The Top 4 Real Estate Stories of 2016
2016 was a year of many more highs than lows in the real estate market and also a year of many unique occurrences. Here are our top four picks for real estate newsmakers and shakers.
Toronto and Vancouver Hot Spots
It’s no shocker that the real estate market around Toronto, the GTA, and Simcoe County has been red hot throughout most of 2016. Vancouver and Toronto have become hot spots for foreign investment with investors snagging easily rentable income properties. These two cities are also ever popular central hubs for immigration with Toronto seeing record immigration rates through 2016 and growth in the first-time buyer population. The new build inventory through the GTA was just 15,100 in August 2016, about half compared to the 31,150 from 10 years ago (source: The Building Industry and Land Development Association). Sparse development land in these soaring metropolises, an ever growing population, and a shortage of newly built homes are the driving forces behind the big city market surge.
Mortgage Rule Change
In an effort to correct the skyrocketing Toronto and Vancouver markets, the Canadian government implemented new mortgage regulations for home buyers. The mortgage “stress test” ensures borrowers are not taking on a larger mortgage than their finances can handle if interest rates were to rise, making sure they meet at least the Bank of Canada’s average interest rate which is approximately two per cent higher than most other lenders. The test is now applied to all applicants whereas it was only applied to those with a five to 20 per cent down payment in the past. The test also ensures borrowers will not be spending more than 39 per cent of their income on home-carrying costs (mortgage, hydro, taxes) or more than 44 per cent on all other total debts (auto financing, credit lender loans). The implementation of these new regulations in October gave borrowers a reality check and simmered the real estate boom.
We’re Moving to Canada, eh.
Trump vs. Hilary…who could forget about one of the most renowned presidential elections in the history of the U.S.? With Americans growing concerned over the fate of their country, talk of moving north to Canada became the buzz. As results poured in on election night and Donald Trump became the clear winner, Google Trends reported web searches for “Canada immigration” and “Canadian citizenship” were up 4,800 and 4,550 per cent respectively. The Canadian immigration website experienced an unheard of number of visits leading to a website crash. When asked about his opinion on immigration to Canada on a post Trump win, Prime Minister Justin Trudeau was quoted as saying “Cape Breton is lovely all times of year,” which also lead to the creation of a website titled “Cape Breton if Donald Trump Wins,” (www.cbiftrumpwins.com). The Economist Intelligence Unit’s global liveability study looks at many factors that create a desirable place of residency including safety, health care, education, environment and infrastructure. The 2016 study ranked Calgary as #5, Toronto as #4 and Vancouver as #3. Who wouldn’t want to live in Canada, the “true North strong and free”?
Crazy Bidding Wars
Shortage of inventory and increasing population… supply and demand…the top factors for driving home prices higher than ever. Fighting for that home of your dreams has proven exceptionally tough with an increase in frequent bidding wars. In November of 2016, one home in the Vaughan area sold for more than $400,000 over the listed price! In original condition since 1984, the home sold for $1.1 million. Talk to The Faris Team for the best advice on how to come out on the winning end of a bidding war.
With so many history-making moments in 2016 and a continuing real estate peak, 2017 is sure to prove just as exciting!