Some families just can't borrow enough to get into the Okanagan's pricey real estate market | iNFOnews | Thompson-Okanagan's News Source
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Some families just can't borrow enough to get into the Okanagan's pricey real estate market

Image Credit: ADOBE STOCK

OKANAGAN - The effects of Canada’s new mortgage stress test are being felt across the country, but perhaps most dramatically in regions like the Okanagan where home prices are already at all time highs.

The combination of soaring home prices and lower mortgage approvals means the Okanagan real estate market is essentially slamming the door on some prospective buyers, particularly young families, Okanagan Mainline Real Estate Board president Marv Beer says.

“There are some people that just can’t get into the market right now,” Beer says.

The test went into effect on Jan. 1 and, broadly stated, means house-hunters might not be able to borrow as much as they could have just a few months earlier. Buyers need to prove they can handle their mortgage payments if interest rates suddenly go up (read more about it here). The idea is to rein in household debt, but it’s having other side effects.  

“We’ve heard stories of people just stepping back from the market because all they can do is wait and hope for a shift in prices,” Beer says.

Immune to the test are cash buyers or those taking out very small mortgages like retirees, and there are lots of those moving to the Okanagan, Beer says. Where the test likely has the biggest impact is with second-time home buyers and young families looking to “move up.”

“Say for example a young family, they want to buy a house but the value of the house is just too high for what they can afford under the stress test and all they can afford is a condo or strata that won’t work for their family scenario,” Beer says.

Those people are either left stuck making their current homes work — which removes inventory for first time homebuyers — or forces them to rent. We’ve all heard time and time again how tight the rental market is in the Okanagan. Some families may choose to move, Beer says.

“The whole market needs to work together, if you don’t have any first time buyers, you don’t have any move up buyers because people in those move up houses can’t sell their homes now. So that puts a ripple effect on the whole market,” Beer says.

He says the stress test is just another way the government is meddling with the market — the speculation tax is another.

“I guess the government is trying to mitigate any interest rate increase. They keep threatening that, but we haven’t seen it yet. Whether that actually plays out remains to be seen,” he says.


To contact a reporter for this story, email Charlotte Helston or call 250-309-5230 or email the editor. You can also submit photos, videos or news tips to the newsroom and be entered to win a monthly prize draw.

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