I’m sure you have heard by now about how fast properties are selling around the Great Toronto Area. The activity started early this year with January having mild weather kick starting the 2015 housing sales. The inventory has remained low in most of the neighbourhoods which has resulted in bidding wars once again. When buyers are faced with competition, they must have all their finances in order and present to the seller that they are strong in their qualifications for buying their home. Some buyers chose to forego their financing condition all together in order to give the seller ease that approval from the bank has already been given. This makes home buying a little more difficult for others facing competition who prefer to have those conditions in the offer protecting them incase they are not fully satisfied with their banks commitment and terms of that mortgage.
When spring market favours the sellers and the inventory remains low, this drives up the average selling price. With interest rates being historically low again this year, it is also a contributor to the increase in the average home value. Toronto has recently reached the one million dollar mark for the average sale price!
There will be a correction at some point down the road when the interest rates are not this low. I do not believe there is a bubble about the burst because the factors in todays economy are not like they were in the late 1980’s. For example, in that hot late 80’s market, the interest rates kept increasing to slow down the rate of inflation but the housing market still increased at a rapid rate even though the cost of borrowing couldn’t slow it down. That eventually came crashing down.
Stay tuned for more insight into today’s real estate market.
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