More than one in four Canadian homebuyers report feeling pinched by the mortgage stress test regulations, says a recent Re/Max survey conducted by Leger. But Re/Max says projections for the spring market are optimistic with most markets expected to remain stable or improve.
“While the stress test did not impact Western Canada’s major markets as much as other parts of the country, the foreign buyer’s tax and proposed speculation tax in B.C. have remained a concern for buyers,” says Elton Ash, regional EVP, Re/Max of Western Canada. “In recent weeks, the speculation tax has actually made some buyers hold off on purchasing, which may affect the housing market in the next few months.”
Re/Max says government intervention and the stress test will continue to play a pivotal role in purchasing behaviour as we look to the months ahead. The Leger survey found that four in 10 buyers have had to compromise on their purchase, and almost one in three opted not to purchase altogether. One-quarter of buyers compromised on the size of their home, while 18 per cent made concessions on the location of their home.
Despite these compromises, 55 per cent of homebuyers say they feel like they can purchase the type of home that suits their families’ needs compared to 46 per cent last year.
“The stress test, along with rising prices over the last two years, has contributed to the evolution of the Canadian homebuyer, and has prompted them to change their perceptions of ‘must-haves’ such as size and location,” says Christopher Alexander, EVP and regional director, Re/Max Integra Ontario-Atlantic Canada Region. “Homebuyers impacted by regulatory changes beyond their control have adapted to the circumstances and still, more than half feel like they can purchase the right home to suit their needs.”
Re/Max says despite all the factors involved, the spring market across most of the country is forecasted to strengthen as we head into the warmer months. Supply is still low in many markets, and while the prices may not reach the same levels as this time last year, healthy price appreciation from the earlier months of this year is expected across many regions, the company says.