Last Updated on 21/07/2024 by wccexam Desk
With many Canadian homeowners facing a sharp rise in mortgage payments, a growing number have decided to list their homes for sale in Toronto. This surge in available properties has resulted in the highest number of housing units for sale in the city in more than a decade.
The trend is especially pronounced in Toronto’s condominium market, where inventory is at a historic high. Fueling this surge are homeowners and investors who bought houses and apartments five years ago at record-low mortgage rates, aiming to capitalize on the city’s lucrative rental market. However, as these mortgages come up for renewal in an interest rate environment starkly different from five years ago, many homeowners are finding their mortgage payments doubling under current rates.
The current supply of homes for sale in Toronto would typically take more than five months to sell, indicating a buyers’ market with limited demand.According to the Toronto Regional Real Estate Board, listings have risen by almost 25% in the first three months of 2024 compared to the same period a year ago, while sales have increased by only 5.3%.
Real estate consultants warn that rising inventories coupled with anemic sales show a high degree of stress in Canada’s biggest property market. They suggest that either a string of defaults or a significant price correction is imminent.
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John Lusink, president of Right at Home Realty, Canada’s largest independent housing brokerage firm, forecasts that Toronto condo prices might drop by 10% by the end of 2024. However, some homeowners are reluctant to lower asking prices and book losses on their investments, at least for now.
As the Bank of Canada considers another rate cut on July 24, economists believe that even a 100-basis-point reduction in the overnight rate would have a muted impact on mortgage rates coming up for renewal. Five-year fixed rates are instead linked to long-term bond yields, which might hover in the 3% to 4% range.