Toronto home sales drop in January as new mortgage rules hit. Did you know that the new mortgage rules could wipe out up to 12 percent of Toronto homebuyers this year?
Hi, I'm Rosalin Smith-Carr here at Johnston Daniel Real estate in Toronto.
Today I want to share with you the serious impact that the new mortgage rules, new stress rules will have on home sellers as well as on home buyers in Toronto.
Effective January 2018 the new stress test rules require that homebuyers prove they could still afford the mortgage payments even if interest rates were raised by two percentage points.
This will cause those buyers to settle for smaller homes put more money down or delay buying. These new January 2018 rules apply even to mortgage borrowers who have down payments of 20% or more of the purchase price.
So, if you are a seller in 2018 it really behooves you to consider these new government rules as they have in effect reduced the amount of money that most buyers are able to borrow.
In order to succeed as a seller now you're strongly advised to follow these steps:
- Be realistic about your asking price.
- Despite some inconvenience to you do make showings easy for buyers.
- Do throw in some items that are not that important to you in order to sweeten the pie.
Here's a very good example of how some sellers have been impacted by these new rules. In April 2017 a central Toronto home came on the market listed approximately 1.3 million in that range.
That was April of 2017.
Over the summer months, the seller was forced to adjust the asking price on two different occasions down to 1.1 million.
Do you know that that home still on the market today? Now at an asking price of just under one million dollars.
This shows how very important it is to get the asking price right from day one so that the buyers won't go elsewhere.
But it's not all doom and gloom.
According to Bank of Montreal economist Benjamin Rietzes, he says that the impact of the new
rules it's not likely to derail the housing market. He says it would take higher interest rates as well to do that.
If you have any questions or concerns about this market I'd love to hear from you so text
me, email or call me.
Thanks for watching