The housing market in Toronto posted the biggest monthly sales decline in a year just last month. This has caused the Realtor Board to review the new mortgage rules which are keeping home’s from selling as per Financial Post’s article posted March. 5, 2019.
Royal LePage’s CEO Phil Soper sat down with Financial Post to discuss the Mortgage Stress Test and Canada’s Housing Market.
Financial Post explains that the office of The Super Intendent of Financial Institutions has implemented a “Mortgage Stress Test” where buyers must now qualify for a mortgage 2% higher than the borrowing rate. The world’s largest Real Estate board believes this should be reduced.
Phil Soper says Sales Volume has decreased by 16 or 17% in 2018. However because of the national economy Phil says it isn’t in the best interest to get rid of this regulation.
Although sales are down Phil isn’t as concerned as he was when home prices were rising in certain parts of the country.
They decided with the rising prices two or three years ago that “you have to clear a higher hurdle to get a mortgage”. This was done to help protect against the increase in mortgage rates and reduce Canadian’s debt.
Volumes of sales have been down however the pricing of houses hasn’t decreased since early 2018. It is believed that houses are still increasing and unemployment is not increasing so there is no true signs of economic trouble. The stress test being taken away would make for things to start to pick up in Real
Estate however it would be short term but for long term and the health of the economy more people are looking for homes than there are homes.
Phil Soper says the housing market is healthy nationally even though Toronto’s housing market posted its biggest monthly sales decline in a year last month. See the video below where Phil Soper explains all of this and elaborates on his view of the stress test and further explains the Canadian Housing Market.
Fournier, C., Hertzberg, E., & Bloomberg News. (2019, March 07). Toronto Real Estate Board calls for looser mortgage rules as monthly sales drop most in a year. Retrieved from https://business.financialpost.com/real-estate/realtors-plead-for-looser-mortgages-as-toronto-sales-drop-again