fbpx
-2.5 C
Elmira
Friday, December 6, 2019
Connecting Our Communities

Tighter mortgage controls unlikely to hinder local market

TRENDING

Restored Victorian home in Elmira the subject of TV competition

Along with the influx of visitors that comes with the holiday season, Elmira will see one new...

New MP jumps to the next stage

Ever since he was elected as the new Liberal Member of Parliament for Kitchener-Conestoga during the October...

Sleeping Beauty wakens to the panto treatment

The classic story of Sleeping Beauty takes on a twist – as well as a boo and...

Meet the candidates

By Veronica Reiner & Aneta Rebiszewski Five candidates are vying for your vote in...

THIS WEEK

Elmira
broken clouds
-2.5 ° C
-1.7 °
-3.3 °
86 %
3.1kmh
75 %
Fri
5 °
Sat
-2 °
Sun
0 °
Mon
4 °
Tue
7 °

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.”

To encourage thoughtful and respectful conversations, first and last names will appear with each submission to The Observer's online community. Pseudonyms are not permitted. By submitting a comment, you accept that The Observer has the right to reproduce and publish that comment in whole or in part, in any manner The Observer chooses. Please note that The Observer does not endorse the opinions expressed in comments. Comments on this story are moderated according to our submission guidelines. Comments are welcome while open. We reserve the right to close comments at any time.

LIVING HERE

Strong demand for traditional real Christmas trees can exceed supply

With Christmas just a few weeks away there’s only a short time left to pick out the perfect tree, but what will you choose: real or fake? Many retailers are facing dilemmas that...

In Print. Online. In Pictures. In Depth.

You obviously love community journalism. Thanks for visiting today. If you have a great local story, let us know.

Getting drivers to slow down a slow process in Woolwich Township

Traffic issues, particularly speeding, are a frequent source of public complaints received by Woolwich officials. Often more perception than reality, the topic is...

Woolwich to attach overdue water bills to property taxes in bid to simplify collections process

Looking to simplify the collection process for overdue water and sewer bills – and increase the chance of getting its hands on...

Putting the cold on ice with the annual hat and mitten toss at Saturday’s Sugar Kings game

There’ll be no need to wait until somebody scores three goals to toss hats out onto the ice, as the Elmira Sugar...

Jacks fall to second after losing twice over the weekend

Sunday’s lousy weather may not have been to everyone’s liking, but the Wellesley Applejacks might have been the only ones happy...

Answering the childhood question that rolls around at the holidays

Get into the Christmas spirit with a fresh retelling of a classic tale inspired by real events in Elora Community Theatre’s lastest offering.

Even those with jobs are increasingly reliant on food banks

An increasing number of full- and part-time workers across Ontario are accessing food bank services, a trend that can be seen in...
- Advertisement -