In the Powell River real estate market, we had the strongest October in sales at 51 since I started charting the monthly data in 2013. It’s the third strongest month in that period overall. At the same time, the inventory of homes for sale was the fewest since 2013 which has created the strongest sellers’ market in almost 5 years and possibly before that. It may be that the tightening of mortgage rules has pushed some buyers to move more quickly to beat the January 1, 2018 deadline, but local mortgage brokers don’t seem to feel that the new ‘stress test’ to qualify for a mortgage will have a major impact in our market. Our prices are probably the best on the lower coast and the lifestyle is stellar (by my own reckoning!) The current conditions are a recipe for continued upward pressure on prices and continued frustration on the part of buyers – particularly those living outside Powell River. Buyers will have to act quickly and decisively to get the home they want!
Stress Test for All
Since July this year a ‘stress test’ has been required of buyers applying for mortgages
who had less than 20% to put down toward the cost of a home . Such mortgages are insured by the Canadian Mortgage and Housing Corp (CMHC) and considered riskier than those with the 20% downpayment. These measures are part of the government’s oversight in the housing and lending markets
to prevent large-scale default in the event of a significant change in interest rates or housing prices. The stress test simply requires that borrowers qualify at an interest rate about 2% above what they’ll actually end up with
. If you can’t qualify, you can’t get the mortgage.
Beginning January 1, 2018, all borrowers will have to qualify at the higher level. It’s estimated that the stress test will reduce the amount of the mortgage by about 20% which will put some people right out of the market and others will have to downsize their expectations for the size or quality of their new home considerably.
Buying Bare Land
Getting a mortgage on bare land can be a challenge. Some lenders will not offer a mortgage on a lot
even with a large downpayment. However they may have line-of-credit or other loan options available to facilitate the purchase of bare land. Before jumping into the idea of buying a lot, do your homework
about how you might finance it.
Building lots (along with homes for sale) are tough to find in this busy market. You may have noticed signs up south of town near the Lang Creek Hatchery. Currently, Sandstone Developments are proposing a rezoning of 77 acres south of the hatchery on the water front and up behind it
for a residential development. There are several approvals needed before the project can go ahead, but they anticipate creating 75-80 lots plus 5 km of trails and 20% open space
. Sandstone has spent $50,000 on upgrades to the Lang Creek water system
prior to any approvals. At the public meeting held in October, the most concern seemed to be about water supply and whether there would be enough for new and current users.
Panoramic Ocean View!
3871 Ontario Ave
- 3 bdr/3 ba; 2754 sq ft; level 90 X 104 lot
- Almost 800 sf of deck; Great, central neighbourhood
- Double carport, extra parking and covered view patio
Check the 3D interactive tour
Call for an appointment!