The good news we’ve been writing about haven’t been limited to real estate in Toronto, southern Ontario, and the GTA, it’s spreading across the country.
The national real estate benchmark, which outlines real estate price changes every 4 months, now shows its first uptick since the beginning of the year. After reaching its all time high in May of 2017, when market dynamism was truly ecstatic, the benchmark collapsed and reach a low point exactly 2 years later. September’s number should bring price growth back in the green nationally. What else can be done to help get that number in a better position? Let’s see.
Meanwhile, political pressure on the Federal government to do more to make real estate more accessible to prospective home buyers is building. Finance Minister Bill Morneau has been pressured to extend the amortization of houses from the present 25 years back to 30. This would provide home owners with more time to leverage a mortgage and the possibility of lower monthly mortgage payments. The previous Conservative government cut the amortization period from 35 years to 30, and then the present 25. This aggressive move was done in order to combat excessive dynamism in the real estate market and was welcomed by many, even though it had a direct and immediate impact on the market.
In the United States, 30 year amortization is common, as are fixed rate 30 year mortgages at very low rates. Imagine not having to negotiate and sign for a new mortgage after every 5 years and instead have the comfort of knowing you will enjoy a historically low, locked in rate for the life of the house. A spacious 5 bedroom, 4 bath suburban home in Indianapolis, Indiana, selling for 399K, can be mortgaged out for 1,400 a month with a 3.3% Bank of America 30 year mortgage with an 80K down payment. This is unheard of in Toronto and the GTA.