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Here's how the federal mortgage stress tests are likely to affect Calgary

By SmartCoverage Team on January 3rd, 2018

Cities like Calgary weren't exactly the impetus for the new federal mortgage stress test rules (*cough* Toronto/Vancouver *cough*) that took effect on New Year's Day, but they will be feeling its effects nonetheless. Where Calgary is concerned, residents should expect at least a modest fall in housing demand.

"We do expect this to cause some slowing in demand but not a significant amount," said Ann-Marie Lurie, chief economist at the Calgary Real Estate Board.

The reason for this is that a stress test lowers the range of options available to potential buyers. Even if they still have a demand for homes, they may be priced out of the homes that were initially within their means.

"If they were thinking they could get a $500,000 home and now they can no longer get that, they're going to have to consider all their alternatives," Lurie added.

Some change was already evident even before the Jan. 1 implementation date. Or rather, there was a pre-emptive response to what people knew was coming, according to Lurie.

"We went from a market that was really trending below long-term averages," she said. "After the announcement, we saw an increase in sales activity [in November and December]. There was nothing else that changed in that timeframe."

There was a similar effect in Ottawa, which experienced a 25 per cent year-over-year increase in housing sales this past November.

Kudos to those who managed to get a sale through before they were priced out of their preferred bracket, and best of luck to the rest of the market in still attaining theirs in 2018 and beyond.

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