The downtown Toronto market is bouncing back following an entire year of consistent, pandemic-incited declines, and the main reason why this is happening may amaze you.
Evidently, real estate professionals have seen many parents buying properties for their youngsters in recent months— explicitly retiring boomer parents and their sponging millennial spawn.
Ontario’s baby boomers are selling their bigger homes to help their children break into the real estate market, according to a report from Strata, which credits rising downtown condo values to family choices.
“At the point when seniors would sell in the past, it was only to downsize,” according to a Toronto real estate professional. “In any case, there’s this pattern where more established property holders are cashing out, so they can assist their kids with a down payment.”
The millennial generation, (which incorporates individuals at present between the ages of 21 and 41) has for quite some time been known to source home down payments from their parents— yet this recent trend goes past generational transfers of wealth.
A Strata realtor says adult children and their parents are becoming worried over the amount of a mortgage they’ll actually be able to qualify for if new lending rules take effect in June.
This new stress test will affect many individuals since it will be a lot harder to qualify for the home loan they need. Most customers are feeling the pressure to jump in before June since they figure this may be their last chance at home ownership.
The Office of the Superintendent of Financial Institutions (OSFI) of Canada has proposed changes that would require borrowers applying for uninsured mortgages to qualify at rates either two percent above market or 5.25 percent — whichever is higher.
The move is intended to cool quick rising home costs across the country, however, the actual expectation of these progressions is doing the inverse, if Strata is right. More condo deals mean more competition and, without enough inventory, higher condo prices
New figures delivered for the current week by the Toronto Regional Real Estate Board (TRREB) show that condo sales in the GTA were up 79.8 percent in the primary quarter of 2021 contrasted with Q1 of 2020.
The normal sale price for a condo in downtown Toronto has ascended throughout that equivalent period of time from $675,844 to $708,298.
While the condo market was slower to recuperate contrasted with low-rise market segments, numerous real estate agents have noticed a marked increase in condo interest since the start of 2021.
This interest will probably keep on increasing as the economy improves and vaccine take-up speeds up, bringing more certainty for first-time home buyers.