The desire for rapidly dropping housing cost in Southern Ontario is forcing appraisers to have a second look at properties they have already assessed to see how much the market has shifted.
Claudio Polito, a Toronto appraiser and principal owner of Cross-Town appraisal Ltd., says lenders on value, as opposed to income and credit history, are really trying to stay on top of a market that appears to be changing rapidly.
According to his estimates, the prices in the Greater Toronto Area have dropped anywhere from 5 per cent to 15 per cent over the last month. The next set of statistics from the Toronto Real Estate Board are due out Monday and will mark the first full month of data since provincial changes to cool the market that included a tax on foreign buyers.
“Lenders I deal with, want to know if your property is still worth $1 million if they are loaning say $650, 000,” said Polito. “They don’t base it on anything else. We have to be precise because it’s not a bank, (small lenders) can’t afford to lose a dollar.”
“It wouldn’t be the first time, appraisals have lagged purchases prices- a phenomenon that previously caught some Vancouver buyers by surprise when it was time to close, said Garry Marr from the financial post, “a lower appraisal could increasingly be an issue for people with previous deals, not yet closed, in Toronto, especially when buyers are coming up with only the minimum 20 per cent down payment for a non-government backed loan.” He further noted.
A more difficult market to assess is one like Calgary, which has seen transactions drying up, making comparisons hard to find.
“The more valid data you have access to, the similar task of preparing the appraisal becomes, said Keith Lancaster, chief executive of the Appraisal Institute of Canada. “When the Calgary market was slow, the lender would say we want sales that are within the last 90 days for comparable. If nothing has sold for comparable for 90 days, you ask the lender if they want to extend the time or the geographic window.”