Its very challenging to predict what's ahead for the housing market. What we do know is the market is rebounding with strong pent up demand as we move into summer. Some of the larger percentage gains were due to the declines in March and April- but we are encouraged by the inquiries and the amount of buyers out there looking to purchase. As many buyers return to the market, they are finding a drastic reduction in the number of listings.
Our Mississauga Market Insights:
- Unit sales in Mississauga were down 55% over May 2019 with the number of new listings down 54% year over year
- The average sales price was $767,500 up from $756,400 last year
- There will be areas in the City that will rebound stronger and quicker especially in the prime areas of South Mississauga
- This is historically the peak time in the residential real estate market
- From our experience, we don’t expect to see significant price changes this year as inventory levels remain tight
Mortgage Update– The Bottom Line
Three months into the Canadian response to COVID-19 and the impact of social distancing, work-from-home, job loss and major economic impact has been felt across the board.
The effects to the real estate and lending markets has been significant. Most recently, on Thursday, June 4th, CMHC announced the following changes apply to new applications for homeowner transactional and portfolio mortgage insurance, effective July 1, 2020:
- The GDS/TDS ratios will now be limited to CMHC’s standard requirements of 35/42 from 39/44
- The minimum credit score required for at least one borrower will increase from 600 to 680
- Borrowers are now required pay the down payment from their own resources rather than non-traditional sources like a line of credit for example.
Although these changes could impact purchasing power by 10% it is not widespread, and there are options and solutions to service home buyers through Genworth and Canada Guaranty. If you are looking to lending options, these new changes are not applicable to clients looking to put 20% or more down. For clients looking to buy with less than 20% down, even after July 1, 2020 (when the new rules are in place) we still have options available to us where your buying power has not been impacted.
From an interest rate perspective, the five year 2.29 percent mortgage has arrived. At the very least, this new rate will entrench the 5 year fixed as Canada’s most popular term.
My advice to anyone looking to become a homeowner and into the market is to engage a mortgage professional and realtor early in the process. Complete a full pre-approval and ensure your credit and savings are in place.