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Powell River real estate market slows down

Mortgage stress test one reason for fewer buyers
real estate
SALES DIP: Powell River home sale numbers remained strong throughout the year, but have dwindled since October. Chris Bolster photo

Powell River Sunshine Coast Real Estate Board president Neil Frost said although the Powell River market was strong this summer, sales have slowed this fall.

“It has quieted down in October and November,” said Frost, “but overall we’re up in volume of sales and price.”

Frost said at this point it is hard to say if the market is back to its typical winter slowdown or if other factors are at play, including the federal government’s announcement in October of its stress test for insured mortgages.

Invis mortgage broker Monica Peckford said she has seen a slowdown since the introduction of the stress test.

“The first part of October was quite busy with people trying to get in before the stress test came to fruition,” said Peckford.

Since then she said potential buyers have been holding off, perhaps thinking the move will lower prices in the sellers’ market.

Despite five-year fixed rate mortgages being offered at between 2.49 to 2.79 per cent, the stress test means a potential buyer needs to qualify at the Canadian benchmark rate of 4.64 per cent.

Peckford added it is a misconception that the stress test applies only to first-time homebuyers.

New stress test rules for borrowers putting less than 20 per cent down were aimed at making sure they are capable of paying a higher interest rate on the mortgage than the one they had been offered.

According to the Canadian Real Estate Board, more time needs to pass before the effect can be gauged on the wider market.

One effect being felt immediately is homebuyers who are not able to put 20 per cent down are being qualified for mortgages about 20 per cent smaller, said Peckford.

“It’s really reduced what they can borrow,” she added.

In comparing this year to 2015, Frost said that despite the slowdown there have still been more sales this year than last. As of Saturday, November 26, total sales were 489 compared with the same period last year where only 424 homes were sold.

“Overall, we are up from 2015, which was a strong year itself,” said Frost.

There were 54 sales in October 2015 compared with only 25 this October, and 55.5 per cent of the sales this year went to out-of-town buyers, people either investing in property or moving here.

Almost half of Powell River home sales in 2016 have been to out-of-town buyers, according to the latest board statistics.

Prices remain up, but demand is down a little and there are also fewer homes available for sale, said Frost.

Despite an increase in local prices, Powell River remains relatively affordable compared to other areas in BC and, according to Frost, it is “a very desirable community.”