- The home must be used as the principal residence.
The Project manager emphasized that the 40% funding from the province is not a grant or ongoing subsidy; it is financing that must be repaid after 25 years or upon selling the property. He also stated that there will be strict oversight to prevent property speculation, flipping, or rule violations.
This is truly an innovative and unique approach brought forth by the Indigenous people.
The irony of the indigenous people leading the resolve in home affordability is not lost me at all.
I wholeheartedly hope it works out.
HuronMortgages.ca is open daily at at 8am. Everything is always confidential so reach out and we can get started on a very mortgage evaluation to ensure you are in the best financial situation. matt@huronmortgages.ca
Matt Monks Level 2 M#M18002043
Thanks For Reading!
Have Questions?
Contact us today to schedule your personalized consultation and take the first step towards turning your homeownership dreams into reality or look into better investing opportunities by phone at 519.497.3667 or by email at Matt@HuronMortgages.ca.
Mathew Monks, Mortgage Agent Level 2
Licence #M18002043
Mortgage Intelligence FSRA
Licence #10428
