Despite a cooling real estate market, the average home price in Canada reached a record high in July -- not exactly good news for brokers itching to convert preapprovals.
According to data released by the Teranet National Bank Home Price Index, selling prices across the country increased by only 0.7 per cent in July, albeit down from the 1 per cent increase that occurred in the two months prior.
From a yearly perspective, prices have increased by 4.8 per cent from last year, but have been showing signs of deceleration overall for the past eight months.
In Toronto, the country’s largest overall market, prices have risen by an average of 9.2 per cent, a statistic that may future retard client willingness to act on their preapprovals. However, the prices have fallen in a few markets, among them Victoria, BC, which saw drop of 0.4% since July 2011.
Still, the overall numbers suggest brokers will continue to face a growing number of pre-approvals as clients wait on a price correction, which, shows no signs of occuring.
“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.
“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.”