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  • Your Ottawa Mortgage

One of provinces most affordable cities, but for how long?

by Neil Sharma 22 May 2018 MBN

The Canadian Real Estate Association just declared the mortgage stress test as the reason for lukewarm housing activity nationwide, but according to one brokerage owner far removed from Canada’s two most overheated markets, there are more factors at play.

“I will agree that’s put additional financing pressure on people trying to get qualified, but I think the fact that the qualifying rate has risen has also put pressure on homeowners,” said Karen Matthey, co-owner of Verico The Mortgage Professionals. “Kingston has one of the lowest vacancy rates in Ontario and also one of the lowest unemployment rates, and that combined with military transfers, and incoming residents and investments into Kingston, has meant that people are finding financing more challenging because home prices are rising.”

Using a household income analysis from Statistics Canada and home prices provided by CREA, Zoocasa determined Kingston is the fifth-most affordable city in Ontario. However, Matthey doesn’t believe it will last.

“I would say it’s beginning to change in Kingston because if you look at average incomes in Kingston—and I’m not going to try to compare Kingston with Toronto or Vancouver because they’re not anything alike—from an income to purchasing power point of view, the price point for homes here is just not available. That doesn’t mean every house is priced out, but the inventory is not available for first-time homebuyers at a price they can afford.”

Like much of the country, Kingston’s first-time buyers often have co-signors on their mortgages, and that could create a host of problems—just not for banks.

“Having three or four applicants on a mortgage makes it very safe for the bank, but not for those people on the mortgage. All four of them carry that mortgage individually on their credit. It’s great for a bank because the bank has increased security, but it’s not great for that father and mother who want to finance their own home, or maybe help their daughter as well as their son, or who have a quarter of the ownership but 100% of the debt. That is one of the biggest concerns. The banking system may be more stable but the Canadian homeowner is not better off.”

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