By Matthew Robinson, Vancouver Sun
December 11, 2015 7:59 PM
It is a fairly significant number of homes, but people buying $800,000 dollar homes typically arent putting down razor thin down payments of five per cent and carrying that kind of a mortgage, Muir said.
First-time buyers, he said, tend to buy at the lower end of the market place, so for them it wouldnt be much of a change.
Muir characterized the federal move as longer-term risk mitigation. When asked if it was a good idea, he said its the least worst measure they could implement right now.
Tom Davidoff, an associate professor at UBCs Sauder School of Business, said increasing down payments to qualify for a Canada Mortgage and Housing Corp.-insured mortgages was a smart move.
Youre hedging against the risk of a home price decline, which is sensible for an insurance company, Davidoff said.
I dont know if house prices are going to fall from where they are here its very hard to forecast home prices especially in a place like Vancouver or Toronto, where its not so easy to add new supply but theres certainly a risk that prices will fall, Davidoff said.
You dont charge a lot of money for each home insurance policy. If a buyer was to default, thats CMHCs problem.
Davidoff said if five or ten per cent of people in the market were taking on five per cent equity loans this could really cool things down. But without seeing CMHCs numbers, my impression is thats a smaller part of the market and therefore its not likely to have a huge effect, he said.
On the listings side, the change could lead sellers in Canada to price homes that are around the $500,000 mark more strategically perhaps listing just under a half-million dollars, Davidoff said.
Neither Muir nor Davidoff could immediately say how many homes in the region would be affected by the change or where they are primarily located. To get a rough picture of the impact, The Sun ran through the regions active MLS listings Friday afternoon.
About one-quarter of Vancouver homes listed on MLS fell within the $500,000 to $1 million range, including 13 single-detached homes, 15 duplexes, 44 townhouses and 285 condos.
About 21 per cent of Burnaby homes on MLS, and 25 per cent of Richmond and North Vancouver homes fell in that price range. Most homes in those cities in that price range were apartments or townhouses. Moving further east, the proportion of single-family homes available in that price range increases. Most of the 39 Port-Coquitlam homes listed in that price range were single-detached houses, as were the bulk of the 661 in Surrey, 106 in Langley and 179 in Abbotsford.