Canadian real estate didn’t move much last month, but the data still hints at an interesting Spring. The price of a typical home slipped 0.3% lower in March. The month also showed a mild increase in sales, as well as an inventory pullback. Diving into more detail, the distribution is the interesting part—new listings began to surge towards the end of the month. CREA made a point to note the first week of April saw a flood of new listings. The question now is whether those listings can be absorbed by the market.
Canada was expecting its central bank to deliver good news for mortgages, but they got the opposite. The Bank of Canada (BoC) confirmed expectations by holding its key interest rate. They also warn that issues such as geopolitical tensions, have slanted inflation risks to the upside. Bond markets responded by sending yields significantly higher, applying pressure to drive fixed rate mortgage interest costs higher.
The US is Canada’s largest trade partner, so they tend to move together closely. This is one of those exceptions, according to BMO, one of Canada’s largest banks. The US has been on a tear, adding jobs and chasing massive economic growth. At the same time, Canada has seen rising unemployment, moving closer and closer to recession. As a result, Canada is expected to cut interest rates before the US, in an attempt to kickstart its economy. That puts a new inflationary problem square and center—a weaker loonie.
The Government of Canada (GoC) is announcing more demand-side stimulus for first-time buyers. In response to soft new home sales, the GoC will allow 30-year mortgage amortizations to increase potential activity. They’re also dramatically increasing the amount first-time buyers can withdraw from their registered retirement funds to provide a downpayment. The changes are good news for those selling homes, but risks concentrating the economy into housing even further. Especially the last part, since they’re literally encouraging people to withdraw retirement funds from capital markets and put it towards housing.
Canadians seemed addicted to mortgage credit but apparently higher rates were the cure. Residential mortgage credit at institutional lenders rose just 0.47% in Q4 to $1.8 trillion. It was the slowest quarter since 2019, and the slowest growth for any fourth quarter since 2008. Higher interest rates are working their magic—limiting what can be borrowed, incentivizing people to pay off their debt, and diverting capital to more productive uses. Don’t worry, experts see rate cuts coming soon and the universe will return to its natural state.
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.
