Time for your cheat sheet on this week’s top stories.
Canadian Real Estate
Last week, the Bank of Canada (BoC) claimed the country has a long-standing housing supply issue. This ticked off a number of experts that have been following this issue, including the economists at BMO. Prior to 2020, housing outpaced household formation and shelter costs were considered affordable across the country. Even the central bank’s housing affordability index demonstrates 20 years of near-record affordability that only ended with a low rate shock that fueled a speculation frenzy.
Canada’s aggressive pursuit of international students is currently under scrutiny. As social media fills with posts of international students sleeping in tent cities and using food banks, the government is feeling pressure to act. A few days ago the first measure was launched—raising the minimum amount of funds required to study in Canada. However, they mentioned nothing about caps on permits or limits on schools to regions with adequate housing. Apparently the only issue policymakers saw is, those on study permits paying 5x more than domestic tuition, simply aren’t wealthy enough.
FINTRAC, Canada’s financial crime watchdog, announced compliance fines for RBC ($7.5 million) and CIBC ($1.33 million). During a routine audit, the agency found a number of gaps in the bank’s respective anti-money laundering (AML) reporting procedures. FINTRAC has been working to try and correct its image after BC’s AML inquiry found the agency to be an unreliable resource.
Canadian insurer Northbridge Insurance has warned that arson of new homes may rise as the economy slows. This comes as investors in pre-construction homes become desperate due to changing market conditions. The firm suggests increased security measures to prevent and document the incidents, as well as to help reduce insurance premiums. If premiums rise, the cost of housing may also go up.
Canadian policymakers are floating the idea of capping international students. They may not need to, since the most recent data for study permit applications shows a 20% decline for the month of September. This is primarily driven by a big pullback in Indian applications, which have slowed since April. Word is spreading fast that Canada’s international students are struggling to find the opportunities promised, leading to fewer applications. Canada threatening limits is simply policymakers trying to save face, attempting to get ahead of data showing it’s struggling to attract students.
Toronto Real Estate
Toronto real estate prices are still falling, and have rolled back a couple of years of progress. Prices fell $20k in November, as sales fell and inventory continues to suddenly build. Economists at National Bank, one of the country’s “Big Six” banks, took note of how quickly this market broke down. By their calculations, it’s one of the fastest loosening of market conditions in Toronto real estate history.
TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
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.
