Canada’s new mortgage and tax rules were put in place to help cool the housing market across the country. On October 17th, rules came into effect that require new insured mortgages to face tougher criteria. On November 30th, the second wave involves the standardization of eligibility requirements for both low- and high-ratio insured mortgages. In a nutshell, it is now more difficult to get a mortgage in Canada, especially for first-time buyers. In addition, when non-resident investors sell their homes, they will now have to pay capital gains taxes, as the tax loophole that enabled them to avoid it in the past is closed.
So, what’s the upshot of all of this when it comes to condominium sales across the Greater Toronto Area? With first-time buyers turning en masse to condos as the only affordable homeownership opportunity they find, we are likely to see a slowdown in this market. I urge anyone thinking of getting into homeownership – one of the wisest things you can do for your personal and financial futures – to check thoroughly with your financial institution. Hearing this news and assuming you cannot afford a home can work against your plans. You may still be eligible, even if you have to look at more compact square footages than you originally imagined. With today’s expertly designed suites living larger than ever before, this is a viable option.
Remember, too, that our conservative Canadian banking practices kept us above water a few years ago when the market in the U.S. took a nosedive. We are still enjoying historically low mortgage interest rates, so even if they edge up in the new year, they contribute greatly to the affordability of homes of all types and sizes. What will remain unaffected by the new rules is the ongoing demand for real estate in the GTA. The government’s actions will not stem this tide. People want to own homes to live in and as a significant part of their investment portfolios. At any price and at any time, homeownership is a wonderful idea.