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Houses are seen in Vaughan, north of Toronto, in this June 29, 2015, file photo.MARK BLINCH/Reuters

People who want to buy real estate in the suburbs surrounding Toronto are not letting a rougher landscape discourage them, even as interest rates rise and banks become more rigid about enforcing the rules.

Real estate agent Ron Sally of Re/Max Millennium Real Estate in Vaughan, Ont., says most buyers and sellers adopted a more clear-eyed approach this year after the market tumult of 2017.

“That’s when things started to get real. In 2018, they officially became real.”

The real estate market in the 905 area code has generally had a tougher go than the more central 416 in the past 18 months or so after government measures were implemented to rein in runaway sales and prices.

Mr. Sally says some homeowners are still trying to make a quick buck after the run-up in prices in previous years. They tend to want to set an inflated asking price and the property then languishes on the market, he explains. They are not serious sellers.

”Serious sellers price appropriately.”

Substantial houses that have an asking price of less than $800,000 still sell quickly in such areas as Brampton and Vaughan, he says, but above that level, sales are more challenging. Lots of $1-million-and-up properties have been sitting.

But while it’s sometimes a hard slog to sell a house in the suburbs, sales of condo units in the 905 area code have been on a tear.

According to the latest figures from the Toronto Real Estate Board, condo units in the 905 posted a 12.8-per-cent jump in October compared with the same month last year. The average price of a unit rose 5.9 per cent last month compared with October, 2017.

In the 416 area code, sales of condo units rose a relatively tepid 2.8 per cent last month, compared with the same month last year. The average price of a condo unit increased 8.6 per cent in October compared with October, 2017.

Demand for condos has also been high in the core and the competition for desirable units has pushed prices higher.

Sales of detached houses in the 905 gained 6 per cent in October compared with the same month last year, while the average price increase was almost flat at 0.4 per cent.

Sales of detached houses in the 416 jumped 10.1 per cent in October compared with October, 2017, while the average price edged up 1.4 per cent in the same period.

In the 905, first-time buyers especially are still striving to get into the market, Mr. Sally adds.

Many lenders require a larger down payment than they used to, and they sometimes pull out of deals at the last minute – even after potential buyers have sought a preapproval for a mortgage.

“Banks want buyers to have more than 20 per cent down. They want them to have 30 per cent.”

Sometimes those buyers deemed too risky by the big banks are forced to turn to a second-tier lender that charges a higher interest rate.

“We’re seeing a big increase in B lenders.”

Mr. Sally says the agents at his firm try to help clients to manage their expectations. He recommends that buyers pay a little bit less than the top amount they’re approved for so the bank will be less likely to get cold feet.

“The challenge is that people are always buying beyond their means.”

According to National Bank of Canada’s quarterly monitor, housing affordability across the country worsened in nine out of 10 urban markets in the third quarter to mark the 13th straight deterioration in the index.

Deputy chief economist Matthieu Arseneau and economist Kyle Dahms say the time required to save for the down payment on a benchmark home at a savings rate of 10 per cent crept up to 57.3 months from 57.2 months in the third quarter from the second.

In the Toronto area, buyers need an annual household income of $159,289 to afford the benchmark home and an annual household income of $93,602 to afford the representative condo, according to National Bank.

Mr. Sally at Re/Max adds that the stress test imposed by the banking regulator at the start of this year has also taken a toll on people seeking mortgages. A provincial election and drama surrounding the negotiations for a free-trade pact for North America added to the uncertainty, he adds.

“There was a lot going on this year” to undermine buyer confidence, he says.

Mr. Sally says that a series of move by the Bank of Canada to raise interest rates has persuaded many buyers to lock in a fixed rate – often for a term of five years.

“Now fixed-rate looks really, really good to buyers.”

Many house hunters are so intimidated by the prospects of a big mortgage that they are reluctant to even have the conversation, he says.

Mr. Sally says that buying a condo unit in the preconstruction phase is still a model that works well for many first-time buyers. Waiting for four or five years for a unit to be built gives them time to save more money to cover their costs on completion.

“Even the builders are getting a little bit nervous,” he says, as developers wonder whether buyers will be able to close on a property in a rising rate environment.

Despite the challenges facing buyers and sellers, Mr. Sally believes that the market in the 905 will pick up in 2019. The two sides are becoming more realistic, he says, which means they can meet in the middle to secure a deal.

The monthly numbers for sales and prices will also look less scary to consumers, he predicts, because 2018 has been a fairly stable year without big gyrations. That means comparisons with the previous year won’t be so jarring, in his opinion.

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