Where does this one veteran forecast a correction?

How will the new mortgage rules impact various markets? One veteran, who has been on the front lines for various market ups and downs, weighs in.

“Could (the recent mortgage rules changes) have some impact in areas like Toronto, where affordability is stretched? Absolutely. We could see some moderation in home price appreciation, but I don’t see a market correction in Toronto. I can see one in Vancouver,” Phil Soper, president of Royal LePage, told CREW. “As for the rest of the nation, I don’t see it. It’s not in the economic cards and these changes aren’t enough to put the market into reverse.”

Since the introduction of new mortgage rules, which make it harder for Canadians to qualify for a mortgage, investors and industry players alike have speculated about what impact they will have on various markets.

Initial sentiment was that the larger, pricier markets – Toronto and Vancouver – would bear the brunt of the new rules. 

And in Vancouver, especially, the effect of those policies will be compounded by eroding affordability, according to Soper.

"You can see the tax on foreign investment or the new federal regulations haven’t changed things dramatically. But they will, because demand is slacking. Every month for six months demand has softened,” he said. “So it will be difficult to separate the impact of a natural, cyclical cooling of the market from the impact of regulations in Vancouver, but I can tell you that, overall, eroding affordability will still play a much bigger role than a change in regulations.”

Outside those cities, however, Soper predicts market conditions to continue to improve.

“For the rest of the country, most of (markets) I see expanding at a good pace. The economic fundamentals, even in hard-hit Alberta, are improving,” he said. “Peoples’ desire to own property and own homes hasn’t waned and the amount of money that they will be paying in interest has not changed. Money has not gotten more expensive; qualifying has gotten tighter.”
 

Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate

COMMENTS

  • by WP- Realtor 2016-10-17 12:04:37 PM

    Soper- "You can see the tax on foreign investment or the new federal regulations haven’t changed things dramatically"..

    Seriously!...Has Mr. Soper seen latest market stats for Vancouvers lower mainland?

    Dear REW, perhaps someone should talk with realtors in the trenches that work with foreign buyers ever so often.

    Let me be VERY VERY clear that my foreign buyers are 'on hold' until things settle with this new tax and now add to the mix Vancouvers latest money grab 'empty homes tax' and an investment in Vancouver is even less attractive!

    Some of these comments seem as rigged as the US. election...ha ha.

  • by Cal 2016-10-17 1:24:04 PM

    Unfortunately Phil's comment that the tax on Foreign investment has not had a dramatic effect certainly does not apply to West Vancouver. The tax has had a very dramatic effect here! in fact, the government has slammed the door on buying in the West Vancouver detached market. Since the tax was implemented, August detached sales are down 76%, September is down 72% and October detached sales off a whopping 94% ( Oct. 1-17 this year compared to the same period in 2015). The same dramatic effect is being seen on the West Side of Vancouver and Richmond, areas where Offshore Buyers represented a very high percentage of every sale over the last 5 years.

    Had the government asked the agents in these areas what effect a 15% tax on Foreign buyers would have we would have predicted exactly what we are seeing.

Get help choosing the best mortgage rate

Just fill in a few details, and we'll arrange for a Mortgage adviser to help you find the best mortgage for your needs

  • How soon do you want a mortgage?
  • Name
  • Where do you live?
  • Phone number
  • E-mail address

Industry news

Submit a press release

Poll

Should government update pot rules to prohibit growing in rentals?