The impacts Canada’s mortgage stress test has had in calming the hot housing market by reducing demand are in the rear view mirror, according to the B.C. Real Estate Association.
In its monthly report on August’s housing climate, it saw a 26 per cent decrease in housing sales from the same month last year. But seasonally adjusted, housing sales have been increasing by two to three percentage points since June.
“The B.C. housing market is evolving along the same path blazed by Ontario and Alberta, where the initial shock of the mortgage stress-test is already dissipating, leading to increasing home sales,” said Cameron Muir, BCREA chief economist.
In its quarterly forecast in August, the association reported MLS residential sales are expected to be 21 per cent lower by the end of this year compared to 2017. That’s a drop from more than 100,000 sales to 82,000 in 2018.
In that report, the BCREA placed blame for the sales decrease on the mortgage qualification stress that was introduced in January, which requires all mortgage applicants qualify for a mortgage at a higher rate than they will actually pay. The idea is to ensure the new home buyer can pay in anticipation of rising interest rates.
Muir said static sales, as well as new home starts, have led to a more balanced supply in market conditions in many B.C. regions, compared to earlier this year. That means less competition and multiple offers that typically drive up prices.
The average price for a home also edged back 1.2 per cent from the same time last year, at $669,776.