Islanders can Ignore the Doomsayers!
We've felt that the local housing market has been relatively stable, even as reports out of the U.S. by New York based economists have said otherwise. A new article
out by the Globe & Mail helps us understand how statistical data can be manipulated or used incorrectly to create inaccurate information. We know the Toronto Condo market is very heated as is the market in Vancouver, but we don't believe the activity in these markets should lead to news about an overheated Canadian housing market. They are simply pockets of overheated housing activity. What is happening in the Toronto condo market doesn't have much impact on what is happening in Charlottetown PEI. Sure there is always some minor impact, but not to the degree that it will have any real bearing on our home prices here.
There is no doubt that what was going on in the mortgage market prior to the changes made by Flaherty in 2008 was fueling the fire of the housing market in PEI. As much as we were all enjoying that boom in the moment, things like very long amortizations (35 & 40 year mortgages), no down payments, and excessing refinancing allowances were not responsible lending criteria. If the rules impacting those things hadn't changed, perhaps our market would be in a bubble situation, but instead the guidelines were put back in line with responsible lending. Our amortizations went back to 25 years, no down payment mortgages were eliminated and you can no longer use your house as an ATM machine. This has helped us gradually put out the fire in the local housing market and is allowing for a modest recovery.
Unfortunately the pre 2008 boom in our local economy that was created by the slack mortgage rules had led some to believe that owning a home, or even owning a home which is out of their price range is a right. In fact, owning a home is a privilege that goes along with hard work and financial responsibility. People who work hard, earn a good income, pay their bills on time and save their money usually have no problem getting a mortgage, but gone are the days where you could have sloppy credit, no down payment and no job stability and expect to qualify. This is as it should be to keep a healthy housing market and economy. We are noticing in our younger clients, first time homebuyers, a switch to more responsible money management. It is very refreshing to see young people who are saving their money, agressively paying down debt and planning for their home ownership by looking for housing that fits comfortably in their budget. People may have adjusted their expectations and attitudes, but they have not stopped buying houses!
PEI's housing market is stable and healthy if you ask us!
Your Mortgage Partners
Posted by Kim Reddin
on March 12, 2014