Would-be home buyers told to consider buying or not

61
3
Would-be home buyers told to consider buying or not

Central bank Deputy Governor Paul Beaudry told would-be home buyers on Tuesday to consider whether it is a good time to buy or not, pointing out market frothiness in certain cities and renewed investor activity. We apologize, but this video didn't load.

Here you can see other videos from our team. If you refresh your browser, or Canadian home prices poised to surge again, as buyers rush to beat rate hikes, the market could be exposed to a higher chance of a correction, he said. The Bank of Canada last month signalled that the overnight rate could start rising in the middle quarters of 2022, at a record low 0.25 per cent. The rush to buy is probably already underway, analysts said. When interest rates start to rise, people get into the market, including investors. Benjamin Tal, deputy chief economist at CIBC Capital Markets, said that there will be an increase in activity over the next few months.

Canadian house prices went up 31.6 per cent year-over-year in March to hit a new record high before softening a bit over the summer. The average price for October is barely below the March peak, with prices accelerating again. Ratings agencies are taking notice. Fitch has pegged Toronto's housing market at 32 per cent overvalued and Vancouver's 23 per cent. Moody s Analytics also has Vancouver overvalued by 23 per cent, Toronto 40 per cent and Hamilton, Ontario, 73 per cent. The average price of a home in Toronto, Canada's largest city, hit $1.2 million US $947,493 in October, up 19.3 per cent from the previous year, and detached homes now average $1.5 million. Prime Minister Justin Trudeau has pledged to act on the runaway market, but critics note that prices have climbed 77 per cent nationwide since he took office in 2015.

Ron Butler, Toronto mortgage broker, says he is getting busier by the hour with clients desperate to get into the market. The prices are going to go up forever, and I have to buy now, because we see it, literally, hourly here people who have just given up and say: The prices are going to go up forever, I have to buy now, he said. Butler said he is working with a longtime Toronto renter who has been waiting for prices to fall so he can get into the market. He is buying an hour drive west in Hamilton because he is worried that he will never own a home. When you buy a house, fear is not a good motivator, said Butler, adding that investors are increasingly gripped by the fear of missing out, or FOMO. Butler estimates that investors who buy properties to rent out or hold for speculative gains make up about 25 per cent of the housing demand at this point, with that number much higher in major cities and especially in pre-sale condo markets.