Canada’s Housing Market: Slow and Steady Wins the Race
Following the federal government’s latest mortgage requirements, the Canadian housing market has seen a dramatic downturn in sales. Over the past few months, cities such as Barrie, Toronto, and Vancouver have gone from having houses sell within 24 hours to houses sitting for weeks – in some cases, even longer. These changes have been felt across the board with new potential home buyers unable to meet the new mortgage requirements, and homeowners looking to sell unable to do so. The slowing down of the real estate market has also led to a reduction in real estate development. After all, if people aren’t able to buy properties, why spend the money building them?
However, within the past few months cities across the country have seen a revitalization in real estate development. With cities across the country experiencing a significant number of new real estate developments in the planning phases. In fact, in some locations, groundbreaking on residential units reached a record high.
In June, Canada Mortgage and Housing Corp. (CMHC) made it known that there was a surge in new build constructions, jumping to almost 250,000 from the mere 193,902 in May. Economists are stating that this upward trend is more in line with what the market was seeing a year prior.
Slow and Steady
While the summer may have brought a positive shift in the construction and new development of homes, economists warn not to get too excited. With the anticipated rise of interest rates and the new lending requirements, the real estate market is going to need some time to recover before it gets back up to where it once was.
On a Positive Note
In metropolitan cities like Vancouver and Toronto, people have come to anticipate buying a condo as opposed to a detached family home. This is because of space as well as supply and demand, for many a detached family home in areas like these are not affordable, at least not at the moment. While the recent change in lending standards has impacted the condo market, in some areas it has made them more in demand than ever. With many want-to-be home buyers unable to qualify for a mortgage that would allow them to purchase a detached family home, condos are becoming the go-to option.
Economists point out that it should not come as a surprise that real estate options such as these have become the newest trend. There is no doubt that depending on the location that you are looking at condos are still quite pricey, the supply of them and their ability to house so many residents within a single structure traditionally make them a more affordable option.
What to Expect
Anytime that interest rates increase, or there is a change in the mortgage lending standards, the real estate market takes a hit. To some extent, it is to be expected. While the Canadian market is currently dealing with both, there is no doubt that it will bounce back – in due time. For the remainder of the year, and early on into 2019, real estate experts and economists anticipate a slow moving market. However, hopefully, by the spring, the slow incline that we have started to see over the past few months will begin to pick up speed once more.
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The Mortgage Centre -Sky Financial Corporation