What will 2018 bring to the Kelowna Real Estate Market?
Wondering what the state of the Real Estate Market in Kelowna is? Let us tell you…
Home sales in 2015 and 2016 surged in Kelowna but in 2017 we saw a return to more historically normal levels in the Kelowna Real Estate market. Even though sales of all residential properties are down roughly 10% from 2016, home prices have increased approximately 7% in the same period. With inventory climbing almost 15% from December 2016 the market is hinting at a more balanced state. Which is positive for both buyers and sellers.
Something we will be keeping an eye on is the new Canadian mortgage rules that were recently implemented and what effect that will have on the Kelowna market. The new rules were implemented to slow the overheated markets in Vancouver and Toronto, but will undoubtedly have an effect on the entire country.
Are you ready for the New Mortgage rules? Whether you’re a buying a home or refinancing, here is some information on what you need to know.
Effective January 1st, 2018, the rules state:
- Home buyers with a down payment of 20% or more will now be subject to stricter qualifying criteria (also known as a “stress test”) that would determine whether a homebuyer would be able to afford their principal and interest payments should interest rates increase. This stress test would use either the 5-year benchmark rate published by the Bank of Canada or the customer’s mortgage interest rate plus 2%, whichever is the higher.
- New rules don’t apply if you’re renewing your Mortgage: The new rules only apply to new mortgage loan agreements. They do not apply when renewing your existing mortgage loan.
What is a Stress Test?
The Stress Test is to ensure borrowers can withstand a jump in interest rates. It will help subject prospective home purchases to a “What if?” scenario. Specifically, what would be the shape of a given buyer’s finances if interest rates were to suddenly spike.
See below link to take your STRESS TEST and see where you sit:
The media in Canada has jumped all over this and have of course added a bit of sensationalism to their reports. That being said, in the last 2 months of 2017, sales of Single Family Homes increased by nearly 18% over 2016 and sales on townhomes and condos dropped by 10.5%, It will be interesting to see if these results can be attributed to these new rules. Stay tuned for future market updates to see what is in store for Kelowna.
Contact us with any questions on the new Mortgage Rules or to discuss the state of the current Kelowna Real Estate Market at 250-575-1946.