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Old 4/16/18, 12:39 AM
Certified Professional Inspector (CPI)
Join Date: Mar 2010
Location: Montreal, Quebec
Posts: 13,974
Default Cracks Are Starting To Show

Cracks Are Starting To Show' In Canada's Borrowing Binge
Canada's housing market has officially entered "correction" territory, with the average resale price falling 10.7 per cent in March from a year earlier, according to data released Friday.
The Canadian Real Estate Association (CREA) wasted no time in pointing to the culprit.
"Recent changes to mortgage regulations are fueling demand for lower priced homes while shrinking the pool of qualified buyers for higher-priced homes," CREA chief economist Gregory Klump wrote in the group's monthly housing report.
"As a result, 'affordably priced' homes are becoming less affordable while mortgage financing for higher priced homes remains out of reach of many aspiring move-up homebuyers."
You could be forgiven for thinking that the new mortgage rules have made a complete mess out of the housing market — and, frankly, it does look a little messy right now.
The new mortgage "stress tests" effectively reduce your home buying power by about 20 per cent, and that lost buying power is at least partly to blame for the soft market.

But that doesn't mean they are a bad idea. There is something larger at stake here. It's looking increasingly likely that, at some point during the housing boom over the past decade, Canadian households' borrowing spiraled out of control.
With household debt now at a record 171 per cent of average annual disposable income, the country faces the risk of a much worse sort of housing downturn: The kind caused by defaulting borrowers, leading to financially troubled banks, and inevitably, a recession.

Robert Young's ​
Montreal Home Inspection Services Inc.
Home Inspections & Building Inspection Services. Covering on and off islands in greater Montreal and Laval. (514) 489-1887 or (514) 441-3732.
Our Motto: Putting Information Where You Need It Most, "In Your Hands."

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