High-end home sales bolster August numbers

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This article was published 09/09/2017 (2984 days ago), so information in it may no longer be current.

Higher-end homes were a hot commodity last month in Winnipeg.

In its August sales report released Friday, the Winnipeg Realtors Association (WRA) said sales of residential-detached homes priced at more than $500,000 were up 32 per cent from August 2016.

It said last month’s sales included seven homes priced at more than a million dollars, with the most expensive selling for $1.7 million.

However, the association said it was an entirely different story for homes priced at less than $300,000. There, sales were down 35 per cent from a year earlier, and association president Blair Sonnichsen blamed that in part on tougher federal mortgage-qualification rules which came into effect last October.

Under the new rules, all insured mortgages must undergo a more stringent stress test to determine whether the borrowers could still make their mortgage payments if interest rates rise. That meant they have to qualify for an insured mortgage using the Bank of Canada’s five-year benchmark interest rate, even though market rates may be several percentage points lower than that.

“August demonstrated demand and confidence in our local market remains strong by virtue of the strength of the upper-end market,” Sonnichsen said. “It also showed the higher stress-test requirement on insured mortgages is preventing a number of buyers from achieving their dream of homeownership, and in some instances keeping existing owners from making their next step to another home.”

He said buying a home became even more difficult for some buyers when the Bank of Canada decided this week to raise its trendsetting rate by a further 25 basis points to one per cent.

On top of that, the federal government is also considering introducing a new stress test for uninsured mortgages, he added, which would require low-risk borrowers to be approved at two per cent above the rate offered by their lender.

The WRA said it agrees with the Canadian Real Estate Association that it would be imprudent to do that before the market has had time to absorb and analyze the compounding effect of this week’s interest-rate increase and the federal government’s earlier tightening measures.

“When you include the most recent bank rate increase, there have been nine changes to tighten mortgage finance in Canada since 2008,” it noted.

With the slowdown in sales of homes valued at under $300,000, total sales for the month through the local Multiple Listing Service (MLS) fell by five per cent to 1,288 units. But thanks to all of the higher-end homes that sold, the dollar volume of sales still increased by four per cent to $378 million, the association said.

It noted that while unit sales were down from a year earlier, they were still almost six per cent higher than the 10-year average for August. It also noted August 2016 was the busiest August on record for home sales.

Last month’s performance left unit sales for the year running marginally ahead of last year’s pace, at 9,796 units, and the dollar volume of sales running five per cent ahead, at $2.86 million.

With 1,288 properties changing hands last month, the number of residential detached homes still on the market at the end August was down 11 per cent from a year earlier, at 2,469 units. However, the supply of unsold condominiums was up by five per cent to 855 units, the association said.

murray.mcneill@freepress.mb.ca