Could stronger activity be around the corner?
A healthy spring mortgage market looks to be in store for the Greater Toronto Area (GTA), with biddings up and overall demand also increasing, according to a prominent broker based in the region.
Christine Xu (pictured), president of Moneybroker Canada, told Canadian Mortgage Professional that her forecast for the market in the months ahead remained positive, having held a “cautiously optimistic” outlook around the beginning of the year.
“I’m very bullish on the market, especially for the GTA,” she said. “Just a couple of months ago, I said spring will bring new hype for the market because the demand is there, and we already see [that] in the GTA. There are multiple biddings, even since a couple of months ago. So I think we’re already getting into a new season.”
The alternative space is seeing particular interest, Xu said, with the trend of borrowers turning to non-bank lending solutions amid steeper qualification criteria showing little sign of slowing down.
“From the alternative side, brokers like me are getting busier than usual because there are so many private inquiries and private deals every day,” she said.
That said, despite predictions of a robust recovery for the GTA, activity in the suburbs could remain subdued for a longer period, according to Xu. She said that those parts of the region may experience milder activity than usual, although more populous areas could benefit from a plethora of new entrants to the market.
“For the suburbs, I think we may see a little quieter time than usual, in other years, but a demand for the major central area is going to be very strong,” she said. “I think there are new buyers coming into the market, new immigrants and younger people who need to live closer to the job. That’s why I think the demand is very strong.”
Daniel Vyner of @dvcapital_, told CMP that alternative and private mortgage borrowers who purchased or refinanced at the height of the recent boom to access home equity or enter the market were facing “multiple layers of issues” in 2023.https://t.co/Q9rLqHHQBF
— Canadian Mortgage Professional Magazine (@CMPmagazine) April 10, 2023
What should brokers focus on?
Prominent client queries in the current environment include new construction closing, with a growing number of Canadians turning to alternative solutions in that space, according to Xu.
Indeed, with the alternative sector having witnessed such rapid growth in recent times – Canada Mortgage and Housing Corporation recently shone a light on its strength – Xu said the onus is on younger and less experienced brokers to acclimatize themselves to the space and develop a strong understanding of its various features.
Rather than trying to compete with banks on the A side, she said brokers could serve themselves and their clients by emphasizing alternative solutions and putting forward a wider array of options for borrowers.
Another trend to watch out for is the rise of the commercial market, which could see an uptick in interest among foreign buyers whose path to purchase residential property has been complicated by the ban on non-resident, non-Canadian buyers.
That’s a space that holds its fair share of challenges as well as opportunities. “You have to be very cautious because commercial is always very volatile,” she said. “The risk is higher. So buyers should pay attention to the risk associated with a commercial investment.”
How has the GTA housing market been faring of late?
Toronto Regional Real Estate Board (TRREB) president Paul Baron indicated last week that competition between buyers had been “heating up” in many neighbourhoods across the GTA, with sales making up an increased share of listings compared to the same month last year.
The board’s chief market analyst Jason Mercer said reasonably favourable conditions for buyers may prevail in the coming months, partly thanks to declining inflation and financial market uncertainty that’s seen medium-term bond yields tick downwards.
While the average selling price in the GTA plunged by over 14% on a year-over-year basis in March, it inched upwards compared with the previous month, potentially indicating a mild revival on the cards for Toronto’s housing market.
TRREB’s CEO John DiMichele said population growth as a result of soaring immigration targets was one of the main reasons for a possible surge in first-time homebuyer intentions in the GTA.
He also suggested higher demand would highlight the supply challenges facing the Toronto market, with a policy focus required to bring more purpose-built rental units to the city.
What are your thoughts on the outlook for the Toronto mortgage market in the coming months? Let us know in the comments section below.
