{"id":9298,"date":"2018-06-04T11:11:49","date_gmt":"2018-06-04T18:11:49","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=9298"},"modified":"2018-05-28T09:47:25","modified_gmt":"2018-05-28T16:47:25","slug":"1st-time-home-buyers-becoming-excluded-from-the-housing-market","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2018\/06\/1st-time-home-buyers-becoming-excluded-from-the-housing-market\/","title":{"rendered":"1st-Time Home Buyers Becoming Excluded from the Housing Market"},"content":{"rendered":"<p style=\"text-align: justify;\">Many of the predictions about first-time buyers becoming excluded from the housing market because of the mortgage stress test are coming true.<\/p>\n<p style=\"text-align: justify;\">As Sherwood Mortgage Group\u2019s president told CREW late last year, Guideline B-20, as the stress test is formally known, would catalyze a decline in market activity\u2014which has, indeed, occurred in most of Canada\u2014and millennial-aged homebuyers would bear the brunt.<\/p>\n<p style=\"text-align: justify;\">\u201cIt will be isolated to certain individuals, mostly first-time buyers,\u201d said Anthony Contento. \u201cWill there be a price drop? Possibly; I\u2019d anticipate anywhere between five and 10%, but our real estate will continue to surge, interest rates will continue to stay low, and we\u2019ll make up the difference on the majority of other purchasers out there.\u201d<\/p>\n<p style=\"text-align: justify;\">It is that true interest rates are still low relative to historical levels\u2014although they are climbing\u2014and it\u2019s also true that real estate has continued surging, particularly in Quebec. However, as reported by the Montreal Gazette, first-time buyers are quickly losing buying power.<\/p>\n<p style=\"text-align: justify;\">\u201cWhat we know for sure is that second- and third-time buyers are the most active right now on the market, especially on the island,\u201d the Gazette quoted Greater Montreal Real Estate Board economist Paul Cardinal as saying. \u201cIf you\u2019re a first-time buyer, you\u2019re looking at the very east part or west part of Montreal, or a condo instead of a single-family home. Or if you absolutely want a single-family home, you might have to go to the suburbs.\u201d<\/p>\n<p style=\"text-align: justify;\">The city has born witness to 15 consecutive quarters of rising sales\u2014Q1 of this year hit a seven-year high\u2014which has depleted inventory and driven prices up.<\/p>\n<p style=\"text-align: justify;\">Montreal Island\u2019s median house prices going back a decade have jumped 63%, however, it\u2019s greatly outpaced median income, which only saw a modest 9% increase. The predictable result is a young buying cohort unable to save for down payments.<\/p>\n<p style=\"text-align: justify;\">The stress test, which requires borrowers to demonstrate that they could withstand a 2% interest rate hike, isn\u2019t the only impediment for first-time buyers. A slew of regulation over the preceding eight years, including shortening amortizations, has created a perform storm.<\/p>\n<p style=\"text-align: justify;\">To elucidate how quickly housing costs have escalated, in 2008 the average single-family home in Montreal\u2019s Sud-Ouest cost $275,000, requiring a minimum down payment of $13,750. Fast forward 10 years, and that same home, now $600,000, would require at least $36,000 down.<\/p>\n<p style=\"text-align: justify;\">The median price for a single-family home in the city\u2019s trendy Plateau-Mont-Royal is over $1mln.<\/p>\n<p style=\"text-align: justify;\">Two years ago, the Canada Mortgage and Housing Corporation decided that uninsured mortgages over $500,000 required 10% down, and in addition to disallowing mortgage insurance for homes over $1mln, they now require 20% down payments.<\/p>\n<p style=\"text-align: justify;\">Cardinal says that while buyers can still get into Montreal\u2019s market, the likelihood that they can buy detached homes on the island will diminish with time.<\/p>\n<p style=\"text-align: justify;\">\u201cScarcity dictates prices. The more scarcity you have, the more upward pressure there is on prices,\u201d Cardinal said. \u201cOn the island of Montreal, where land is available to build, it will be for condos. Scarcity of single-family homes will increase.\u201d<\/p>\n<p><a href=\"https:\/\/www.canadianrealestatemagazine.ca\/news\/another-major-housing-market-is-reeling-243012.aspx\" target=\"_blank\" rel=\"noopener\">Another Major Housing Market is Reeling<\/a> by Neil Sharma | Canadian Real Estate Wealth<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Many of the predictions about first-time buyers becoming excluded from the housing market because of the mortgage stress test are coming true. As Sherwood Mortgage Group\u2019s president told CREW late &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2018\/06\/1st-time-home-buyers-becoming-excluded-from-the-housing-market\/\">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":[13],"tags":[],"class_list":["post-9298","post","type-post","status-publish","format-standard","hentry","category-real-estate"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.7 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>1st-Time Home Buyers Becoming Excluded from the Housing Market &#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\/2018\/06\/1st-time-home-buyers-becoming-excluded-from-the-housing-market\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"1st-Time Home Buyers Becoming Excluded from the Housing Market &#8226; Rory C Real Estate | Oakwyn Realty\" \/>\n<meta name=\"twitter:description\" content=\"Many of the predictions about first-time buyers becoming excluded from the housing market because of the mortgage stress test are coming true. 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