Brian White

Change to Mortgage Underwriting - October 17, 2017

The Office of the Superintendent of Financial Institutions (OSFI) announced new restrictions on uninsured mortgages today. Effective January 1, 2018, all home-buyers with a down-payment of more than 20 per cent will have to qualify at the higher of the posted 5-year qualifying rate and their contractual rate plus 200 basis points (2 per cent).  This is in addition to policy announced in October of 2016 that required all insured borrowers qualify at the posted 5-year qualifying rate.

In addition to the new stress test for uninsured mortgages, OSFI is also requiring lenders to establish and adhere to appropriate loan-to-value limits reflective of risk and the current economic environment and is prohibiting s lending arrangements designed to circumvent loan-to-value limits such as combing mortgages with other lending products.

These new residential mortgage underwriting requirements will apply to all Federally regulated financial institutions.
 
The impact of the new stress test requirement will be to lower the purchasing power of households by up to 20 cent. Like past tightening of mortgage regulations, we anticipate that the market impact will be sharp but temporary. In the past, we have seen home sales decline in the 3 to 9 months following the implementation of tighter mortgage lending standards, with the severity of the impact fading within one year.  However, these new regulations impact a larger pool of mortgages and so the impact could be more significant than in the past.

This October I am celebrating 27 years in the real estate & construction industry. All of my clients enjoy my competitive knowledge base an advantage they don’t get from most of the agents in the business. I treat my clients like family, so they are comfortable moving forward, and when the time comes to make a move, they have complete confidence in their decision. Experience matters!

I'm never too busy for any of your referrals,

Your Realtor for Life,

Brian White

Canadian Housing Starts - October 10, 2017

Canadian housing starts decreased by 4 per cent in September to 217,118 units at a seasonally adjusted annual rate (SAAR).  The six-month trend in Canadian housing starts also declined to 214,821 units SAAR.

New home construction in BC rose 6 per cent on a monthly basis to 37,470 units SAAR but was down 18 per cent on a year-over-year basis.  Single detached starts were flat compared to one year ago while multiple unit starts declined 24 per cent year-over-year.

Looking at census metropolitan areas (CMA) in BC: 

• Total starts in the Vancouver CMA fell 13 per cent from August and were down about half compared to September 2016. Multiple unit starts were down 58 per cent from one year ago as record levels of units under construction weigh on new projects.

• In the Victoria CMA market, housing starts continue to surge, rising 127 per cent year-over-year. Multiple unit starts continue to drive new home construction, with starts more than triple levels seen last September.
• New home construction in the Kelowna CMA jumped more than 200 per cent year-over-year as close to 350 new multiple unit starts were recorded.

• Housing starts in the Abbotsford-Mission CMA also more than doubled year-over-year due to strong growth in both single and multiple starts.

As you see outside the forgien tax umbrella markets continue to grow while the changes have had a negitive impact on the market and is shrinking the equity of BC homeowners.

This October 19th, I am celebrating 27 years in the real estate & construction industry. All my clients enjoy my competitive knowledge base an advantage they won’t get from most agents in the business. I treat my clients like family, so they are comfortable moving forward, and when the time comes to make a move, they have complete confidence in their decision.

I'm never too busy for any of your referrals.

Your Realtor for Life

Brian

The Ontario real estate industry received some long overdue good news from the Toronto Real Estate Board, as home prices climbed 6%, representing the first monthly increase since the slide began in April.

The housing slowdown that began when Ontario following in British Columbia's footsteps instituted a set of new regulations, including a 15% foreign buyers’ tax, that caused house prices to slip almost 20% since the peak in April of this year.

Home Capital Group Inc.(TSX:HCG) also played a large part in souring investor sentiment. The crisis sparked a sell-off in other alternative lenders, like Equitable Group Inc.(TSX:EQB) and mortgage insurers like Genworth MI Canada Inc.(TSX:MIC). After a tumultuous spring and summer, Canada housing has shown signs that it may be ready for a significant bounce back in the coming months.

CMHC is set to explore loosening of regulations

The Canadian Mortgage and Housing Corporation (CMHC) is reportedly mulling regulatory changes to make it easier for small-business owners to qualify for new mortgages. Current mortgage regulations have stringent income stipulations that force small-business owners, contractors, and other non-salaried workers to qualify based on a two-year average. This can be especially complicated for younger workers in contract work, which is becoming more prevalent in the so-called gig economy.

Intuit Canada released a study in January in which it projected self-employed Canadians will make up 45% of the workforce in 2020. If and when these regulations are loosened to adapt to the new working environment, it could entice many new prospective buyers.

New construction and real estate investment continues at a record pace

Toronto and its surrounding cities saw an incredible rise in the first third of 2017. Hamilton, Ontario, was of particular interest as a city undergoing a transition into an affordable landing spot for those priced out of Toronto. On September 29, Hamilton surpassed the $1 billion mark when it came to construction investment in the city. This represents the fastest growth in investment in the city’s history.

RioCan Real Estate Investment Trust(TSX:REI.UN) announced that it plans to pursue a $2 billion sale of its holdings in secondary markets and focus more on commercial and residential properties in major cities.

Immigration is set to rise in 2018

Canadian immigration minister Ahmed Hussen indicated that immigration levels may increase in 2018 from the already record levels of 300,000 per year seen in 2015 and 2016. Some experts are predicting a rise in the 310,000-320,000 range.

Immigration from outside Canada into Ontario was the highest reported in five years in 2016. Immigration also remains one of the main sources of population growth in the city of Toronto, both from outside and inside Canada. There is still debate over how immigration has impacted demand, but the continuing surplus should yield positive results for the market.

Investors in housing and alternative lenders should also take solace in the recent comments by the Bank of Canada following the September 6th rate hike. Governor Stephen Poloz has assured that the bank will proceed with caution, which seems to indicate a gradual approach to rising interest rates. This should help lenders and the industry at large keep borrowing costs low.

This October 19th, I am celebrating 27 years in the real estate & construction industry. My clients enjoy my competitive knowledge base an advantage they won’t get from most agents in the business. I treat my clients like family, so they are comfortable moving forward, and when the time comes to make a move, they have complete confidence in their decision.

I'm never too busy for any of your referrals.

Your Realtor for Life

Brian

Canadian Employment - October 6, 2017

Canadian employment increased by 10,000 jobs in September while the the national unemployment rate remained steady at 6.2 per cent. In the twelve months to August, employment in Canada is up 1.8 per cent, or 320,000 jobs. Somewhat tepid job growth along with slumping exports and flat real GDP in recent months means the Bank of Canada will very likely hold off on raising rates at its October meeting.
 
In BC, employment declined for a third consecutive month, falling by 6,700 jobs in September. Full-time employment was up by 5,000 jobs but an 11,600 decrease in part-time work more than offset those gains.   Over the past twelve months, the level of employment in BC is up 3.6 per cent.  Despite three months of falling employment, the provincial unemployment rate continued to slide lower due to declining participation in the labour market. The BC unemployment rate fell 0.2 points to 4.9 per cent, the lowest rate since September 2008.

This October 19th, I am celebrating 27 years in the real estate & construction industry. All of my clients enjoy my competitive knowledge base an advantage they won’t get from most agents in the business. I treat my clients like family, so they are comfortable moving forward, and when the time comes to make a move, they have complete confidence in their decision.

I'm never too busy for any of your referrals.

Your Realtor for Life

Brian