Real Estate market GTA, Halton, Burlington, Oakville – 2018
Mortgage stress test a factor as house prices forecasted for 2018
Stricter criteria to follow with mortgage application
If you’re looking to move up into a bigger home in the GTA, it will be harder to do, according to the Royal LePage Market Survey Forecast.
Many home buyers are expected to be impacted by the mortgage financing stress test, which will come into effect on Jan. 1. Issued by the Office of the Superintendent of Financial Institutions, the stress test requires existing and prospective homeowners to meet stricter criteria when applying for a mortgage or new financing.
Shawn Zigelstein, a sales rep for Royal LePage Your Community Realty, believes the stress test could cause affordability to drop 20 per cent.
“For someone today who could afford a property and get qualified for a million dollars, suddenly, that price will change down to about $800,000 give or take,” he explained. “I think that’s going to be the biggest change for a lot of people.”
Zigelstein doesn’t see that test causing that big of a change on first-time home buyers, because they aren’t upgrading.
Re/Max also conducted a Housing Market Outlook Report, where it expects the average home price in Brampton to rise 3.5 per cent, to $732,126; and the average home price in Mississauga to decrease 2.5 per cent to $711,322.
According to their study, Mississauga is among the municipalities that experienced increased demand from buyers looking to purchase homes before the new stress test regulations take effect.
With stricter criteria to follow, ReMax believes a “temporary reduction in consumer confidence may further stagnate price growth as potential buyers and sellers take a wait-and-see approach.”
As for millennials who show aspirations of getting into home ownership, like their parents, Zigelstein believes it’s becoming increasingly difficult for them to do.
“If we look at the last 10 years, comparing (house prices) to salary and wages, they have not gone up by the same levels,” he said.