Working throughout June, one could feel that the market was extremely active with multiple offers and activity at a high rate. But we were all quite surprised when the final numbers came in from the Toronto Real Estate Board showing that June’s sales (8,701) were only down 1.4% from June of 2019 (8,826). We knew that there has been a huge pent-up demand for homes and that demand exploded in June! I believe that that will continue in July and August.
Prices were up 11.9 % on average over June 2019, with the year to date average price rising to $891,167, up 8.7% over 2019-year end average price $819,286. All segments of the market were very active with multi-million home dollar homes starting to move again with 365 homes selling over $2,000,000, including 323 detached homes as well as 16 condo apartments!
The big news of the market is really twofold. One is that there is a small inventory of homes for sale (29% less than it was a year ago). The second factor is that interest rates have dropped to 2% for a five-year term. This has brought new buyers into the marketplace because they can now qualify for mortgages and really brings down the cost of borrowing for those investing in rental properties. For example, at 2% interest rate on a $700,000 mortgage represents $14,000 of Interest or roughly $1,166 per month. At 3% interest it represents $1,750 of Interest monthly, ($584 per month more). That really answers the question of, “Should I wait for prices to come down before I buy?)” The answer is you should buy before interest rates go up because that probably has a greater effect on your monthly payments then does price. Investors have realised that $584 per month would go a long way to turning a break-even rental property to a profit-making rental property!
If you have questions on the above, give me a call, I'll be happy to help show you why the mortgage interest rate is just as important if not more important than price.
While Corvid-19 cases are on the decline, let's not lower our guard! I am still selling homes in a secure and safe manner protecting myself and my customers. If you have any questions or have a friend who is thinking of buying or selling please remember me, I'll be happy to be of service!
Have a great July and stay safe!