With new mortgage stress test rules on the minds of many Canadians looking to purchase real estate in 2018, questions as to whether buying in the first quarter (for those who secured pre-approvals which are typically good for 120 days) or waiting for a potential price correction following the implementation of said rules is one which many are battling as we start the New Year.
With the new stress test rules now in effect, and data unlikely to be concrete out of the gate, an aura of uncertainty has gripped the market of late, with real estate speculators and first time homebuyers alike considering the potential impact these new measures will have on the Canadian housing market.
The bullish school of thought generally relies on the fact that the Canadian real estate market has remained relatively immune to recent macroeconomic effects and cooling measures which have been put in place of late. Case in point: the recent foreign investment tax placed on homes bought by foreigners in B.C. and Ontario aimed at cooling the real estate markets in these respective regions.
While B.C. saw a significant reduction in sales volume following the implementation of the tax, prices began to creep up almost immediately following a very tiny drop in prices; Ontario has had a different experience of late, however many industry experts expect prices to begin to rise more gradually moving forward, given the significant drop house prices have seen since this Spring (a 17% drop, on average).
The bearish school of thought, however, focuses on the experience of other countries outside of Canada which have seen significant reductions in real estate values in the past decade, an experience not shared by Canada but a risk to which, perhaps, the country is not immune.
Invest wisely, my friends.
