Homeowners cashing out of hot housing markets
Some sellers are cashing out of Canada’s hot housing markets as property values soar to new heights — while others may have already missed their chance.
In the Greater Toronto Area (GTA), homeowners who previously had no plans to move are packing up once they realize how much their property’s have appreciated in value.
“One client purchased a home for $440,000 one year ago, sold it for just over $600,000 this year without putting barely any money into it,” said Durham Region realtor Rich Gordon. “They did pretty well.”
“They’re living mortgage-free after a couple years.”
In Toronto, the average price of a detached home hit nearly $1.3 million in September, up 18.3 per cent from a year before; Vancouver has seen a year-over-year gain of 28.5 per cent in house prices.
A Surrey, B.C. family made headlines in June for selling their home to travel the world for a year. The family’s five-bedroom home sold at nearly $1.3 million, which was over asking.
“We were very fortunate that our neighbourhood is booming,” Natalie Chen told Global News at the time.
“Houses are going for over asking in less than a week, and we kind of just decided to take advantage of that.”
Now or never?
Warning bells are sounding that the markets could be in for a crash.
A recent report from the National bank said Vancouver real estate values are likely to drop by 10 to 20 per cent over the next year. The prediction for Toronto was more modest, at 3 per cent.
There are a few factors at play.
First, there was the introduction of B.C.’s new 15 per cent tax on foreign buyers, which prompted a rapid slowdown in sales.
Then in October, new federal mortgage rules were announced and quickly implemented, intended to stabilize the country’s housing market. The rules were predicted to particularly impact first-time home buyers, and experts have said mortgage rates could rise across the board.
The changes are leaving some homeowners on edge in Vancouver.
“Some (sellers) are fearful,” said James Garbutt, a realtor in the Vancouver area.
“When you compare it to the peak of the madness in April, we’re off — for certain products — by about 20 per cent.”
Investment properties and those at the higher price points are hurting the most, Garbutt said, while family homes and entry-level residences are still moving.
“The homes that were inflated the most, got the most attention and climbed the most at the peak of spring, are also the ones starting to get hit the most,” Garbutt said.
He’s advising people to sit tight.
“I think that those that have to sell, have to sell. Those that don’t, hang on ’til next year.”
Back in Ontario, Gordon isn’t exactly convinced that house prices are set to crash, but agrees there could be a pricing “plateau” in Ontario’s future.
“I don’t see a quick cool-down anytime soon.”
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