Wondering whether rising interest rates and the new mortgage rules are going to blow the froth off Canada’s hottest real estate market? The test for that may be what happens to a new Toronto listing that has locals talking.
The two-bedroom, one bathroom rowhouse is on the market for an asking price of just under $750,000 in the coveted neighbourhood of Trinity-Bellwoods, where you’d be lucky to snatch a single-family home for under $1 million. It’s a stone’s throw from the lovely Trinity-Bellwoods Park and just a block away from the trendy Queen Street West.
The charms, though, end there.
“This two-storey home just needs TLC, renovations and remodelling to become your dream home!” reads the listing.
But many people who viewed the property on social media had a different take.
“Exactly how many people were murdered there?” remarked another twitter user.
“I can actually smell that through my screen,” wrote another.
Whether the property commands the listing’s asking price may tell us a lot about the direction of the housing market in Toronto and, perhaps, the rest of Canada, too.
The average national home price reached just over $496,500 in December, up 5.7 per cent from a year earlier, data released on Monday by the Canadian Real Estate Association show. And home sales were up a healthy 4.1 per cent.
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Six-in-10 local markets also saw a surge in activity in December with the Greater Toronto Area, Edmonton, Calgary, the Fraser Valley, Vancouver Island, Hamilton-Burlington and Winnipeg leading the country.
But some of that activity likely reflected buyers piling into the market to avoid the impact of the new mortgage rules that took effect Jan. 1. The regulations, which impose a stress test on borrowers with large down payments who do not require mortgage insurance, will likely force many house-hunters this year to settle for smaller homes than they would have qualified for under the previous regime.
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Toronto seemed to benefit significantly from this pull-forward effect. Home sales jumped by over eight per cent in December compared to November, rebounding strongly from the mid-year lull, when Ontario adopted a foreign homebuyers’ tax and other market-cooling measures.
Whether that momentum lasts into 2018, however, remains to be seen.
If the demand was up in Toronto, so were new listings, which left the market balance “relatively loose,” BMO economist Robert Kavcic wrote in a note to clients on Monday. The picture is similar in Vancouver.
And “below the surface,” both cities are seeing a “rift” between the demand for high-end detached homes, which is cooling, and a red-hot condo market.
The January home sales report will be the first snapshot of the housing market after the implementation of the stricter mortgage rules. Toronto, in particular, where uninsured mortgages seem to make up a “relatively large” share of the market, according to TD economist Rishi Sondhi, might turn out to be the key barometer.
– With files from the Canadian Press