other

Slower Market Leads to Fewer, Pricier, Mortgages

The pace of new mortgages in Canada slowed between April and June of 2017 finds TransUnion, as higher prices and fewer sales in the real estate market impact borrowers.

“Recent new regulations in Ontario appear to have had an impact on the volume of home sales and, consequently, mortgage demand,” says Matt Fabian, director of research and industry analysis at the credit rating agency. “So while the number of mortgages is increasing, it is doing so at a slower pace than last year.”

The report, which is issued quarterly and compiles data from TransUnion’s nation-wide credit file database, also finds that mortgages are getting more expensive and borrowers are owing more, in relation to rising home prices. The average mortgage holder owes a balance of $198,781, a 5-per-cent increase from last year.

“Home values continue to rise compared to the previous year, pushing overall mortgage debt levels up. However, we did observe an easing of this trend in the second quarter from the previous quarter,” says Fabian, referring to softer summer prices as a result of the Ontario Fair Housing Plan.

However, while Canadians may be taking on larger mortgages, they’re effectively paying them off, as serious delinquency levels – mortgages left unpaid for 60 days or more – dropped four basis points, to 0.56 per cent.

“Consumers have so far been able to manage their mortgage obligations despite the increase balance levels,” Fabian adds.

Vancouver Real Estate Hurting Local Film Industry

Historic homes and properties often used for film and TV locations are becoming a scarcity in Vancouver as rampant development tears them down for condos – and it’s posing a challenge for local film companies trying to shoot in the city, reports the Globe and Mail.

Detached character homes, which resemble the aesthetic of American architecture, are increasingly hard to find, especially in the groups needed for neighbourhood shots. However, it’s Vancouver’s empty homes epidemic – fueled by domestic and foreign speculation – that further exacerbates the issue.

“What I find most, I think, frustrating, is just empty homes. It’s hard to track down who owns them,” says Vancouver location manager Mary Jo Beirnes to the Globe’s Kerry Gold, adding that it’s a lost economic opportunity. “We often use a location awaiting redevelopment, maybe a ship yard or saw mill that is now defunct… that’s a great opportunity for the film industry to step in, and create an economic opportunity where it didn’t exist before. But when we see empty homes, we want to create a win-win situation, where at least some economic input can be reached.”

Related Read: Rent Our Your Home or Pay $10,000 per Day Says Vancouver Mayor

B.C. Realtors Warn Against More Mortgage Rules

The British Columbia Real Estate Association (BCREA) is warning the federal government that further tinkering with mortgage qualification rules could have severe consequences for already strapped home buyers.

In a letter to the Office of the Superintendent of Financial Institutions (OSFI), BCREA CEO Robert Laing said the fed’s B-20 proposal – which will require all mortgage borrowers to undergo a “stress test” and qualify at a rate of 4.84 per cent – will put too much pressure on a market that is already acclimatizing to considerable change. Currently, only borrowers paying less than 20 per cent down on their homes must qualify at the stress test rate.

“Introducing additional tightening measures while the housing market is still absorbing numerous changes over the last several years puts affordability at risk, could imbalance local markets across the country and has the potential to negatively impact the Canadian economy,” he writes.

“Homeownership is a key contributor to the country’s GDP and overall economic health. It also provides stability to communities and neighbourhoods and remains a cornerstone of many Canadians’ investment goals, allowing individuals and families to invest in an asset that can grow in value and generate financial security for their retirement.”

He adds that creating policies based on Canada’s two largest markets doesn’t accurately reflect conditions in the rest of the country, and that recent Bank of Canada hike will put even more pressure on buyers. BCREA’s formal recommendation is that the government “refrain from fundamental changes to the national housing system at a time of rising interest rates.”

Calgary Office Buildings Become Condos Under New Bylaw

In downtown Calgary, a city ravaged by the downturn in oil prices, there’s plenty of premium office space standing empty – in fact, commercial real estate in the core has a vacancy of a whopping 25 per cent. However, one developer is turning that empty space into bustling multi-family residential housing, thanks to a new bylaw.

Passed in June, it mandates that developers need only have a building permit, rather than a development permit, to repurpose space for residential purposes. Artis, one of the largest real estate investment trusts in Canada, is kicking things off with Sierra Place – formerly a 10-storey office building, it will be turned into 100 apartments, conveniently located near dining, retail and transit. A parcel of unused commercial land by Stampede Station is also on the commercial-to-condo makeover list.

Tougher Proposed Rules For Your Real Estate Agent

When the Ontario government unveiled its Fair Housing Plan in April, part of the measures included a review and rewrite of the code of ethics and rules that govern real estate professionals in the province. Now, the Ontario Real Estate Association is weighing in, releasing a list of proposals from its REBBA (Real Estate and Brokers Business Act) Task Force.

Among its recommendations is a call for harsher penalties, doubling the maximum fine to $50,000 for realtors who breach REBBA, and up to $100,000 for brokers. This is key as the Real Estate Council of Ontario (RECO) has been criticized in the past for being toothless regarding fining and disciplinary measures.

It also calls to empower RECO to order realtors who breach REBBA to pay back all or part of their profits from the deal in question (called disgorgement), subject the organization’s revenue to Auditor General of Ontario audits, implement an Ombudsman, and make it more transparent to freedom of information requests.

OREA is currently “re-inventing” itself as an industry watchdog after being stripped by RECO earlier this year of its status as education provider – as of July 2019, all realtor training will be provided instead by Humber College Institute of Technology and Advanced Learning, in partnership with NIIT Canada.

Rate Hike Hitting Canadians in the Wallet

The Bank of Canada, which sets the tone of borrowing affordability, mandated higher interest rates in July, hiking its own trend-setting rate from 0.5 per cent to 0.75. This had a direct impact on the Prime rate offered by consumer lenders, which has trickled down to mortgage and LoC borrowers with higher monthly payments – and it’s hitting a third of Canadians where it hurts.

A recent poll conducted by Forum Research of 1,150 Canadians finds 34 per cent feel the higher Prime rate is negatively affecting their finances while 22 per cent say it will have at least a somewhat negative effect, and 12 per cent say it will have an extremely negative effect. The poll also asked whether respondents felt Canada in general has become a more expensive country to live in over the past three years.

Says Forum Research President Dr. Lorne Bozinoff, “Almost three quarters think Canada has become more expensive over the last three years, and with more than a third thinking the interest rate hike by the Bank of Canada will have a negative effect on their personal finances, and the rumours of another hike to come may only worsen these concerns.”

Mortgage analysts strongly feel that there will be at least one more hike from the BoC to come in 2017, and potentially several more next year as improving economic conditions pave the way to tighter monetary policy.

Former Fighter Steps Out of Ring for Real Estate Career

Brian Stann, a popular American UFC commentator and former mixed martial arts fighter, has announced he’s stepping away from the broadcaster’s booth for a career in real estate.

He made the announcement via his social media channels, stating on Instagram that he’ll be attending Northwestern University in the fall for his MBA and taking on a leadership role at an upstart real estate firm.

Hopefully that fighting mentality will serve him well on many a tough offer night!

© 2015-2016 Zoocasa Realty Inc.,

Delta Gardens condominium/townhouse development attracting downsizers and young families alike

Mary Frances Hill
The Province

Delta Gardens

What: One-, two-, and three-bedroom homes

Where: 11501 84 Avenue, North Delta

Developer and builder: Maple Leaf Homes Ltd.

Residence sizes: Homes up to 1,368 square feet; for prices, contact [email protected]

Sales centre: 11501 84 Avenue, North Delta

Hours: noon — 5 p.m., Sat — Thurs

As young families move up and into larger homes to accommodate growing broods and empty nesters decide to cash in on their single-family homes and find more manageable spaces in which to live, the two groups are bound to meet at places like Delta Gardens, a community of spacious condos and townhomes in North Delta.

The Maple Leaf Homes project comprises 122 one-, two- and three-bedroom condos and townhomes, the latter now sold out. It appeals to these groups, with space to spare for entertaining or the room they need to grow.

“The townhomes give the purchaser the luxury of their own entries and personal spaces, separate from the common areas of the home,” says Donna Russell, the designer at Delta Gardens and the principal of the Collaborative Design Studio. “With multiple floor(s), we spend a great deal of time on each and every floor plan to maximize space, and analyze potential furniture layouts and functionality.”
She says townhomes and the larger condominium units are popular as an alternative to pricier single-family homes, yet buyers are looking for the high standards they’d expect from a larger home and are less willing to compromise than they’ve ever been.

“Collectively, we approach every new project as an exciting and creative opportunity,” she adds. “We are finding, however, that the townhome market is really expanding for the downsizer and upsizer [families moving into larger homes]. Buyers’ expectations are [growing].”

In the living room at the display home, mellow, muted textures cover everything from the pillows and throws to the light neutral upholstery — gentle on the eyes and a distraction from the harder edges of the inset fireplace and television on the wall.

This softness in the living area also offsets the contemporary angular and rectangular furnishings. The “framing” of the kitchen prep area in light wood lines the area and makes it appear larger, and the boxy chandelier over the rectangular dining table also makes for a clean, contemporary look.

 “When developing the concept of the display home, we wanted to create a serene, light and airy monochromatic colour scheme,” Russell says.

“To create the visual interest and the warmth, it was essential to add texture to the design and mindfully select the accents.”

These accent colours — deep brown, mossy and forest greens and warm rust — reflect the development’s surroundings. Delta Gardens is within minutes of Watershed Park and Burns Bog, so it seemed natural to incorporate this warmth into the display home, she says.

Russell says that the Maple Leaf Homes’ team agreed that the homes’ thoughtful layouts and the smaller decor details were shared favourite features in the homes, Russell says.
“We were collaboratively able to incorporate open dens into almost all units that could be easily closed off.  We also liked the powder room details, [such as the] floor-to-ceiling tiled feature wall, edge-mounted sink on the quartz ledge counter, and the decorative pendant lighting.”

© 2017 Postmedia Network Inc.

Holly Amaya
other

We know, we know: Coming up with a design scheme from scratch in any room is difficult, let alone your primary living space. You might be tempted to pick out a sofa and a coffee table and call it a day. That’s all you really need, right?

Nope! In order to design a truly inviting living room that’s also at its most functional, you’ll need to do a little extra thinking. Where will your guests sit? Where do the wires go? Where will your kids’ 10,000 Lego blocks actually live when they’re not scattered all over the floor?

We consulted with design experts across the country to suss out the top things people forget when creating a living room that’s not only beautiful but also, well, livable. Take a look.

Related Articles

• What Does Your Living Room Say About You?
• Don’t Fall Victim to These 7 Common Furniture-Buying Fails
• 10 Sneaky Tricks to Make Your Living Room Look Expensive

1. Not considering how you live

Do you have kids? Hold frequent play dates? Host a weekly book club? Throw neighborhood dance parties? It might seem obvious, but you need to consider what you do in your living room and let that dictate the design.

And don’t allow denial to creep in. Maybe you secretly want a glamorous, all-white living room that would fill a Kardashian with envy. But if your life is full of kids’ toys and grape juice stains, you’ll have to be honest with yourself about what works and plan around it. (Don’t despair—there are ways to have nice things even when your kids are hell-bent on destroying them.)

2. Relying on a rough budget estimate

Home design and decor aren’t usually cheap. Not only will you shell out for furniture and accessories, but if you’re looking for any kind of expert help—from interior designers to contractors to electricians—that also costs money. This isn’t the time for rough estimates. Make sure you’ve itemized every single potential cost ahead of time, and built up an emergency fund—because whatever can go wrong probably will.

“Have an idea of the number of pieces you need, the cost of them all, the cost of any labor you might need to hire—like an electrician to move a light, wallpaper installation, or a painter—and then take an honest look at the total,” says Lori Paranjape of Redo Home + Design in Nashville, TN. “Once you know what the accurate numbers are, you can begin the project using the budget that you have.”

3. Prioritizing style over comfort

“I hate when people have tiny perchlike chairs taking up space just because it’s an antique, or shallow, rigid sofas just for their look,” says San Diego designer Christina Hoffmann. “The last thing I want to do at the end of the day or when I’m visiting someone’s home is plop myself on an uncomfortably expensive-seeming piece of furniture.”

Don’t forget a place to put your feet up—figuratively and literally. Hoffmann recommends an upholstered ottoman or chaise (add bonus points if it also offers hidden storage space).

4. Forgetting to measure (and measure again)

Experts universally agree: Measure, measure, and then—just when you think you’re done measuring—measure again. For precision, block off measurements of prospective new pieces with blue painter’s tape. As a general rule of thumb, leave 18 inches between your sofa and coffee table, and a minimum of 32 to 36 inches of clearance between adjacent seating.

“Scale is a tough (and expensive) lesson to learn,” Paranjape says. “There is no trick to this besides measuring everything … twice!”

5. Choosing rugs that are too small

Simply put, small rugs dwarf your space.

“Properly sizing a rug is a bit of an art form,” Paranjape says. “It’s important to ensure all legs of your furniture comfortably fit on the rug.”

Opt for a larger, less expensive rug over a smaller, pricier one. Consider a jute rug for a nicely textured, earthy feel. For more visual interest, Chicago interior designer Claire Barnes recommends layering antique Oriental rugs (which she says instantly elevate existing furnishings) over a larger natural fiber rug,

6. Not thinking about lighting

Even well-designed living rooms can be uninviting without ample and thoughtful lighting.

“Lighting is one of the most important elements in a space and one that is often overlooked,” says designer Jessica Davis of JL Design Nashville. Choose a table lamp (or hire an electrician to install an overhead pendant) in your favorite reading nook, and add floor lamps to anchor larger pieces of furniture such as the sofa.

Barnes recommends adding plug-in sconces next to furniture arrangements as an affordable alternative to the cost of rewiring a wall.

And “if you’re building, don’t forget to put a floor outlet in the middle of the flooring so you can float your furniture and still plug in a lamp on an end table,” says Jaimee Rose of Jaimee Rose Interiors in Phoenix.

7. Not having enough seating

Again, go back to your room’s purpose: Will you need extra seating for football parties, ladies’ night, or family gatherings? Plan accordingly by using space-saving options such as ottomans (group them in twos) or benches (preferably with built-in storage).

Chicago-based designer Summer Thornton likes to include accessory chairs around the perimeter of the room that can easily and quickly be pulled up to accommodate guests during parties.

8. Forgetting about wires

We love our technology, but the unsightly cords that come with it? Not so much. Luckily, there are some clever ways to hide those bad boys. Hoffmann is a huge fan of Ikea’s cord and cable management kits, which help control cable chaos with tiny, easy-to-use clips and ties. If you’re mounting your TV on the wall, be sure to find a contractor or handyman to snake the cord behind your wall so you aren’t stuck looking at dangling cords. And talk to your cable provider about wireless TV receivers, which help you ditch most cords altogether.

9. Not containing your junk

Check out Ikea for a great selection of paper pop-up storage boxes for just a few bucks each; use these to contain everything from remote controls to cords to pet toys. When you choose furniture, consider pieces that serve multiple purposes: a coffee table with hidden storage to stow board games or stash kids’ toys out of sight, or this fabulous side table from CB2 that doubles as a stool (genius!).

10. Overspending on the wrong pieces

Does that $1,200 side table really matter if you won’t have any money left for other fine pieces? If your funds are limited, spend where it matters: the sofa.

“A beautiful sofa with plush, luxurious pillows makes all the difference in a living room,” Hoffmann says. “Consider hitting up the fabric store and splurging on something great that expresses your style—then have a local seamstress sew it into pillow covers! You can use your existing inserts or get some on Amazon.”

11. Stopping before you’re truly finished

You’ve selected your couch, chairs, and coffee table, but don’t forget about the essential finishing touches that will take the room from so-so to ah-mazing. Accessories such as throw blankets, decorative pillows, unique lamps, artwork, and decorative window treatments will give your space a textured, layered look.

“I find that people often stop when the room is about 80% complete,” Thornton says. “They are so focused on the main pieces—the sofa, side chairs, and ottoman—and they think the space is done once those are in. But in reality, great rooms have a lot more layers and complexity.”

©1995-2017 National Association of REALTORS

An emerging ski hill close to Vancouver and Sunshine Coast oceanview subdivisions may represent low-cost, big-gain potential

Western Investor

BC’s new NDP government has pledged to cut fares on the Lower Mainland-Sunshine Coast BC Ferries routes, dropping all fares by 15 per cent and bringing back free passenger service for seniors three days a week.

“It will make a difference,” said Teresa Sladey of Royal LePage Sussex in Madeira Park, noting that the majority of buyers of recreational property in the Pender Harbour area of the Coast are from the Metro Vancouver region.

The reduced ferry fares are expected to help awaken one of the sleeper recreational real estate markets of British Columbia, though recent price hikes may have already alerted some investors.

Housing prices on the Sunshine Coast increased 20.8 per cent in July from a year earlier, compared with a 1.9 per cent annual increase in Metro Vancouver. Yet the typical detached house on the Coast sells for around $564,000, less than a third of the price in the Metro mainland.

The house price gap between the ferry dock on the Sunshine Coast and the one in West Vancouver is now $3.1 million, making the 35-minute ride worth about $90,000 a minute.

While waterfront prices in Gibsons and Sechelt on the Sunshine Coast easily top $1 million, a 40-minute drive to Pender Harbour opens visitors to less expensive recreational property.

Pender Harbour Landing, an on-going oceanfront development, has fully serviced half-acre ocean view building lots from $150,000 and one-acre parcels for less than $200,000.

“Sixteen of the 39 lots have sold,” said Sladey, noting that a prime 2.5-acre waterfront lot is still available at $1.7 million.

The current BC Ferries fare between Horseshoe Bay, West Vancouver, and Langdale is $54 for standard-size vehicles and $16.50 for adult passengers.

After the 15 per cent reduction, expected this fall, the vehicle fare would drop to $45.90 and the adult passenger fare to about $14, according to B.C. Transportation Minister Claire Trevena.

Baldy Mountain

Baldy Mountain Resort in the South Okanagan, close to the U.S. border and Osoyoos Lake, and less than three hours from Vancouver, was bought out of receivership by a group of B.C. investors for $3.4 million two years ago. The new owners are now getting their real estate packages to the market in preparation for the 2017-18 ski season.

And, based on comprable B.C. ski resort prices, Baldy may represent a bargain for recreational real estate buyers.

So far, nine fully serviced lots are offered, all with the option of having a Linwood Home ski cabin built on them.

Three lots have already sold and there were conditional offers on two others as of August.

The remaining lots, at around 5,200 square feet, are priced from $80,000 to $110,000. The ski-in, ski-out lots are ready to build on, or investors can hold them for future construction.

Linwood normally provides design work and building packages to lock-up stage.

Client cans then either hire a contractor to complete the finishing or do it themselves, explained Mount Baldy spokesman Scott MacKenzie.

The Linwood cabins are from 800 square feet to 1,800 square feet and prices range from $61,500 to $130,000, so an investor could buy a lot and ski cabin for around $150,000 to $250,000.

Baldy Mountain Resort reopened last season and had 100 per cent occupancy for the few rentals at the resort. The resort does not have an official rental pool, but a local owner will act as a rental property manager, according to MacKenzie.

Copyright © 2017 Western Investor

Andrea Nazarian
REW

BC housing minister Selina Robinson is considering the possibility of altering the province-wide formula that sets the maximum amount landlords can increase rent by annually, the minister told media this week.

The current formula, part of the Residential Tenancy Act, allows landlords to increase rent by 2% plus inflation. With current inflation rates, the maximum rent increase would be 4% in 2018. If next year’s rent hike goes into effect, the average rent for a one-bedroom apartment in Metro Vancouver, which is currently $1950, would increase by $936 annually. Robinson explained that the formula will be evaulated by her ministry as they work out ways to make renting less stressful across the province.

“[We are] having conversations right now,” said Robinson in an interview. “We just saw [the 2018 increase] come out and I know that people are very, very concerned.”

The province is looking into lowering the annual rent increase to only the rate of inflation, which would make the maximum rent increase 2% this year, or $468 annually on an apartment rented at $1950 monthly. 

During the provincial election in May, the NDP promised to help deal with the rental crunch by building 114,000 co-op and rental homes and by giving renters an annual home credit of $400. The party also promised to end the “fixed term lease” loophole, in which tenants are forced into one-year leases with higher than normal annual rent increases based on a minor technicality.

Robinson said that rent control is one of several aspects of the province’s affordability problems.

“I’m looking for things we can deliver ASAP, because I know this is a crisis,” she told The Vancouver Sun. 

© 2017 REW.ca

The feds seek to ensure that assignment resellers are compliant with the Income Tax Act

Darryl Greer
Vancouver Courier

The federal government is taking the property developers behind the Marine Gateway project on Marine Drive in Vancouver and the Residences at West on southeast False Creek to court, probing for information on buyers who flipped their pre-sale contracts before construction was completed to verify compliance with the Income Tax Act.

In two applications filed in the Federal Court of Canada in June, the minister of national revenue wants to compel PCI Gateway Residential LP, PCI Gateway Residential GP Ltd., Executive-Argo False Creek (No. 1) LP, Executive-Argo False Creek (GP No. 1) Ltd. and 0742012 B.C. Ltd. to hand over information or documents on buyers who assigned their contracts prior to completion.

“Some persons who entered into agreements with the respondents for the purchase of condominium units … before or while the units were still being constructed (the ‘Assignor’), assigned that purchase agreement to another person,” the applications state.

“The Minister seeks to verify compliance by those Assignor(s) with any duty or obligation under the [Income Tax Act] and the [Excise Tax Act] but is unable to obtain the identities of the unnamed Assignor(s) from [a] publicly available source.”

In an emailed statement, Canada Revenue Agency (CRA) spokesman David Morgan explained the rationale behind the applications.

“In general, people who buy and resell homes in a short period for a profit may be engaged in property flipping. The CRA acquires and analyzes third-party data and uses this information to identify whether all income from property flipping is being reported correctly. The profits from flipping real estate are generally considered to be fully taxable as business income. The facts of each case determine whether such profits should be reported as business income or as a capital gain,” Morgan wrote.

Executive Group president Salim Sayani and Argo Ventures CEO Jason Hyunwoo Hong, owners of the numbered company, did not respond to Business in Vancouver’s requests for comment about the case.

The firms behind the Residences at West project at 1783 Manitoba Street began pre-sales for the first phase of the development in June 2012, featuring units starting at $294,900 for a one-bedroom, and up to $499,900 for a two-bedroom, with completion slated for 2014.

Units in the building are now worth considerably more.

For example, according to the BC Assessment Authority, as of July 2016, a one-bedroom unit on the top floor (1705-1783 Manitoba Street) was assessed at $816,000, up from $620,000 a year prior. (The BC Assessment Authority has assessments for 187 units and states that the building was completed in 2015.)

In a phone interview with BIV, PCI Developments Corp. president Andrew Grant said he didn’t know why the government was targeting the Marine Gateway.

“It is a high-profile project,” Grant said. “If they were trying to get some data or track some assignments of contracts between our purchasers and subsequent people that closed on the units, then maybe they feel that because it’s high-profile and it’s large, that it would be more efficient to look at a project like that.”

Grant said pre-sales at Marine Gateway began in March 2012 and closed about four years later. He said the company took steps to verify buyers’ information and restricted purchases to one unit per buyer, eschewing bulk sales and sales to corporate entities.

“We had criteria in 2012, which was probably several years before some of this controversy and profile around foreign buyers came about, but we had a process,” he said.

“Our bank and our lenders, at that time [in] 2012, were concerned about knowing the origins of where people were coming from and the funds being used to buy, so it was relevant to us and we did a good, thorough job.”

He said they had “nothing to hide,” but the company would disclose information only if ordered to do so by the court under the proper authority out of respect for buyers’ privacy.

“They’ve requested some information and we are not going to provide or disclose any information on our purchasers or the purchase contracts without being assured that they have proper authority to get that information. If they have to go to court to get that, then so be it, and if they get that authority, we will co-operate, but only to the extent we’re required to,” he said.

“We’ll see what information that they request from the courts, and we have retained lawyers on this to make sure, because, as you can appreciate, there’s confidentiality involved. There’s all sorts of privacy rights that our buyers have and we want to make sure that we don’t breach anybody’s rights. And that anything we do, we have been properly requested and we’ll conform to that, to the extent that our lawyers agree to release that information.”

Grant added that while he couldn’t provide exact numbers on how many assignments occurred before construction of Marine Gateway was finished, anecdotally he didn’t think there were that many to raise eyebrows or attract scrutiny from federal tax authorities.

© 2017 Vancouver Courier

Garry Marr
The Vancouver Sun

Demand for housing could be cut anywhere from five to 10 per cent because of tougher qualification rules being considered by Ottawa, according to a report by Toronto-Dominion Bank out Monday.

The report from Beata Caranci, chief economist with the bank and Diana Petramala, also an economist, takes aim at a proposal from the Office of the Superintendent of Financial Institutions.

The federal banking regulator is looking to crack down on non-insured mortgages – impacting people with at least 20 per cent down – by making those consumers qualify based on a rate 200 basis points above what is on their contract.

“Government policymakers are not done yet with regulatory changes on the mortgage market,” the pair wrote in their 13-page report, noting income testing is currently used for high-ratio mortgage loans backed by Ottawa.

 “In the year of implementation, we estimate that this new rule could depress demand by 5% to 10%, and shave 2% to 4% off of our current forecast for the average price level in 2018,” the authors said, as the proposed measures will act as another force that limits price growth in the future.

Those consumers, who often have as little as five per cent down, must qualify based on the posted five-year rate of the Bank of Canada, which is currently 4.84 per cent.

The economists suggest changes to tighten the rules on non-insured mortgages will lead buyers to “come up with a bigger down payment, opt for a lower priced home and scale back other debt,” and may even delay purchases all together.

As part of the report “Navigating a Soft Landing”, the economists looked at the “unprecedented” number of policy changes over the past 18 months.

Other key changes implemented by Ottawa included increasing the minimum down payment on homes worth more than $500,000 and reducing portfolio insurance, a program that allowed financial institutions to securitize loans they deemed risky, but not legally required to be insured.

“Each successive regulation change at the federal level has left a smaller mark on home buying activity,” the economists wrote, noting the most recent changes from Ottawa during that 18-month period may have only shaved two per cent off of demand.

Previous changes, beyond the ones OSFI is currently considering which the real estate industry has asked Ottawa to put on hold, have been aimed at the insured market. The problem is new loans that require mortgage insurance are less than 20 per cent of all new chartered bank mortgage originations, down from 40 per cent in 2008. Recent rule changes impact the insured market but it is increasingly a smaller part of the overall market.

It is provincial changes that are having more of an impact on the housing market according to the TD economists, pointing to a 15 per cent tax implemented on foreign buyers in the Vancouver and Toronto area markets by their respective provincial governments. Vancouver has bounced back somewhat, and while the pair downplayed the impact of foreign buyers in Toronto, they said “domestic speculation” was a key factor.

While buyers may be hoping rising interest rates could trigger a crash, those first-time buyers “may be holding their breath for a while” because prices are likely only going to reset back to the levels of where they were before a year of exorbitant gains, the report concludes.

“Listings shot up in the GTA following the policy measures not because homeowners suddenly became incapable of affording their homes but because speculative activity is being squeezed out,” they wrote.

The economists said soft landings can happen and maintain Vancouver is the “poster-child” as, since 1990, the city has had five cycles where prices ran up anywhere from 15 to 20 per cent and corrected shortly afterward by 10 to 14 per cent.

In the GTA, they expect the current pullback in prices to be sharp and short with levels returning to where they were in mid-to-late 2016, noting average prices are down about 13 per cent from their peak. They expected another six per cent in price declines in 2018 in Toronto.

© 2017 Financial Post