Many factors can impact the performance of the housing market in Canada. While Alberta residents typically look to the economy to determine the outlook of the residential real estate market, legal changes may be having the biggest impact in the new year. The new mortgage stress test, which comes into law in Jan. 2018, has caused the Canadian Real Estate Association to forecast a 5.3 percent drop in national sales in 2018.
The 2018 forecast from the Canadian Real Estate Association prior to the passing of new mortgage law projected 8,500 more residential real estate sales than the adjusted estimates. The Association also predicts that the national home price will slip by 1.8 percent in the new year. Part of the reason for the change is the high number of home buyers who entered the market in late 2017 in order to buy residential real estate before mortgage laws came into effect.
The revised guidelines, called B-20, were announced in October. Home buyers will have to prove they can still service their uninsured mortgage at a significantly higher interest rate in order to qualify. Prior to the passing of this law, Alberta's real estate market had seen a steady 2017 year with annual gains in both Calgary and Edmonton.
There is no way of knowing the result of any new legislation with certainty. However, news about this change shows how important it is for residential real estate buyers and sellers to stay aware of law changes in Alberta and throughout Canada. Those seeking legal advice for a real estate transaction should contact a lawyer for support.
Source: Financial Post, "Home sales seen to fall more than 5% as new mortgage rules kick in", Armina Ligaya, Dec. 14, 2017