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Six Months was What it Took to Absorb Latest Mortgage Changes!

Blog Image, Adjust to Change, August 2018

Ever since the US 2008 sub-prime mortgage crisis, we’ve seen a never-ending string of change. Mortgage lending rules have become tougher and tighter. Underwriting is stricter and more thorough. (As usual, the government has not missed an opportunity to stick their nose into your business by making lenders ask for more income documentation.)

The rule of change is that it takes around six months for consumers to adjust.
We’ve seen this pattern many times. If you look back two years, in Vancouver, the provincial government brought in a 15% foreign buyer’s tax. Pessimists said the sky was falling and that this would destroy the housing market. I had a different opinion… I said it would return to normal within six months.

Sure enough, the housing market went soft and prices declined, temporarily. Then they rebounded and increased to new record heights.

We had another big change in Toronto when the Ontario government followed BC and imposed a 15% foreign buyer’s tax in 2017. Sure enough, the market went quiet, but six months later it was back to normal activity and prices recovered.

This latest round of changes is no different!

Our Federal government brought in much tighter qualifying rules with the infamous ‘stress test’, where borrowers must qualify by adding 2.00% to their interest rate.

The Spring market was quieter than usual… prices had not rebounded yet. And finally, in July, we just saw house prices increase year over year for the first time in 2018.

Canada’s housing market has been resilient. We’re still considered somewhat of a safe haven to park money. Our government is stable, our streets are safe and we’re at peace with most nations (ok, not including Saudi Arabia… Which begs the question: Why is the government conducting relations via twitter? The Trump era? But, I digress…)

Now’s still a good time to buy real estate across Canada. Check out the latest ranking of Canada’s Best Places to Live 2018 to see how your area scored!

Buying real estate is a solid long-term investment. I’ve seen articles and arguments about renting vs buying. But, the problem is, if you rent, you’re at the mercy of the owner. If they decide to sell, and many do, you have to look for a new place.

One of my client’s has a daughter who’s 24. She rents in Brampton for $1,300 per month. The house sold and she’s currently unable to find anything below $1,800 per month. $500 is a huge increase in housing costs per month!

Rental prices are up everywhere! In Guelph, townhouse rentals are up to $2,000 per month or more. And, in Toronto, rent for a two-bedroom condo is approaching $3,000 per month.

If you’re paying a mortgage, you’re growing your own equity… and only you decide when it’s time to move!

Your best interest is my only interest. I reply to all questions and I welcome your comments. Like this article? Share with a friend.

Steve Garganis: 416-224-0114;




Steve Garganis View All

As an industry insider, Steve will share info that the BANKS don't want you to know. Steve has appeared on TV's Global Morning News, CBC's "Our Toronto" and The Real Life TV show. He's also been quoted in several newspapers such as the Globe and Mail, The Toronto Star, The Vancouver Sun, The Star Phoenix, etc.

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