For years, experts have been saying the Canadian housing market bubble has to burst, and indeed is in imminent danger of collapse, but it seems for all these years, it hasn’t happened. Given the latest figures it doesn’t appear that it will collapse in the foreseeable future.
Some new figures are out showing Canada’s housing market costs continue to rise, and the two major centres, continue to be “red hot”.
New statistics today from the Canadian Real Estate Association (CREA), national home sales were up on a month-over-month basis in November 2015, with sales up nationally 1.8 percent compared to November 2014.
If you exclude the two hottest markets, the greater Vancouver and Toronto areas, the national home price rose 3.4 percent on a year to year basis. If you add them in, the national price rises to 10.2 percent.
Indeed, the Vancouver area a near record 3,524 homes changed hands in November alone, and in the Toronto area, November sales hit a record 7,385. For the first eleven months of this year, 94,401 homes were sold which already beats the previous record set for the 12 months of 2007.
Can you afford it?
The average price for a dwelling in the Toronto area was up 9.6 percent over last year, with a detached home inside Toronto averaging over a million dollars, and a condo averaging $415,316. Just outside the city in the greater Toronto area, the cost rose over 10 percent to an average of almost $830,000 for a detached home.
In Vancouver the composite price rose by a whopping 17.8 percent averaging $752,500, while a detached home in the city rose even more at 22.;6 percent to well over $1,200,000.
Recently the federal government attempted to cool down the two hot markets by increasing the minimum down payment on houses costing more than $500.000.
Presently buyers are required to have a minimum five percent down payment to qualify for Canada Mortgage and Housing Corporation insurance. The CMHC insurane is insisted upon by banks and lenders as protection when providing a mortgage worth more than 80 per cent of the home’s value.
The new law to take effect next February will require a minimum 10 percent down payment on homes over $500.000
Realtors think this may spur some people who had been fence-sitting, to jump in and buy a home before the new rules.
Gregory Klump, CREA’s Chief Economist is quoted in a press release saying, “Minimum down payments will be going up for homes that sell for more than half a million dollars, so larger more expensive housing markets will be affected most. Unfortunately, the regulatory changes will also cause unintended collateral damage to housing markets beyond Toronto and Vancouver, including places that are facing economic headwinds from the collapse in oil prices.”
This is referring to Calgary Alberta, which is heavily involved in the oil industry which has suffered as world oil prices dip. The housing market there has fallen off as well as in Saskatoon and Regina in the province of Saskatchewan.