Happy New Year! 2018 is upon us and with already being a few days in, we’ve had questions about our opinions on the state of the real estate market in Calgary. Given we’ve had so much unfavorable activity over the last several years with the recession and markets, people’s concerns and questions about one of our biggest assets that we will own in life are understandably warranted.
The big concern is the fact that as of January 1st 2018, the new stress test mandated by the federal government takes effect. Previously, the stress test applied to those consumers who had less than 20% as a down payment to put towards their home purchase. Now, this stress test applies to everyone applying for a mortgage. Individuals across the board will have to qualify for the posted average mortgage rates, or a rate that is two percent higher than what their bank is offering. This has been implemented to protect consumers and lenders and effectively, the federal government, and though this decreases the purchasing power for many applicants, it is widely believed this will have more of an effect in the Vancouver and Toronto markets, where house prices are much more inflated.
Calgary has high-condo availability, so this makes condo-type dwellings attractive for buyers rather than sellers because prices will be on average lower to try and sell. However, if you are in the market for a condo, then this is your time to rise and shine and find your dream unit!
The recession is by definition over, so that may now prompt buyers who were hesitant to make a financial move over the last year to come out of the shadows and make a purchase. In addition, since the Bank of Canada increased borrowing costs twice in 2017 (in July and September), more buyers may be inclined to make a purchase throughout the early part of 2018 because there is concern that mortgage rates could continue to rise throughout 2018.
To end, as there is more economic stability in our city, it is expected that we will more confidence and an increase in the real estate sector. The amount of growth is of course not known, but it is expected that there will be a modest rising trend both in home sales and also home values throughout 2018.
As always, we remain at your disposal to answer any questions you may have. Feel free to contact us at any time!