5 Things you need to know about Canadian Real Estate in 2018

With the new mortgage rule at hand, Canada’s Real Estate Market will bring new challenges and opportunities for the year 2018. Here are 5 Key Facts that you need to know.

1) More local than ever

To begin with, there's no such thing as a Canadian real estate market. What happens in Toronto and Vancouver’s booming housing market is quite different from that in, say, recovering areas such as Calgary and Edmonton.

The momentum for each month in national home sales activity gained strength late last year, and further expected economic and job growth will boost sales activity this year despite the rising interest rate.  According to Canadian Real Estate Association President Andrew Peck said, "Even so, momentum for home sales differs depending on location and type."

"While activity remained below year-ago levels in the GTA, the decline there was more than offset by some sizable year-over-year gains in the Lower Mainland of British Columbia, Vancouver Island, Calgary, Edmonton, Ottawa and Montreal."

2) The Stress Test

It will be more difficult to become a homeowner this year. As of January 1, borrowers with uninsured mortgages (those putting a down payment of 20 per cent or more) need to undergo a stress test. They must qualify at a new minimum rate: the greater of the Bank of Canada's five-year benchmark rate of 4.99 per cent, or 200 basis points higher than their mortgage rate.

These new rules could reduce your purchasing power substantially.

3) Rising interest rates

The Bank of Canada’s move to increase the benchmark rate to 1.25 per cent will drive up variable mortgages and consumer loans was widely anticipated since the introduction of stress testing 

Royal Bank of Canada’s moved in increasing their benchmark rate was followed by other major Canadian Banks such as Bank of Montreal, CIBC, Scotiabank and TD Canada Trust. 

4) Sustainable growth

Even in previously booming markets such as Toronto and Vancouver, sales are softening and price growth is slowing. For prospective home buyers sitting on the sidelines waiting for your opportunity, this maybe it.

After routine, double-digit price growth in many markets in Ontario and British Columbia over the last few years, appreciation is expected to return to more sustainable levels this year. In its 2018 housing market outlook, ReMax forecasts price growth to be flat in the Greater Toronto Area (compared to 14-per-cent growth from 2016-17), 5 per cent in the Fraser Valley (11 per cent in 2016-17), and a decline of 5 per cent in Victoria (versus 11 per cent growth in 2016-17).

5) Year of the condo

Limited supply and worsening affordability challenges in low-rise homes, particularly in Toronto and Vancouver, have made condominiums an increasingly popular housing choice.

The market in Condo's appreciated in price faster than any other housing type, rising 14.3 per cent to $420,823 on a year-over-year basis.

In its latest Housing Trends and Affordability Report, RBC Economics says overall Canadian housing affordability, for the third quarter of 2017, hit its worst level since the end of 1990.This means condos could rise into the market.

Source: http://www.huffingtonpost.ca/ypnexthome/5-things-you-need-to-know-about-canadian-real-estate-in-2018_a_23337271/