Real estate sales in Canada are trending upward and it’s likely an indication that consumers have come to grips with B-20.
Canadian Real Estate Association sales statistics for July show national home sales rose 1.9% over the previous month—and according to REMAX’s regional executive vice president, that means buyers have finally adjusted to stricter qualification rules.
“It certainly looks like consumers are slowly becoming accustomed to the B-20 mortgage qualification guidelines,” said Elton Ash. “It’s occurring a little later than we thought, and that seems to be the reason why inventory levels are dropping in the Toronto area.”
While a tough pill to swallow for many, Canadians are realizing that in order to become homeowners, they’ll have to settle for less house.
“What’s occurring is they’re readjusting their expectations,” he said. “In other words, where they may have qualified previously to purchase an $850,000 home, they’re now looking at a $750,000 home. It’s not that they’re seeking secondary financing—because the only lenders not bound by B-20 are credit unions and private lenders—it’s reducing their overall expectations of what they can afford in the type of home they’re looking for.”
The real estate market, it would appear, has finally balanced, and Ash expects that to last through the first quarter of 2019. He added that last year’s record sales volume and price increases were an anomaly that people should be cognizant about before making drawing comparisons.
“When you measure against a record-setting year on a year-over-year basis, what appears to be negative is actually positive,” said Ash. “The whole B-20 mortgage qualification stress test was brought in to slow the market, and that is certainly what’s occurring, and what we’re getting into is more traditional market situation where it’s balanced overall. The days on market for homes are stretching out to what they were, and multiple offer situations have disappeared across the board, although in Toronto proper they occur in certain situations.”
As Ron Butler of Butler Mortgage previously told MortgageBrokerNews.ca, the doom and gloom pervading discussions about Toronto real estate ignore a salient fact: After peaking, the market is returning to normalcy.
“It’s down from an all-time record unit of sales,” said Butler. “It’s down from the highest peak, so all that’s going to happen this year is it will look like the numbers in 2015. Sales are still happening; they’re just not happening at a record level like they were years ago.”
