If you haven’t already heard, the Canadian real estate market has been continued to surge, with Vancouver and Toronto leading this charge.
Well, if you have been following the current real estate climate across Canada, then perhaps you might be wondering when this market will return to normal?
As we find ourselves nearing the holidays, you might also be wondering if the real estate market will slow down at Christmas?
To help answer this question, it is important to first take a look at house sales over the last few months. While 2017 did experience somewhat of a dip in the months following the introduction of the foreign buyers tax, house prices, however did not actually see a decrease.
As per the Canadian Real Estate Association (CREA), the forecast for home sales in 2018 is pointing towards a slowdown. A likely reason for this being, none other than the upcoming January 1st changes made by the Bank of Canada to regulate mortgages.
More specifically, the government is set to implement certain mortgage regulations, where potential homeowners will need to qualify for a fixed rate of 5% mortgage set by the Bank of Canada or an interest rated mortgage 2% higher than their mortgage rate contract. The precise rate is to be determined by whichever rate is higher at the time.
With these changes, potential buyers previously excused from certain mortgage regulations, such as those who have made a 20% down payment, or those buyers with a low-ratio status, as of January 1st, will now be held to the same rules as everyone else. Along with these changes, it has been speculated that this may lead to a decrease in home prices and ultimately sales across Canada.
While these upcoming mortgage rules can provide a glimpse into what 2018 may hold in terms of the pace of the Canadian real estate market, it is also important to take a look at what may be happening before we arrive in the new year.
On one hand, Christmas time is typically a time when some businesses tend to slowdown, is it also the case for the real estate markets? While real estate agents and groups may want to take some time off to enjoy the holidays, this Christmas time however, are less likely to share this same track record. Alternatively, it may be poised to experience yet another surge.
So, then why would Christmas time be a busier time for the Canadian housing market this year? The answer here, perhaps can be traced back to the above mentioned impending mortgage rules that will be in existence by the 1st of January. The reason behind this point of view being that current homebuyers may be looking to buy a new home before tighter mortgage eligibility rules become enforced.
Therefore, in order to secure their new mortgage before these changes take place and make it more challenging to either enter the property ladder for the first time or buy a new residence, Canadians may be putting a rush on buying now. This in tern, may create a wave of home sales this month, leading to a potential slowdown in 2018.
While the Christmas season may have contributed to a housing market slowdown in the past, this year Canada’s housing market may be less likely to repeat this same pattern.