Apparently, the new rules requiring that people have a reasonable chance of repaying a mortgage before advancing the loan are now depressing home sales and prices in Canada. Who would have thought… See Sharp drop in home sales portends stagnant year ahead:
Year-end statistics published Tuesday by the Canadian Real Estate Association (CREA) show 458,442 homes sold across the country in 2018, down 11.1 per cent from 515,681 sales in 2017.
It was the worst year for national sales since 2012 and the largest annual drop in activity since 2008, when sales fell 17 per cent as the economy slid into recession.
The decline was due in large part to slowing activity in British Columbia and in the Greater Toronto Area, both hit hard by new government measures, including higher interest rates and tougher mortgage qualification rules that took effect Jan. 1, 2018.
Sales in the Vancouver region fell 31.6 per cent last year, while sales in the Fraser Valley slid 30.8 per cent and Victoria saw sales fall 20 per cent. Sales in the Greater Toronto Area were down 16.4 per cent in 2018, CREA said. Market activity also slowed sharply in other major markets in Southern Ontario, and across the Prairies as oil prices dipped and economies slowed.
If the adage ‘equal and opposite in the other direction’ now holds, this period of falling and stagnant Canadain realty prices could last for a decade or more, and a great many people will be lamenting for years that they did not cash out or downsize when prices were near cycle highs.
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