You might be wondering why we would put together a ‘report’ on a year that has barely started. But 2018 is unlike most other years for real estate in Markham and the GTA.
First, 2017 saw the voting in of many government initiatives aimed at keeping the Ontario real estate market in good shape for both buyers and sellers. And at least one of those initiatives took effect on January 1, 2018.
So let’s take a look at what’s been happening in real estate so far in 2018.
Average Home Prices are Up
Earlier in January, the Toronto Real Estate Board reported that average prices for homes of all types across the GTA were up in 2017 to $822,681, representing a 12.7% increase over 2016.
Closer to home, average prices for homes of all types in Markham were up about 11% in 2017 versus 2016. The story is similarly good across York Region, which saw a 12.12% increase in average prices for all types of homes.
New Mortgage Rules Take Effect
While 2017 saw the Ontario Government introduce legislation to keep the real estate market in check, it’s the federal government’s turn in 2018. On January 1, their new mortgage rules came into effect.
The new rules require all uninsured mortgage borrowers to qualify for their mortgage against the Bank of Canada’s 5-year benchmark rate, or at their contract mortgage rate plus 2%, instead of simply qualifying for current mortgage rates.
With the 5-year benchmark rate usually about 1.5% above current rates, it means mortgage borrowers need to qualify for rates that are higher than the rates they will pay. The idea behind legislation is to make sure borrowers are able to pay if mortgage rates go up in the future.
Bank of Canada Increases Key Interest Rate
In mid-January, the Bank of Canada announced an increase in its key lending rate, to 1.25% from 1%. The key rate affects the mortgage rates that home buyers get from financial institutions.
While an upward movement in interest rates might seem like not the best news, it’s important to remember that rates are coming off near-record lows that lasted throughout 2015, 2016 and 2017. Historically, mortgage interest rates remain incredibly low, including being less than a third of what they were 10 years ago.
Condominium Markets Enjoying a Boom
If you were impressed by the sale price increases of homes in Markham, York Region and the GTA, prepare to be even more impressed by the price increases for condominium apartments.
In 2017, average prices for condos were up in both Markham and York Region by just short of 15% versus 2016. The local numbers even outperform the increases in the rest of the GTA, which saw a condo price increase of 14.36% in 2017.
So why are condominium sale prices outperforming other types of real estate here and across the GTA? They are a great way for first-time buyers to get into the real estate market at prices that are significantly lower than those for a detached or semi-detached home.
And new condominium developments in both downtown Toronto and downtown Markham give people a chance to live close to lots of urban amenities, including shops, restaurants and community centres that can take longer to get to from housing subdivisions.
There you have it. There’s been lots of real estate news so far in 2018. Regardless of what the news brings, the fundamentals of finding the right home and getting the best price for the house you’re in remain the same. It all starts with finding the best realtor for your needs. Call us here at The Tar Team to learn more.