{"id":7475,"date":"2017-11-23T10:10:01","date_gmt":"2017-11-23T18:10:01","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=7475"},"modified":"2017-11-07T15:24:26","modified_gmt":"2017-11-07T23:24:26","slug":"canadian-housing-affordability-to-deteriorate-further-heading-into-2018","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2017\/11\/canadian-housing-affordability-to-deteriorate-further-heading-into-2018\/","title":{"rendered":"Canadian Housing Affordability to Deteriorate Further Heading into 2018"},"content":{"rendered":"<p style=\"text-align: justify;\">Canadian home buyers should brace for an increasingly unaffordable housing market in the coming year, according to a new note from Scotiabank Economics.<\/p>\n<p style=\"text-align: justify;\">In the note, the Scotiabank Senior Economist Adrienne Warren writes that the cost of homeownership now accounts for 37% of the median Canadian income, the highest share in almost 30 years.<\/p>\n<p style=\"text-align: justify;\">\u201cWe expect affordability to deteriorate further in 2018 and 2019 alongside rising borrowing costs and new mortgage rule changes,\u201d reads the note.<\/p>\n<p style=\"text-align: justify;\">Those mortgage rule changes will come into effect on January 1, when all uninsured borrowers will be required to qualify against the Bank of Canada\u2019s five-year benchmark rate, or at their contract mortgage rate plus an additional 2%.<\/p>\n<p style=\"text-align: justify;\">The new rules are intended to ensure that uninsured borrowers can withstand higher interest rates. The overnight rate \u2014 which influences mortgage and was at a historically low 0.5% earlier this year \u2014 has been raised 50 basis points since July, with some predicting a third hike next year.<\/p>\n<p style=\"text-align: justify;\">\u201cMore stringent stress tests for uninsured mortgages\u2026 will exert a drag on affordability,\u201d reads the note. \u201cIt is estimated that about 10 per cent of current loan applications would no longer qualify under the new rules.\u201d<\/p>\n<p style=\"text-align: justify;\">While affordability pressures could slow the market and cause prices to drop, Warren predicts that it is more likely prices will continue to rise in the new year.<\/p>\n<p style=\"text-align: justify;\">\u201cComing into 2018 we\u2019re looking at historically high immigration rates, which is going to put pressure on the market, particularly on single family dwellings which are sought after but really hard to add to the stock,\u201d Warren tells BuzzBuzzNews.<\/p>\n<p style=\"text-align: justify;\">She cites strong fundamentals such as low employment, a growing population, rising density and land costs as additional reasons for a price surge.<\/p>\n<p style=\"text-align: justify;\">According to the note, it would take at least 10 years of stagnant home prices and moderate income growth to make home ownership in Toronto and Vancouver affordable to the average Canadian.<\/p>\n<p style=\"text-align: justify;\">\u201cWhen you look at these numbers, it makes sense that in most parts of the country we\u2019ve seen an increase in rental demand,\u201d says Warren. \u201cThough we\u2019ve seen a fall off in homeownership rates most sharply in Toronto and Vancouver.\u201d<\/p>\n<p style=\"text-align: justify;\">Warren stresses that the current unaffordability of Canada\u2019s housing market is here to stay.<\/p>\n<p style=\"text-align: justify;\">\u201cThis is not a temporary deterioration we\u2019re seeing,\u201d says Warren. \u201cThis is going to be something that continues into the next two years.\u201d<\/p>\n<p><a href=\"http:\/\/news.buzzbuzzhome.com\/2017\/11\/bank-predicts-canadian-housing-affordability-deteriorate-heading-2018.html\" target=\"_blank\" rel=\"noopener\">Bank Predicts Canadian Housing Affordability to Deteriorate Further Heading into 2018<\/a> by Sarah Niedoba | Buzz Buzz Home<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Canadian home buyers should brace for an increasingly unaffordable housing market in the coming year, according to a new note from Scotiabank Economics. In the note, the Scotiabank Senior Economist &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2017\/11\/canadian-housing-affordability-to-deteriorate-further-heading-into-2018\/\">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-7475","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>Canadian Housing Affordability to Deteriorate Further Heading into 2018 &#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\/2017\/11\/canadian-housing-affordability-to-deteriorate-further-heading-into-2018\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Canadian Housing Affordability to Deteriorate Further Heading into 2018 &#8226; Rory C Real Estate | Oakwyn Realty\" \/>\n<meta name=\"twitter:description\" content=\"Canadian home buyers should brace for an increasingly unaffordable housing market in the coming year, according to a new note from Scotiabank Economics. 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