WILD: GTA housing market gradually cooling
For the third month in a row, home sales across the GTA dipped in June.
Not so much that buyers should expect to see many bargains in what has been a gradually cooling market.
We’re still a long way from a buyer’s market and bidding wars and multiple offers remain part of the landscape.
But it’s worth taking a look both at what’s currently happening with sales and where we may be headed for those planning to buy any time soon.
The ongoing COVID pandemic, pent-up demand, low interest rates and a housing supply shortage were among the factors that fueled red-hot market activity early in the New Year and peaked at record levels in March.
That’s when the cooling began.
Home sales, while still brisk in April at 13,636 sales, were down almost 2,000 from the high the previous month.
In May, sales dropped another 1,700 to 11,930.
And in June, a more gradual flattening led to 11,106 sales, a dip of less than a thousand.
June was also the first month under the federal government’s new stricter mortgage stress test, which reduced the amount of money buyers can borrow by about 5% and particularly impacted first time buyers.
In a nutshell, buyers must now prove they can carry a mortgage payment that’s significantly higher than posted bank rates (at 5.25% in fact).
That new qualifying rate was intended partly to tap the brakes on the overheated market and partly to ensure buyers won’t be in over their heads should inflation creep into the market, which is likely at some point down the road.