October reflects the average number of sales that we experienced in Red Deer throughout the summer, particularly in July. The active listing count is now following the typical downward trend as we enter the colder months, as sellers plan to pull down their for sale signs & string their Christmas lights. The average number of days to sell has dropped slightly as those happy buyers secure their new nests for the winter.
It will be interesting to see how the market will respond to even further mortgage changes to take place. Stress tests, used for approving high-ratio mortgages will be applied to all new insured mortgages – including those where the buyer has more than 20 per cent for a down payment. The stress test is aimed at assuring the lender that the home buyer could still afford the mortgage if interest rates were to rise. The home buyer would need to qualify for a loan at the negotiated rate in the mortgage contract, but also at the Bank of Canada's five-year fixed posted mortgage rate, which is an average of the posted rates of the big six banks in Canada. This rate is usually higher than what buyers can negotiate. Other aspects of the stress test require that the home buyer will be spending no more than 39 per cent of income on home-carrying costs like mortgage payments, heat and taxes. Another measure called total debt service includes all other debt payments and the TDS ratio must not exceed 44 per cent.
These measures will affect home buyers who have at least 20 per cent for a down payment but are seeking a mortgage that may stretch them too thin if interest rates were to rise. It also affects lenders seeking to buy government-backed insurance for low-ratio mortgages. The government is responding to concerns that sharp rises in house prices in cities like Toronto and Vancouver could increase the risk of defaults in the future should mortgage rates rise.
Nontheless, we can always be optimistic for the spring, With the recent surge in the price of oil, growing political parties & pipeline cancellations it's hard to see where Alberta's future lies or when the Real Estate markets will return to 2014 statistics. Let's hope things iron out over a busy winter in the oil & gas industry here in Alberta.
Information Based on Red Deer Real Estate Board MLS® Stats 2013-2017
Posted by Jay McDouall on
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