This chart shows how far BC’s housing market has fallen since tougher mortgage rules were introduced

Photo: Rain Sun/Flickr

To demonstrate how BC home sales activity has dropped off in the 14 months after policymakers changed the qualification process for uninsured mortgages, a provincial real estate association has drawn a line in the sand — or rather, a chart.

With the release of the British Columbia Real Estate Association (BCREA)’s February home sales statistics earlier this month, the industry association included the chart, giving a before-and-after look at seasonally adjusted BC home sales, which plummeted 27 percent last month on a year-over-year basis.

“Prospective homebuyers continue to be sidelined by the mortgage stress test,” says Brendon Ogmundson, BCREA’s deputy chief economist, in a news release. “As a consequence, and despite a strong BC labour market, sales remained slow in February,” Ogmundson.

Last January, federal policymakers expanded mandatory stress testing to the uninsured mortgage segment. The rule change meant that even if a borrower was able to cobble together a downpayment of 20 percent — thus not requiring mortgage insurance — they’d still be need to qualify at a rate 200 basis points higher than what their bank was offering. Insured mortgage applicants already faced stress testing.

BC home prices have also taken a hit since the federal policy was implemented. The average selling price of a residential property in the last month was $678,625, down 9.3 percent from a year prior.

Ahead of the release of the Canadian federal government’s budget, which was unveiled on March 19th, Justin Trudeau’s Liberals faced calls to relax the stress tests.

SEE ALSO:Will federal plans to help first-time buyers make any difference in Canada’s ultra-expensive housing markets?

No such change appeared in the 2019 budget, although a number of other items focused on housing affordability did.

These items include raising the maximum amount a first-time homebuyer can draw from their RRSP to finance the purchase, to laying out plans for a shared-equity mortgage scheme that would see the Canada Mortgage and Housing Corporation get a stake in a first-time homebuyers property in exchange for some downpayment financing.

“While we welcome the incentives for first-time home buyers, the announced measures fail to address the damage done by the mortgage stress test,” says BCREA in a separate response to the budget.