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Did Home Capital cool the real estate market
May 31, 2017
After the government intervention and the difficulties Home Capital Group Inc. is experiencing, sellers are rushing to list to avoid missing out on the recent price gains.
On the other hand buyers are rethinking purchases and sellers are wondering why they aren’t attracting bidding wars as their neighbours had just a few weeks ago.
Carissa Turnbull, a Royal LePage broker in Oakville said “We are seeing people who paid those crazy prices over the last few months walking away from their deposits. They don’t want to close anymore” Her open house over the weekend did not get a single visitor.
Home Capital may have helped cool the market. The run on deposits at the Toronto based mortgage lender has sparked concerns of contagion, and with the new Ontario tax on foreign buyers and federal government moves last year, getting a mortgage has become harder. Whether Home Capital did have an impact on the market or not the perception has changed. Home Capital caters to new immigrants and other homebuyers who can’t get a traditional bank loan and if they can’t get a mortgage they can’t purchase a home which will ultimately affect the market.
Brokers say some owners are taking their house off the market because they were seeking the same high offers that people were getting as recently as six weeks ago.
Real estate lawyer Mark Weisleder said some clients want out of the transaction. He said “ some buyers are looking for another buyer to take over their deal. They are nervous whether they bought right at the top and prices may come down”.
Rising household debt and runaway housing prices led to credit rating downgrades for the county’s six biggest banks by Moody’s Investors Services.
Essentially, there is a “fear” factor and people are nervous.
If you were able to sell your property at the height of the real estate prices and have not bought a new home yet renting may be an alternative while this situation plays out.
Article adapted from Kim Chipman, Bloomberg News for Financial Post