Bank of Canada Governor, Tiff Macklem, delivered some final comments this week at a keynote speech in BC. He didn\u2019t mince words following the fastest rate hiking cycle in recent history. \u201cThere\u2019s no question that if you bought a house near the peak, you took a variable rate mortgage with a high loan to income ratio you\u2019re really feeling the squeeze of higher interest rates.\u201d No doubt. Here\u2019s our real life example to refresh your memory. 1. $500,000 mortgage, 25 year amortization, 1.5% mortgage rate = $2000\/month $500,0000 mortgage, 25 year amortization, 5.5% mortgage rate = $3052\/ month 2. $1,000,000 mortgage, 25 year amortization, 1.5% mortgage rate = $3997\/ month $1,000,0000 mortgage, 25 year amortization, 5.5% mortgage rate = $6104\/ month \u201cLook, the housing market was unsustainably hot for the last couple of years, part of getting the economy into better balance is getting the housing market in better balance.\u201d Macklem concluded. Have no fear, the housing market is definitely in better balance, at least if you\u2019re a buyer. National housing figures released last week paint a rather drastic turn of events in the nations housing market. Home sales fell 39% year-over-year in November. The 30,135 sales reported across the entire MLS system are the lowest for the month of November in over a decade. You\u2019d have to go all the way back to November 2008 during the depths of the financial crisis for lower sales volumes. It\u2019s no wonder the Bank of Canada is finally talking about a pause, having shifted to a wait and see approach on future rate hikes. Regardless, even a pause does not prevent further downwards pressure on housing. The MLS home price index dropped another 1.4% month over month in November, bringing the total decline to 16.4% since peaking in March. This is the sharpest correction since the index was created in 2005. <\/p>\n
\n\n
<\/picture>\n
<\/div>\n<\/p><\/div>Source: CREA, Steve Saretsky<\/figcaption><\/figure>\n<\/p><\/div>\n
What\u2019s even more interesting is that this 16% drawdown has happened at a time when new listings remain low. With the one exception of 2019, November 2022 saw the fewest new listings in 17 years!! There is still only 4.2 months of inventory on a national basis, we are only now back to pre-pandemic levels. This is undoubtedly supporting further price declines in the market, at least for now. The next test comes in the spring when, seasonally, new listings increase. It\u2019s worth noting that while national house prices are down 16% from the peak, and 4% on a year-over-year basis, the declines vary by city. <\/p>\n
\n\n
<\/picture>\n
<\/div>\n<\/p><\/div>Source: Ben Rabidoux<\/figcaption><\/figure>\n<\/p><\/div>\n
\n
Calgary +9.7%<\/li>\n
Montreal +1.1%<\/li>\n
Vancouver -0.5%<\/li>\n
Ottawa -0.7%<\/li>\n
Toronto -5.3%<\/li>\n<\/ul>\n
In other news, OSFI confirmed what we suspected last week. At their annual December 15 meeting, the banking regulator confirmed the mortgage stress test is here to stay, at least until they can conduct a further review of mortgage underwriting standards. In January, OSFI says it will launch a consultation to review its B-20 mortgage underwriting guidelines. This could \u201ctake months, not weeks,\u201d it said on a media call. \u201cThis review will include the MQR (minimum qualifying rate), which forms part of B-20, but will also progressively include other mortgage underwriting standards,\u201d the regulator noted. \u201cWe expect to leave the MQR at its current rate pending the outcome of the review, although the economic environment could result in a more immediate change.\u201d The economic environment they\u2019re referring to is a continued deterioration in the housing market, which the bond market is certainly signalling with the 100bps yield curve inversion. <\/p>\n
The Canada 5 year bond yield, which has historically tracked the 5 year fixed rate mortgage continues to fall, now hovering around 2.9%. This brings us back to levels last seen in early May when the 5 year fixed mortgage was hovering in the low 4\u2019s. Perhaps a sign of things to come. We shall see. <\/p>\n
Lots more to discuss in the New Year. This will be the last edition of the year, see you all in 2022. Happy Holidays!<\/p>\n","protected":false},"excerpt":{"rendered":"
Bank of Canada Governor, Tiff Macklem, delivered some final comments this week at a keynote speech in BC. He didn\u2019t mince words following the fastest rate hiking cycle in recent history. \u201cThere\u2019s no question that if you bought a house near the peak, you took a variable rate mortgage with a high loan to income […]<\/p>\n","protected":false},"author":1,"featured_media":10333,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[70],"tags":[],"acf":[],"yoast_head":"\n
Better Balance - Steve Saretsky<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.stevesaretsky.com\/2022\/12\/news\/better-balance\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Better Balance - Steve Saretsky\" \/>\n<meta property=\"og:description\" content=\"Bank of Canada Governor, Tiff Macklem, delivered some final comments this week at a keynote speech in BC. He didn\u2019t mince words following the fastest rate hiking cycle in recent history. \u201cThere\u2019s no question that if you bought a house near the peak, you took a variable rate mortgage with a high loan to income […]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.stevesaretsky.com\/2022\/12\/news\/better-balance\/\" \/>\n<meta property=\"og:site_name\" content=\"Steve Saretsky\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/stephen.saretsky\" \/>\n<meta property=\"article:author\" content=\"https:\/\/www.facebook.com\/saretsky91\" \/>\n<meta property=\"article:published_time\" content=\"2022-12-20T03:14:25+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-01-04T00:14:15+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.stevesaretsky.com\/wp-content\/uploads\/2023\/01\/F6YYS3VNSBEYHG7ZKMUDWPC4UA.jpg.webp\" \/>\n\t<meta property=\"og:image:width\" content=\"1280\" \/>\n\t<meta property=\"og:image:height\" content=\"854\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/webp\" \/>\n<meta name=\"author\" content=\"Steve Saretsky\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@https:\/\/twitter.com\/SteveSaretsky\" \/>\n<meta name=\"twitter:site\" content=\"@SteveSaretsky\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Steve Saretsky\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.stevesaretsky.com\/2022\/12\/news\/better-balance\/\",\"url\":\"https:\/\/www.stevesaretsky.com\/2022\/12\/news\/better-balance\/\",\"name\":\"Better Balance - Steve Saretsky\",\"isPartOf\":{\"@id\":\"https:\/\/www.stevesaretsky.com\/#website\"},\"datePublished\":\"2022-12-20T03:14:25+00:00\",\"dateModified\":\"2023-01-04T00:14:15+00:00\",\"author\":{\"@id\":\"https:\/\/www.stevesaretsky.com\/#\/schema\/person\/21dcfa049c53088c3f577e61e857c1e4\"},\"breadcrumb\":{\"@id\":\"https:\/\/www.stevesaretsky.com\/2022\/12\/news\/better-balance\/#breadcrumb\"},\"inLanguage\":\"en-CA\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.stevesaretsky.com\/2022\/12\/news\/better-balance\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.stevesaretsky.com\/2022\/12\/news\/better-balance\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/www.stevesaretsky.com\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Better Balance\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.stevesaretsky.com\/#website\",\"url\":\"https:\/\/www.stevesaretsky.com\/\",\"name\":\"Steve Saretsky\",\"description\":\"Vancouver Real Estate Blog\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.stevesaretsky.com\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-CA\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.stevesaretsky.com\/#\/schema\/person\/21dcfa049c53088c3f577e61e857c1e4\",\"name\":\"Steve Saretsky\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-CA\",\"@id\":\"https:\/\/www.stevesaretsky.com\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/0d45900a2542f7770ef6a15f1ad4ccdd?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/0d45900a2542f7770ef6a15f1ad4ccdd?s=96&d=mm&r=g\",\"caption\":\"Steve Saretsky\"},\"description\":\"Born and raised in Vancouver, BC. I have a passion for Real Estate, creating a business, and connecting with people. I build my Real Estate business on human relationships not leads and numbers. I believe in advising my clients on making the best real estate decisions not on closing another commission cheque. My goal is to help people build wealth through real estate.\",\"sameAs\":[\"http:\/\/www.buyvancouvercondos.ca\",\"https:\/\/www.facebook.com\/saretsky91\",\"https:\/\/twitter.com\/https:\/\/twitter.com\/SteveSaretsky\"]}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Better Balance - Steve Saretsky","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.stevesaretsky.com\/2022\/12\/news\/better-balance\/","og_locale":"en_US","og_type":"article","og_title":"Better Balance - Steve Saretsky","og_description":"Bank of Canada Governor, Tiff Macklem, delivered some final comments this week at a keynote speech in BC. He didn\u2019t mince words following the fastest rate hiking cycle in recent history. \u201cThere\u2019s no question that if you bought a house near the peak, you took a variable rate mortgage with a high loan to income […]","og_url":"https:\/\/www.stevesaretsky.com\/2022\/12\/news\/better-balance\/","og_site_name":"Steve Saretsky","article_publisher":"https:\/\/www.facebook.com\/stephen.saretsky","article_author":"https:\/\/www.facebook.com\/saretsky91","article_published_time":"2022-12-20T03:14:25+00:00","article_modified_time":"2023-01-04T00:14:15+00:00","og_image":[{"width":1280,"height":854,"url":"https:\/\/www.stevesaretsky.com\/wp-content\/uploads\/2023\/01\/F6YYS3VNSBEYHG7ZKMUDWPC4UA.jpg.webp","type":"image\/webp"}],"author":"Steve Saretsky","twitter_card":"summary_large_image","twitter_creator":"@https:\/\/twitter.com\/SteveSaretsky","twitter_site":"@SteveSaretsky","twitter_misc":{"Written by":"Steve Saretsky","Est. reading time":"4 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/www.stevesaretsky.com\/2022\/12\/news\/better-balance\/","url":"https:\/\/www.stevesaretsky.com\/2022\/12\/news\/better-balance\/","name":"Better Balance - Steve Saretsky","isPartOf":{"@id":"https:\/\/www.stevesaretsky.com\/#website"},"datePublished":"2022-12-20T03:14:25+00:00","dateModified":"2023-01-04T00:14:15+00:00","author":{"@id":"https:\/\/www.stevesaretsky.com\/#\/schema\/person\/21dcfa049c53088c3f577e61e857c1e4"},"breadcrumb":{"@id":"https:\/\/www.stevesaretsky.com\/2022\/12\/news\/better-balance\/#breadcrumb"},"inLanguage":"en-CA","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.stevesaretsky.com\/2022\/12\/news\/better-balance\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/www.stevesaretsky.com\/2022\/12\/news\/better-balance\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.stevesaretsky.com\/"},{"@type":"ListItem","position":2,"name":"Better Balance"}]},{"@type":"WebSite","@id":"https:\/\/www.stevesaretsky.com\/#website","url":"https:\/\/www.stevesaretsky.com\/","name":"Steve Saretsky","description":"Vancouver Real Estate Blog","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.stevesaretsky.com\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-CA"},{"@type":"Person","@id":"https:\/\/www.stevesaretsky.com\/#\/schema\/person\/21dcfa049c53088c3f577e61e857c1e4","name":"Steve Saretsky","image":{"@type":"ImageObject","inLanguage":"en-CA","@id":"https:\/\/www.stevesaretsky.com\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/0d45900a2542f7770ef6a15f1ad4ccdd?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/0d45900a2542f7770ef6a15f1ad4ccdd?s=96&d=mm&r=g","caption":"Steve Saretsky"},"description":"Born and raised in Vancouver, BC. I have a passion for Real Estate, creating a business, and connecting with people. I build my Real Estate business on human relationships not leads and numbers. I believe in advising my clients on making the best real estate decisions not on closing another commission cheque. My goal is to help people build wealth through real estate.","sameAs":["http:\/\/www.buyvancouvercondos.ca","https:\/\/www.facebook.com\/saretsky91","https:\/\/twitter.com\/https:\/\/twitter.com\/SteveSaretsky"]}]}},"_links":{"self":[{"href":"https:\/\/www.stevesaretsky.com\/wp-json\/wp\/v2\/posts\/10327"}],"collection":[{"href":"https:\/\/www.stevesaretsky.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.stevesaretsky.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.stevesaretsky.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.stevesaretsky.com\/wp-json\/wp\/v2\/comments?post=10327"}],"version-history":[{"count":1,"href":"https:\/\/www.stevesaretsky.com\/wp-json\/wp\/v2\/posts\/10327\/revisions"}],"predecessor-version":[{"id":10332,"href":"https:\/\/www.stevesaretsky.com\/wp-json\/wp\/v2\/posts\/10327\/revisions\/10332"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.stevesaretsky.com\/wp-json\/wp\/v2\/media\/10333"}],"wp:attachment":[{"href":"https:\/\/www.stevesaretsky.com\/wp-json\/wp\/v2\/media?parent=10327"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.stevesaretsky.com\/wp-json\/wp\/v2\/categories?post=10327"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.stevesaretsky.com\/wp-json\/wp\/v2\/tags?post=10327"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
![\"\"](\"https:\/\/substackcdn.com\/image\/fetch\/w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep\/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F99420324-9482-46b4-af75-d19289678ee3_1836x940.png)
<\/picture>\n![\"\"](\"https:\/\/substackcdn.com\/image\/fetch\/w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep\/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fb08141ce-fee6-4ebd-bfdf-eb045c65f492_874x695.png)
<\/picture>\n![\"\"](\"https:\/\/www.stevesaretsky.com\/wp-content\/uploads\/2023\/01\/httpsbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.compublicimages6371ca7f-4d1a-41a0-b072-219ed9b44e30_1632x890.png\")
<\/picture>\n<\/div>\n<\/p><\/div>![\"\"](\"https:\/\/www.stevesaretsky.com\/wp-content\/uploads\/2023\/01\/httpsbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.compublicimages787f0ea8-e1de-42be-86a6-ace697610a44_2024x1144.png\")
<\/picture>\n![\"\"](\"https:\/\/substackcdn.com\/image\/fetch\/w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep\/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F6371ca7f-4d1a-41a0-b072-219ed9b44e30_1632x890.png)
<\/picture>\n![\"\"](\"https:\/\/substackcdn.com\/image\/fetch\/w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep\/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F787f0ea8-e1de-42be-86a6-ace697610a44_2024x1144.png)
<\/picture>\n