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7 Aug

Market Update – July 2019 

Mortgages

Posted by: Gert Martens

Market Update 2019 

Working as a Grande Prairie mortgage broker means keeping an eye on the real estate market.  Here in the Alberta region, I’ve seen a lot of ups and downs this year.  The outlook for the moment is stable but still struggling.  The bubble-like conditions in the market during 2017 made 2018 a real challenge as the housing market tried to regain its footing.  2019 has continued with this trend so far.

Between steadily rising interest rates and stricter rules for qualifying for a mortgage, it’s no surprise that the figures at the end of 2018 looked somewhat lacklustre.  The first half of 2019 saw a cooler market overall. So, how do things look for the second half of 2019?

2019 Market Update

It’s been predicted that the last two quarters of 2019 will see an improvement in market conditions.  The Bank of Canada had expected to raise interest rates quite a bit at the start of the year.  However, with the softer housing market, they had to reconsider.

There are a few factors that should affect the coming months in a positive way, such as population growth, immigration targets, a stronger job market, and steadier household incomes.  Hopefully, we will start to see people moving away from rentals and into the home buying market.   Of course, this may vary from one area to the next.

While we have seen prices lowered for homes and sales up in areas like Vancouver, Ottawa, Toronto, and Montreal, a less positive picture has been painted for Alberta.  In Alberta, the market has continued to struggle due to the effects of oil prices dropping and the energy sector struggling.  In January, we saw resales hit an 80-year low.

For Buyers

The outlook for buyers for the rest of 2019 continues to remain the same, with prices slowly climbing and pressures on affordability sticking around.  Overall, the number of Canadian looking to become homeowners within the next 5 years has dropped from 48% in 2018 to 36% in 2019.  Many feel the mortgage stress test is to blame for this though.

The number of new mortgages in 2018 dipped to 11.9% and with many homebuyers being unable to qualify for mortgages, we will see a continuation of this.  If you are looking to make a purchase this year be sure to keep an eye on mortgage rates.

For Sellers

For the remainder of 2019, we should see home prices rise by about 1.7%.  There could be fewer buyers looking for homes and lower home values.  This is quite the change from 2017 when we saw prices spiraling and bidding wars.

It would be a good idea for sellers to strategize how to best market their properties, so find out as much as you can about home prices in your area before sticking them on the market.

Current Homeowners

For those who own homes and are nearing renewal time, the remainder of 2019 could be tricky.  Should they stick with their current lenders, they won’t have to deal with the mortgage stress test but will miss out getting a better rate with someone else.  Homeowners looking to switch lenders will need to consider if they want to go through the mortgage stress test.  The more homeowners that decide to stay with their lenders, the lower the incentive will be for banks to offer renewal rates that are lower to gain new clients.

Where interest rates are concerned, since the Bank of Canada hiked up rates a year and a half ago, we will start to feel the impact in the months ahead. According to the Office of the Superintendent of Bankruptcy in Canada, October of 2018 saw a rise of 9.2% in insolvencies.  This looks like a trend that will continue for 2019 with a lot of homeowners struggling to keep on top of their mortgage payments.

If you are looking to apply for a mortgage or renew with someone else, give our Grande Prairie mortgage brokers a call today to see what options are there for you.