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Market Fear

The firm went into survival mode as concern about Toronto’s housing market was escalating, with Bank of Canada Governor Stephen Poloz warning the gains were unsustainable. Worries about a market bubble morphed into nervousness about whether Canada might be on the brink of a financial meltdown. Rising household debt and runaway housing prices led to credit rating downgrades for the country’s six biggest banks this month by Moody’s Investors Service.

“It’s fear,” Century 21 Millennium Inc. brokerage owner Joanne Evans, who focuses on Toronto suburbs such as Brampton, said about the potential Home Capital effect on housing. “It’s another contributing factor to the fear of ‘what’s going to happen?”‘

Home Capital’s competitors have seen a surge in demand as more brokers steer clients away from the struggling lender, Dasgupta said. Those lenders in turn are experiencing slower response times due to a backlog of borrowers.

“Home Capital is a bigger deal than the government announcement,” Weisleder said. “It’s had a bigger impact on the market.”

Rental Time

Still, not all sellers are feeling pinched.

Michael Hartmann put his north Toronto home up for sale on May 17, and it sold on May 22, the first day he began taking offers. The 53-year-old professor at McMaster University’s DeGroote School of Business in Hamilton, Ontario, decided not to take his agent’s advice to price the house on the low side in an attempt to stir up a bidding war.

He nudged the price up to be more in line with other homes in the neighborhood and sold it for $1.65 million, $10,000 above asking price. Hartmann said he and his wife will take their time before choosing their next move.

“We are in the fortunate position as empty-nesters that we don’t have to rush back into the market,” he said. “We have the advantage of seeing whether we go back in and buy in Toronto or somewhere else in Canada or go abroad.”

In the meantime, they plan to rent.

Bloomberg.com