Is the Market in Really Bad Shape

 

The Canadian housing market seems to be on the bend since the start of the fiscal year 2019 and the slow sales continue its trend up until the month of February and March, apparently. Potential buyers, property developers, and other key players in the industry see how things interconnect leading to the market fluctuation and unpredictability.

The housing industry shows slow sales on the market and the Canadian Real Estate Association confirmed this with the February 2019 data:

Canadian Homes: Sales and Prices Plummet in February

The prolonged effects of tougher mortgage policies continued to make their mark on national home sales and prices in February, with the Canadian Real Estate Association’s latest report revealing the largest monthly decline in activity since the stress test was introduced last January.

It was the lowest level in 10 years for February sales, as CREA reports that they’re down in three quarters of all markets, including Canada’s largest cities. – Via zoocasa.com

Although there are differences in opinion, CREA maintains its stance that the mortgage stress test is a huge contributor to the slowdown on the Canadian real estate market.

In line with the slow housing sales, the federal government releases a statement on how it could do something about the issue:

Canadians Not Convinced with Housing Affordability News by Federal Government

The federal government is suggesting it’s going to tackle housing affordability issues, but it looks like many Canadians aren’t buying it.

More than half of the respondents to a new survey from real estate portal Zoocasa.com say government intervention alone isn’t enough to make Canadian housing affordable.

One possible measure proposed is loosening the stress test introduced last year for uninsured mortgages, a regulation that forces borrowers to qualify at a rate 200 basis points above what their bank is offering — even if they can afford a 20-percent downpayment.

The Canada Mortgage and Housing Corporation announced its goal to ensure all Canadians have an affordable home come 2030. – Via livabl.com

On top of reducing the stress test, key players in the industry also pointed the extension of the maximum amortization period as one of the effective solutions to the affordability concern.

Finally, the steady decline of national housing sales could be an issue but developers have also set a new record in the industry with this news:

Real Estate Developer Debt in Canada Reaches All-Time High

Canadian real estate developers are pushing their debt capacity to new highs. Bank of Canada (BoC) numbers show developers racked up a new record high at for credit at chartered banks in Q4 2018. Debt levels for developers are almost three-quarters higher than previous peaks.

Canadian real estate developers have borrowed a new all-time record. The balance of loans at chartered banks reached $16.68 billion in Q4 2018, up 2.36% from the quarter prior. – Via betterdwelling.com

The new record is epic as the data comparison with the previous housing cycles showed a huge difference.

Get more fresh and helpful news next week when we come back with more updates on the real estate and housing market in Canada today!