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
Posted by: Bryan Jaskolka | Jan 17, 2022 1:45:33 PM
The really frightening part of all of this is that YOY, prices are still up by over 1 per cent: http://www.canadianmortgagesinc.ca/index.php/toronto-sales-down-in-december-prices-up-yoy/. Until prices start going down, we won't really be in a cooling at all.
Posted by: CityGirl | Jan 19, 2022 8:33:17 AM
As a mortgage agent, my business was directly affected by the mortgage rule changes back in July but in a good way! I have always encouraged my clients to stay within a reasonable budget for buying a home and now I have the new guidelines to help enforce fiscal responsibility. I really wish that the government would step in and make changes to the credit card industry because that is the root of all financial trouble. Mortgage debt is "good" debt, in that, the equity grows (over time) by changes in the market and with paying down the principle, it grows even more. Having said that, First Time Home Buyers need to keep a level head when considering their house buying budget. You can be "approved" for a very high amount of mortgage debt but they need to consider all the other costs associated with owning a home (utilities, property taxes, maintenance, etc.). I feel that the government has reached its limit in restricting mortgage debt. Now it's time to tackle consumer debt. How can we encourage the government to step in regarding personal credit limits? Or limit the interest that can be charged on credit cards? Something needs to be done before we end up in the same boat as our American neighbours.
Posted by: ABgurl | Jan 20, 2022 9:43:10 AM
Its about time that "people" who can't afford a home are stopped from entering. If one looks through the annals of history, home ownership was not a right but a privilege but somewhere along the line in the last 50 years, it morphed into a right ( as an side I find it highly interesting that it was Flaherty in the first place who allowed the 30+ yr-shades of England where transgenerational mortgage transfers were/are the norm- mortgages which permitted people who should not be owning a home when they really could not afford it to enter the market). In addition to the issue of homeowners that can't afford the place, I have to question when did it become the norm as well, that instead of chosing wisely and purchasing your home with the intention of it being the "only" house you will own over your lifetime like our grandparents did( and making it work for all the stages of your life from the having a family stage to the seniordom years)? This buying a first time home with the expectation that you will "trade up" as you enter the various stages of your life, has contributed greatly to the fact that Canadians remain in debt and do not look to the future as needing to pay off your home ASAP.( I am frigging amazed at the people I speak to that have no issue with making a once a month mortgage payment for the FULL length of a 25 + mortgage because they have come to believe that it is the norm to have debt( as they put it , that's just the way it is now-mortgage and car payments forever) and secondly, because they know their budget would not allow a faster pay-dowm as they really coulnd;t afford the house in the first place). And lest everyone thinks I am simply "picking on" the younger generations( the X,Y and those very few Zs that have gotten into the market), the worst damn offenders are the boomers( from 1944 to 1958/9- I unfortunately am considered to be a part of the boomer gen BUT my cohort group from 1960 to 64 are very very different from those ahead of us in that there were so many of them , we had no chance at anything as we entered adulthood from jobs to owning homes until very late in our lives ) who have fueled the "expectation" that everything is a right including home ownership when it can not be afforded ( and don't forget this group is the same bunch of idiots who attempt to retire with mortgage and consumer debt unlike the genrations before them such as my grandparents of the depression era so is it any wonder that their offspring seem to think that they too are entitled and live well beyond their means which also includes mortgages they can't afford??)