Woolwich & Wellesley Township's Local Community Newspaper | Elmira, Ontario, Canada
Help
Follow

You want a little more local in your inbox.

The last seven days of local community news delivered to your inbox. Stay caught up on the latest local reporting with The Observer This Week. Every Thursday.

Enter your email to subscribe. Unsubscribe anytime. We may send promotional messages. Please read our privacy policy.

Tighter mortgage controls unlikely to hinder local market

Is the Canadian housing market overheating? The Canada Mortgage and Housing Corp. (CMHC) thinks so, and this week, the federal government institution moved to tighten loans on new mortgages. Meanwhile, the housing market is booming, with Toronto and Vancouver seeing a 16 per cent increase in July compared to the same time last year, and the Waterloo Region enjoying nearly identical results.

Kitchener-Waterloo Association of Realtors president Dietmar Sommerfeld says the local housing market is doing just fine.[Will Sloan / The Observer]
Kitchener-Waterloo Association of Realtors president Dietmar Sommerfeld says the local housing market is doing just fine. [Will Sloan / The Observer]
In August, banks and credit unions will be kept on a budget of $350 million in new guarantees. This comes on top of earlier restrictions placed on banks from buying bulk insurance from CMHC. For Dietmar Sommerfeld, president of the Kitchener-Waterloo Association of Realtors, these restrictions are sensible.

“There are a lot of people that want to make a story out of things that there’s really not a story of,” he said at his Kitchener office. “If you take things in very small isolation, you can make a story, but the market has been really consistent over a very long period of time.”

He continued, “I think there’s a general misconception. CMHC has always had a limit on how many loans they would insure. This is really nothing new. I don’t know whether they’ve always publically said, ‘We’re reaching the cap of our limit.’ They probably have, and the media hasn’t picked it up.”

Indeed, Sommerfeld views such measures as financially sound.

“That’s prudent finance on the part of the federal government, and we probably should be celebrating the fact that [Finance Minister Jim] Flaherty or our federal government are doing a good job in controlling the government exposure,” he said. “I don’t know if they’re thinking our market is overheated, but they expose CMHC to a certain amount of risk in insuring loans, and we look to our government to keep a generally stable economy, and this is really just a part of that.”

But such decisions are not without controversy. After Flaherty announced stricter mortgage insurance rules in June 2012, many media outlets attributed the rest of 2012’s sluggish market to this shift. According to Sommerfeld, the Waterloo Region has not suffered greatly.

“The stats that are reported are primarily driven by Toronto and Vancouver, and we’re so isolated from that,” he said.

“This has been a very stable community for a really long time, and in the last 10-15 years, the tech community has grown and become a bigger factor in terms of employment. That’s great, because some of the traditional manufacturing has left, and fortunately for us, because of the universities and the jobs generated by the spinoff companies from the universities, we’ve been able to maintain and continue to grow our employment.”

Certainly the Waterloo Region’s housing market has been robust, with sales up 15.9 per cent in July compared to 2012. In July 2013, 620 residential properties were sold (with 535 sold in 2012). Other statistics are similarly encouraging: home sales were up 8.1 per cent; single detached home sales were up 18.8 per cent; townhomes were up 21.9 per cent; and condominium sales rose 14.8 per cent.

Like Toronto and Vancouver, the region saw slower-than-expected sales in late 2012 and early 2013. These numbers can be interpreted as a rebound, but Sommerfeld says they’re consistent with a larger pattern of growth.

“At the beginning of the year, [the stats] were maybe flatter than they sometimes are in the spring market, but our view as a board was, you can’t look at these things day-to-day, month-to-month.

“The first six months of the year have basically demonstrated that because of the strong employment that we have in the Waterloo Region; because of the diversified economy that we have; because of the low interest rates, that the market is continuing more or less along the same lines as it has the last 25 years.

The region’s up-and-coming status has helped aid growth. “The Places to Grow in Ontario legislation that has identified the Waterloo Region as an area that they want to see grow over the next 20 years. We’re as much the beneficiary of that as anyone else,” said Sommerfeld.

As for speculation that the CMHC could cause buyers to hesitate – that’s not necessarily a problem.

“I think there’s nothing wrong with buyers looking at the market and being realistic. It’s a long-term commitment and they should look at all the factors [like] their own job security. If this means someone may take pause and say, ‘Do I have a job that’s permanent enough to support the commitment that I’m taking?’, that’s not a bad thing.”

A little more local for your inbox.

Seven days. One newsletter. Local reporting about people and places you
won't find anywhere else. Stay caught up with The Observer This Week.

Enter your email to subscribe. Unsubscribe anytime. We may send you promotional messages.
Please read our privacy policy.

Total
0
Shares



Related Posts
Total
0
Share