Freehold houses in Markham - a market report in August

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The housing market in Toronto is closely watched by investors.  Let us see what news have been released in the recent past.

First of all, the mortgage policy in Scotia bank was tightened. It was declaring that the bank becomes the third bank that requires income verification for Permanent Resident and Non-Resident Programs. This policy started to implement on August 24th, 2018. This was from internal sources and verified by mortgage brokers who received the formal announcement from the bank.  It indicates that 3 out of 5 big banks in Canada are now put restrictions on new immigrants. It will be a negative news to the current housing market. The 35% down payment from the new immigrant will not be sufficient enough to get the mortgage approval without checking the new immigrant’s income. This policy apparently narrows down the number of buyers who wants to purchase a house in this housing market.

Secondly, in July, the prime rate from the Bank of Canada increases to 1.5%. It was the central bank’s fourth rate increase in the last 12 months. The other banks raised prime lending rate following BoC rate hike. For example, the Royal bank increased its prime rate to 3.7 per cent in July 2018.

Thirdly, the TREB recently issued a statement, ensuring they will be working with their members to comply with the Competition Tribunal Order. It allows members to publish additional information on their password-protected virtual office websites for informational purposes. Does it affect the price of houses? May or may not.

The mortgage policy and rate apparently are not in favour of the benefit for the buyer.

Let us take a look at the housing market actual performance. Here I collect data from the Markham area.

detached.jpg

The first graph shows the average price in the past three years. It shows that the detached house price in Markham area is almost flat in the year 2018. The average price in August is lower than the price in the year 2016 and 2017. From the historical data, the sale price will have chances to be slightly increased in September and reach a small peak in October. It is very possible that the detached house price will stay in the range of 1,200,000.00  - 1,300,000.00  this year, and it will continue to stay within this range in the early months of next year.

semi_detached.jpg

The average price of semi-detached houses in Markham shows that the price of semi-detached house does not affect by the government policies and mortgage policies much. The trends in 2018 shows better performance in the first half year comparing to 2016. The average price lies in the range from 800,000.00 to 850,000.00 in the second half of a year in all three years. Apparently, the owner who bought a semi-detached house in January 2016 and sold it in March 2017 will get the maximum return on the appreciation rate if the owner is lucky. And from the figure, the average price of a semi-detached house in Markham will be stable at the price around 830,000.00 in the current market, and most possibly, in the next couple of months.

freeholdTH.jpg

The average price of freehold Townhouse shows similar patterns as the semi-house shown above. By just reading the plots, buying a freehold TH pays almost the same price as the ones in a semi-detached house. For the purpose of the investment, the return of these two kinds is almost the same. Different sizes, renovations, ages and locations of the house take more accounts on the price when purchasing. The trends of its price tend to locate within the range from 780,000.00 to 850,000.00 in the next few months. It has very little chance that this average price will drop to 700,000.00 as it was in January 2016.

In all, the average price of all three types of house shows stable in the Markham area. This article only shows price comparisons of three types of freehold house in Markham. Other ways of interpretation of the data have been used to understand the market from different angles and will be posted.

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