Chilliwack – As a fresh new year launches, 2018 will definitely be remembered as the year of the Stress Test.
One year ago, mortgage stress testing rules came into effect, introduced by the federal banking regulator to keep home buyers across the country from taking on levels of debt that might be too risky.
The intent of the Stress Test was to guard against potential buyers taking on too much debt, particularly in inflated housing markets such as Vancouver and Toronto. This would assure less risk of default if interest rates rise.
Hardest hit were first-time buyers, who found themselves qualifying to borrow approximately 20 percent less that was available to them before. It also had a significant effect on “move-up” buyers, and the impact was particularly felt in the typically slower months of housing sales in Chilliwack and area.
“We experienced a noticeable lull in December,” noted Chilliwack and District Real Estate (CADREB) President Lori Maier. “Last month saw a 42 percent decrease in sales, compared to a record December of last year when people were getting into homes before the new regulations came into effect”.
Last month, there were 118 sales, compared to 204 in the same month last year. This equated to $57.27 million, compared to $98.5 million in dollar values.
While the market will continue to be affected by the Stress Test, CADREB notes that all indicators point to a solid balanced market in early Spring.
“All of the economic markets, not just real estate, are feeling economic changes,” noted Mrs. Maier. “Overall, the pressure on mortgage rates has had less effect due to decreased markets, and with little change locally in median house prices, all indicators point to a solid balanced market in early Spring”.
Overall, 2018 saw a total of 3,118 sales compared to 4,162 in 2017, representing a 25 percent decrease.
Of the 118 sales last month, the highest number sold (13 each) were those in the $450,000-$449,000 range, and houses between $550,000-$599,999.
Sales inventory remains strong, with 987 active listings in a variety of price ranges. It’s a great time to make a deal, whether it is your first home, dream home, or an investment property.