The Metro Vancouver housing market will continue to see increased interest rates, financial pressure from mortgage stress tests and low inventory this coming year, according to a new report from Re/Max Canada.
Despite these factors, Re/Max Canada said the “move-over” buyer and influx of newcomers to the city is driving some demand within the region.
Transition buyers who are hoping to gain more space and upgrade their real estate are taking advantage of favourable conditions for this kind of move, said Tim Hill, a real estate adviser at Re/Max.
“The gaps between the townhome market and the detached market in many cities are really good. They're better now than they were in the peaks of the market,” he said. “Right now the move is less costly to the consumer, even with the higher interest rate, than it was in the peaks of the market.”
Anticipated changes and tightening of restrictions to mortgage stress tests have encouraged 21 per cent of Canadian home buyers to make a move sooner than originally planned this coming year, according to a Leger survey commissioned by Re/Max Canada as part of the report.
“People are now having to qualify at seven per cent, in some cases eight per cent for a stress test. And that really hurts affordability and brings down buying power too,” said Hill.
However, while Hill said that some variable rate mortgage holders are considering a move, he hasn’t personally seen buyers change course due to the stress test.
Nearly 60 per cent of Canadians have concerns regarding the home-buying process. The highest-ranking concern, at 34 per cent, is inflation and the rising cost of living.
Lack of affordable housing options and the rising cost of rent are other notable concerns for homebuyers, both at 25 per cent.
“Our severe lack of supply in every town, community and city across the country, seeps into almost every facet of the lives of Canadians. Not only are their housing options being impacted, but a tighter housing market may compromise job prospects, among other things, placing even greater urgency on governments and housing industry experts to address Canada’s affordability crisis,” Elton Ash, executive vice-president at Re/Max Canada, said in a statement.
Though the majority of homebuyers in Canada are anxious about the housing market, 32 per cent remain optimistic that conditions are regaining balance in 2023.
In addition, one in five homebuyers and sellers support the building of Canada’s “missing middle” through the addition of new developments.
“The potential wide-spread impacts of our housing crisis can be mitigated, but challenges need to be tackled in a co-ordinated, strategic effort by all levels of government. I encourage visionary thinking and solutions that may include reforming municipal zoning laws to allow for a greater diversity of housing; expanding capacity for laneway developments; and using available land to drive housing supply in a manner that doesn’t compromise climate adaption and mitigation efforts,” Christopher Alexander, president of Re/Max Canada, said in a statement.
“For that to happen, some tough decisions need to be made.”
