Most commentators believe that when CMHC shortened the amortization period on insured mortgages from 30 to 25 years that it would have the biggest impact on the Toronto real estate market. From our observations (and anyone else commenting can only rely observations too), the shortened amortization period has not had as big an impact as many believe. Furthermore, consumers are extremely adaptable and we believe that it will be even less of a factor in six months. But the really big change is that CMHC will no longer insure properties valued in excess of one million dollars and this will have a big impact in Toronto and Vancouver. A lot of younger people with big incomes but smaller down payments – 10-15% will be shut out of this market. Will these people settle for properties under a million or will they just not buy? Already we are seeing a big drop off in sales in the one to one and a half million dollar market. From a statistical point of view, reduced sales at the high end will produce falling average prices as the mix of sales will change over time. With an average detached house price in Toronto of $741,000, we believe that overall sales will be lower – again like Vancouver which has an even higher average detached house price point. Economists will then be quick to point out that the market is showing even more weakness. However these lower sales volumes have been artificially induced and will not translate into ‘actual’ lower prices. That’s why the CMHC million dollar cap on insured properties will have the biggest impact on sales in Toronto Real Estate Market going into 2013!