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January 15, 2022

Canadian home sales drop dramatically year over year: report

Sales of existing homes in Canada fell again last month, the Canadian Real Estate Association announced today, one more example that Canada’s runaway housing market is slumping.

What’s more interesting, however, is that actual sales for December, while not seasonally adjusted, were off 17.4% from a year earlier. That's quite a drop, given that interest rates remain essentially unchanged over the period. 

But rates don't matter if you can't get a mortgage in the first place.

It seems that Finance Minister Flaherty’s latest round of rule changes, which included cutting the maximum length of insured mortgages to 25 years from 30, may be making even more of a dent than expected.

The changes mean that many more Canadians who might be considering buying a new home no longer qualify.

“Successive rounds of tightening mortgage regulations have kept the housing market in check during what has become an extended low interest rate environment,” said Gregory Klump, CREA's Chief Economist.

Many economists expect this tightening to continue through the year. And that's probably a good thing.

Here's the thinking: If prices slide slightly while the economy improves, gradually improving affordability, then the chances of a more dramatic correction when interest rates do rise are reduced.

Are you trying to enter the housing market? What's keeping you back? How far do prices have to drop for you to reach your entry point?

By Gordon Powers, MSN Money



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...