According to the most recent RBC Economic Outlook, Canada’s economy was pushed into a higher gear n the latter half of 2015, and this momentum means good things for the housing industry as we move into 2016. Although the Canadian dollar continues to dip, the housing outlook remains positive. In Ontario, the ongoing shortage of single family homes for sale in and around the GTA continues to drive very strong price gains. Record levels of activity in the province would likely be higher were it not for a shortage of low-rise homes coming onto the market.
However, after the election the newly elected Liberal federal government indicated its plans to help stimulate the economy in 2016 and recently announced changes to mortgage rules to temper the ever growing markets in Toronto and Vancouver. The government is raising the minimum down payments on some government-insured mortgages, a move aimed at curbing the risk of a housing crash in Toronto and Vancouver where high prices are leaving some families at risk from heavy debt loads.
The finance minister, Bill Morneau announced the plans in December that will force a minimum down payment on homes worth at least $500,000 to rise to 10 per cent from 5 per cent starting Feb. 15, 2016 — however the higher threshold will only apply to the portion in excess of that mark. That means the minimum down payment for a home worth up to $1 million would be 7.5 per cent. Setting down payment rules by a home’s price allows the government to target the hottest areas without damaging slower markets, such as Calgary where consumers are struggling as energy companies cancel projects and fire workers.
Although 2015 continued to see the rise in house prices in the Toronto market, things are set to change in 2016 and the Liberal government is making sure that happens. It may seem like another obstacle for first time buyers to enter the home market, but it should be seen as an advantage by allowing new buyers to enter the market without the risk of their investment fluctuating drastically. It may even help slow growth in the city and give us all a chance to catch up. As we move into a new year, rest assured that your home is still a valuable asset and will remain one well into 2016 and beyond!