{"id":14597,"date":"2017-10-06T01:00:32","date_gmt":"2017-10-06T05:00:32","guid":{"rendered":"http:\/\/www.zoocasa.com\/blog\/?p=14597"},"modified":"2017-10-06T09:19:27","modified_gmt":"2017-10-06T13:19:27","slug":"new-mortgage-rules-confirmed-vancouvers-missing-middle-and-an-airbnb-ally-weekly-real-estate-news-recap","status":"publish","type":"post","link":"https:\/\/www.zoocasa.com\/blog\/new-mortgage-rules-confirmed-vancouvers-missing-middle-and-an-airbnb-ally-weekly-real-estate-news-recap\/","title":{"rendered":"New Mortgage Rules Confirmed, Vancouver\u2019s Missing Middle, and an Airbnb Ally: Weekly Real Estate News Recap"},"content":{"rendered":"

New Mortgage Rules To Be Announced By End of Month<\/h2>\n

New mortgage rules that will tighten qualification criteria for more borrowers are confirmed to be finalized by the end of October, and will go into effect within two to three months, the banking regulator has\u00a0announced<\/span><\/p>\n

Referred to as B-20 and B-21, the changes will require all mortgage applicants to qualify at a higher rate than that of their actual mortgage, most likely a 2-per-cent threshold. Currently, only borrowers who pay less than 20 per cent down on their homes must be stress tested at the Bank of Canada\u2019s current benchmark rate of 2.84 per cent. Co-lending mortgage arrangements, which allow one borrower to piggyback on another with more equity, will also be banned.<\/span><\/p>\n

Related Read: <\/b>New B-21 Mortgage Rules Are Coming. Here\u2019s What to Expect<\/b><\/a><\/p>\n

The changes are to offset the risk of highly indebted households, made worse by rising real estate prices in Canada\u2019s biggest markets says OSFI head Jeremy Rudin. \u201cWe are not wanting to see those risks crystallize in rising arrears and defaults before we act,\u201d he said to an audience at the Economic Club of Canada.<\/span><\/p>\n

The pending changes have prompted calls for caution from various corners of the housing industry, as a number of tweaks have already been made to chill the market. It\u2019s feared too much has been introduced too soon, which could have unintended consequences for buyers. Tim Hudak, President of the Ontario Real Estate Association, called it an outright \u201c<\/span>war on home buyers<\/span><\/a>\u201d, while the Canadian Builders Association has warned scaling back the market could mean a downturn in industry jobs.<\/span><\/p>\n

GTA Home Sales Down 35% From Last Year<\/h2>\n

The latest numbers from the Toronto Real Estate Board show the current state of the housing market is still drastically below last year’s activity – but that’s not necessarily a bad thing, as it ushers in balanced conditions and greater choice for buyers.<\/p>\n

Overall home sales continue to lag by double digits compared to last year, with 6,379 homes changing hands \u2013 a 35-per-cent decrease from September 2016. However, they were relatively flat month over month at an increase of 0.3 per cent, indicating that the rapid cool down triggered by the Fair Housing Plan in May is moderating. The average price across all home types increased 2.6 per cent year over year and 5.9 per cent from August, to $775,546.<\/p>\n

Check out our infographic to see how home prices have changed across all home types in September<\/a>.<\/strong><\/p>\n

Canadian Housing Affordability Hits 27-Year Low<\/h2>\n

It\u2019s no secret that real estate is expensive in Canada \u2013 but a new report from RBC finds buying a home hasn\u2019t been this unaffordable since the 90s.<\/span><\/p>\n

The lender\u2019s <\/span>Housing Trends and Affordability Report<\/span><\/i><\/a> reveals the national aggregate affordability measure \u2013 which RBC calculates using housing costs as a share of household income \u2013 rose to 46.7 per cent in the second quarter. That\u2019s a 27-year high, and the eighth consecutive quarter of affordability deterioration.<\/span><\/p>\n

Not surprisingly, Toronto saw the greatest increase in unaffordability, with the city\u2019s index hitting 75.4 per cent, up from 71.1 per cent just one quarter ago. Craig Wright, senior vice president and chief economist at RBC, says this is despite the implementation of the Ontario Fair Housing Plan, which was\u00a0introduced to calm market conditions in the Golden Horseshoe. Sales have fallen dramatically since the rules were put in place, but that hasn\u2019t yet translated to improved affordability, he says.<\/span><\/p>\n

\u201cOnce again, the Toronto area played a big role in shifting up the national affordability needle in Q2. While Ontario\u2019s Fair Housing Plan did cause a reaction on part of buyers and sellers in April, the impact on prices wasn\u2019t felt immediately,\u201d he states. \u201cIn the end, any evidence of price mediation in the Toronto region emerged too late to make a difference in the second quarter.\u201d<\/span><\/p>\n

Vancouver continues to be the least affordable real estate market in Canada, with an index of 80.7 per cent. This indicates prices are rebounding in the west coast city after slight softening over the past two quarters as a result of the Foreign Buyer\u2019s Tax. <\/span><\/p>\n

RBC also warns that rising interest rates are a contributing factor in unaffordability, and will continue to be for the foreseeable future.<\/span><\/p>\n

\u201cRising interest rates could have significant implications for housing affordability nationwide. After back-to-back increases to interest rates in June and September, there are indications that the Bank of Canada will likely make one more before the year\u2019s end and three more times in 2018 for a total increase of 100 basis points,\u201d says Wright. \u201cWe estimate that this potentially could lift the RBC aggregate affordability measure up by a further 3.5 per cent nationwide, although other factors, such as income gains, would have a mitigating effect.\u201d<\/span><\/p>\n

Saving for Down Payment Main Reason Millennials Remain at Home<\/h2>\n

The millennial who won\u2019t leave the family nest, occupying the basement and relying on mom to do laundry, is a growing stereotype, but a recent report debunks the myth that young adults are lazy or financially incompetent. A University of Waterloo survey that polled 700 Canadians on why they remain home finds the main motivation is the opportunity to save, especially for a home down payment of their own.<\/span><\/p>\n

A full 79.2 per cent of millennials cited saving as their reason for remaining in the family home, while 42.1 per cent point to extremely high rents in the cities where they work. The average one-bedroom rent price recently exceeded $2,000 in Toronto, while vacancies are at a record low.<\/span><\/p>\n

Other reasons included the succinct \u201cI want to\u201d (34.6 per cent), paying off debt (32.4 per cent), looking for work (25.1 per cent), other (19.3 per cent), and caregiving (12.1 per cent).<\/span><\/p>\n

According to 2016 Census numbers, nearly half of all millennials in Toronto remain living\u00a0with their parents.<\/span><\/p>\n

Hefner Leaves Crystal Harris Lavish LA Home<\/h2>\n

Crystal Harris, widow to late Playboy founder Hugh Hefner, may have been left out of his reportedly US$43-million will \u2013 but the controversial media mogul has left her a foothold in the Los Angeles real estate market.<\/span><\/p>\n

It\u2019s reported that Hefner purchased the US$7 million home for Harris, who he married in 2012 and is 60 years his junior, as part of a prenup in 2013. Nestled in the LA hills, this 5,900-square-foot modern home has four bedrooms, five bathrooms, a huge infinity pool, cinema room, gourmet kitchen, games room, and massive floor-to-ceiling windows that let in panoramic LA views. Sounds like the perfect pad for Harris to throw a legendary party or two of her own.<\/span><\/p>\n