All three levels of government are enacting policies to help “cool” the housing market. What are those policies, what will the result of those policies be and how will they affect home buyers and sellers? Let’s start with the new policy changes:
Federal – New mortgage “stress-test” rules mean it will be much harder for buyers to qualify for large mortgages. The typical buyer will qualify for 20% less of a mortgage than they might have previously. Proposed small business tax changes could also affect the purchasing power of some individuals.
Provincial – The provincial government is working to close the fixed term tenancy “loophole” which allows both tenants and landlords to end a lease at an agreed upon date. Legislating away landlord rights to rent their homes out for specific periods of time can only decrease rental stock over time, as renting is now even more risky for home owners. If approved, this new policy will be retroactive and affect the contracts landlords and tenants already have in place.
Municipal – In an attempt to make housing more “affordable,” the City of Vancouver is doing a great job of achieving the opposite. The new vacancy tax has countless loopholes. By the City’s own estimates, this policy will take years to become revenue neutral and will only open up a handful of rental options, mostly for luxury properties.
The Mayor’s new “locals first” presale agreement is a great example of his ego getting in the way of good policy decisions. Enforcing the policy is a difficult legal challenge and adds more red tape to an already outrageous building process.
Keith’s Advice for Buyers – If you’re a buyer who is already stretching their budget, you may want to consider buying before the end of the year. However, if you have time and are unconcerned about mortgage approval, wait to see how prices are affected by the new mortgage rules in the new year. If you’re brave enough to build, lots are popping up all over, as builders pack up and head to other municipalities with less red tape.
Keith’s Advice for Sellers – Although still hot, the condo market is starting to see some declines in price. Pricing strategy and proper marketing is more important than ever. The detached market (over $1.5M) has been declining for months now, but in a small city like Vancouver with a lack of supply, I don’t expect to see prices dip below where they were in 2016.
– Keith Roy