The "spring market" is finally drawing to a close in Toronto, as we hit our annual seasonal slowdown. The number of transactions in June was down 5.4% in the Greater Toronto Area, and 13% in the City of Toronto - the latter of which the Toronto Real Estate Board attributes in large part to the burden of the City of Toronto's Land Transfer Tax. "Recent polling by TREB suggests that many households are considering home purchases outside of the City of Toronto to avoid paying the Land Transfer Tax. This goes a long way in explaining the disproportionate decline in sales in the City versus surrounding regions," said TREB President Ann Hannah.
That said, house prices have continued to rise, with June's average price of $508,622 representing a 7.2% year-over-year gain from June 2011. The affordability picture in Toronto is still good, claims TREB, with a mortgage on an average-priced home with 5% down and a 25-year amortization comprising only 35% of the average household income, well under the Finance Ministry's guidelines of a 39% maximum. "According to new mortgage lending guidelines set out by Finance Minister Jim Flaherty, the GTA housing market remains affordable," said TREB's Senior Manager of Market Anaysis, Jason Mercer.
The new maximum amortization period for a mortgage is 25 years. Gone are yesterday's 30-year mortgages: now, you'll only have 25 years to pay it off. This means that mortgage payments will also be higher - but you'll save money in the long term, because you'll be paying interest for 5 fewer years!
CMHC will no longer insure mortgages on homes worth over $1 million. That means that if you want to buy a home for over $1 million, you will need at least 20% down.
You can only take out 80%, rather than 85%, of your home's equity when you refinance. This requirement is a safeguard against an American-style situation in which many homeowners are "underwater", or they owe more than their house is worth, if the market does experience a down period. It requires homeowners to keep more equity in their homes.
If you want CMHC insurance because you have less than 20% down, your maximum gross debt service ratio is 39 per cent and the maximum total debt service ratio is 44 per cent. This just puts a stricter limit on the percentage of your total income is taken up by your mortgage payments, if you want CMHC to insure it.
Knowing what your home is worth is important information to have if you are thinking of selling your home.
We will conduct a thorough comparative market analysis by searching the database of all homes listed or sold in your area.
With this current market data, we will be able to determine what your home might sell for if you decided to put it on the market.
There is no cost or obligation for this valuable service.
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