2020 Has definitely been a year for the books. After a decent start to the year in real estate we were suddenly thrown into a global coronavirus pandemic which saw a lot of businesses shut down and required many of us to stay at home. Surprisingly we didn’t slow down for long as home sales picked right back up and we are seeing lots of showings and offers coming in. Listings have still slowed down as most people are unaware of the buyer activity and thinking it is not a great time to list. This could be a good opportunity for someone wanting to sell their home as there is less competition on the market and still a large pool of buyers looking. government programs such as CERB helped many people through the mandatory lockdown who could not work, which helped keep our economy going.

CMHC Tightening Qualification Rules

Canada Mortgage and Housing Corporation (CMHC) has been tightening the qualification rules for borrowers of high-ratio mortgages. The new rules have lowered the debt ratio and increased the minimum credit score. This is in response to the covid-19 pandemic which has left many Canadians vulnerable.

New Mortgage Qualification Rules:
If you have less than 20% down payment, CMHC will now be:

– Limiting the Gross/Total Debt Servicing (GDS/TDS) ratios to its standard requirements of 35% (from 39%) and 42% (from 44%),

– Establishing a minimum credit score of 680 (from 600 previously) for at least one borrower; and

– No longer treating non-traditional sources of down payment that increase indebtedness, as equity for insurance purposes.

What Is A High-Ratio Mortgage?
Simply put, a high-ratio mortgage is when a borrower has less than 20% down payment on a home. The minimum down payment amount in Canada is 5%, however, if a down payment is less than 20% the borrower will be required to get default mortgage insurance on their loan. This is typically done through CMHC or Genworth.

* It is important to note that typically when one mortgage insurer changes its rules the others usually follow suit. In this case Genworth and Canada Guaranty Mortgage Insurance Co. have not increased qualification rules.

Market Stats

Corner Brook Market Stats –  Year-to-Date (Jan-June)

	2020	2019	% Change
Sales	66	65	+ 1.5%
New Listings	161	215	– 25.1%
Active Listings	179	208	– 13.9%
Median Price	$176,000	$170,000	+ 0.9%
Average Price	$189,543	$185,816	+ 0.2%

Pasadena Market Stats – Year-to-Date (Jan-June)

	2020	2019	% Change
Sales	9	18	– 50%
New Listings	38	51	– 25.5%
Active Listings	39	44	– 11.4%
Median Price	$195,000	$220,000	– 11.4%
Average Price	$202,889	$233,328	– 13.0%

Buyer Activity Still Strong

Surprisingly we are still getting a lot of buyer activity. We are still receiving lots of viewing requests and offers and sales are still coming in. For local residents we require each person to wear a mask and wear gloves or use hand sanitizer and we limit the amount of people viewing the home at a time. There are covid disclosure forms that we get filled out that disclose whether any of the parties have had to quarantine or if they have come into contact with anyone that may be at risk for covid-19. For out of province home buyers we are offering video tours, virtual tours, and video calls as we personally tour the property with those prospective buyers over facetime or skype. This gives them the opportunity to look at the home in detail without actually physically having to be there. If they choose to make an offer we can do all the paperwork digitally.

Listing Inventory Down

Listing inventory is down a whopping 25% so far this year compared to last year but sales have stayed relatively the same. That means there is a shortage of listings and still just as many buyers out there waiting for the right property to hit the market (you can see a list of buyers that Team Bishop is currently working with). In fact, the industry as a whole is struggling to fill the demand of pent up buyers that can’t find what they’re looking for with the current listings.