It is not a fact that the new mortgage rules caused sales of existing homes to decrease in May and June. There were sign of that prior to Ottawa tightening mortgage rule. The price of the average home sold was $369,339, which was 0.8 percent less than in the same time period in 2011. The new rules will only exacerbate the cooling down of the housing market.
Vancouver and four Southern Ontario cities have had declines in home sales reaching the double digits. The new stricter rules for mortgage lending were put into place to counteract a possible bubble in the market. Condominiums in in Toronto are of special concern.
The amount of equity borrowers can use as collateral decreased to 80 percent. It was 85 percent. The maximum mortgage is now 25 years instead of 30 for all government insured mortgages. Houses selling for over a million dollars are no longer eligible for government-secured mortgage insurance.
Is it likely Canada will experience a housing bubble? One expert considers it a strong possibility. A home in the U.S. costs half of what a home in Canada costs. They had been priced pretty close to parity previously. Now it is suspected that the prices in Canada are unsustainable.
Home buyers did not quickly purchase houses before the new rules took effect. They took effect in July. Usually, there would be a rush when more restrictions were due to take effect. Now no one knows how it will impact Canada’s housing situation as far as more or fewer sales.
New listings went up 1.4 percent in June when compared to May. The Toronto market was in the lead. However, nearly half of 100 local markets countrywide, showed a minimum of 1 percent in new listings. New listings rose again in June as well. Market conditions show some improvement and that provides hope for a better future in real estate.
Prices differ widely in different parts of Canada. Vancouver has taken a dip and is now a buyer’s market. In Toronto, the asking price has risen 6.8 percent. Meanwhile, Calgary has seen a rise in sales of 16.7 percent. It seems like a return to what was called the three primary factors that influence buyers when it comes to real estate, namely, location, location, location.