Why house prices are unlikely to rise any time soon

Two years ago, the Canadian housing market experienced one of its hottest springs ever, with prices in cities like Toronto and Vancouver rising at an alarming rate. But since then, real estate has lost its sizzle, thanks to the implementation of foreign buyer taxes, higher interest rates and stricter mortgage qualification rules. And while the federal government promised new help for first-time buyers in the recent budget, many details are unclear.

Last January, the government imposed a new mortgage stress test. Uninsured borrowers must now qualify at the Bank of Canada’s five-year benchmark rate, or at their current rate plus an additional two per cent. The changes had an instant effect on sales, one that is likely to continue this spring. Prices in February fell for Vancouver, Edmonton and Calgary, marking Calgary’s 10th month of drops, with Edmonton in negative territory since the summer of 2017.

And while some were predicting that the 2019 federal budget might have an impact on the market, it now seems unlikely that any of the initiatives announced by Finance Minister Bill Morneau will have an effect on the spring market. Arguably the budget’s biggest measure aimed at helping the real estate market was the new Canada Mortgage and Housing Corporation First-Time Home Buyer Incentive.

Bunch of politicians walking through a strata complex : 'Yep here's a bunch of places I'd never live in!'

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Douglas Todd: Why we need to stop subsidizing foreign ownership of Metro Vancouver housing“Imagine that a wealthy person could access all of the same social services and public amenities as a local individual, but not pay income taxes. That would be a huge advantage in the housing… It is also common for foreign-based landlords expect renters to pay the utility bills (providing water distribution and waste collection) on top of rent. Many people signing a lease have been surprised by these clauses that can add hundreds to the cost of renting. Typical vancouver grump!
Source: VancouverSun - 🏆 49. / 61 Read more »