When it comes to government intervention and mortgage stress tests, are buyers feeling the pinch? According to a recent Re/Max survey conducted by Leger, more than one in four Canadian home buyers report feeling pinched by the new mortgage stress test regulations. Re/Max says government intervention in mortgage lending rules and the stress test will continue to play a major role in the behaviour of buyers in the coming months. The survey revealed that more than forty per cent of buyers have had to make compromises on their home purchases, while almost one in three decided not to purchase at all. One in four buyers compromised on the size of the home they ultimately purchased, while 18 per cent compromised on the location of their new home.
Despite these compromises, buyer confidence remains relatively high. Fifty-five per cent of potential homebuyers said that they feel they can purchase a home that suits their needs compared to forty-six per cent last year. “The stress test, along with rising prices over the last two years, has contributed to the evolution of the Canadian homebuyer, and has prompted them to change their perceptions of ‘must-haves’ such as size and location,” says Christopher Alexander, EVP and regional director, Re/Max Integra Ontario-Atlantic Canada Region. “Homebuyers impacted by regulatory changes beyond their control have adapted to the circumstances and still, more than half feel like they can purchase the right home to suit their needs.
Re/Max says projections for the spring market are optimistic with most markets expected to remain stable or improve and while that would not be surprising for a spring market it’s still reassuring to hear. Supply is low in many markets and demand will grow as the weather warms up. While the prices may not reach the same levels as this time last year, healthy price appreciation from the earlier months of this year is expected across many regions, the company says.
The Guelph Association of Realtors reported 184 MLS sales for the city of Guelph in March, down 33% from March of last year. Keep in mind that March 2017 was a record month and 184 sales is much closer to normal for this time of year. The year to date sales are 442, also about 33% less than last year at this time. The average sale price in March for the royal city was $505,042 and 45% of MLS sales sold for full price or more. The sales to listings ratio stood at 70% for March. This is just about the historical average for Guelph. So even with new mortgage stress tests and uncertainty in other markets, Guelph’s real estate market returned to normal last month. March was in most aspects a very typical March for Guelph with many sales figures returning to historical averages. The only stand out is that 45% of homes sold for full price or more. This is about 10% higher than normal for this time of year and is primarily due to the fact that the inventory of homes for sale is quite low. Only 220 active listings at the beginning of April. This represents only 1.5 months of inventory at current sales levels.
Buyers: The crazy spring market conditions of a year ago haven’t returned! Although 45% of homes are selling at full price or more, 55% of homes are selling below asking price! It’s possible to find a good buy out there and even if you find yourself in a multiple offer situation, chances are the sale price won’t be too far above asking.
Sellers: Inventory is very low and almost half of all homes sold are getting a least full price. A little sunshine should really give the market a boost. May and June should be the best two months of the year to sell.
Dean Manton is Guelph’s real estate expert. Now in his 20th year! Buying or selling call Dean today!
