July’s Toronto Housing Market Was A Busy One Why?

 

It was a curious July as I experienced one of the busiest I have had in years.  It seems that home buyers did not take a holiday and were continuing to purchase a home.

Buyers were continuing calling me to get out and show them condos as well as houses. These were clients who in the spring we toured a number of properties, who at the end May and early June express to me that the were gong to take a break for summer.    Within two weeks from that conversation, I was once again called to actively continue finding a property in July.

We all know that nothing happens in isolation and there was a key factor in buyer motivation.     We all heard in June that the CMHC were taking an active step to cool our housing market.   I am sure we all heard in the news that the CMHC had informed banks and large lenders that it was capping guarantees on mortgage-backed securities.

What does this means to home buyers? With the tightening of credit conditions the CMHC will only be allowing banks to assume $350 million each month.   Most like we will see a jump in mortgage rates this fall of between 0.2 to 0.65 percentage points.  How this will translate to the consumer is an increase in mortgage rates offered by the banks.   So those buyers who had pre-approved rates from their lenders, certainly wanted to purchase at their lower rates as opposed to renewing their pre-approval  in September or October at a higher interest rate.

Let me give you the big picture to illustrate the unfolding housing situation.   Jim Flaherty said this year the CMHC can have 85 Billion in mortgage-backed securities for the year and as of July the banks had already used 66 Billion.

Toronto Real Estate Board

  • 7,338 sales in July 2012with July 2013 showing  8,544 sales – Up by 16.4%
  •  $475,523 average selling price July 2012 with July 2013 coming in at $513,246 – Up by 7.9%
  • July 2012 it took an average of 26 days to sell a home where July of this year 26 days…basically the same

 

Canadian Real Estate Association

  • July 2013 home sales were up by 9.4% from July of 2012
  • The national average home sale price was up 8.4% year over year based upon July

 

Sales were up in all markets, however the key driver to most of this summer activity was clearly generated by the CMHC changes.  I would expect to see a similar trend in August, with buyers looking to purchase before an anticipated rate hike.