What’s Happening In The GTA Real Estate Market?

The GTA real estate market has been in the center of attention for quite some time with Toronto in the limelight.  There were many turbulent events and speculations in the past three months that caused a whirlwind in the market. Since the first quarter of 2017 saw a dramatic increase in housing prices (a 30% increase) compared to last year, the Toronto government became worried about a bubble effect, so it took matters into their own hands to deal with the potential bubble threat.

Why a bubble effect was hovering over the GTA real estate can be explained in a simple manner. There are several reasons that led to an overheated market:

  1. The real estate business has become one of the fastest growing markets in Toronto, and in Ontario in general, we have to say, it became a significant factor in the overall economy, given that real estate businesses in Ontario accounted for 29% of the economic growth last year. This means that Ontario, including the GTA, became heavily dependent on the housing market. The bigger the sector grew, the pricier it became. Some would even say that real estate surpassed manufacturing in the past period, which means that real estate carries a heavy burden on its shoulders as it became one of the major reasons for a flourishing economy in the GTA.
  2. Another reason that led to the “bubble-trouble” was an influx of immigrants. We are not only talking about foreigners here, but mostly about Canadians who moved from other cities to the hotspot city of Toronto.
  3. Also, a lot has been speculated about slowed down housing projects and the lack of land and space to expand construction projects. Such a lack of supply also contributed to a pricier market. Still, many realtors disagree on this, stating that there is enough space for new construction projects.
  4. The last factor that possibly had an impact on the accelerated real estate market was the affordable interest rate that has been kept at a low for around a decade until it recently rose again.

“Cooling” Measures and Speculations

Based on the above-mentioned reasons and a potential bubble explosion, the first thing to do was to think of how to cool off the market. A la Vancouver-style, the Toronto Government decided to introduce a foreign 15% tax included in the 16 measures plan that was (and still is) supposed to slow down the real estate market. Among the 16 measures, a stricter rent control was also emphasized in order to keep the market further slow (e.g. introduction of a vacant home tax).

This represented a sign for buyers to take a break and wait for subsequent developments. Already in May, the market started to cool off, and house sales in the GTA fell by over 37% in comparison to last June. Nevertheless, many realtors claimed that buyers would be back as soon as they process the changes. But, before that happened, the long speculated interest rate increase was already announced, which grew by 0.25%, and stands now at 0.75%.

Still, based on the Vancouver example, many experts believe that once everyone gets used to the new market conditions, prices will go up again. Despite slower demand in the past several months, the federal housing agency believes, it is just temporary and that it is a matter of time when the listed houses will sell like crazy again. Others, on the other hand, believe that it will take more time for the Toronto market to heat up again, due to speculations that further changes will be introduced, as for example, stress tests for uninsured mortgages.









Mortgage Rates over the Last 10 Years in Canada

Canadians have the option to choose between a 1-year, 3-year, 5-year, and 10-year terms when they are applying for a mortgage loan. Further, as we all know, we can opt for either fixed or variable rates. Fixed rates are the preferred variant with Canadians, and the majority (ca. 66%) usually picks a 5-year term.

Canadians like to play it safe; and even if some analyses proved that variable rates might be a better option, in the long run, it is hard to enter that risk since the uncertainty, especially, nowadays, is simply too high.  

The economy is constantly changing which also has a major impact on the real estate market, and the rates offered by different banks and non-banking mortgage lenders are driven by the economic state of play. Let us take a look at how things looked in Canada since 2007 and how much the fixed mortgage rates have changed. Our chart excludes ten-year period rate since they are not very popular in Canada.

Fixed Mortgage Rates in Canada (2007-2017)

Year 1-Year Rate 3-Year Rate 5-Year Rate
2007 7.12% 7.33% 7.30%
2008 6.72% 6.91% 7.10%
2009 4.10% 4.64% 5.72%
2010 3.49% 4.28% 5.57%
2011 3.53% 4.29% 5.40%
2012 3.18% 3.91% 5.27%
2013 3.08% 3.73% 5.23%
2014 3.14% 3.69% 4.91%
2015 2.96% 4.43% 4.67%
2016 3.14% 3.39% 4.66%
2017 3.14% 3.39% 4.64%


The fluctuation of the interest rates is a reflection of how the economy is doing. When things are going south, the banks usually lower the rates in order to still attract customers and keep the money coming in, even when times are hard and challenging. The table above shows that in 2007, the mortgage interest rates were very high, which simply was a result of the housing boom right before the onset of the financial crisis. People had easy access to money back then, and it was only natural that they could afford a mortgage interest rate above 7%.

The crisis year 2008 saw a decline, but the first significant drop was recorded in 2009 when the rates decreased by around 2% for all three mortgage terms.  

The average mortgage rate has hit an average 3% low since 2010, and it is still in place. The lowest prime rate was recorded in 2009, and it stood at 2.25%, while the highest prime rate stood at 6.25% (the year 2007).

The last five years have witnessed a struggle in fluctuation as the prices kept going up and down for all three mortgage terms. The consequences of the crisis can still be felt, and the rates are kept low to attract more buyers, and yet somehow, we are being told that future outlooks look promising and that the rates will increase, especially, since the Canadian real estate market has been flourishing (for the most part) in the past few years.

During 2008 and 2009, the fixed mortgage rates dropped at a slower pace in contrast to the variable ones since times were uncertain and many backed out of variable rates fearing the worst. Well, it turns out that the variable rates would have been a more convenient option. Let us now take a look at how the variable rates compared to the five-year fixed rates in the mortgage market over the last decade.

Variable Mortgage Rates in Canada (2007-2017)

Year Variable Rate 5-Year Rate
2007 6.18% 7.30%
2008 4.79% 7.10%
2009 2.42% 5.72%
2010 2.60% 5.57%
2011 3.00% 5.40%
2012 3.00% 5.27%
2013 3.00% 5.23%
2014 3.00% 4.91%
2015 2.79% 4.67%
2016 2.70% 4.66%
2017 2.70% 4.64%


We can see that the majority of mortgage borrowers would have fared better with the fixed rates as they were highly unpopular, so they plunged in value dramatically. Even in 2007, when the market was at the peak, variable rates were still lower by more than 1%.

The Significance of Mortgage

Many buyers are primarily focused on how much the property or home they want to buy costs. The mortgage comes second as it usually seems insignificant, but in reality, mortgage can even double the price of your home. Of course, the shorter the term, the lower the rate, but few have the luxury to opt for a 1-year or 3-year term.

The other question is whether to select a closed or open mortgage. An open mortgage is only offered for 1 and 3-year periods, and it implies the possibility to be paid off earlier without any additional costs, whereas closed mortgage binds you to stick to the contract; and if you signed up for 20 years, then, 20 years it is, unless, you want to pay the penalty fee which shall be imposed if the borrower pays off the mortgage earlier.

The charts clearly indicate that a slower economy opens up lower-cost possibilities, but a slower economy reflects onto all of us, and we are more likely not to have the needed cash ourselves when times are tough. Maybe this article will make you think about entering a risk with variable rates which proved to be the more cost-efficient method according to our charts.

The Current State of the Real Estate Market in Toronto

Even if many are still haunted by what happened in the USA almost a decade ago when the real estate bubble exploded causing global consequences also known as the global financial crisis of 2008, it does not mean that Canada is on its way to repeat the US pattern leaving 6 millions of USA citizens without their savings and causing an economic downfall domino effect almost worldwide. Even if Home Capital Group Inc. faced some serious issues earlier this year, the Canadian real estate market is still stable.

Regarding Toronto, the situation is similar as in the rest of Canada, including the drop in home sales since May 2017 that caused panic among home buyers and sellers, but a collapse is far-fetched at this point even if many news headlines claimed the opposite.

It is true that Toronto home prices have been growing at a slower rate since May this year and they fell by 16% compared to last year. This led many to believe that the market is going down in addition to the liquidity problems of Home Capital Group that resulted in withdrawal of money and savings as soon as the biggest Canadian mortgage non-banking lender announced that they need a backup of C$2 billion. Nevertheless, real estate remains one of Toronto’s major economic growth drivers, and it is highly unlikely to collapse.

What Exactly Led to Home Capital’s Demise and the Post-Crisis Recovery

After the mini-real estate crisis in May, Toronto is looking at great prospects for the future given that Home Capital is on a good path of recovery as they implemented measures to keep their liquidity intact. What exactly happened with the mortgage lender? After they had sought a C$ 2 billion loan to keep up with their payment obligations and to prevent a chain reaction in the market, many interpreted it as a red flag which resulted in a drop of Home Capital shares and further withdrawal of savings. The thing is that Home Capital reacted on time and responsibly approached the lack of funds, and we simply have to give them credit for that. In the meantime, Home Capital managed to secure the necessary funds to pay their debts and mortgage commitments.

The biggest non-banking mortgage lender was not directly responsible for the mortgage drama, but rather a small number of their broker partners who tried to secure a profit on fraudulent loans. The subsequent OSC investigations hampered Home Trust to finance mortgages which caused a whirlwind in the real estate market.

Nevertheless, though, we have to face the fact that it would take its toll on the real estate buyers and sellers if Home Capital was about to drown, especially because they hold more than 1% of the total mortgages funded in the non-banking sector. Unable to renew their mortgages, many people would be forced to sell their homes, but it would take a lot more to take down the Toronto real estate market.

How Does The Market Reflect on Sellers and Buyers?

The market experienced a slight change after the issues in May as more homes are found on the sales list currently, i.e. listings increased by 73%, while sales dropped by 26%. Still, even if this statistics looks harsh, prices are still steady in Toronto, especially since buyers were able to get a better bargain than they hoped for earlier this year, according to analyses from the First Quarter. The increased number of listings offers more variety to the buyer, but we have to admit that it reduces the profit odds for sellers. The sellers’ best friend, currently, is time, which means that they should not rush into unfavorable deals just because they think they won’t be able to sell. Remember, time is your friend. They should not expect to land dream deals overnight, but they may count on good deals if they set realistic asking prices. The situation may not be as glorious as at the beginning of the year, but the prices are still pretty high and stable.

As for buyers, they should make sure to follow the updates on the listings which gains them an advantage over competitors.

Also, keep in mind that Canada’s banks operate under very strict regulations,which automatically means that a Canadian market crash is highly unlikely.

Despite amended mortgage regulations and possibly higher interest rates, the Toronto real estate market is expected to grow by the year’s end, especially because the market is balanced. It is more about balance than anything else. Rises and drops in prices are perfectly natural, and the supply-demand chain is still within the normal.

3 Power Scripts for Inexperienced Agents

When you’re new to real estate, prospective clients may question whether you have the skill to represent them. These scripts emphasize your drive and work ethic over transaction history and will help put clients’ minds at ease.
scripts in lead type

New agents don’t have a good answer when a prospect asks, “How many homes have you sold?” Because of their lack of experience, they can’t reassure the prospect with a long history of brokering successful deals. So what else can rookies rely on to win business? These three super impactful scripts take the focus off your experience and put it on your knowledge and determination to work hard for the client. If you deliver them with panache, good posture, a believable smile, solid eye contact, and confidence, you’ll attract and convert more clients.

Before we get to those scripts, let’s first agree on a foundational principle: Practice makes perfect. I find that the majority of real estate professionals — not just new ones — could benefit from putting in regular practice time. Look at practicing scripts as a revenue-producing activity. These scripts need to be ingrained in your brain, easily accessible, and authentic. Do yourself and your bank account a favor and put in 30 minutes five days in a row (or more) to simply practice your scripts and presentations. I guarantee that will be time well spent.

Script Number One: The Listing Closer

“Mr./Mrs. Seller, if you were to sign with me right now, here’s what would happen: Today, we would have a ‘coming soon’ sign in the yard. Today, we would build out your online marketing campaign and launch it on social media. Today, we would contact other agents in the area to alert them of the listing. And that’s just day one. Let’s get started.”

The key to this script is your delivery. By putting the emphasis on what you’ll do for your client todayand delivering it with an I-know-what-I’m-doing attitude, you will look and feel like you have been doing this for years. Not only does it convey a sense of urgency, it also shows that you have a plan — a method — and that you’re a professional.

Script Number Two: Social Media Master

“I may be new, but I’m a master on social media. I will target your property to the online audience most likely to buy in this neighborhood. Very few agents know how to do that or simply do not have it implemented in their marketing program. Did you know that house hunters who see your property online — and that’s the majority of them — will decide within four to six seconds whether they are interested in viewing your home? On top of that, we are going to put your property on Facebook Live and drop a location pin so everyone knows where to find your beautiful property. We do this by design to drive the right traffic to your property. This helps us reach the greatest possible and most realistic audience of buyers.”

If your sellers are tech-savvy, this script will speak to them. It conveys the message that there are a lot of real estate pros who are not keeping up with the most current tools and platforms to most effectively meet today’s consumer — but you are. Even being new to real estate, you can stand out as a smart, cutting-edge professional, and often, that is exactly what the seller wants.

Script Number Three: Niche Knowledge

“Do you know anyone who needs assistance with a commercial property, farm or ranch, or downtown loft, or wants recommendations in other cities? I have a solid and highly screened network of professionals I work with in all of these specialties throughout the state and country (and internationally, if applicable). I can help connect you or folks you know with the right professionals.”

If you use this script all the time, you will start generating consistent referral opportunities. But this script will also make you look knowledgeable of the industry on a big-picture scale by recognizing the various niches and needs of your consumers and their sphere. You will come across as the professional who is always looking for other opportunities to provide solutions for your client.

Here’s the key with all of these scripts: You have to be saying these things all the time. Create your own powerful versions of these scripts and add a few more to the mix, and then make them such an ingrained part of everything you do that your family and friends could recite them. Practice until you can’t get them wrong. With that kind of effort, you’ll start attracting and converting more clients.

Buyer Scripts #11 – By KW Map Coaching

Setting Expectation When Working with Buyers

If I am able to listen properly and you are able to articulate what your needs are, we should be able to find the home you’ll buy within the first five homes we look at. If I find that within the first five homes we’re not doing that, then we have a problem. At that point, I’ll ask you more questions so I can reevaluate your needs. Fair enough?

Buyer – Setting Expectations of Trust

I’m going to tell you everything about the homes we will be viewing together, both good and bad. My job is to provide you with enough information so that you can make an intelligent and informed decision. Fair enough?


To a Buyer that Wants to See 20-plus Homes Before Deciding

I would be incompetent if I showed you that many homes. You are interested in finding the home you’re going to buy quickly, aren’t you?


Buyer Wants to Think About It

You’re looking at this house today and you want to go home tonight and think about it, and what if there was another couple who saw this home yesterday and they thought about it last night? What if you lose this home? How will you feel if I call you tomorrow and tell you that it’s already sold to someone else?

Buyer Script #10 – By KW Map Coaching – Relocation Buyer

Relocation Buyer

Let me explain how I work … The first day we’ll be looking at 3-4 homes in 3-4 different areas. You’ll need to tell me exactly what you like and dislike about each of them. Based upon that information, I’ll be able to get a clear picture in my mind of what will ultimately meet or exceed your expectations. The next day we’ll look at another 3-4 homes, any one of which you’ll be able to buy. We’ll decide on which
home is the best, write and negotiate the contract, and by noon – at the latest 3:00 – you’ll be under contract. Now, that’s the way that it works, do you have any questions before we start the process?


Relocation Buyer – Control Your Time
Mr./Mrs. Buyer, I understand you are anxious to find a home. Tell me, has your company stipulated that you must look on the weekends only? I ask this because most people prefer to show their homes and negotiate during the week. Since you have a short time scheduled, I would suggest a weekday rather than a weekend, so we have more homes to view. Would seeing more of the homes available be of
benefit to you?

Buyer Script # 9 – by KW Map Coaching – Qualifying a Buyer

Out of all the scripts that I have heard, this one is perfect for Qualifying a Buyer.  Rather than asking – are you working with a Realtor – we suggest the following.

I assume that because you contacted me directly that you’re not currently obligated to another Agent, is that correct?

For online leads you can say: I assume that because you registered on my site, that you are currently not working with another Agent, is that correct?

Buyer Script # 8 – By KW Map Coaching – Financially Qualifying the Buyer

Financially Qualifying the Buyer

(To begin the financial qualifying of a buyer, we suggest using this strategy.)

Are you paying cash or do you require financing? (This is a smooth lead in to all of the financial questions you’ll be asking.)


When financially approving a buyer, there are two numbers that are important here.

One is the amount of money that you feel you can spend on a house, the other is what the bank feels you can spend.

As long as those two are in agreement, we’ll have no problem. However, if those two numbers are a little out of sync, you may run into a problem. So, when is the best time for my lender to give you a call to make sure that those two numbers are in alignment – weekdays, weekends, or in the next 15 minutes?