Increasing mortgage rates slowed home sales in April from the frenzied pace they started the year at, the Canadian Real Estate Association said Monday.
The association found the number of homes sold dropped by 25.7 per cent to 54,894 last month from 73,907 in April 2021, when the country set a record for the month.
On a month-over-month basis, sales in April were down 12.6 per cent compared with March, but still ranked as the third-highest April sales figure, just behind 2021 and 2016.
“The demand fever in Canadian housing has broken and, who would have thought, all it took was a nudge in interest rates by the Bank of Canada to change sentiment,” said BMO Capital Markets senior analyst Robert Kavcic, in a note to investors.
CREA attributed much of the slowdown to fixed mortgage rates, which have been on the rise since 2021, but have been more impactful in recent months. The association pointed out that typical discounted five-year fixed rates have leaped from about three to four per cent over the span of a month.
The rate is also weighing on how buyers fare with the mortgage stress test, which once required those with uninsured mortgages – borrowers with a down payment of at least 20 per cent – to carry a mortgage rate of either two percentage points above the contract rate, or 5.25 per cent, whichever is greater.
For fixed borrowers, CREA said the stress test just moved from 5.25 per cent to the low six per cent range, another roughly one per cent increase in a month.
“People are nervous. They are thinking, ‘if I take on this mortgage, when mortgage rates are going up and the price to (live) is more, what is going to happen?” said Anita Springate-Renaud, a Toronto broker with Engel & Volkers.
She noticed that many homes were still getting multiple offers last month, but instead of 20 offers, two or three was becoming the norm.
Properties are also taking longer to sell. Homes that used to find a buyer in three or four days are now sitting for two weeks, in some cases, she said.
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Many other realtors have found buyers and sellers holding off on purchasing or listing properties until they see how much of an effect mortgage and interest rate changes have on the market.
“For buyers, this slowdown could mean more time to consider options in the market,” said Jill Oudil, CREA’s chair, in a news release.
“For sellers, it could necessitate a return to more traditional marketing strategies.”
This shift in sentiment was reflected in the number of newly listed homes, which, on a seasonally adjusted basis, fell by 2.2 per cent to 70,957 last month from 72,557 in March.
On a non-seasonally adjusted basis, new listings amounted to 91,559 last month, down 10.5 per cent from 102,294 in April 2022.
Even though CREA reported slowing sales and fewer listings, Canadians were shelling out even more for homes than they did in 2021.
The national average home price was a little over $746,000 in April, up 7.4 per cent from about $695,000 during the same month last year.
Excluding the Greater Toronto and Vancouver areas from this calculation, cuts $138,000 from the national average price, CREA said.
However, on a seasonally adjusted basis the national average home price slid by 3.8 per cent to $741,517 last month from $771,125 in March.
The home price index benchmark price hit $866,700 last month, down 0.6 per cent from a month ago but up 23.7 per cent from a year ago and 63.9 per cent from five years ago.
The benchmark price was lowest in Saskatchewan, where it totalled $271,100 and highest in B.C.’s Lower Mainland, where it amounted to more than $1.3 million.
Kavcic found Ontario markets “weakening most and fastest, especially further outside the core of Toronto (these were also the hottest markets in the country during the pandemic).”
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Ontario’s suburban markets are the “shakiest” because of how prices have fallen from February peaks, but he said single-detached and townhomes look to be cooling quickest.
“Sales in the province slid 21 per cent in April and are now back in-line with pre-pandemic activity levels,” he said.
“The market balance has gone from drum tight with ‘not enough supply,’ to one that resembles the 2017-19 correction period.”
Within the province, TD Economics economist Rishi Sondhi found Toronto be an outlier because sales and prices dropped more there than in the country overall.
Sondhi believes the Toronto market is now close to tipping in favour of buyers, but in the coming months, expects prices to continue falling nationally, reflecting the cooler demand backdrop.
© 2022 The Canadian Press
Ford government caps rent increases to 2.5% in 2023 – CityNews Toronto
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Air Canada to reduce flights this summer amid 'customer service shortfalls' – CTV News
Air Canada is planning to reduce its flights in July and August, according to a statement from the company’s president, as the airline continues to deal with “customer service shortfalls.”
“Regrettably, things are not business as usual in our industry globally, and this is affecting our operations and our ability to serve you with our normal standards of care,” Michael Rousseau wrote.
The airline will be reducing its capacity as summer travel comes to a peak and pandemic-related restrictions on travel continue to lift.
In an emailed statement to CTV News Channel, an Air Canada spokesperson said the company will be reducing its schedule by an average of 154 flights per day for July and August. Prior to this change, Air Canada said it was operating around 1,000 flights per day. The routes most affected are flights to and from Toronto and Montreal airports. The changes will reduce the frequency of these flights, and will primarily affect evening and late-night flights on the airline’s smaller aircraft.
The spokesperson also said the airline will be temporarily suspending routes between Montreal and Pittsburgh, Baltimore and Kelowna, and Toronto and Fort McMurray. International flights will remain mostly unaffected, except for timing changes that the spokesperson said would reduce flying at peak times.
“To bring about the level of operational stability we need, with reluctance, we are now making meaningful reductions to our schedule in July and August in order to reduce passenger volumes and flows to a level we believe the air transport system can accommodate,” the statement reads.
While Rousseau acknowledges this will have a “negative impact on some customers,” he said he hopes giving this notice to the public of the airline’s reduced schedule will allow travellers to make other arrangements.
“We are convinced these changes will bring about the improvements we have targeted,” he said. “But to set expectations, it should also be understood the real benefits of this action will take time and be felt only gradually as the industry regains the reliability and robustness it had attained prior to the pandemic.”
Recent data shows that as we head into the summer travel season, more than half of all flights in and out of some of Canada’s major airports are being cancelled or delayed as the tourism and airline sectors continue to face staffing shortages.
On Wednesday, the CEO of the Montreal-Trudeau Airport – where Air Canada said it would be reducing some of its flights – told CTV News Montreal that the airport was already in discussions with airlines to reduce the number of flights.
“We’re having discussions and it’s likely the frequencies — the number of flights we’ll have on a given destination — or destinations themselves,” Philippe Rainville said, adding that a staffing shortage at the airport is causing issues, most notably in loading and unloading luggage from planes.
Toronto Pearson International Airport is experiencing similar issues, with videos circulating on social media appearing to depict hundreds of pieces of luggage piled up in the baggage claim area.
“I have had conversations with the four largest airports and the two largest airlines just on Thursday and I will be having follow up conversations with them soon,” Transport Minister Omar Alghabra said at a press conference on Wednesday. “They know that they need to add more resources and they are working on that and we are offering our support to address these issues. But these are unacceptable issues.”
Airline and airport workers say some of the big reasons behind the struggle to address the industry’s staffing shortage are that they’re not being treated well, and their pay is not sufficient for how difficult the job is.
“There are so many screening officers that have quit because of low pay and poor working conditions that the airports are severely understaffed,” David Lipton, representative of the United Steelworkers union in Ottawa, told CTV National News on June 19.
Lipton said some unions are offering screening staff hundreds of dollars a week if they don’t take a vacation or sick days.
With files from CTV News Montreal, CTV News Toronto, and Alexandra Mae Jones
Accounting firm EY to pay $100M US fine after auditors caught cheating on ethics exams – CBC News
Accounting firm Ernst & Young will pay $100 million US to settle U.S. Securities and Exchange Commission (SEC) charges that its auditors cheated on certified public accounting (CPA) exams and that it misled the agency’s investigators.
The London-based auditor admitted to the charges and agreed to pay what the SEC said is its largest fine against an auditor.
“EY acknowledges the findings determined by the SEC,” said Brendan Mullin, EY media relations director, adding that the firm’s response has been “thorough, extensive and effective.”
“At EY, nothing is more important than our integrity and our ethics.”
The CPA is the key qualification for accountants in the United States.
EY has also agreed to “undertake extensive remedial measures to fix the firm’s ethical issues,” the SEC said.
49 people got test answers ahead of time
The Wall Street watchdog found that 49 EY professionals “obtained or circulated” answer keys to CPA licence exams, while hundreds of others cheated to complete the continuing professional education components relating to CPA ethics.
“This action involves breaches of trust by gatekeepers … entrusted to audit many of our nation’s public companies. It’s simply outrageous that the very professionals responsible for catching cheating by clients cheated on ethics exams,” said Gurbir Grewal, the SEC’s enforcement director, in a statement.
“And it’s equally shocking that Ernst & Young hindered our investigation of this misconduct,” added Grewal.
EY submitted to the SEC that it did not have issues with cheating when, in fact, the firm had been informed of potential cheating on a CPA ethics exam by a member of staff, the SEC said.
It added that EY admitted it did not correct its submission even after an internal EY investigation confirmed there had been cheating, and even after its senior lawyers discussed the matter with the firm’s senior management.
The SEC’s order also finds that EY violated a Public Company Accounting Oversight Board (PCAOB) rule requiring the firm to maintain integrity in the performance of a professional service.
The SEC has ordered EY to retain two independent consultants to help remediate its deficiencies. One will review the firm’s policies and procedures relating to ethics and integrity. The other will review EY’s conduct regarding its disclosure failures, including whether any EY employees contributed to the firm’s failure to correct its misleading submission, the SEC said.
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