Real Estate: Sales slump accelerates in GTA

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Real estate: the fall in sales is accelerating in the Greater Toronto Area

Some sellers are canceling their listings to take advantage of the booming rental market.

The readjustment of the housing market in the Greater Toronto Area s& #x27;has intensified in the past month. In July, sales fell 47% compared to the same period last year and 24% compared to last June.

The Toronto Regional Real Estate Board (TRREB) revealed on Thursday that last month's 4,912 sales represent almost half of the 9,339 properties that changed hands in July 2021 and indicate that the market is slowing from the blistering pace seen in the first half of the year. and at the end of last year.

The TRREB and real estate agents attribute much of the slowdown to rising mortgage costs after Canada's key interest rate was raised by one percentage point in mid-2019. July. This is the largest increase the country has seen in 24 years.

This increase has caused people to rethink their housing intentions. Potential buyers are waiting for further lows to materialize in the fall, while sellers are waiting for the market to turn in their favor again.

Some sellers are even canceling their listings to take advantage of the hot rental market: in this area, vacancy rates are falling and prices are rising.

In January, when the market was overheated, 380 condo listings had been terminated in the Greater Toronto Area (GTA). According to real estate company Strata, there were 2,822 in June, an increase of 643%.

The moderation in the number of sales, however, is slow to be reflected in prices.

The average home price was $1,074,754 last month, up 1% from $1,061,724 in July 2021, but down 6% from $1,145,994 in June 2022, finds the TRREB.

New releases, which stood at 12,046 last month, were also down 4% from July 2021.

For the TRREB, the current market requires government intervention, in particular to stimulate housing supply and revise mortgage policies.

Many GTA households are planning to buy a home, but there is currently uncertainty about where the market is headed, said TRREB CEO John DiMichele.

< p class="e-p">Policymakers could help dispel some of this uncertainty.

Mr. DiMichele recommends that the government review the Office of the Superintendent of Financial Institutions' stress testing guidelines. The mandatory test sets the qualifying rate on uninsured mortgages at two percentage points above the contract rate or at 5.25%, whichever is higher.

Kevin Crigger, president of the TRREB, echoes John DiMichele's plea, saying that longer mortgage amortization periods of up to 40 years on renewals and transfers should be explored.

< p class="e-p">With significant lending rate increases over a short period, there has been a shift in consumer sentiment, not market fundamentals, he said in a statement.< /p>

The federal government has a responsibility not only to maintain confidence in the financial system, but also to instill confidence in homeowners that they will be able to stay in their homes despite rising mortgage costs.

With information from La  Canadian Press

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