August Real Estate Happenings
A new stress-test proposal from the Office of the Superintendent of Financial Institutions (OSFI) could rattle the housing market. The proposal is to stress test all uninsured mortgages at the quote plus two%.
As a quick reminder, if your down payment is less than 20% then you need to insure your mortgage. If you can dig up 20%, then your mortgage is uninsured.
Previously, OFSI introduced a similar stress-test but only on uninsured mortagages. Instead of cooling the housing market, the test pushed buyers into uninsured mortgages. Typically, you can borrow money, from family or alternative lenders, to inch past the 20% mark. Voila, no stress-test. This time they are really bringing the hammer down.
Others have speculated that the main cause of our housing bubble woes is the abnormally low interest rates. A stress test would boost effective interest rates by 2% overnight.
To make matter worse, an interest rate hike is looking increasingly likely. Canada's Q2 performance wow'ed economists, coming in at an annualized rate of 4.5%. Since the prices of homes are set by how much people can borrow, this could be a perfect storm.
On to the rental stats now.
August Rental Stats
In August, listing volume across the city increased by 8%! There were almost 5000 listings in the month of August. This volume is probably because summer is ending, and people are all moving home. Just normal school year churn. Previously, only January saw more listing volume. Mt-Pleasant-E lead with +19% volume growth, while Downtown, Mt-Pleasant-W, Pt-Grey and Sunset all saw +10% volume growth.
Sadly, this volume isn't depressing prices much. Median rentals are a mixed bag (month over month changes in parentheses). We're about to break the $2000 mark for a one bedroom apartment in Vancouver though.
- Studios $1650 (+0%)
- 1 bedrooms $1950 (+2.6%)
- 2 bedrooms $2600 (-1.8%)
- 3 bedrooms $2950 (+1.7%)
That's it for August. If you want to stay up-to-date on Vancouver's rental market, sign up for my newsletter in the navigation bar.