Fredi Magazine Winter 2016 / Volume 2 Issue 2 - Page 58

» location, location, location Q A BY ALAN SERRECCHIA SOLD 2-STOREY DETACHED Private Cul-De-Sac CUSTOM BUILT IN RICHMOND HILL + 4 Bathrooms + 4 Bedrooms 3,500-4,000 sq. ft. » How strong was the 2016 real-estate market? The strongest ever to be exact. As we enter the final days of 2016, we reflect on what will go down as the best year on record for residential real-estate in the GTA and the year that lies ahead. Average home prices rose by 19-24% across the board in the 416 and 905 areas for all low rise and nearly 10% for high rise. Will 2017 usher in more of the same upward trend? The reality is, that this powerful growth has caught the attention of the federal government, which has begun to enact measures aimed at cooling the market in the name of protecting the long term financial security of Canadians. They have increased the minimum down payment required on homes priced over $500,000; as of October 17th, 2016 they have legislated a so called “stress test” on new buyers to ensure that lenders reject borrowers who cannot withstand certain increases in interest rates; and finally, they are aiming to amend tax rules to curtail foreign investor loopholes. All of these measures of course have the potential to affect the market but the reality is, the number one factor pushing our market to unprecedented heights is the demand for ownership and the short supply of listings – and this fact remains unchanged going into 2017. The other thing to keep in mind, is that the “stress test” only really impacts first time buyers, so all homeowners with existing insured mortgages or those simply renewing mortgages, are not affected at all. As for any tax system changes, they are all still only in the theoretical stages so their impact, whatever it may be, is not something at play within this market as of yet. Overall, it is with careful consideration of the above points that I feel confident heading into 2017 that the upward trends we have all enjoyed in 2016 will continue for the most part uninterrupted. 58 • fredi winter 2016 QUESTION ANSWER While it may seem like some of the recent initatives enacted by the government are “penalties,” they are anything but. They are measures created to ensure that you do not end up on a financial path that will ultimately prove unsustainable. It is really about protecting your future self until you gather enough experience in the market that your choices will be better guided by experience. Of course, it doesn’t seem that way right now, but your future self will thank you as these mandates force first time buyers to either over-qualify or be patient until their financial position is stronger. This said, it is not all bad. Over the years, the government has put forward a few measures to specifcally help first time buyers – most notably, the Home Buyers’ Plan which does provide a significant tax benefit and a strong vehicle to start your long term savings plan. Most recently, Ontario also agreed to refund first time home buyers up to $4,000 from the land transfer tax – this is set to take effect as of January 1, 2017. While such countermeasures may not be enough to fully offset all of the challenges confronting first time buyers, they at least show that attempts to strike a balance are under way. HOUSE&HOME //