With the governments announcement of the new amortization limit to 25 years, this will impact how much of home buyers will afford. Up to now, new homes have had a distinct advantage over resale with selection, design and features for the price, but not anymore. Buyers who have wanted the most for the least could qualify for a much higher loan amount to pay for all the fancy upgrades that new homes have offered.
Since the cost of new homes keep rising due to inflated land and construction costs, it has been very difficult for builders to keep their prices steady, therefore prices have only gone up each year. But now the cost advantage will move to the resale home market as more and more people who had relied on the longer mortgage amortizations realize the value that resale homes now offer, such as fully landscaped and fenced lots and finished basements, drapery and best of all a completed street with no construction noise or mess!
I believe that the demand for resale homes will now only increase as these people see the value that is offered. Of course for those that can afford a brand new home with the 25 amortization., these new rules will not affect them. Therefore, we are now back to were we were 25 years ago where a new home was out of reach for most first time homebuyers, I remember those times, and it was fine.