The Bank of Canada slashed interest rates Friday for the second time this month, a move that came as sentiment had begun to darken in the country’s real estate market with the spread of the COVID-19 crisis.
At the same time, however, the federal banking regulator and finance department suspended changes to the mortgage stress test that would have made it easier for borrowers to qualify for a bigger loan.
The central bank made its surprise interest rate cut to 0.75 per cent, from 1.25 per cent, less than two weeks after it cut the level from 1.75 per cent, which triggered a frenzy in the mortgage market, with homeowners and buyers taking out new loans, refinancing, renewing and breaking their old mortgage contracts.
Story continues below advertisement
But this rate cut did not spur major lenders to trim their mortgage rates. In fact, some responded by raising rates. “The banks are trying to control a run on refinancing,” said Shawn Zigelstein, sales representative with Royal LePage Your Community Realty.
Confidence in real estate started to turn to caution midweek, with the number of coronavirus cases rising, business activity slowing and stock markets suffering historic declines.
“Pure economic reality set in,” said Ron Butler, a broker with Butler Mortgage Inc., which is licensed in Ontario, Alberta and British Columbia.
“I have gone from extremely enthusiastic about real estate and mortgages to ‘what the hell?’ right now,” he said.
Mr. Butler said his outlook changed midweek after some of his clients started asking whether they could break their property acquisitions in Ontario before their deals closed.
The Bank of Canada rate should help demand in the sector, and also free up cash for consumers, economists say. Lower interest rates typically make it easier for homeowners with mortgages to pay their loans if they have a variable rate or if they are able to renegotiate at a lower level. It could also free up extra cash if a home owner decides to refinance.
At the same time, plunging oil prices, a slowdown in business activity and a near shutdown in the entertainment and travel industries is damaging Canada’s economy.
Story continues below advertisement
“Two forces act in opposing directions,” said Benjamin Tal, deputy chief economist with Canadian Imperial Bank of Commerce. “There is a point that reduced confidence takes over lower rates. I see a wave of rate renegotiations coming, something that will help to free some money for other purposes.”
The Office of the Superintendent of Financial Institutions, the federal banking regulator, said it would suspend consultations on the stress test for uninsured mortgages, as well as other policy development until conditions stabilize.
The regulator was expected to follow the finance department’s decision to use a new rate to calculate the stress test for insured mortgages that have a down payment of less than 20 per cent. That change is also on hold.
Under current rules, borrowers must qualify at an interest rate that is either two percentage points higher than their actual contract, or at the Bank of Canada’s benchmark five-year mortgage rate (currently sitting at 5.19 per cent) – whichever is higher.
“Policy makers may be concerned that in light of the sudden steep drop in interest rates, combined with a tight housing market and a more challenging near-term economic outlook, now is not the time for changes in the stress tests,” said Douglas Porter, chief economist with Bank of Montreal.
It is too early to say whether the economic slowdown and spread of the coronavirus will slow sales and depress prices in Southern Ontario, Montreal, Victoria and Ottawa – where a shortage of properties has spurred competition and offers well over the asking price.
Story continues below advertisement
Several Toronto home buyers said their enthusiasm for house hunting has waned in recent days. “It’s all very unnerving,” said Geoff Charkow, who started looking for property for his family of four about three weeks ago. “When you are going to spend, make the biggest purchase of your life … you will want to make sure that the timing is right.”
Realtors across the country said more clients are starting to voice concerns about open houses and questioning whether they should list their homes.
Real estate agent Andre Kutyan of Harvey Kalles Real Estate Ltd. in Toronto said some sellers insist that he question the buyer’s agent about his or her own health and travel history – and those of the client. Mr. Kutyan said one homeowner added the requirement that anyone who books an appointment to view her home must agree to wear a mask and disposable gloves.
In Calgary, where the real estate market has been depressed since the oil downturn of 2015, the rate cut has spurred a wave of refinancings. Corinne Lyall, a broker owner of Royal LePage Benchmark in Calgary, said she has heard some clients are concerned about having open houses.
“There is a fine balance between supporting our clients to get their homes sold and being cautious about the virus epidemic,” she said. “So far in Alberta, the advisory is still low, so we feel we should carry on with business unless there is a serious change to our advisory status.”
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
MONTREAL – The Quebec Professional Association of Real Estate Brokers says Montreal-area home sales rose 9.3 per cent in August compared with the same month last year, with levels slightly higher than the historical average for this time of year.
The association says home sales in the region totalled 2,991 for the month, up from 2,737 in August 2023.
The median price for all housing types was up year-over-year, led by a six per cent increase for the price of a plex at $763,000 last month.
The median price for a single-family home rose 5.2 per cent to $590,000 and the median price for a condominium rose 4.4 per cent to $407,100.
QPAREB market analysis director Charles Brant says the strength of the Montreal resale market contrasts with declines in many other Canadian cities struggling with higher levels of household debt, lower savings and diminishing purchasing power.
Active listings for August jumped 18 per cent compared with a year earlier to 17,200, while new listings rose 1.7 per cent to 4,840.
This report by The Canadian Press was first published Sept. 6, 2024.
In the quest to find cities where renters can enjoy the best of all worlds, a recent study analyzed 24 metrics across three key categories—Housing & Economy, Quality of Life, and Community. The study ranked the 100 largest cities in Canada to determine which ones offer the most to their renters.
Here are the top 10 cities that emerged as the best for renters in 2024:
St. John’s, NL
St. John’s, Newfoundland and Labrador, stand out as the top city for renters in Canada for 2024. Known for its vibrant cultural scene, stunning natural beauty, and welcoming community, St. John’s offers an exceptional quality of life. The city boasts affordable housing, a robust economy, and low unemployment rates, making it an attractive option for those seeking a balanced and enriching living experience. Its rich history, picturesque harbour, and dynamic arts scene further enhance its appeal, ensuring that renters can enjoy both comfort and excitement in this charming coastal city.
Sherbrooke, QC
Sherbrooke, Quebec, emerges as a leading city for renters in Canada for 2024, offering a blend of affordability and quality of life. Nestled in the heart of the Eastern Townships, Sherbrooke is known for its picturesque landscapes, vibrant cultural scene, and strong community spirit. The city provides affordable rental options, low living costs, and a thriving local economy, making it an ideal destination for those seeking both comfort and economic stability. With its rich history, numerous parks, and dynamic arts and education sectors, Sherbrooke presents an inviting environment for renters looking for a well-rounded lifestyle.
Québec City, QC
Québec City, the capital of Quebec, stands out as a premier destination for renters in Canada for 2024. Known for its rich history, stunning architecture, and vibrant cultural heritage, this city offers an exceptional quality of life. Renters benefit from affordable housing, excellent public services, and a robust economy. The city’s charming streets, historic sites, and diverse culinary scene provide a unique living experience. With top-notch education institutions, numerous parks, and a strong sense of community, Québec City is an ideal choice for those seeking a dynamic and fulfilling lifestyle.
Trois-Rivières, QC
Trois-Rivières, nestled between Montreal and Quebec City, emerges as a top choice for renters in Canada. This historic city, known for its picturesque riverside views and rich cultural scene, offers an appealing blend of affordability and quality of life. Renters in Trois-Rivières enjoy reasonable housing costs, a low unemployment rate, and a vibrant community atmosphere. The city’s well-preserved historic sites, bustling arts community, and excellent educational institutions make it an attractive destination for those seeking a balanced and enriching lifestyle.
Saguenay, QC
Saguenay, located in the stunning Saguenay–Lac-Saint-Jean region of Quebec, is a prime destination for renters seeking affordable living amidst breathtaking natural beauty. Known for its picturesque fjords and vibrant cultural scene, Saguenay offers residents a high quality of life with lower housing costs compared to major urban centers. The city boasts a strong sense of community, excellent recreational opportunities, and a growing economy. For those looking to combine affordability with a rich cultural and natural environment, Saguenay stands out as an ideal choice.
Granby, QC
Granby, nestled in the heart of Quebec’s Eastern Townships, offers renters a delightful blend of small-town charm and ample opportunities. Known for its beautiful parks, vibrant cultural scene, and family-friendly environment, Granby provides an exceptional quality of life. The city’s affordable housing market and strong sense of community make it an attractive option for those seeking a peaceful yet dynamic place to live. With its renowned zoo, bustling downtown, and numerous outdoor activities, Granby is a hidden gem that caters to a diverse range of lifestyles.
Fredericton, NB
Fredericton, the capital city of New Brunswick, offers renters a harmonious blend of historical charm and modern amenities. Known for its vibrant arts scene, beautiful riverfront, and welcoming community, Fredericton provides an excellent quality of life. The city boasts affordable housing options, scenic parks, and a strong educational presence with institutions like the University of New Brunswick. Its rich cultural heritage, coupled with a thriving local economy, makes Fredericton an attractive destination for those seeking a balanced and fulfilling lifestyle.
Saint John, NB
Saint John, New Brunswick’s largest city, is a coastal gem known for its stunning waterfront and rich heritage. Nestled on the Bay of Fundy, it offers renters an affordable cost of living with a unique blend of historic architecture and modern conveniences. The city’s vibrant uptown area is bustling with shops, restaurants, and cultural attractions, while its scenic parks and outdoor spaces provide ample opportunities for recreation. Saint John’s strong sense of community and economic growth make it an inviting place for those looking to enjoy both urban and natural beauty.
Saint-Hyacinthe, QC
Saint-Hyacinthe, located in the Montérégie region of Quebec, is a vibrant city known for its strong agricultural roots and innovative spirit. Often referred to as the “Agricultural Technopolis,” it is home to numerous research centers and educational institutions. Renters in Saint-Hyacinthe benefit from a high quality of life with access to excellent local amenities, including parks, cultural events, and a thriving local food scene. The city’s affordable housing and close-knit community atmosphere make it an attractive option for those seeking a balanced and enriching lifestyle.
Lévis, QC
Lévis, located on the southern shore of the St. Lawrence River across from Quebec City, offers a unique blend of historical charm and modern conveniences. Known for its picturesque views and well-preserved heritage sites, Lévis is a city where history meets contemporary living. Residents enjoy a high quality of life with excellent public services, green spaces, and cultural activities. The city’s affordable housing options and strong sense of community make it a desirable place for renters looking for both tranquility and easy access to urban amenities.
This category looked at factors such as average rent, housing costs, rental availability, and unemployment rates. Québec stood out with 10 cities ranking at the top, demonstrating strong economic stability and affordable housing options, which are critical for renters looking for cost-effective living conditions.
Québec again led the pack in this category, with five cities in the top 10. Ontario followed closely with three cities. British Columbia excelled in walkability, with four cities achieving the highest walk scores, while Caledon topped the list for its extensive green spaces. These factors contribute significantly to the overall quality of life, making these cities attractive for renters.
Victoria, BC, emerged as the leader in this category due to its rich array of restaurants, museums, and educational institutions, offering a vibrant community life. St. John’s, NL, and Vancouver, BC, also ranked highly. Québec City, QC, and Lévis, QC, scored the highest in life satisfaction, reflecting a strong sense of community and well-being. Additionally, Saskatoon, SK, and Oshawa, ON, were noted for having residents with lower stress levels.
For a comprehensive view of the rankings and detailed interactive visuals, you can visit the full study by Point2Homes.
While no city can provide a perfect living experience for every renter, the cities highlighted in this study come remarkably close by excelling in key areas such as housing affordability, quality of life, and community engagement. These findings offer valuable insights for renters seeking the best places to live in Canada in 2024.
