The recent rainy weather caused a bit of a waterfall in the Powell River real estate market in October.  The 22 sales were almost half of those in September at 42. There have been almost as many explanations as there were sales: The Vancouver market has cooled off considerably? The recent new mortgage rules have reduced the number of buyers? An early start to the seasonal slow-down?  All of these may have played a part, but we have been low on listings for most of the year, so there’s just not much to buy! The buyers are still out there and grabbing the well-kept, well-priced homes as quickly as they come on the market.  The numbers say that we’re close to a balanced market, but I wouldn’t grab onto that idea too quickly.  Low inventory and ready buyers is still a recipe for upward pressure on prices.  We’ll see what November brings.  We have four sales and eight accepted offers waiting in the first four days of the month.

The Mortgage Stress Test

In mid-October, new rules for insured mortgages were put in place by the Federal government.  It will make it more challenging for some buyers to purchase the house they want, but ultimately it’s a protection against mortgage rates increasing and leaving a buyer who has mortgaged to the top of his/her reach unable to make the payments.  When being considered for a loan against a mortgage, all buyers must qualify for a five-year fixed term rate which is 2% higher than what they may negotiate. Previously only those with less than 20% down on short-term or variable rates has to qualify at this higher rate.

According to mortgage brokers, they’re not expecting the impact to be that big since the “high-risk buyers” were already subject to a stress test.

Pre-Approval No Guarantee

With prices rising and in some instances, competing offers driving a sale price up, it’s becoming more common for lenders to ask for an appraisal.  It’s a good and fairly common practice for buyers to go to their lender in advance of making an offer and having the bank look over their financial situation and tell them how much the buyer can borrow.  The lender will often lock-in the pre-approval at an agreed upon rate of interest.  Even with this safeguard, it’s always prudent to make an offer “subject to financing”.  The lender can change their mind about lending against a particular property right up to the last minute.  If it appears the home may be over priced, they will order an appraisal and possibly decide that they will not lend the full amount against the house for fear that the value of the home may not cover the mortgaged amount.  If you have an accepted offer, keep in close contact with your lender even after you’ve had their approval and removed your financing subject.

Investment Opportunity!

4478 Michigan Ave

• 2 city “authorized” suites
• Central location, some ocean view
• Well-maintained suites with good tenants

$289,000

Call for more information!

604 223-0811

www.billbailey.ca