TREB Calls For A Review Of Mortgage Stress Test As Home Prices Rise
The cold weather hasn’t stopped Toronto home prices from going up.
In February, the average selling price of all home types in the Greater Toronto Area rose from $767,801 to $780,397. That’s a 1.6 per cent increase year over year, according to data released by the Toronto Real Estate Board (TREB).
The rising prices can be attributed to a tighter market, as there were 6.2 per cent fewer listings in February compared to last year, but still a steady demand. Roughly 5,000 homes were sold in the GTA last month compared to 5,148 in February 2018, a 2.4 per cent decline year-over-year.
What’s notable is that February saw the biggest monthly sales decline in the past year, dropping by 7.7 per cent from January. As a result, TREB President Garry Bhaura has called for the mortgage stress test be reassessed.
“The [Office of the Superintendent of Financial Institutions] mandated mortgage stress test has left some buyers on the sidelines who have struggled to qualify for the type of home they want to buy,” Bhaura said in a press release. “The stress test should be reviewed and consideration should be given to bringing back 30-year amortizations for federally insured mortgages.”
Increasing the amortization period from 25 years to 30 could help ease the financial stress of first-time homebuyers thanks to smaller payments. But as more first-time homebuyers enter the market as a result of this, starter home prices could also rise above the average $700,000, Realosophy broker John Pasalis told the Toronto Star.
Based on TREB data, semi-detached homes and condo apartments have both had notable increases in price year-over-year in February. Semis are up 7.5 per cent with an average cost of $794,978, while condos are up 6.9 per cent with an average cost of $555,986.
Townhouses averaged $638,222, up 1.8 per cent year-over-year, while the average detached home cost $963,618.