Market Continuing to Slow, Mortgage Changes To Have Big Effect
With changes to foreign ownership and now tougher mortgage rules coming from different levels of the government it is clear they want to actively cool our market. To put it plainly our market has been put on notice, and if you want to realize the gains of the last few years, then you have a finite amount of time to do so. Activity has been sharply trending downwards in the last few months, but there is still plenty of activity to sell. The detached home market has been the first to slow down, while apartments are still moving quickly if priced well. We had 2 condo sales in the last two weeks that went into multiple offers and subject free sales so there is definitely still life in the market.
The Quick Numbers (Greater Vancouver)
REBGV Video Update
New Mortgage Rules, Government Induced Cooling of Market
All the way back in June’s market update I highlighted mortgage practices as one of the biggest causes for the strong 2+ year market. Back in July I wrote “we basically hand out money for free with today’s interest rates“ and they would need to “dampen borrowing, and set tighter debt ratio thresholds (ratio of an individuals total debt vs total incomes) to not arbitrarily bump interest rates, but to protect buyers from themselves”. It seems like the government agrees, as it has now added a ‘stress test’ requirement to mortgage lending which basically checks whether a borrower could still afford a mortgage at the higher 5 year posted rate (around 4.6%). To give an example of how this has already had an effect, one of my colleague’s clients tested how they would qualify under the new rules and found an $80,000 reduction in their purchasing power which was a 20% decrease! With so many new rules put in place to cool our market, seller’s would be well advised to consider selling before the end of the year.