What Is An Exclusive Listing?
With non-stop government intervention, policy changes, and U.S. influences, the state of the Toronto real estate market has people talking shop even more so, than ever before. In fact, it’s hard to know what is up or down, fact or fiction! When it comes to Toronto’s real estate market, there is an influx of predictions, forecasts, media headlines and changing perspectives. So, before we head into 2019, we’re sharing our top five real estate influencers of 2018. This is what’s had everyone questioning if it’s a good time to buy or sell.
Since July 2017, the Bank of Canada has raised their key interest rate target by a quarter of a percentage point, four times. The bank’s rate is now set at 1.75 percent. This is the highest it’s been in almost a decade, dating back to December 2008. And, we’re still 1% short of what would be considered a normal or neutral interest rate for strong economic times. Further, Canada’s central bank has kept its interest rate at record lows for several years. This is to stimulate the economy following the economic slowdown of 2008. But, since then, we’re seeing continuous increases as the economy returns to sounder footing. And, with this, a large proportion of economists expect at least three more rate increases to 2.5% by the end of 2020. It’s important for you to understand how this impacts you, your current mortgage, and your future acquisitions!
As of January 1, 2018, Canada’s top banking regulator introduced a nationwide OSFI mortgage stress test. This threw another curve ball over and above mortgage increase hikes! The new guidelines require a minimum qualifying rate for uninsured mortgages – meaning, those with a deposit of 20% or more. In particular, the OSFI requires federally regulated financial institutions to vet applicants for all uninsured mortgages using a minimum qualifying rate. This rate must be equal to or greater than the five-year benchmark rate published by the Bank of Canada, or their contractual mortgage rate plus two percentage points
Furthermore, the purpose of the mortgage stress test is to ensure that borrowers are able to pay off their loan if interest rates were to become higher than it is today. Now, with the impact of the OSFI-mandated mortgage stress test and higher borrowing costs on affordability, some markets over others are experiencing stronger rates of price growth over the past year. We’re seeing the semi-detached and condominium market segments undergoing price increases, whereas, detached homes have remained flat.
Doug Ford’s provincial Conservative Government released its Fall Outlook earlier this quarter. In the report, came the announcement that all new rental units, or those that are currently unoccupied as of November 16, 2018, will be exempt from the rent control rules that were implemented in April of 2017. These rules had been implemented by the Liberal Government. This announcement comes after the average rental rate in the City of Toronto grew 12.1% since last April.
With this change, comes the encouragement towards builders, to construct purpose-driven rental apartments by providing a business model that permits developers to charge increased rent. More than this, the City of Toronto and the Province of Ontario needs to support supply versus curbing demand. This is one small step in the right direction.
Canada and the U.S. made the announcement that their new trilateral trade deal with Mexico – the United-States-Mexico-Canada Agreement (USMCA) in November of 2018. Although speculators were concerned about the news surrounding Canadian free trade and tariffs, the underlying conditions for a strong Toronto house market remains. In addition, James Laird, President of CanWise Financial, told Huffington Post Canada that there is clarity on free trade with Canada’s biggest partner. Specifically, his statement was that, “this big cloud of uncertainty on the Canadian economy has been lifted.” This is good news for us as a city and a country as a whole!
The recent announcement of Zillow’s move into the Canadian market has caused controversy. It’s left many Canadians and the industry fearful of a big U.S. behemoth takeover. Not to mention, the possibility of fundamentally changing the way we do business in Canada. Zillow officially launches Canadian listings this month. In fact, the first set of non-U.S. properties are now available for browsing on the giant home search tool already! Currently, their focus is to build market awareness, partnerships, and infrastructure.
Furthermore, there are still some legal and legislative kinks that need ironing out as a result of a recent decision made by the Supreme Court of Canada. That being, the high court’s refusal to give leave to the Toronto Real Estate Board (TREB) in its appeal against the competition Bureau’s order to allow for the publication of sold prices on VOWS (password-protected Virtual Office Websites). How this will impact the publication to non-password-protected websites like Zillow still remains to be seen. And with this in mind, we’re all about supporting change and progressive methods of doing business in this country, so Fox Marin is inviting Zillow with open arms!
If you’re looking to make sense of all of this, know that you’re one of many! Understanding how this impacts you and your real estate decisions is important. Know that, you can consult with Fox Marin – we’re happy to talk shop anytime. You all know we like to talk a lot around these parts!
This article is written by Kori Marin, Managing Partner and Broker at Fox Marin Associates. With a passion for Scandinavian design and all-things-Toronto, Kori brings her own brand of charismatic energy, creative integrity, and expertise to her work.