Brokers are now getting an early sign of what’s to come, as the country’s hottest markets – including Toronto – see June home sales cool, even before the latest mortgage rules kick in.
The Greater Toronto real estate board is reporting 9,422 home sales through the MLS system last month, down by 5.4 per cent compared to June 2011.
The year-over-year decline was even steeper in the City of Toronto proper, where sales fell 13 per cent from those a year earlier.
The number of sales across the country in Vancouver suffered a worse fate, dropped more than 17 per cent from May and 27.6 per cent from June 2011, the Real Estate Board of Greater Vancouver said Wednesday.
In neither market did prices fall, another concern for brokers facing what the inevitable decline in new home purchases and a drop in originations.
The phenomenon is only expected to heighten industry concerns about the government`s decision to tighten mortgage rules with a 25-year amortization cap and an 80 per cent ceiling on refis.
The former is of particular concern to broker in Toronto and Vancouver where economists predict a significant percentage of first-time homebuyers will be shut out of the market.
After consideration of the sudden changes imposed onto the Canadian consumer, AMBA is concerned the government has once again restricted consumer choice,” writes the association in a release Thursday.
“With this type of government intervention, the housing market will have an involuntary slowdown, while other more expensive debt grows.
“AMBA strongly feels more government consideration should have been taken into account regarding personal debt such as credit cards, lines of credit and vehicle loans.”
At least one of the big banks is asking for the same soul-searching, suggesting the government may want to look at reverting back to the current rules if the market slow to a crawl.
That kind of standstill may most affect brokers, Realtors and others dependent on the country’s housing market, say economist. They also argue that the government has little intention of reversing course.