TD Bank economist Diana Petramala noted that a pick-up in sales had been expected as buyers rush to beat new rules that come into effect on March 18th.
“The growth spurt will likely be short-lived, and come at the expense of future sales,” Diana Petramala said. “As was the case the last time the federal government made mortgage insurance rules more restrictive, the strength in sales will likely be followed by a short period of weak housing data.”
The sales increase was also anticipated by CREA with president George Pahud saying, “If last year can be used as any guide sales activity may heat up further as we get closer to the date on which mortgage regulations come into effect.” (Source)
And heat up they have. Calgary single family home sales are up over 14% from February 1-14 of last year.
Pending sales remain elevated above 2010’s levels.
While sales and pendings are up, the amount of homes for sale in Metro-Calgary are also up 17% year-over-year. Currently sitting at 3339, up from 2855 on Feb 14, 2010.
It seems Calgarians are preferring SFH ownership as condo sales continue to lag. The 231 sales recorded in the first half of February is down 17.5% from last year.
A bright spot is that pending sales have steadily kept climbing and this week overtook 2010’s levels. If this continues, it should help narrow the year-over-year difference in sales going forward.
As is the case with SFH, inventory is up from 1589 last year to 1748 today – a 10% increase.
Stay Out. Unless We Like What You’re Doing
CREA recently cautioned the federal government to stay out of the mortgage market until the effects of recent changes can be gauged.
“It will take some time before the longer term impact of the latest mortgage regulations on the housing market can be known,” CREA president George Pahud said. “For that reason, further action shouldn’t be taken until the impact can be measured.
Mind you, when 25 year amortizations were increased in a haphazard experiment a few years ago there was no prudence or cautionary oversight. Amortization lengths were increased 60% practically overnight to 40 years. As if that wasn’t rash enough, the minimum downpayment required was reduced to nothing.
Part of CMHC’s purpose is to “provide policymakers with the information and analysis they need to sustain a vibrant housing market in Canada.”
Where was the cautionary advise then?
Now we get to watch a volatile housing market fluctuate as they backpedal, reining in the amortization length 5 years at a time and slowly tightening the rules that should never been loosed in the first place.