by Macrealty Marketing Team | Nov 8, 2017 | In The News
A one-bedroom condo at 1565 W 6th Avenue in Vancouver listed for $698,000. The overheated entry-level home buying market is being caused by conflicting initiatives from various levels of government, says Dan Scarrow.
The federal government’s tougher mortgage lending rules and the British Columbia government’s affordable housing measures are working against each other. Ultimately, these moves will hurt first-time buyers the most, says a senior real estate executive with a leading Vancouver-based firm.
Canada’s banking regulator, the Office of the Superintendent of Financial Institutions, says it wants to reduce the risk of mortgage defaults due to high levels of household debt. But applying stricter lending guidelines is making it more difficult for home buyers to access mortgage funds, says Dan Scarrow, vice-president at Macdonald Realty.
Last year, the former Liberal provincial government offered first-time home buyers help in covering the cost of a mortgage down payment with an interest-free loan of up to $37,500 that is payment-free for the first five years, Scarrow said, adding the new NDP government says it wants to continue the program for the time being.
These initiatives, on top of government intervention with the 15 per cent foreign buyers’ tax introduced last year and two interest rate hikes this year, are causing major market distortions, such as overheated entry-level home buying and a cooling of the higher priced homes in Vancouver, he said.
Over the past year, MLS statistics show that the benchmark price for a single-family home in greater Vancouver rose only 2.9% to $1,617,300 while condo prices soared 21.7% to a benchmark price of $635,800.
In the end, all these initiatives are hurting the very people that various levels of government are trying to help, says Bill Dick, managing broker for Macdonald Realty.
“Since many of the government reforms have been implemented, the top end of the market has softened while the entry level has performed extremely well,” he said.
While Macdonald Realty realizes there is a place for some government intervention in the housing market, it is against the mortgage regulation changes that it sees as unnecessary, especially considering that Canadian banks have long been recognized globally for managing their business well.
“The regulators have arbitrarily insisted that buyers undergo stress testing that artificially limits the amount that they can borrow, making it harder for first-time buyers to compete with already wealthy landowners,” Scarrow says. “The banks have their own risk assessment and they have made the determination that these are acceptable risks and returns that they are willing to take.”
Macdonald Real Estate Group employs more than 1,000 people in over a dozen real estate offices across British Columbia. Last year, sales volume exceeded $8.9 billion while assets under management grew to over $5 billion.
This story was created by Content Works, Postmedia’s commercial content division, on behalf of Macdonald Realty. The article was originally posted on vancouversun.com November 6, 2017. Written by Michael Bernard.
by Macrealty Marketing Team | Jul 13, 2017 | In The News
First-time homebuyers and owners about to renew their mortgages are nervous about the first benchmark interest-rate hike, a Victoria mortgage broker said Wednesday.
The increase, the first in nearly seven years, might prompt some people to lock in their mortgage rates, Colleen Flynn of Select Mortgage Group said. “It’s a concern for people. They are saying: ‘What’s this going to mean for me?’ ” she said. “I think more people are locking in to be cautious.”
Flynn said she’s also getting calls from homeowners who want to renew their mortgages early.
The Bank of Canada raised its key interest-rate target to 0.75 per cent from 0.5 per cent on Wednesday, prompting the five big banks to raise their prime rates a quarter of a percentage point. At the Royal Bank of Canada, that puts the prime rate at 2.95 per cent, up from 2.7 per cent.
Economists expect a gradual cycle of rate hikes amid rising confidence in the economy and projected growth.
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by Macrealty Marketing Team | Oct 14, 2016 | In The News
Sales of condos and townhomes could soften in Canada’s two largest housing markets as first-time buyers face tougher lending rules that take effect on Monday.
The mortgage changes will likely be felt especially hard in Greater Vancouver and the Greater Toronto Area, according to the Canadian Real Estate Association.
“First-time home buyers, particularly in housing markets with a lack of affordable inventory of single-family homes, may be priced out of the market by the new regulations that take effect on Oct. 17,” CREA chief economist Gregory Klump said in a statement on Friday.
He made the comment as CREA released data showing the average price for various housing types sold nationally in about 100 markets in September reached $474,590, up 9.5 per cent from the same month in 2015. Sales volume increased 4.2 per cent.
Last week, the federal government announced measures to tighten mortgage rules. Ottawa is also closing tax loopholes used by some foreign buyers.
In most cases, homeowners who are looking to upgrade to larger houses must first sell their existing properties before they are able to acquire their next place.
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by Macrealty Marketing Team | Oct 3, 2016 | In The News
The federal government announced new measures for housing market to slow the injection of foreign cash and to tighten eligibility rules on prospective borrowers. Jonathan Cooper, vice president of operations at Macdonald Real Estate Group, joins BNN with perspective on Ottawa’s new housing policies.
Realtor: Ottawa’s new housing policies ‘logical step’
(To view the video on mobile devices, please click here for direct play on BNN.)
About Macdonald Real Estate Group
Based in Vancouver, Canada, Macdonald Real Estate Group (MREG) has an annual sales volume of over $7 billion and over $2 billion in assets under management. With more than 20 offices and nearly 1,000 staff and REALTORS®, MREG offers a full range of real estate services, including residential and commercial brokerage, property and strata management, project marketing, and the MREG Canadian Real Estate Investment Centre in Shanghai, China. Macdonald Realty is the residential division of Macdonald Real Estate Group. For more information, visit www.macrealty.com.
by Macrealty Marketing Team | Jul 7, 2016 | In The News
Jonathan Cooper, Vice President of Operations at Macdonald Real Estate Group joins Business News Network (BNN) for reaction to B.C.’s housing data as well as OSFI’s warnings to mortgage underwriters.
(To view the video on mobile devices, please click here for direct play on BNN.)
