Brokers are facing a growing number of pre-approvals as clients wait on a price correction, which, according to CMHC’s latest report, is unlikely to materialize.
“At least 25 to 35 per cent of my clients have put their decisions to purchase on hold,” said Deepak Bansal, a GTA broker at Dominion Lending Centres. “They took a pre-approval and hope to revisit their purchase options again in November or December.”
He’s not the only broker waiting with a growing number reporting that more and more clients are sitting on the fence waiting for the market to cool down. They’re also influenced by the media buzz of a market correction of at least 10 per cent over the next couple of years.
But today, CMHC predicted a more moderate slowdown in sales. What it is not predicting, however, is a fall-off in prices.
On average home prices are between $351,000 and $378,400 in 2012. Home prices next year will be around $358,000 to $395,800, according to CMHC’s calculations.
Despite the growing pre-approvals brokers are still getting enough business.
“This wait-and-see option is only evident in a select group of my clients,” said Bansal. “These are home buyers who are in no rush and have the luxury of waiting for a better price.”
Still, another broker operating in the hot Unionville-Markham area northeast of Toronto said her business is experiencing a bit of a slowdown now.
Christine Xu of Argentum Mortgage and Finance is hoping it is just the effect of the market’s seasonal cycle.
“We tend to have a seasonal slowdown around July to December as most sellers and investors go on vacation,” Xu told MortgageBrokerNews.ca. “But for the long term impact, we still have to wait and see.”
Xu believes the recent mortgage rules changes has caused some cooling down already.
“The new rules have shut out some first time buyers from the market and larger down payments have turned off some potential investors,” she said. “Luckily this does not seem to discourage new immigrant buyers who make up the bulk of my business.”