So far this month SFH average prices are down $7,500 from February’s month-end, and down $17,000 from March 2010. The median is down $5,000 from last month and down $28,000 from last March.
Similar story for condo prices. Average price is down $7,700 from last month and down $14,000 from last March. Median prices are down $11,000 from last month and down $19,000 from last March.
Normally, I purposely refrain from posting prices during the mid-month reviews because a lot can happen in the final two weeks. But the reason I’m looking at prices this morning is because of what some are asserting regarding the market – that the rule changes are having a minimal impact.
But that may not necessarily be the case in Calgary, where the impact of more stringent lending rules may have been overstated, said Sano Stante, head of the local realtors organization.
“I’m not convinced that new mortgage rules have been that significant in impacting our market,” said the president of the Calgary Real Estate Board. “Honestly, we don’t think that it’s going to have a huge impact,” he said.
President of the Calgary Real Estate Board said the impact of the changes will be minor for most buyers.
To avoid higher monthly payments, the logic goes, many buyers tried to sign mortgages before the deadline, sparking a flurry of activity that drove up prices. Once sales die down, prices could slide.
Although this may be the case for the national market, Stante said it doesn’t have to be the case in Calgary, where the economy has been relatively strong. (Source 1, Source 2, Source 3)
A job market report from the City of Calgary this week actually paints a completely opposite picture to CREB’s hypothesis. From the report:
During the 2008-2010 period, Calgary entered the recession after Canada and has still not recovered all of the job losses associated with the downturn. Canada has however recovered all the jobs that were lost and is now into the expansion phase of the business cycle.
(click to enlarge)
What could be dragging the average/median prices lower so far this month? First-time buyers, getting into the market before the rule changes. Those that need to have a 35-year amortization would likely be purchasing homes priced on the lower-end.
I’m not the only one that thinks that 35-amortizations (and the end of them) is and will have a big impact on the market.
The following was taken from a RE/MAX agents monthly newsletter:
There’s no more 35-year amortization. Period. The new maximum amortization is 30 years. And you must have an approved mortgage in place by March 18 at the absolute latest to get the 35-year.
That might not sound like a big deal and maybe it’s not for you. But if you’re the type who wouldn’t think of getting a 35-year mortgage anyway, you will be shocked to know that MOST buyers have opted for the maximum amortization over the last few years. The vast majority in fact!
That’s a reflection on our society I suppose. The majority of people want to get the most house they can possibly afford for the lowest payments.
If you don’t think that the rush to get in on the 35-year mortgage is affecting the market, you’re wrong… The only question is, “How much is it affecting the market?” That’s still a very large unknown.
Interesting that the flurry of activity before changes haven’t driven up prices, but rather depressed them. Have first-time buyers reached the limits of their purchasing power?
