US Election Shocks, Rate Drops & GTA’s Real Estate Rebound – What You Need to Know

📊 Rate Watch: What U.S. Election Results Mean for Canadian Mortgage Rates

Canadian mortgage rates overview as on 08 Nov 2024:

• The graphic above displays the latest standard rates offered by lenders. However, we’re consistently securing rates significantly below these figures for our clients. To explore your personalized rate options, please don’t hesitate to reach out.

• Recent events in the U.S., including the election results, have influenced expectations around interest rates. Economic indicators in the U.S. surged following the election, which may impact both American and Canadian bond yields. While it’s still early to assess the full effects, this development could temper expectations for substantial rate cuts.

• For now, Canada’s rates remain under a slight downward trend, though we may see the Bank of Canada adopt a more cautious approach in the coming months.

• If you're in the market for a mortgage, let's discuss your options. We’ll help you determine whether a variable or fixed-rate mortgage best fits your needs in today’s evolving rate environment. Reach out to start the conversation!

Managing Expectations Regarding Mortgage Interest Rates:

• Not All Rates Are Created Equal: If you hear about someone getting an ultra-low rate, even if it is true, it doesn’t mean that rate is available to everyone. Rates depend on many factors like credit, income, down payment, property type, and how much you’ve invested with the bank. In a wildly fluctuating interest rate environment, it also depends on when the other person got his/her final rates.

• Your Profile Matters: The rate you qualify for is based on a full assessment of your financial profile. This includes a detailed review of your credit score, income stability, and other personal details, after verifying the information with supporting documentation. A quick conversation with a mortgage professional or online quote won’t give you the full picture.

• Relationship with a Lender Won’t Guarantee Lower Rates: Even if you’ve banked with a lender for years, that alone won’t necessarily get you a better rate. What matters more is the strength of your overall profile as assessed by the lender.

• Beware of Pre-Approval Rates: Rates provided in a pre-approval letter are often not the final rates you’ll receive. Most lenders don’t do a full underwriting review until a property is identified and an offer is signed. Without this, the quoted rate is just a starting point.

• Ask the Right Questions: Before accepting a quoted rate, ask:

  • Has the lender reviewed all of my financial documents?

  • Have they done an in-depth analysis of my mortgage needs? If the answer to these is “no,” take the rate with a grain of salt—it may change once your profile is fully reviewed.

• How to Improve Your Rate: While some factors are out of your control, you can take steps to improve your chances of a better rate. Focus on maintaining a solid credit score, saving for a larger down payment, and being prepared with all necessary documentation.

Real Estate Radar: GTHA Real Estate Rebounds: October Sales Surge Amid Rate Cuts!

Real Estate Radar: GTA Market Report - October 2024

The Greater Toronto Area (GTA) saw a significant resurgence in home sales this October, with activity up 43% year-over-year and 33% month-over-month, totaling 6,658 transactions. This surge follows recent rate cuts, with four reductions since June, including one in October. Despite a high inventory, the influx of buyers brought a degree of balance back to the market, reflected in a sales-to-new-listings ratio (SNLR) of 43% — squarely in the “balanced market” range.

Price Movements

• Benchmark Home Price: $1,060,300, down 3.3% annually but stable month-over-month, marking the lowest since August 2021.

• Average Home Price: $1,135,215, up 2.5% from September and showing a 0.8% annual increase — a first since April 2024.

• Median Home Price: $960,000, up 1.1% monthly and 0.1% annually, providing a clearer snapshot of mid-market activity.

By Property Type

• Detached Homes: Average price rose to $1,462,838, a 0.9% yearly gain.

• Semi-Detached Homes: $1,108,376 on average, up 0.5% from last October.

• Freehold Townhouses: Declined 3.3% annually to $1,007,417, though up 2.5% month-over-month.

• Condo Apartments: Average price fell 2.1% year-over-year to $694,038 but rose 1.7% from September.

Regional Highlights

• City of Toronto: Strong growth with an average price of $1,165,660, up 4.7% monthly and 3.4% annually.

• Brampton: $1,019,645 average price, up 2.0% year-over-year.

• Mississauga: $1,081,951 average price, down 2.2% annually but up 3.1% from September.

• Oshawa: Declined 3.6% yearly to $775,011, yet sales soared 64% annually.

Market Outlook

With more buyers returning as rates ease, the GTA may see increased demand, though high inventory levels will keep competition robust. October’s average days on market rose to 43, and properties sold for 99% of the listing price on average, suggesting buyers have some negotiating power.

🍁 📊 Maple Pulse: GTHA Market Heats Up as U.S. Election Sparks Uncertainty—What You Should Know

• Toronto Real Estate Market Sees Sales Surge in October as Interest Rates Fall: Toronto’s real estate market saw a dramatic 44% increase in home sales in October compared to last year, spurred by recent interest rate cuts from the Bank of Canada. According to the Toronto Regional Real Estate Board (TRREB), buyers are returning to the market as borrowing costs decrease, though overall home prices remain stable. Sales rose across all property types: detached homes by 46%, townhouses by 56%, and condos by 33.4%. Despite higher sales, condo prices remain flat due to ample inventory, providing buyers with negotiating power. TRREB forecasts moderate price growth in the short term, with a possible acceleration by spring 2025 as inventory levels tighten.

• Bank of Canada Eyes Housing Market Amid Continued Rate Cuts: In an interview, Bank of Canada Senior Deputy Governor Carolyn Rogers indicated that while inflation is improving, the Bank is cautious about the housing market's reaction to rate cuts. The recent 50-basis-point reduction has already spurred real estate activity, and the Bank aims to avoid reigniting a housing surge while still easing economic pressures. With many homeowners facing upcoming mortgage renewals at higher rates, Rogers emphasized that the Bank will monitor adjustments in consumer spending and savings. Reflecting on its pandemic-era policies, the Bank plans to publish a review to assess its actions and impacts on Canadians.

• Trump’s Election Win Spurs Global Economic Uncertainty, Impacts Rate-Cut Prospects: Donald Trump’s return to the U.S. presidency has sparked major concerns among global central banks, fearing slower economic growth and potential inflation surges due to his trade and fiscal policies. Trump’s proposed tariffs—up to 60% on imports from China—could disrupt global trade, with spillovers impacting countries reliant on stable U.S. trade relations, including Canada and Mexico. Market responses have been swift, with a stronger dollar, rising U.S. Treasury yields, and devaluation pressures on currencies like China’s yuan. With inflationary pressures already challenging, many central banks may now reconsider planned rate cuts amid a tense global economic outlook.

• Bank of Canada Cautions Against Quick Fixes in Mortgage Market Amid New Policies: Bank of Canada Deputy Governor Carolyn Rogers warned against "tinkering" with mortgage rules to improve affordability, cautioning that measures like extended amortizations and lower down payments could have lasting financial impacts. The recent federal policy changes, which extend 30-year amortizations to first-time buyers and raise the insured mortgage price cap to $1.5 million, aim to broaden access but may increase risks for borrowers and lenders. Rogers emphasized the need for a balanced approach, advocating for long-term housing supply solutions over short-term financing fixes, which could undermine household and economic stability.

• CRA Tightens Scrutiny on Airbnb Property Sales Amid HST Ruling: The Canada Revenue Agency (CRA) is increasing oversight of Airbnb property sales after a Tax Court of Canada ruling determined that short-term rental properties are subject to HST on the full sale price. The case involved a condo in Ottawa used as a short-term Airbnb rental for 14 months before its 2018 sale, which the court ruled was taxable as a commercial property, similar to a hotel. This judgment signals that sellers of short-term rental properties could face substantial HST liabilities, prompting tax experts to advise Airbnb operators to seek professional tax guidance on property use and sales.

Mortgage Mastery: Financing Your New Construction Property

Financing a new build home comes with unique considerations, especially in Ontario’s rapidly growing housing developments and condo market. Here’s a look at financing options, along with tips for navigating the new-build mortgage process.

1. Pre-Construction vs. Completion Mortgages

• Pre-Construction Mortgage: Funds are advanced during the construction phase in installments. This type of mortgage requires you to start payments as soon as the developer begins construction.

• Completion Mortgage: Available only after construction is complete. Ideal for buyers who don’t need to pay immediately but will start payments upon closing.

2. Deposit Structure for New Builds

New builds often require higher deposits than resale properties. For example:

• Condos: Typically, deposits of 15–20% are required, staggered over the construction period.

• Detached Homes: Expect a 10–15% deposit. Some developers offer flexible deposit schedules, which can help with cash flow.

3. Interest Rates and Builder Incentives

• Interest Rate Holds: Many lenders offer rate holds between 4 and 12 months (subject to lender discretion) for new builds, allowing you to secure a rate early.

• Builder Incentives: Builders may offer cash-back deals, upgrades, or rebates to help reduce closing costs. Explore these options, as they can significantly reduce upfront expenses.

4. Government Incentives

• 30-Year Amortization: As of August 2024, first-time homebuyers of new builds can qualify for a 30-year mortgage amortization, which reduces monthly payments, making new homes more affordable

• GST/HST Rebates: Buyers of new homes can qualify for GST/HST rebates, reducing the total tax burden.

Navigating a new build mortgage requires careful planning, especially in Ontario’s active real estate market. Working with an experienced mortgage agent can help simplify the process and ensure you get the most out of your financing options.

Heavenly Real Estate: Even Angels Can’t Resist Checking Market Value! 👼💸🌤️

Remember, real estate—and life—is all about where you focus your energy. Let’s keep building, believing, and investing in the future we want!