Sheldon and I had the pleasure of chatting with Lewis Kelly from the Edmonton Journal yesterday. We discussed the real estate market in Edmonton and the impact the mortgage rule changes will (or won’t) have on our market. You can see the resulting article on the Edmonton Journal web site.
Overall Sheldon and I feel the mortgage rule changes will have very little effect on our market for a few reasons:
- No warning – in the past the federal government has given lots of warning about impending mortgage rule changes. This time potential buyers had less than 3 weeks to react – that’s not a lot of time to make a major decision like buying a home. For those that were already planning on buying, they may move their decision up by a few weeks, but that just means a small jump in sales for a couple of weeks followed by a dip in sales for a few weeks (net-zero).
- Timing – the spring market is over, summer holidays have begun, real estate is not the first thing on most people’s minds in July even if they were looking in April, May or June.
- Small changes – the changes were not unexpected, and they weren’t very big. They don’t have much of an impact on affordability (in Edmonton anyway).
- Job growth and migration – there are plenty of jobs and people are moving here to take them. The rental market is tight and affordability is high.
- Steady as she goes – the market here was just chugging along nicely – typical sales numbers, gradual price changes. In over heated markets like Vancouver and Toronto a small external force on the market can have can have a big impact on affordability and both cities saw big declines in June.
The weekly numbers last week showed a jump in sales, and I can only assume the rule changes contributed to that jump. This week the sales have dropped back down – people may have moved their decision to buy up by a week or two but the overall effect is negligible.
Of course “The Greater Fool” predicted a 20% drop in our market as a result of the mortgage rule changes, but he’s been predicting the same thing for various reasons for over 5 years now. If he was right our real estate in Edmonton would be worthless by now.