Regulation changes and economic factors can have a major impact on the housing market. In Alberta and throughout Canada, incoming federal regulations may make December a busy season for residential real estate. This is because of regulations taking effect on Jan. 1, 2018 that will impact resellers.
The federal regulations are designed to address issues related to the resale of residential real estate, an area that has been relatively unregulated up to this point. Under the new mortgage regulations, prospective home buyers will need to qualify based on either the five-year fixed rate product from the Bank of Canada or two percentage points above their contracted mortgage rate, whichever is higher. The regulations hope to prevent people from purchasing homes that they cannot afford in the long term.
Mortgage professionals in Alberta and throughout Canada are concerned that the regulations will limit the people who are able to purchase residential real estate. Although the regulations are an effort to slow down the housing market, the extent of the impact remains to be seen. Experts expect that particularly hot housing markets may slow down in 2018 as a result of the change, while the rest of 2017 will be busier than typical holiday seasons.
Concerns with changes in the housing market are causing regulators to consider many options. This can lead to changes that could catch even a seasoned investor in residential real estate off-guard. Those buying and selling a home in Alberta should speak to a lawyer about each purchasing decision to stay up-to-date on current legislation and legal responsibilities.
Source: Financial Post, "One last gasp for the Canadian residential market as rule changes cloud 2018 outlook", Garry Marr, Oct. 27, 2017