A leading housing analyst has said that the expected interest rate hike is not justified and he expects “some retreat during the coming months.”
Will Dunning fears that a small one percentage point increase in mortgage rates would result in a decline in home sales in the GTA of 15.3 per cent by 2015, with prices also dropping by six per cent in the same period.
However, real estate agents on the ground have been quick off the mark to debate this prediction. Rob Mills from Royal LePage says a one per cent hike may have a small impact but not “as bad as the media makes out.”
Referring to the wave of negative media headlines in the last 18 months, Mills said that it ironically has had the positive impact of first-time buyers holding off, leasing and now ready to enter the market.
“The demand is still quite strong on the ground,” he says. “I am aware of a number of first time buyers whose leases are up in the coming months and have saved a larger down-payment in the last year and now ready to enter the market.”
Dunning believes that sales figures for June and July will show growth as “buyers are rushing into the housing market to take advantage of pre-approved mortgage rates.” He also added that positive sales in April and May were facilitated by media outlets raising consumer awareness about low interest rates.
Talking to CREW about specific residential markets, Mills says that the condo market is somewhat sluggish in some areas as “investors are unrealistic in the prices that they are looking for.
Written by Grainne Burns Friday, 05 July 2013