Toronto Real Estate in 2010: 5 key factors to watch

2009 was an amazing year for real estate in Toronto. The year started off really slow as sales and prices remained low after the financial crisis. Then everything began to turn around towards the beginning of April. Sales slowly picked up and then took off, as records were broken in the last half of the year. Of course another amazing factor is that Culture Realty Solutions Inc. incorporated in April of 2009!

Lets examine some key factors to look for in 2010. These factors will most likely have an effect on the real estate market in Toronto.

1. Hot Market:
2. Interest rates:
3. Minimum down payments and amortizations:
4. HST:
5. Changes to MLS® access?:

1. Hot Market:

The Toronto Real Estate market is red hot. December had the highest number of sold homes ever and the average price for a home is also setting records! This pace is expected to continue for the immediate future. The sales and pricing numbers that will be reported in Jan, Feb, and March of 2010 will be compared to the same period in 2009 (when we will still in the financial crisis) so be prepared for some astonishing numbers. These record numbers tend to make newspaper and TV headlines, which can create a feverish atmosphere around real estate and result in a continuing hot market.

2. Interest rates:

The Bank of Canada has reported that interest rates should remain low until June 2010. There are many public officials that are warning Canadians against taking on too much debt while the rates are low, because the rates have only one way to go: up! If interest rates increase, it will mean that buyers will be able to afford smaller mortgages and this could put downward pressure on home prices. However, the Bank of Canada also needs to be concerned with other economic factors (such as the Canadian Dollar), so no one is quite sure when rates will go up, or if rates will go up quickly or slowly.

3. Minimum down payments and amortizations:

The Canadian Government is concerned that the low interest rates might be creating a housing bubble. The Bank of Canada might not want to raise interest rates because it's affect on the Canadian Dollar, so they mentioned that their other alternative is to change the minimum down payment and the maximum amortization period. Currently buyers can obtain a 35 year amortization and put 5% down. The government mentioned that it might reduce the minimum down payment to 10% and reduce the amortization allowed. This would create downward pressure on the real estate market, because a significant number of buyers would not be able to afford homes if these new rules are instituted. There has been no confirmation that these new rules would be passed, but it's something to watch in 2010.

4. HST:

The HST will be passed in July 2010 in Ontario. Most real estate fees (commissions, legal fees, moving expenses...) are charged 5% GST. Starting in July, these fees will now be charged 13%. That is a significant increase on fees that are already quite expensive. It can cost more than $25,000 in fees to sell a $400,000 home. This means that the taxes paid on these fees will go from $1,250 to $3,250. That is a $2000 increase on taxes paid when you sell a home. This should not have a very large impact on most individuals, but it is still money that you have to pay and comes out of your pocket. This money is no longer available for down payments, upgrades...

5. Changes to MLS® access?:

Toward the end of 2009, the competition bureau rules that the Canadian Real Estate Association needed to adjust the rules by which it governs the MLS® system. No changes have been made yet, but it will be something to watch for in 2010. Culture Realty Solutions Inc. makes an effort to have our customers save money on real estate commission. Some people think that significant changes to the MLS® rules might result in more savings for consumers.

Culture Realty Solutions Inc
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