New mortgage rules make buying hard

How’s this for an opener:

While the country’s new mortgage rules are meant to cool the market, eventually making housing more affordable, they’ve put home ownership out of reach for many prospective buyers.

Uh-huh. And what if the problem was that we put home ownership in reach of too many prospective buyers?

Those who don’t have a down payment of 20 per cent or more will be limited to a maximum amortization period of 25 years. Since 40 per cent of new mortgages last year were for 26 to 30 years, according to a survey from the Canadian Association of Accredited Mortgage Professionals, real-estate neophytes might feel the change most dramatically.

WHoa! Did they just say 40 percent of new mortgages were over 25 year amorts?

Another new rule announced by Mr. Flaherty sets the maximum gross debt-service ratio – the percentage of household income being used to pay for housing – at 39 per cent so buyers will be less likely to take on mortgages that are too big and could leave them floundering if rates increase.

That’s the one that Andrea Benton, a 37-year-old entrepreneur in North Vancouver, B.C., said hits her family of four hardest.

“It means my total family income would have to be an exorbitant amount to afford an $800,000 house,” she said.

You mean you’re expected to have a high income to afford an $800,000 house?!?

Read all the comedy in the full article here.

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[…] but there isn’t much looking up in the outlook.  We’re now a couple of months into the new mortgage rules that have taken out some first time buyers and put pressure on $1 million […]

Boombust
Guest
Boombust

If that 20K party/get together is going to happen…I would suggest the Admiral Pub in N. Burnaby. Central enough.

Be sure to wear you “moniker” name tag!

I hope the partaaaay goes ahead SOONER, rather than later. Te he!

Hibernating Renter
Member
Hibernating Renter

@HFHC: Are you a realtor? Will you make yourself known? I’m sure some of us would like to show our gratitude by making a purchase through you when we come out of hibernation. (Not me, though; I already told paulb I’ll be in touch)

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[…] forum is calling on ‘sellers to unite’ to prevent further price drops. (hat tip to VMD on Vancouver Condo Info). “A brand new house in good area of West Richmond, 8111 Dalemore Rd, […]

Vote Down The Facts
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Vote Down The Facts

@midnite toker: “Do I really have to move to Calgary to make more than $65 k a year ?”

Er, no.

Arthur Fonzarelli
Guest
Arthur Fonzarelli
Immigration changes passed today include tossing out / paying out all present economic class immigrant applications through the federally administered programs: Federal Skilled worker Program and Immigrant Investor Program. There were about 80,000 of them ALONE. Also the PNP and those programs increase language level requirements from CLB3 to CLB4. Wow that’s a lot of people No new Immigrant Investors for six months, no Federal Skilled Workers – THEN they open up for new applications January 2013. Those don’t process overnight. That sure slows things down for a long long time. Hmmm.. Also huge clamp down on new refugees – stricter management of the detention centres and deportations. “Nobody is held captive – they can leave the detention centre any time they want – to go back to their country.” Part of me loves it, part of me hates it,… Read more »
midnite toker
Member
midnite toker

@BurbsBoy: Damn right ! Do I really have to move to Calgary to make more than $65 k a year ? I’m kind of settled here.

Anonymous
Guest
Anonymous

20k party by Aug 15?

Today’s sales numbers were absolutely brutal. A s/l of 20% in June?

BurbsBoy
Guest
BurbsBoy

I have to agree on the difficulty in attracting good, well skilled, engineers or technicians here… our company is looking to hire at least 3-4 people right now (pneumatics, electronic, electrical, PLC… that kind of stuff) and wages just are not enough to entice anyone to Vancouver… everyone we’ve interviewed so far says “hey I need at least $X to get the same thing I already have”… and no company here that I know of can afford to pay $X. Tough spot for companies in Vancouver.

crashcow
Member

There’s lots of media attention recently around the improving US housing market. The front page of the NYT today was the latest to declare the recovery was at hand. I agree there’s now a good case for owning over renting in many places in the US, but do not underestimate their shadow inventory.

“The problem is that the Banks had voluntarily stopped their foreclosures while negotiating the robo-signing settlement. They are now poised to flood the market with foreclosed homes. Their distressed sales are likely to pressure prices.”

http://www.ritholtz.com/blog/2012/06/looming-foreclosures-house-price-obstacle/

VMD
Member

@paulb:
paulb’s stats corroborated by Larry’s numbers a bit later:
Vancouver All Areas*
New Listings – 247
Back On Market Listings – 4
Price Changes – 161
Sold Listings – 48

*Attached & Detached – Date: 2012/06/28 Time: 21:34

Meh
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Meh

I think the biggest change to immigration is the language requirement. I’m hearing some Irish accents around Vancouver these days. I’m sure Mr. Kenney is pleased.

piklishi
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piklishi

@HFHC Please keep posting, and if you have time to break it down as well will be great. Thanks.

oneangryslav2
Guest
oneangryslav2

@oneangryslav2: Jeebus! I should proofread my posts before clicking submit!

HFHC
Guest
HFHC

I will keep posting the stats and they will continue to be the whole lower mainland up to and including abbotsford. I would like to contribute more during the day if time permits at work. Maybe I could break it down by SFH, townhouse and condo. Let me know if you guys have some ideas. As long as I have access to the mlxchange I will post

oneangryslav2
Guest
oneangryslav2

@HFHC: Hi HFHC! Please continue posting. We’ll know that your numbers are for the whole of the Lower Mainland and not the Vancouver and inner suburbs only (as Paul’s are). More, in this case, is definitely care. Your work is much appreciated!

VHB
Member
VHB

@VHB: That should read:

Inventory as of June 28, 2012

VHB
Member
VHB
Jun-2012 Total days 21 Days elapsed so far 20 Weekends / holidays 8 Days missing 0 Days remaining 1 7 Calendar Day Moving Average: Sales 117 7 Calendar Day Moving Average: Listings 259 SALES Sales so far 2356 Projection for rest of month (using 7day MA) 117 Projected month end total 2473 NEW LISTINGS Listings so far 5307 Projection for rest of month (using 7day MA) 259 Projected month end total 5566 Sell-list so far 44.4% Projected month-end sell-list 44.4% MONTHS OF INVENTORY Inventory as of June 27, 2012 19553 Current MoI at this sales pace 7.91 Yeah, we might get under 2500 sales–but remember there were a few days early in June when PaulB was unable to post. I used Larry’s numbers for those days. In any case, the final official numbers will be slightly different–but not too far… Read more »
Arthur Fonzarelli
Guest
Arthur Fonzarelli

While I appreciate deeply the fact that sales have hit the wall, I don’t like how prices continue to do the Wile-E Coyote thingy… then all the market fluffers do is talk to prices. Wonder if the benchmark will actually make some downward progress – if so they’ll have to come up with a new measure – tracking the rate of acceleration of price declines or some obscure shit that helps the market fluffers keep the market “pumped up” between “shoots”… http://en.wikipedia.org/wiki/Fluffer.

Best place on meth
Member
Best place on meth

@Bo Xilai:

Since the launch of Canada’s Economic Action Plan 2012, Minister Kenney has announced a series of changes to CIC’s economic immigration programs. They include:

changing business immigration programs to target more active investment in Canadian growth companies and more innovative entrepreneurs

That’s right communist party officials, simply laundering your bribe/extortion money in Vancouver real estate simply won’t cut it anymore.

You’re now going to have start businesses and create jobs and all that nasty stuff that involves hard work and intelligence.

Still interested?

crashcow
Member

49 sales today. nice.
10-yr low sales activity ratios.
pushing 20K inventory & 10 MOI marks.
Record high leverage & valuation ratios.
tightening mortgage rules & hard stop in new CMHC lending

I hope SamanthaD is still enjoying her patio wine. Bless her heart. She’ll be needing a lot more booze in the coming years.

Yalie
Guest
Yalie

@Bo Xilai:

Too bad about the skilled worker program. Like all immigration programs it had its flaws, but at least it had its heart in the right place. Recent layoffs at Radical Entertainment aside, most of the people I know in the local tech community are having a tough time attracting skilled engineers to work in Vancouver.

On the other hand, good riddance to the investor immigrant program. I don’t hear too many complaints about a lack of billionaire sweatshop owners coming to the city – except maybe a few west side realtors and house flippers. I will shed a tear for them.

Vote Down The Facts
Guest
Vote Down The Facts

@Bo Xilai: “Another nail in Vancouver’s real estate coffin…”

The Skilled Worker changes won’t have an effect for 12-18 months, due to the time it takes to process applications.

Your own link says: ‘“This temporary pause on new Federal Skilled Worker applications will allow us to set the program on a new course as we intend to launch revised selection criteria soon,” said Minister Kenney. “The pause has no impact on the number of workers Canada admits into the country, as CIC continues to process applications already received. Current immigration remains at historically high levels.”’

Bo Xilai
Guest
Bo Xilai

Another nail in Vancouver’s real estate coffin…

http://www.cic.gc.ca/english/department/media/releases/2012/2012-06-28.asp

“Effective July 1st, 2012, Citizenship and Immigration Canada will place a temporary pause on new applications to the Federal Skilled Worker Program (FSWP) and federal Immigrant Investor Program (IIP).”

And to think all my friends in the Communist Party of China had all their suitcases full of cash ready to buy up Vancouver real estate…

Best place on meth
Member
Best place on meth

The chances of hitting 2500 sales this month just took a savage beating.

June might be another 10 year low.

Large price drops begin in July.