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A "For Sale" sign sits in front of a house, in Toronto, on April 20, 2010. (Darren Calabrese/THE CANADIAN PRESS)
A "For Sale" sign sits in front of a house, in Toronto, on April 20, 2010. (Darren Calabrese/THE CANADIAN PRESS)

Toronto housing market preps for an early ‘spring’ Add to ...

Patrick Rocca is spending a little extra time out of the city this week, but he expects to begin setting offer deadlines immediately upon his return to Toronto.

“I have three listings coming up as soon as I get home.”

The broker with Bosley Real Estate Ltd. says he’ll be selling one bungalow and two traditional two-storey houses in the desirable Leaside neighbourhood.

He expects to set offer dates for all three properties because the asking prices will fall in the competitive $900,000 to $1.3-million range.

“That’s a sweet spot,” Mr. Rocca says. “We’re expecting good things with all those properties.”

Mr. Rocca characterizes the fall market of 2015 as weird. Sales were unpredictable after Thanksgiving, he says, as some properties sparked spirited bidding and others did not.

He cites the case of one house in the $1-million range that sold for $100,000 less in November than a comparable property sold for in September.

Buyer fatigue seemed to set in after October’s federal election, he adds.

Mr. Rocca says the spring market is always robust, in his experience, and he expects a continuation of the scant supply and heavy demand that fuelled a record-setting market in 2015. And while the Royal Bank of Canada drew attention this week as the first of the big banks to increase rates on some of its mortgages in 2016, rates are still very low.

“There are a lot of people preparing for spring,” Mr. Rocca says of the decluttering and prepping that is already under way.

By “spring,” Mr. Rocca means the third week of January, when the first “for sale” signs begin to appear in most neighbourhoods. Condo units might arrive on the market in the first days of the year, but typically owners of single-family dwellings will wait for better weather.

Many sellers want to wait until their gardens are in bloom to list, but some of the most outlandish bidding wars take place from late January through early March, when there are few properties and lots of energetic buyers.

But it’s still a question whether those frustrated Toronto-area house hunters who had so much trouble finding a place to buy in 2015 will face as much competition from rival buyers this year.

Many economists are expecting that the slowdown that has already begun in many Canadian cities will take hold in housing juggernauts Toronto and Vancouver as well. The Canadian Real Estate Association is forecasting that, nationally, prices will edge up by 1.4 per cent this year.

Some market watchers are wondering if the federal government’s move to tighten the rules surrounding government-backed insured mortgages will have an impact on the market – either by spurring on buyers who want to sign a deal before the stricter criteria kicks in, or by dampening the purchases of those who will need to save more.

Under the rule change announced last year, the minimum down payment for new insured mortgages will rise to 10 per cent from 5 per cent for the portion of the house price above $500,000. The 5-per-cent minimum for properties up to $500,000 remains unchanged. The new formula comes into effect Feb. 15.

David Madani, an economist with Capital Economics, doubts the rule change will significantly cool housing activity in Toronto and Vancouver. First-time buyers often aim for properties under $500,000. Those who purchase more expensive properties with help from their parents likely won’t be deterred either, he adds. Prospective move-up buyers won’t be affected because they usually have considerable equity built up in their homes.

Mr. Madani is more concerned about the high level of indebtedness in this country’s households, and the reliance of the economy on household consumption and housing to drive growth.

The U.S. Federal Reserve Bank’s move last month to start increasing interest rates will eventually influence Canada’s economic fortunes. Even as the Bank of Canada keeps its benchmark rates low, yields on U.S. Treasury and Government of Canada bond yields may rise, Mr. Madani says, and that trend could put pressure on Canadian borrowers.

He expects a faster progression of rate increases from the Fed over the next two years.

Mr. Madani warns that swollen household debt is a major vulnerability for this country’s economy – especially since much of the debt has been taken on to buy houses in markets that the central bank has acknowledged are overvalued by as much as 30 per cent.

“In large cities such as Toronto and Vancouver, the degree of overvaluation is even more stretched, in our opinion,” the economist says. “These key regional markets are long overdue for a major correction.”

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