Rising home price percolating through Canadian Real Estate Market
Despite of qualifying rates and rising interest, luxury sector of Canadian Real Estate Market should be unaffected.
Sotheby’s CEO and President Brad Henderson said that luxury real estate market tends to be more function of consumer confidence which is a function of confidence of business, which is a function of employment, and unemployment is at low rate but right now it is of less than 6% in Toronto region.
“GDP growth is too strong in Toronto as compared to Canada, and job prospects are too good. People will make all of the discretionary purchases when they had a huge level of confidence.”
Unsurprisingly, well-heeled have an easier time to absorb hike in rates than rest of the buying real estate market.
Henderson said that in terms of luxury real estate market, generally it is not as sensitive to have changes in interest rates as the low-income and first-time buyers qualify for the mortgage stress test which is not an issue for those people who can afford luxury homes. “If people are not happy with price of home which they may get for their home.
Rise of home price may percolate up to a ladder, because there are number of sectors of real estate market that depend on each other.
Matt Smith, Forest Hill Real Estate Broker said that many argue that luxury Canadian Real Estate Market is immune to such huge raises, given fact that home buyers are making some sizeable down payments or paying payment of 100% cash.
Matt also said that while it is true and they have the buyers who fall into this category, there are some number of buyers out of these who are diminishing.
They all are becoming rare, in fact rather than common. Reality is that real estate market is interconnected— the luxury segment, mid-market and the entry-level —and new regulations pressed into an effect by Ontario government.