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How the Current Winnipeg Real Estate Market is Faring in the Wake of Tightened Lending and Export Rules

Sep 07, 2018

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The Canadian economic landscape has changed a lot in the last two years, and its effect on local housing markets is still being sifted through. With lending rules tightening in 2017 and 2018, it’s made the process of buying houses more difficult, which has also impacted the sale of houses. Trump’s imposition of lumber tariffs and the threat of steel and aluminum tariffs are already impacting our national economy. What most homeowners don’t realize is that this is having an impact at the consumer buying and selling level.

 

What Has Happened

Over the last two years, the government of Canada has imposed very stringent rules that made history. Never before had we seen such a tightening of the lenders’ purse strings at a national level. This was done in response to inflating real estate prices and mortgage debt loads across the country that threatened to balloon to unreachable heights. These hot and rising markets had the makings of the 2008 US real estate meltdown. Something had to be done, and more stringent (responsible) lending was the answer.

The challenge is that this solution was actually designed with the Eastern (ON) and Western (BC) markets in mind, to quell the inflating markets there. The new rules have helped to cool those volatile markets, hopefully allowing the bubble to slowly and safely descend back to Earth, but the broad stroke, nationwide application has also negatively impacted the steady, balanced housing markets in the prairies.  

On a separate front, markets have been impacted nationwide after the US president imposed a 20.8% tariff on Canadian lumber producers for softwood lumber imports and is threatening tariffs on steel pending the forced renegotiation of NAFTA.  The fallout to date includes a decreased GDP, a sunken stock market, and a lot of fear. “Imports on tariffs could hit the country particularly hard. Canada exports nearly 90% of its steel to the United States.”[1] 

These historical changes will impact many industries across the nation, the housing market included.


What Is Happening

Scary version? We don’t know. Even the nation’s leading economists can’t seem to agree on an outlook. What we do know is that the Bank of Canada is not looking to increase the interest rate, so we shouldn’t see a repeat of the 1980s’ rate hike and subsequent fall out any time soon. Rather, the Bank of Canada seems to be taking a ‘wait and see’ approach.

 

 

How it Affects Housing:

Tariffs mean higher costs, which mean businesses lose profitability. That’s when we can expect to see job loss and increased prices. When that happens in one industry (steel exporting, let’s say), other industries are inevitably impacted. Once employment is affected, we see the impact filter its way all the way down into retail. There will be less consumer spending, prices are driven up, and ultimately there are fewer disposable dollars in every household budget. Buying power depletes in every industry, including in the housing market.

Value of real estate is based on vibrancy of markets.

The Current State of the Winnipeg Real Estate Market


Fortunately, going into all this, Winnipeg had a relatively balanced housing market. That has helped us to holding our own so far.

We’ve noticed buying power has diminished slightly, thanks to the lending rules, which makes some prices drop slightly and in some cases, causes the sale or purchase of a house take longer than it used to, but overall, we’re not in a downturn.


Bottom Line Advice for Homeowners

The best thing to do when deciding to buy or sell a house in this market is to go in with your eyes open. Know there are bigger issues at play that impact the value of your home. Your sale or purchase may take longer than it would have three years ago, and more changes may impact the market in the coming weeks and months, so be patient and be flexible.






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