Since the Ontario Liberal government’s housing market-cooling policies launched on April 20 there has been a complete turn around with the market now becoming a buyers one.
This has also made the housing bubble burst without a crash according to BMO’s chief economist Douglas Porter, mentioning that this was due to Ontario government’s measures to cool the market.
There has been a 13% drop in the last four months and it is expected to continue to go down making it a full-blown buyer’s market. People looking to buy now don’t have to make rushed decisions, get involved in bidding wars or buy a house without inspection.
Porter also states to the CBC’s Metro Morning that even now in, “August, we’re seeing declines in sales from about 40 per cent from a year ago.”
However, this cooling off in the market is not helpful to people that bought homes during the peak of it all. Buyers who expected $1 million loan from the bank are actually just getting $850,000 days before the deal is closed.
This all starts when the lender sends out the appraiser to judge the property and they state that the house it’s not worth what the buyer offered a month or two ago.
Many people are now struggling to finance the rest of the money getting second mortgages and bridge loans, and some other buyers trying to back out of their deals, or asking the sellers for a price reduction from the original offer.
Housing prices are expected to continue dropping with the recent increase of interest rates by the Bank of Canada.