BIG CHANGES COMING DECEMBER 15TH

The Government of Canada is introducing significant mortgage reforms to make homeownership more accessible, especially for younger Canadians. These updates, the most ambitious in decades, are designed to ease financial pressure and open the door to new opportunities for buyers.

The Benefits:

• Afford More Home: The price limit for insured mortgages is increasing from $1 million to $1.5 million. This means all buyers can qualify for a mortgage with less than a 20% down payment on higher-priced homes, better reflecting today’s housing market realities.
• Lower Monthly Payments: First-time homebuyers can now access 30-year amortizations, while anyone purchasing a new build can also take advantage of this option. Spreading payments over a longer period helps make monthly mortgage costs more manageable and homeownership more affordable for these buyers.
• Easier to Switch Lenders: With a policy reversal, insured mortgage holders can once again change lenders at renewal without requalifying under the stress test. This fixes a bad policy introduced a few years ago, and now encourages competition and helps homeowners secure better interest rates.

These reforms are part of the federal government’s broader strategy to improve housing affordability and create a more inclusive market. By raising the mortgage cap, extending repayment terms, and simplifying rate shopping, the government is helping more Canadians, especially younger buyers, enter the housing market.

And yet, the GST Holiday—running from December to February—offers tax relief on essentials like children’s clothing, toys, and Christmas trees, but doesn’t extend to new homes. Perhaps the housing market missed Santa’s list this year . .

Still, these changes aim to equip Canadians with the means to build equity and achieve long-term financial stability in a more accessible housing market.

MORTGAGE RATES HORIZON

In July, the Bank of Canada dropped the overnight rate by .25% to 4.5%. In September there was another .25% drop and in October the drop was larger at a .5% drop. This sequence of rate drops has been touted as the catalyst for a turn-around in the real estate market, which has also been trending down this year since April.

Certainly, the variable rate has followed the Bank of Canada direction as the two are tied together and the variable rate has dropped from over 6% to the low 5% range, depending on the lender. The longer-term rates have moved much less. In July, the best 5-year closed mortgage rate was 4.89% and today that same mortgage is a best rate of 4.44%, again depending on the lender, as many are higher. The variable rate has dropped a full percent, but the 5-year rate dropped less than ½ percent. The concern is that the longer-term rates are measured by and reflect the bond market. Recently the bond market has been going up, and if the bond market rates rise, then the longer-term mortgage rates will likely rise.

For the last couple of years, we have seen an inverse rate chart, where the short-term rates are higher than the long-term rates. Historically this has been indicative of, or even a forecast of a decline in real estate values. That has held true this time as well. If the short-term rates continue to decline and the longer-term rates remain steady, then that inversion will be corrected. This would be a good indicator for future real estate prospects.

Will the BoC apply a further drop on December 11^th? Some have predicted as much as a .75% drop, though the popular trend predicts a .5% drop. This is based on the latest data from consumer pricing and inflation numbers. What has been overlooked is the Canadian dollar. The exchange rate with the US Dollar is a critical factor in our economy. Canada's largest trading partner is the United States, and the value of the Canadian Dollar directly impacts the cost of goods moving across the border in both directions. Historically the BoC has adjusted the lending rate as a tool to support the Canadian Dollar against the US Dollar to support our economy. Recently the Canadian Dollar has been losing ground to the US Dollar and with the Republican win in the US, businesses in the US are likely to feel optimistic and the value of their currency may rise. The US banks have also been less active in dropping their lending rates, compared to the activity in Canada.

I expect that the Bank of Canada will either hold their rate steady or drop it .25% in consideration of the other economic factors at play.

If you’re looking to renew a variable rate, I would think there is still some downward trend. If you’re looking to renew into a closed 5-year term, significant rate drops look unlikely in the near future. Of course, some world event could happen that will change everything, again. As to the market, the turnaround has not happened so far, though things are a bit busier in some sectors. I do expect next Spring to be very active.

The Fraser Valley Real Estate Market in Transition: Insights for Buyers and Sellers This November 

Did you know that Canada’s real estate sector contributes over $250 billion annually to our GDP? Yet, in recent months we've seen the challenges it faces as it grapples with fluctuating interest rates and rising household costs. The Bank of Canada’s efforts to curb inflation through progressive rate cuts—including a notable 50-basis-point reduction—were expected to spur a surge in buyer activity. While the Fraser Valley did see an uptick in sales this October, the overall impact has been less dramatic than some analysts anticipated. Affordability remains a significant hurdle, shaping buyer decisions and tempering the recovery many had hoped for.

October brought a 5 percent decline in new listings compared to September, with 3,194 homes hitting the market. However, when compared to the same period last year, new listings were up by an impressive 26 percent. Overall inventory also experienced a slight dip of 3 percent from the previous month, landing at 8,799 active listings—a notable 34 percent increase year-over-year. These mixed signals reflect a market in transition, hovering in balanced territory with a sales-to-active listings ratio of 15 percent. In real estate terms, a balanced market—where neither buyers nor sellers hold a clear advantage—is typically defined by a ratio between 12 and 20 percent.

For sellers, this shift demands a strategic approach. Pricing a property too high in today’s cautious market can easily deter potential buyers who are acutely aware of their budget constraints. A well-priced home not only attracts more attention but can also ignite competition, leading to multiple offers—a scenario that’s increasingly rare but still possible with the right strategy. Sellers who position their homes competitively are more likely to see success, even as affordability concerns weigh on buyer behaviour.

Economists predict that gradual rate cuts will continue to shape the market, with a moderate recovery expected by 2025. These cuts should provide some relief to highly indebted households, easing financial pressure and encouraging cautious optimism among buyers. However, the long-standing issue of Canada’s housing supply shortage looms large, acting as a counterweight to market recovery. Until meaningful solutions address the supply-demand imbalance, affordability challenges are likely to persist, limiting the transformative impact of rate reductions.

For both buyers and sellers, this period of transition underscores the importance of timing, pricing, and strategy. While the market offers opportunities, navigating its complexities requires a thoughtful approach. Those who plan carefully and act decisively are best positioned to make the most of this evolving landscape.

October 2024 Brings a Buyer’s Market to Fraser Valley

The Fraser Valley real estate market is shifting, and for detached homes, we’ve officially entered a buyer’s market with a sales-to-active listings ratio of 10%. This change marks a significant departure from the frenetic activity we’ve seen in recent years, creating new dynamics for both buyers and sellers. For buyers, this is the opportunity you’ve been waiting for. More inventory means you have a wider selection of homes to choose from, and with fewer competing buyers, you’re no longer facing the relentless bidding wars that defined previous markets. Negotiation is back on the table, allowing you to include conditions, request repairs, or even aim for a better price—things that seemed nearly impossible not long ago.

For sellers, this is where strategy comes into play. While homes may take longer to sell, it’s not all bad news. If you’re buying and selling in the same market, the conditions level the playing field. You might not see the same sky-high prices as during the peak, but you’re also likely to secure a better deal on your next home. The key is to position your property well. Pricing competitively and presenting your home at its absolute best are critical in a market with more inventory. Buyers have choices now, and standing out is more important than ever.

Markets like this require a steady hand and a thoughtful approach. Buyers need to act while conditions are in their favour, as these windows of opportunity don’t last forever. Sellers need to trust the process, knowing that with the right preparation and guidance, the shift can work in their favour too. This isn’t a time to panic—it’s a time to plan.

Government Interference - January 2022

During the recent federal election I posted the party platforms on the housing issues in our current market. Each party had a plethora of possible or pathetic proposals. Since then the Provincial NDP has announced a number of other possible changes in an attempt to affect the current housing market. Most recently the concept of an additional tax on houses valued in excess of $1 million was touted and then backed by CMHC.

Almost all these ideas are bad and will have long term negative affects on the industry and your principal dwelling investment. They are also not applicable or necessary in any of the other types of market we have experienced in the last 20 years. This current over-heated market will change, and likely before the governments implement their strategies to affect the market.

On the Provincial side it has been proposed that the buyer have a right to a 7 day walk-away from any Contact of Purchase and Sale for real estate in BC. This option exists in new construction now and it works because the seller/developer is not relying on any specific sale for timely action on another transaction. The developer is there selling a great number of units over a lengthy period of time.

For the individual homeowner a sale of a home is typically tied to the purchase of another home and decisions on the purchase are governed by the results of the sale. In a normal market a buyer makes an offer with a number of due diligence conditions in the terms to be satisfied within a 7-10 day window. There is a principal at law that the buyer must make best effort to fulfill those conditions. A walk-away clause has no obligation on the part of the buyer and the seller is held hostage for the 7 day window while their opportunity to proceed on the other side of a move is held up by the walk-away clause. There is also nothing to stop a buyer making several offers on homes, tying them up for 7 days and then later deciding if they actually want to proceed with any of the agreements.

In the multiple offer trials we see now, a buyer will try to enhance their offer buy overriding the walk-away option and although you cannot waive a statute right, they could pay a non-refundable deposit directly to the owner to show binding intent. Then if they walked away it would cost them the deposit paid. In this heated market buyers are looking for a competitive edge to win the bid for the home, and the government cannot curb human drive and ingenuity.

As to the recent proposal of a tax on homes valued in excess of $1 million, it’s just the dumbest idea in a while. If you own a detached home in Langley it is now valued in excess of $1 million. This means most detached homeowners in the Lower Mainland will be receiving an additional tax. The Municipal Tax program already adds a greater tax to those with a more valued property. It is a reasonably equitable method of taxation. Yet again, with this suggestion the Federal Government is showing how completely out of touch they are with the constituent.

Both governments need to hear from the homeowner that these ideas are not just foolish but hazardous. I encourage you to contact your local MLA and MP and let your opinion be measured.

That Crazy Market - April 2021

A quick look at the chart on the right gives you a strong indication that the market is at a record level of activity. With a list to sell ratio of 68% it is higher than it was in the push of 2015-17 and higher than the push of 2005-07. This level of activity creates a very difficult market for the buyer as they struggle against multiple competitors to simply buy a home. On the other side of the deal, the seller is inundated with dozens of viewings each day as they move toward offer presentation day where they sift through many offers to find the one that is best.

Realtors® on both sides of the deal are working very hard to get the best for their client and trying to give sane advice in an insane market. When a listing gets 12 offers, the listing agent has a fixed set of protocols and documents to work through to ensure things are done properly. The Buyers and their agent know that if they don’t win, they’re back the following weekend to do it all over again on another property. 11 buyers and agents face this outcome. The stress is significant for all involved. Frankly, a balanced market is a much better market to work within for all involved.

The big question is how long will this last. This marketwill continue until supply increases or demand lessens. With sellers worried about being able to buy, there is reticence to listing first, so this shortens supply. New construction is held up as well because local governments are backlogged (due to Covid apparently?) and permits are taking much longer to obtain. There is also a shortage of developing land, again due to delays.

On the demand side, interest rates are at historic lows, though they are starting to rise in the last few weeks. Unemployment is not the concern it was last year and generally there is optimism. Then add in to the consideration that immigration has been curtailed this last year and only a portion of what we typically see in a year has actually come to the Lower Mainland. As Covid rules relax immigration will ramp up adding a bit more pressure on housing.

The next thing to happen is that prices reach a point where buyers cannot borrow any more and the number of offers decline. The Buyer then turns to a less expensive alternative and we will see the townhomes accelerate first and then the condo market will take off. This is already starting to happen with existing condo inventory selling off the market, again reducing inventory and pushing prices up.

Navigating all these issues, both on the selling side to maximize the eventual selling price, and for buyers working a strategy to get the best possible outcome in a multiple offer scenario, involves planning and experience. Frankly, that’s what I do and have done for many years. Knowledge of the Rules and Procedures combined with experience and success in all types of markets, that’s where I shine for you.