market correction might be the only solution, “but that’ll just leave a whole lot of people upside down.” We’ll take a pause for the cause, instead. The Canadian Real Estate Association provides one, in the form of its average price forecast for this year. For BC, it sees prices in Vancouver falling 7.8 per cent, compared to 8.1 per-cent-growth in 2016. For Ontario, it foresees prices climbing just one per cent, versus shooting up more than 15 per cent last year. “There will certainly be opportunity for first-time buyers in both markets,” ReMax Vice-President Elton Ash told New Home Guide. “The challenge will be in the higher qualification rates for high-ratio mortgages. Once firsttime buyers reset their affordability expectations, they will see price advantages in buying in 2017.”
2 | Ottawa is in your corner – really The latest mortgage rule changes introduced by the federal government late last year were intended to stabilize “overheated” housing markets, mostly in Vancouver and Toronto, slow home price growth and keep mortgage indebtedness under control. What the changes also do, however, is make it more difficult for young Canadians to take that important first home-buying step. Homebuyers who apply for a highratio mortgage (less than 20 per cent down payment) now have to undergo a “stress test” by qualifying at a rate (4.64 per cent) you may not even actually have to pay (if you qualified for a mortgage at some of the current better rates, say 2.5 per cent). These changes may mean that your buying power is reduced, but it’s for your own good. The stress test is intended to assure lenders – and yourself – that you could still afford your payments if interest rates rise. In other words, the changes are intended to protect you from the “stupidity” (Vaz-Oxlade’s words) of borrowing more easy money than you should.
You can also look forward to Ottawa releasing the National Housing Strategy some time in 2017. It is intended to address multiple and varied issues, from affordable housing to rental markets to home ownership, and execute a vision that is equitable across differing economies, markets and conditions. It’s a tall order, indeed. Such complex and far-reaching challenges are why some critics are skeptical that Ottawa can deliver anything meaningful in the strategy. But we’ll take a more positive outlook. Canada has never had a national strategy, and given the growing importance – and challenges – of housing, only good can come from the process.
3 | Economic mettle Canada has proven its economic mettle time and time again over the last several years. In its Financial System Review in December, the Bank of Canada says the Canadian financial system remains resilient, as the nation’s economy improves. The proof is in the pudding, in the way of Statistics Canada’s Employment Report from December, which says employment rose by 54,000 for the month, with the unemployment rate at 6.9 per cent. For the fourth-quarter of 2016, employment increased by 0.6 per cent – the largest increase since the second quarter of 2010. For 2016 as a whole, employment gains totaled 214,000 or 1.2 per cent, compared to 0.9-per-cent growth over the same period a year earlier. Just a bunch of numbers, right? Not exactly. Housing markets can’t thrive without a strong economy. Economic growth leads to employment growth, wage growth, and greater consumer confidence – which all lead to buying homes and household goods.
4 | Alberta rebound Housing markets in Calgary and Edmonton remained relatively stable in 2016, with moderate declines in sales and average prices as a result
of the extended recovery of the oil sector. The average residential sale price in Edmonton decreased by two per cent year-over-year, while in Calgary it dropped by four per cent, according to ReMax. Buyer activity is expected to pick up slightly in the second half this year, with improving employment opportunities in the oil sector. For the province as a whole, the Canadian Real Estate Association says 2016 and 2017 will finish up largely flat in terms of price growth – but this is actually an improvement over a 1.9-per-cent decline in 2015. Alberta, no doubt, will take it. The consensus is that real estate in the province is poised to begin to rebound in the second half of 2017. On the new home front, housing starts – an important sign of economic health – are starting to rise. “A member survey showed home starts are expected to rise a modest 5.7 per cent in 2107,” Donna Moore, CEO of Canadian Home Builders’ Association – Alberta, told YP NextHome. “That optimism likely reflects gains of almost 50 per cent in oil prices last year that are raising consumer comfort levels after a couple of tough years for the economy.”
5 | Interest rates Vaz-Oxlade’s concerns notwithstanding, it’s fair to say Canadians have benefited from the prolonged period of low interest rates. Most experts don’t see any significant change here for 2017, though some lenders recently inched up rates on some mortgage products. “It’s no secret that fixed mortgage rates are closely correlated with bond yields,” says Andrew C. MacDonald, a client account manager at Torontobased Calum Ross Mortgage. “We’ve already seen an upward movement in bond yields from historical lows, and most lenders have started to raise interest rates slightly, as a result. The good news is rates are still hovering just above historical lows, which makes now a great time to purchase a home.” JAN 21 - FEB 4, 2017 | NEW CONDO GUIDE 37