{"id":7444,"date":"2016-10-06T16:51:41","date_gmt":"2016-10-06T20:51:41","guid":{"rendered":"http:\/\/www.zoocasa.com\/blog\/?p=7444"},"modified":"2016-10-07T13:02:47","modified_gmt":"2016-10-07T17:02:47","slug":"september-real-estate-numbers-reveal-market-reaction","status":"publish","type":"post","link":"https:\/\/www.zoocasa.com\/blog\/september-real-estate-numbers-reveal-market-reaction\/","title":{"rendered":"September Real Estate Numbers Reveal New Rule Reaction"},"content":{"rendered":"

The September numbers are in for Canada\u2019s two largest markets \u2013 and they show Vancouver and Toronto home buyers are reacting to recent housing market rules in different ways.<\/p>\n

The Real Estate Board of Greater Vancouver reveals the west-coast city is still reeling from a newly-introduced 15% tax on foreign home buyers, as home sales plunge nearly 10% from August, and 32.6% from last year. It\u2019s the first time in two years that sales have fallen below the 10-year average, and detached and luxury housing seem most impacted, as wealthy-out-of-country buyers are clearly reassessing their options.<\/p>\n

Meanwhile, Toronto real estate<\/a> continues to boom, with a whopping 9,902 sales in September, reports the Toronto Real Estate Board \u2013 an increase of 21.5%. Prices continue to rise in both cities, to an average of $1,532,242 and $755,755, respectively.<\/p>\n

While it\u2019s too soon to tell if Toronto is absorbing displaced investor attention, TREB President Larry Cerqua says buyers are clearly still willing to persevere against steep price growth and competition to get the home they want.<\/p>\n

\u201cWe continued to see a strong demand for ownership housing up against a short supply of listings in the Greater Toronto Area in September,\u201d stated Cerqua. \u201cThe sustained lack of inventory in many neighbourhoods across the GTA continued to underpin high rates of price growth for all home types.”<\/p>\n

New Rules to Limit Home Buyer Affordability<\/h2>\n

While the divergence between the two cities as a result of the tax is an interesting development, it may be a short-lived trend; this month\u2019s numbers are the last without the influence of newly announced mortgage rules, which take effect on October 17. As of that date, all mortgage applicants paying less than 20% down on their homes will need to pass a mortgage \u201cstress test\u201d, forcing them to qualify at a higher rate than the discounts currently available on the market.<\/p>\n

Related Read: New Mortgage Rules May Impact Your Ability to Buy a Home<\/a><\/strong><\/p>\n

Analysts Concerned for Future Home Sales Activity<\/h2>\n

The Department of Finance announced the rule changes as part of efforts to cool housing prices and deter risky borrowing, and believes they could lead to an 8% dip in sales over the next year. However, other analysts say they\u2019ll knock a large number of first time buyers out of the market, and could impact affordability\u00a0by as much as 20%.<\/p>\n

The British Columbia Real Estate Association<\/a> is among the most vocal in opposing the new rules, releasing a statement that implies the government seems to have missed the point.<\/p>\n

\u201c(This will) cause the sharpest drop in the purchasing power of low-equity home buyers in years,\u201d reads BCREA\u2019s statement. \u201cAt a time when housing affordability is a critical issue, deliberately chopping millennials purchasing power by as much as 20% will only exacerbate a well-known problem.\u201d<\/p>\n

According to BCREA, there are a few ways this will play out in the market:<\/p>\n