This year will give some new opportunities and challenges for Canadian housing. Below are 5 things that you should know about Canadian real estate, 2018.
Local than ever
Andrew Peck, President at Canadian Real Estate Association said in releasing CREA’s stats on January 15 that monthly momentum for home sales activity at national level gained a very strength during late last year, and further expected job growth and economic will buy home sales activity during this year despite of higher expected rate of interests .
“Activity remained below just a year ago level in GTA, this decline was more than the offset by some of the sizeable year-over-year gain in Lower Mainland of Montreal, Ottawa, Edmonton, Calgary, Vancouver Island and British Columbia.”
This will be very difficult to become a homeowner during this year in Canadian Real Estate. As of 1st January, borrowers with some uninsured mortgages need to undergo stress test.
They must qualify this test at new minimum rate i.e greater of Bank of Canada’s 5 year benchmark rate of around 4.99%. All of these new rules can reduce purchasing power substantially.
At a qualifying rate of 4.99%, a 20% down payment and 25 years amortization are the ballpark numbers that you will sure to look into while you planning to buy home in Canadian markets. Here are some Secret to Real Estate Wealth which reveal secrets for Building and Protecting Real Estate Wealth in Canada.
Rise in Interest Rates
This will be very expensive to borrow money in year 2018.
Calum Ross of Mortgage Management Group, Toronto, a mortgage expert began calling for some fixed rate of mortgage which began to rise few months ago, it is based on Canadian employment data.
As of mid-January, big banks of Canada started to raise their benchmark 5 year mortgage rate. Bank of Canada raised its rate target to nearly 1.25% as announcement of rate of interest.
CMHC says that Canada Mortgage and Housing Corp. expects rise of mortgage rates from now to year 2019. 5 year mortgage rate is expected to stay between 4.9% and 5.7% in year 2018, and between 5.2% and 6.2% in 2019.
Even in scorching markets like Vancouver and Toronto, home sales are very softening and growth of price is slowing down. For the prospective home buyers sitting on sidelines waiting for good opportunity, so it may be like this.
After regular routine, there is a price growth in number of Canadian Real Estate market by double digit price in British Columbia and Ontario over last few years, appreciation is expected to get return to the number of sustainable levels in this year.
In 2018, outlook of housing market, ReMax forecasts growth of price get to be flat in Greater Toronto Area, 5% in Fraser Valley and a decline of around 5% in Victoria. You can also go through Real Estate Action 2.0.
Year of the condo 2.0
Royal LePage, is one of the largest realty authorities of Canada declared 2017 as “year of condo.” Worsening affordability and Limited supply challenges in low rise of homes, particularly in Vancouver and Toronto, have made condos is an increasing housing choice.
According to Royal LePage’s National House Price Composite, price of a home increased by 10.8 % in Canada year-over-year to around $626,042 in 4th quarter of 2017.
Median price of 2 storey homes rose by 11.1% year-over-year to nearly $741,924, while price of bungalows jumped by 7.1% to nearly $522,963.