Predictions on how the new mortgage rules will affect the Toronto Market

Our Finance Minister Bill Morneau announced on October 17 a new ‘stress test’ on all new insured mortgages and stricter tax exemptions laws for real estate in Canada.  This was put into place to prevent consumers from taking on too much debt and to also calm down our very active housing market.


It’s too early to tell what is going to happen with house prices and the market as a whole.  But as of September, the average cost of a home is 20% more expensive than homes a year ago.  


What I predict will happen

  • A lot of first time home buyers that have less than a 20% downpayment will be pushed out of the market
  • Those first time home buyers that can’t buy will add even more fuel to the already heated condo rental market
  • The price point of $600,000 to $800,000 will have a huge pool of buyers as buyers will have to shift to their lower budget
  • The 2 bedroom condos and townhouse market will see even fiercer competition among buyers as this type of inventory will become more attractive as their dreams of a freehold home will be put on hold for a little while

We probably won’t see any major effects until Q2 of 2017 as Q1 of 2017 is usually a very slow time for the market and will be hard to gauge the effects of the new rules.

As of right now the current Toronto market is still very strong.  Here are some October numbers :

  • Sales for October rose 11.5% over the same time last year
  • Sales for semi-detached homes dropped 3.5% due to a lack of listings
  • The average home prices in October for Toronto was $762,975

Given all of this, Toronto is still a very safe place to invest your money and the world has been seeing this.  Prices just keep on climbing.  When it will stop, no one knows, even if they pretend to tell you otherwise.

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