We are on day 10 of 2018, and one thing is for sure: real estate news does not take a break.
The new mortgage regulations came into effect on January 1, 2018. The significant change in mortgage regulations is the establishment of a new minimum qualifying rate (or financial stress test) for borrowers making a down payment of 20 percent or more of the home's value. Previously, the stress test was only required for those borrowers with insured mortgages and terms less than five years.
What does this mean?
Mortgage applications will be vetted using a minimum qualifying rate equal the Bank of Canada’s five-year benchmark rate, which is currently (4.99 per cent). In other words, their contractual rate plus two percentage points. The stress test will reduce people’s purchasing power by 20 per cent.
Higher Property Taxes
The other big news came from BC Assessment. The dollar value for the 2,044,482 properties in the province is here.The good news goes to detached homeowners, who might even see their property assessments go down or remain steady from last year. According to CBC, for the first time in years, many single-family homes in Vancouver, the North Shore, Burnaby and Richmond went down in value — some by as much as 10 per cent.
The bad news goes to condo owners who will see their property value increase. Brian Smith, deputy assessor at BC assessment, said to Metro Vancouver, "2017 has been one of the first years that I've seen where the strata market has increased by a greater percentage than the single-family market.”
Keep in mind; higher property value doesn’t necessarily translate into higher property taxes. However, the deadline to appeal your BC Assessment is January 31. Click here if you need more information.
We ended 2017 with the most inventory since 2014. Assuming that these sellers are planning on bringing their properties back on the market, coupled with the fact that the weather appears to be mild for the rest of January, I think we can expect a bit of a flood of inventory in the next few weeks. People are wary about the effect the new mortgage regulations might have on the prices. Industry experts have forecasted downward pressure on prices as the aftermath of these changes.
In other words, we can expect the market to come strong out of the gate as people try to sell before there is any downward pressure, coupled with mild conditions in the weather, which historically means more inventory during the winter months.
Keep in mind that higher inventory and lower sales usually create negative pressure on prices. If you are wondering if it is time for you to sell your home and want to know how much your property is worth, contact me here and get a free market evaluation.