Wishing you a very Hopeful New Year and Best Wishes!
Real Estate rings in the new year with hopes for yet another busy and booming market year. The shift in the Real Estate market from a Buyer’s Inclined Market to a Seller Oriented Market has heavily been influenced by the drop in mortgage rates. The borrowing rates of 1.4%-1.5%, for a 5-year fixed mortgage’ are escalating Buyer demands not only in the GTA but also in the outside regions of Waterloo, Simcoe, Dufferin, Brantford, and Hamilton. Below is a quick review of the Average Price trending from December 2019 to December 2020.
The rippling effect of shortage in supply and upward pressure on prices has not in any way wavered the buyer. A quick observation of the numbers presented below reveals that Caledon and Oakville are cities that surged in price. Caledon’s average price is higher and skewed due to the large volume of multi-million dollar acre lots in this part of the GTA. The graph below represents the Average Price across various major cities in the GTA.
The impact of COVID-19, in Spring of 2020, mitigated as soon it was felt. The demand kept the market driven and the usual bleak real estate winter experienced 64% more sales in December 2020, in comparison with December 2019. A quick glance at the chart below shows that compared to December 2019, December of 2020 embraced a phenomenal 66% growth in new listings. While many economists predicted employment disruptions would negatively impact the Canadian housing market, it still was not enough to satiate the demand and put a cap on pricing.
Elixir Real Estate is anticipating a healthy housing price growth in 2021. The driving forces for which are low borrowing rate, causing price aggression. A closer look at the tabular representation of the monthly payment schedule for a $500,000 mortgage at 1.5% for a 25-year amortization and a payment schedule for ledning with a 3.2% interest rate showcase a tilt towards interest rather than principal.
As you would note above that with such low rates of 1.5% or less, almost 70% of mortgage payment comes back to us as principal repayment right from the first month itself. The reason why both for investments and ownership there is an inherent demand in the market.
So here’s to a 2021 that belongs, all to you!