What Does a Weak Canadian Housing Market Mean to You?
The Canadian real estate market is looking weaker than it has in a long time. That may leave you wondering what that means to you as a homeowner or potential buyer or seller. The number of home sales in February reached its lowest point in a 10-year period, which is a traditionally weak month of the year for home sales. The average price of homes also dropped 5.2 percent from last year. So, what’s going on, and what do you need to know to protect your home and your assets?
There are several potential reasons why the Canadian real estate market is currently on the decline. Perhaps the most notable is the mortgage stress test passed by the federal government last year. This stress test has made it more difficult for buyers to secure loans for their homes. This has led to a decrease in home sales as well as a decrease in average home price as buyers struggle to keep up with the new requirements.
And the drop in sales in February? Some analysts say that it could be due to poor weather conditions across the country. People were less likely to get out of the house and look for homes, perhaps putting it off until later in the year.
However, the drop in sales and home prices in the Canadian real estate market may not be occurring across the whole country. In fact, the trend is being led by British Columbia and Alberta as these areas struggle to keep up financially.
Hope for the Future
The outlook for the future is not all bleak, though. While the Canadian real estate market is projected to continue to drop in 2019, it may make a comeback come 2020. Projected sales are expected to rise to 459,400 over the course of 2020, which is a full 2 percent increase from the 2019 projections. It’s expected that the national average price will probably stabilize sometime in 2019 at around $487,000. This is due to decreasing home prices in some areas and increasing home prices in others as more people move to larger cities with better economic opportunities.
Mortgage Stress Test Consequences
As the change in mortgage stress test came relatively recently, it still remains to be seen what the ultimate impact will be. Some worry that the new regulations are going too far, prohibiting buyers from getting into homes they would otherwise have been able to buy. CREA chief economist Gregory Klump said, “Only time will tell whether successive changes to mortgage regulations went too far, since the impact of policy decisions becomes apparent only well after the fact.” Therefore, we can only wait and see what the Canadian real estate market holds in the coming months and years.
Whether consumers are planning on buying or selling, they should hire a real estate agent to help them navigate the Canadian real estate market. With so many changes going on, it pays to have the advice of an expert on your side.