{"id":12029,"date":"2019-03-29T10:10:30","date_gmt":"2019-03-29T17:10:30","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=12029"},"modified":"2019-03-29T09:06:06","modified_gmt":"2019-03-29T16:06:06","slug":"dont-blame-mortgage-stress-test-for-the-biggest-drop-in-home-sales","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2019\/03\/dont-blame-mortgage-stress-test-for-the-biggest-drop-in-home-sales\/","title":{"rendered":"Don&#8217;t Blame Mortgage Stress Test for The Biggest Drop in Home Sales"},"content":{"rendered":"<p style=\"text-align: justify;\">Realtors and a big Canadian bank aren\u2019t seeing eye-to-eye on what\u2019s behind the freeze that hit the national housing market market this February, when saw home sales fell lower than they\u2019ve been since 2012.<\/p>\n<p style=\"text-align: justify;\">The number of homes that changed hands in February was down 9.1 percent compared to January and 4.4 percent on an annual basis, once adjusted for seasonal factors, according to the Canadian Real Estate Association (CREA). The benchmark price of a home, meanwhile, was roughly unchanged from the previous month as well as a year ago.<\/p>\n<p style=\"text-align: justify;\">In commentary accompanying the data, which was released this week, the association suggests the mortgage stress test hammered home sales in the 14th month since federal policymakers introduced the measure.<\/p>\n<p style=\"text-align: justify;\">\u201cOnly time will tell whether successive changes to mortgage regulations went too far, since the impact of policy decisions becomes apparent only well after the fact,\u201d writes Gregory Klump, CREA\u2019s chief economist, in a statement.<\/p>\n<p style=\"text-align: justify;\">Last January, stress testing \u2014 which was already mandatory for mortgage applicants without a minimum 20-percent downpayment in hand \u2014 was expanded to the uninsured sphere.<\/p>\n<p style=\"text-align: justify;\">Previously, borrowers could avoid the stress testing, which requires them to qualify for a loan at a rate 200 basis points above whatever their lender offers, by putting forward 20 percent or more.<\/p>\n<p style=\"text-align: justify;\">BMO Chief Economist Douglas Porter isn\u2019t so quick to attribute the slow February to this major policy change.<\/p>\n<p style=\"text-align: justify;\">\u201cWhile the weak results prompted some to rail against tighter mortgage rules and other constraints, we would instead highlight the weather,\u201d writes Porter in a response to the CREA release.<\/p>\n<p style=\"text-align: justify;\">Even a mild February is normally a slow month for home sales anyways, he notes, and last month was anything but.<\/p>\n<p style=\"text-align: justify;\">It\u2019s something he pointed out earlier this month as the Toronto and Vancouver real estate boards released their respective home sales data for February.<\/p>\n<p style=\"text-align: justify;\">This time around, Porter also notes that the biggest annual drops were limited to Western Canada, where markets reliant on the energy sector remain depressed and Vancouver continues to correct.<\/p>\n<p style=\"text-align: justify;\">If BC and Alberta are pulled from calculations, sales climbed 2.8 percent annually, Porter notes.<\/p>\n<p style=\"text-align: justify;\">\u201cWe won\u2019t delve into great detail on these figures; as one wise person put it, at this time of year, housing releases are more of a weather report than an economic report,\u201d adds Porter.<\/p>\n<p style=\"text-align: justify;\"><a href=\"https:\/\/www.livabl.com\/2019\/03\/mortgage-stress-testing-canadian-home-sales-experts-dont-agree.html\" target=\"_blank\" rel=\"noopener noreferrer\">Mortgage Stress Testing to Blame for The Biggest Drop in Canadian Home Sales in 7 Years? Experts Don&#8217;t Agree<\/a> by Josh Sherman | Livabl<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Realtors and a big Canadian bank aren\u2019t seeing eye-to-eye on what\u2019s behind the freeze that hit the national housing market market this February, when saw home sales fell lower than &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2019\/03\/dont-blame-mortgage-stress-test-for-the-biggest-drop-in-home-sales\/\">read more<\/a>]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[],"class_list":["post-12029","post","type-post","status-publish","format-standard","hentry","category-market-updates"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Don&#039;t Blame Mortgage Stress Test for The Biggest Drop in Home Sales &#8226; Rory C Real Estate | Oakwyn Realty<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.roryc.ca\/blog\/2019\/03\/dont-blame-mortgage-stress-test-for-the-biggest-drop-in-home-sales\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Don&#039;t Blame Mortgage Stress Test for The Biggest Drop in Home Sales &#8226; 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