The big news of March 19 could be the disappointment of the day. In an effort to help buyers, the mortgage industry had made proposals to the Federal Government to reduce the mortgage stress test from 2% down to 1% and increase the amortization period on insured mortgages from 25 years to 30 years. Neither of these proposals were implemented. The Government did increase the amount of money that can be withdrawn from an RRSP by an individual, first-time buyer. The amount is now $35,000 up from $25,000. Money withdrawn must be paid back into the RRSP within 15 years.
The Government has also introduced an incentive program where buyers who have the minimum down payment for a home can apply for an amount equal to five or ten percent of the purchase price through a shared equity program administered by Canada Mortgage and Housing Corporation (CMHC). Five percent is available for a previously lived in home and 10 percent for a newly constructed home. The money provided through this program would only have to be repaid when the home is sold. To qualify for the program, the buyers would have to make a combined income of less than $120,000 per year. The amount of the mortgage combined with the incentive funds cannot total more than $480,000. If you are a qualifying buyer, this incentive could save you over $200 per month in mortgage payments. That’s a good incentive. The program should be running by September. The plan is to run the program for five years but there is no guarantee of that.
The question that has everyone talking is how will this affect prices in September? The incentive program is aimed at a specific group of buyers. Most of these buyers will be looking to buy a home under $500,000 so the effects of this program in the Lower Mainland will be seen mainly in the attached property market, which has been the hottest market in the past 24 months. More people would have benefited if the Government had announced a reduction in the stress test.
Sales were up over 25% in February compared with January however, sales for February 2019 were almost 30% lower than February 2018. Of the 982 total sales, 354 were residential detached homes, 236 were townhouses, and 288 were condos.
Prices for detached homes were stable in most areas. Cloverdale and South Surrey/White Rock are posted small gains in the Benchmark price. Prices for condos and townhouses still dropped in many areas over the month.
For the Fraser Valley region, the average number of days to sell a condo in February was 40 and 39 for townhomes. Single family detached homes remained on the market for an average of 43 days before selling.
HPI® Benchmark Price Activity
- Single Family Detached: At $958,900, the Benchmark price for a single family detached home in the Fraser Valley increased 0.5 percent compared to January 2019 and decreased 3.7 per cent compared to February 2018.
- Townhomes: At $516,000, the Benchmark price for a townhome in the Fraser Valley in the Fraser Valley decreased 1.2 percent compared to January 2019 and increased 2.8 per cent compared to February 2018.
- Condos: At $409,700, the Benchmark price for condos in the Fraser Valley increased 0.2 percent compared to January 2019 and decreased 3 per cent compared to February 2018.
Last month’s sales were 42.5% below the 10-year February sales average.
For detached properties, most areas continued in a buyers market. Townhomes and condos were generally in balanced markets for January. Prices for detached homes and townhouses dropped in January while condo prices in many areas, particularly Vancouver East, Port Coquitlam and Coquitlam actually increased.
HPI® Benchmark Price Activity
- Single Family Detached: At $1,453,100, the Benchmark price for a single familydetached home decreased 0.7 percent compared to January 2019, decreased 9.7 percent in the past year and decreased 7.6 percent in the past six months.
- Townhomes: At $789,300 the Benchmark price for a townhome decreased 1.4 percent compared to January 2019, decreased 3.3 percent in the past year and decreased 6.7 percent in the past six months.
- Condos: At $660,300, the Benchmark price for condos actually increased 0.3 percent compared to January 2019 but decreased 4 percent in the past year and decreased 5.1 percent in the past six months.