GTA condos have managed to buck the recent housing market slump, posting month-after-month of price increases. The reason? Well, according to Realosophy president John Pasalis, mortgage stress tests could have something to do with it.
In 2016, Canada’s Department of Finance introduced a mortgage stress test for buyers with less than a 20 per cent down payment. In January 2018, an additional stress test was introduced for uninsured buyers.
Both measures have seriously cut into home buying budgets and — according to Pasalis — inadvertently driven up prices in the condo market.
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“Basically what happened…it really just pushed a lot of people who probably could have previously afforded [low rise] homes into the condo market,” Pasalis tells Livabl, in a recent video interview.
According to Pasalis, before the 2016 stress test was introduced, GTA condo prices rose 30 per cent over a four year period. After, they rose 30 per cent in a single year.
“That’s really just a function of a surge in demand,” he says. “Buyers surged into the market, and pushed prices up.”
For a closer look at what’s been pushing condo prices skyward, check out the video above.