Mortgage "bazooka" knocks sales to 7-year low
May 22 2018
What some realtors are calling a mortgage “bazooka” has driven Canadian home sales to a seven-year low following the implementation of tougher mortgage regulations.
The Canadian Real Estate Association (CREA) reports that national home sales fell 13.9 per cent in April, with resales falling in 60 per cent of markets. Among the worse hit markets were Calgary, the Fraser Valley in B.C. and Ottawa.
Home sales across the country were down nearly 3 per cent from a month earlier.
CREA says the national average sale price decreased 11.3 per cent in April from a year earlier to just over $495,000. Listings of homes for sale were also down, falling 4.8 per cent from March to April to the lowest level in nine years.
CREA, and many agents, blame the federal mortgage stress test that now requires all homebuyers qualify at higher five-year mortgage rates than what is available on the market. The strategy was aimed at cooling hot housing markets in Metro Vancouver and Greater Toronto, but it is affecting buyers across the country.
In Vancouver, resale transactions in April plunged to a 17-year low, according to the Real Estate Board of Greater Vancouver.
Agents in cities where sales and prices were already struggling say the tougher lending rules aren’t needed or welcome.
“It’s like using a bazooka to kill a housefly,” said one Calgary real estate agent.