Canada Housing Market: The Slowdown in January

By The A-Team | Feb 20, 2019 | Fort McMurray- Buyers Advice

It is time for another set of important news in the Canadian housing market. With numbers for the first month of the year coming in, it's a good opportunity to see what January did for the market.

First up is the latest news on the national home sales for last month, as reported by the Canadian Real Estate Association (CREA):

CREA: Breaking Monthly Losing Streak Recorded for January National Home Sales

An uptick in national home sales in January has broken the four-month trend of declining activity, though the market remains subdued from a long-term perspective.

Barb Sukkau, CREA’s president, says that weaker conditions are due to the fact that “home buyers are still adapting to tightened mortgage regulations brought in last year”, but the effects are unbalanced across the country, sales remain below the 10-year average in British Columbia, Alberta, Manitoba, Ontario, and Newfoundland and Labrador. – Via

According to the chief economist of CREA, Gregory Klump, the weaker sales and prices in the Canadian housing market are results of the stress test and tighter mortgage regulations.

Speaking of mortgages, industry watchers and pros shared a 360-view of the housing market, particularly how harder borrowing has changed first-time buying:

Understanding Mortgage Stress Test in Canada for First-Time Buyers

For prospective homebuyers, there are several financial hoops to jump through on the way to property ownership: growing a healthy downpayment, securing a preapproval, and finding a home that fits within budget, to name a few. Yet, even with years of financial planning, the dream of homeownership can quickly come crashing down if one cannot jump through the hoop that trips up first-time and repeat buyers alike: the mortgage stress test.

In January 2018, the Office of the Superintendent of Financial Institutions, a federal watchdog and the sole regulator of Canadian banks, implemented the Residential Mortgage Underwriting Practices and Procedures guideline – otherwise known as B-20. Under B-20, all new and renewing homebuyers who opt for a regulated mortgage lender are subject to a mortgage stress test, which evaluates the borrower’s ability to afford residential mortgage payments against higher interest rates. OSFI says that this policy protects Canadian homeowners from excessive debt and unaffordable mortgage payments. – Via

First-time homebuyers are encouraged to learn more about the mortgage stress test, as even small changes in interest rates can have a big impact on the kind of home they can afford.

Lastly, another report reiterated a continuous trend in the national market regarding the gradual decrease in prices:

Canadian Housing Prices Not Rising in Previous Five Consecutive Months Since 2013

Canadian real estate markets are still significantly cooler than we’ve gotten used to. The National Bank of Canada – Teranet House Price Index (Teranet HPI) resumed price growth deceleration in January. Prices also failed to rise on a monthly basis, for the fifth month in a row. The monthly movement (or lack of), occurred for the first-time the index has done so since 2013. – Via
Analysts are saying that Canadian real estate prices are positive although most markets are down from the top.

Stay tuned for more information on the Canadian housing market.

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The A-Team

RE/MAX® Fort McMurray's #1 Real Estate team of hard-working, talented REALTORS® who specialize in helping you successfully sell or buy.