5 Reasons Why The Housing Market Won't Crash

Every year around this time since being in the business (for now ten years plus), we are forced to confront the media's claims that the GTA's housing market "bubble" will surely burst this year.  Well, we're here to say it won't.  And the following top five reasons are testaments to this fact.

After the Greater Toronto Area's record year in 2015 for both the number of homes sold and the average price, the question is: when will it all come crashing down? The answer: not in 2016. Here are five reasons why this won't be the year of Toronto's housing collapse.

1. Supply and Demand

It's the simplest rule of market economics and it applies to Toronto's real-estate market. The population keeps growing, and people have to live somewhere.

There's little room to build more single-family houses to increase the supply. The demand from families who want to live in the city with a patch of grass remains huge. The number of new listings on the market continues to be outstripped by the number of buyers. 

Dec 2015 - Toronto Real Estate Board Report

The second best sales result on record for December capped off a record year for TREB MLS home sales in the GTA. Toronto Real Estate Board announced that there were 4,945 sales reported in December bringing the calendar year total to 101,299 - a substantial 9.2% increase compared to 2014 as a whole. Strong annual sales increases were experienced for all major home types last year.

December 2015 Market Stats

New 10% Minimum Downpayment Is On The Way...

The federal Department of Finance is seriously considering weighing in on Canada’s housing market by raising the minimum down payment on a home purchase from 5% to up to 10%. Their recommendation to the Minister of Finance could come as early as January 2016.

According to RateSpy.com founder and independent mortgage broker Robert McLister, government policy-makers are considering a graduated minimum down payment threshold based on either the home value or the mortgage amount. Homes/mortgages under $500,000 would only require a 5% down payment, while those between $500,000 and $700,000 would require 7% down and anything over $700,000 would require 10% down.

Apparently, the rationale for this new graduated scale is two-fold: 

- Tougher lending requirements should help cool the housing market, particularly in red-hot Toronto and Vancouver.

- It would also help minimize the exposure taxpayers have to insured mortgage default losses. 

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Meet Our Team

Maison Valley consists of Mase Dhirani and Sam Valimohamed, two top-producing RE/MAX Ultimate agents, who specialize in the various aspects of both residential and commercial real estate including selling properties, acquiring for buyers, investments & property management.

Broker, RE/MAX Ultimate
Broker, RE/MAX Ultimate