Canadian real estate buyers pay steep premiums to own, compared to their global peers. IMF research shows Canada’s house price-to-rent ratio, the difference between renting and buying, is one of the highest in the world. Owning a home in Canada more closely resembles ratios in countries like Latvia and Slovak Republic, than countries like the US and Australia.
House Price-To-Rent Ratio
The house price-to-rent ratio is the annual cost to carry a house, compared to rent in the region. Ownership costs include some other fees like property taxes, but also leave out some costs like maintenance. The ratio does not tell us anything about “affordability,” since income isn’t a factor. Instead, it strictly compares ownership vs renting. Looking at this number, we find out what kind of premiums homeowners are willing to accept paying.
There’s a few reasons you want to look at these numbers, but the biggest is relative consumer value. The ratio is often used by economists to determine whether a market is fair, undervalued, or in a bubble. The most notable use of these ratios was during the US housing crisis, during which researchers flagged the ratio’s performance in 2004, when it passed 115%. Four years later, the US was declared a bubble as it collapsed and people flowed away from ownership. Now let’s look at where Canada is, in the context of the rest of the world.
Canada’s House Price-To-Rent Ratio Is The Highest In The G7
Canada currently has one of the highest house price-to-rent ratios in the world. The ratio was 122.43% in 2019, meaning it costs 22.43% more to buy than rent. Overall, it’s the 8th highest in the world. No G7 country ranks above Canada, with mostly smaller, developing economies ranking above. This is likely why Canada has so many negative cap landlords currently in the market.
House Price-To-Rent Ratio
The house price-to-rent ratio for IMF tracked real estate markets in 2019.
Source: IMF, Better Dwelling.
Canada’s Ratio Is Higher Than 80% of Economies Tracked
Canada’s house price-to-rent index is substantially higher than its international peers, especially the US. About 80% of countries tracked by the index have lower ratios. The US is all the way down at number 25 with 108.99%. Canada’s premium is closer to countries like Latvia and the Slovak Republic, than the US.
This year is only half over, but Canada’s numbers are likely to change – and not in the direction one might expect. Rents are currently falling, especially in cities like Toronto and Vancouver. Meanwhile, house prices have managed to stay at a similar level or even rise. This would send the ratio even higher, unless house prices see similar drops as well. There’s a few forecasts that see house prices following rents in the second half of 2020, but so far there’s limited movement.
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WE Charity laying off staff, looking to sell real estate in Toronto – Kamloops This Week
OTTAWA — WE Charity is scaling back its operations, making dozens of layoffs in Canada and the United Kingdom and looking to sell some of its real estate holdings in Toronto.
The charity has been embroiled in a political controversy since the Trudeau government chose it to run a now-abandoned youth volunteer program.
WE Charity says its financial position has been greatly affected by the COVID-19 pandemic and “recent events,” prompting a need to shift programming and reduce staff.
At its global headquarters in Toronto, 22 full-time employees will be laid off and another 59 employees working on fixed-term contracts with the charity won’t have their contracts renewed when they expire at the end of the month.
WE Charity’s U.K. operations will be centralized in Canada, which means 19 full-time and contract employees in London will be laid off.
In addition, a number of buildings on a block near Moss Park in Toronto acquired by the charity as part of a 25th anniversary plan to create a youth campus will be assessed by the organization to determine which ones could be sold.
This report by The Canadian Press was first published Aug. 13, 2020.
Sale of Private Residential Estate Breaks Quebec Real Estate Record – GlobeNewswire
Montreal, Quebec, Aug. 13, 2020 (GLOBE NEWSWIRE) — Sotheby’s International Realty Canada today announced the sale of a private estate in Montreal that has set a new benchmark as the highest recorded residential property sale through the MLS® (Multiple Listing Service) system in Quebec’s history.
Listed at $20 million, the sale closes as Montreal’s real estate market soars following the resumption of real estate brokerage activities in May.
“Situated on almost 30,000 square feet of beautifully landscaped grounds, this estate provided a rare opportunity to own one of the most prestigious properties in Montreal,” said Liza Kaufman, listing agent with the Kaufman Group of Sotheby’s International Realty Quebec, who represented the sellers and the buyers in the transaction.
“By marketing the property across Sotheby’s International Realty’s exclusive media network, we generated strong local and international demand and several offers. This sale reflects how confident luxury buyers are in the long-term fundamentals of Montreal. It also reveals a consumer trend that is emerging with the pandemic – more than ever, people are seeking security and a desirable lifestyle by investing in their homes,” Kaufman said.
Built in 1924, the six bedroom home, with six full bathrooms, two powder rooms and one powder room in the pool cabana, has been fully restored to merge classic European architecture with stylish contemporary designs, bespoke furnishings and world-class comforts, including a 14-car garage and saltwater pool.
The main kitchen is equipped with a Lacanche Cote d’Or, nine-burner gas stove with double ovens, large Miele Refrigerator, large Miele freezer, Miele dishwasher, compactor, double sink, garburator and pot filler. A grand centre marble island seats four with an adjacent breakfast table with seating for six. An additional pair of writing desks and an abundance of hidden storage make the kitchen a central hub for the home.
The imposing entry opens to a grand centre hall paneled in rich wood, offering exquisite moldings and a gas fireplace. The cross hall plan is perfect for entertaining. The light-filled living room features large windows overlooking the city and a beautiful marble antique mantle piece. The adjacent dining room is available for intimate dinners or lavish entertaining, and it is serviced by a caterer’s kitchen featuring a Wolf oven, Subzero refrigerator, gas stove, dishwasher, microwave and wine refrigerator.
French doors open to a spectacular multi-level backyard which feature the pool and stone terraces large enough to host a wedding party and other large events. A custom stone fire pit, pool cabana with change room and powder room, tree house and children’s play area, make this an outdoor paradise.
“Montreal’s residential real estate market has been strong across the conventional and luxury real estate market, and across every residential property type this summer,” says Daniel Dagenais, Managing Broker of Sotheby’s International Realty Quebec. “In fact, according to the latest statistics released for the Montreal Census Metropolitan area by our real estate board, residential sales surged 46% year-over-year from July of last year and set a new record for a month of July.”
The transaction demonstrates a resurging demand for luxury Canadian properties.
“The Montreal real estate market, as well as major metropolitan markets such as Toronto and Vancouver, saw significant gains in the first months of 2020 before COVID-19 disrupted their momentum,” says Don Kottick, President and CEO of Sotheby’s International Realty Canada. “We’re now seeing pent-up consumer demand surge into new activity. In addition, global uncertainty is firing up new demand for real estate in key Canadian markets including Montreal, not only amongst locals, but from buyers from the U.S. and overseas who are seeking sanctuary and a secure financial investment.”
According to Kottick, favourable mortgage lending conditions and continued volatility in the stock market are also positioning Canadian real estate as a desirable and secure investment.
Further details of the sale of this estate remain private.
About Sotheby’s International Realty Canada
Combining the world’s most prestigious real estate brand with local market knowledge and specialized marketing expertise, Sotheby’s International Realty Canada is the leading real estate sales and marketing company for the country’s most exceptional properties. With offices in over 32 residential and resort markets nationwide, our professional associates provide the highest caliber of real estate service, unrivalled local and international marketing solutions and a global affiliate sales network of approximately 1,000 offices in 71+ countries and territories to manage the real estate portfolios of discerning clients from around the world. For further information, visit www.sothebysrealty.ca.
Media Contact Victoria Levy Talk Shop firstname.lastname@example.org 604-738-2220
Edmonton-area real estate market hot despite COVID-19 pandemic – Global News
According to the Realtors Association of Edmonton, even though concerns remain over the coronavirus pandemic, residential sales in the city and surrounding areas are up this summer.
In the first few months of the pandemic, sales were down more than 35 per cent from March to April. But they’ve since rebounded and then continued to grow.
In May, the housing market shot up more than 54 per cent compared to April, and in June they rose again, up more than 77 per cent. Those sales held steady, increasing slightly in July.
Residential home sales were up nearly 14 per cent in July 2020 compared to last July.
Homes are also selling faster. On average, a single-family home is selling in 49 days — eight days faster than this time last year.
Reema Kaushik is a top-ranking mortgage advisor for CIBC.
“We were quite worried in March when the pandemic started. We thought that people would be scared to buy a home,” she said, joking that she thought she’d have time to try out new recipes on YouTube.
But instead, she’s busier than ever.
“I think one of the biggest reasons is the competitive rates that every lender is offering. We’ve never seen such great rates — ever,” Kaushik said.
She also points to an incentive by the Canada Mortgage and Housing Corporation for getting new buyers into the market.
“It allows first-time home buyers, within a certain eligibility criteria, to borrow five per cent for existing homes and 10 per cent down payment for new construction homes.”
New construction mortgages are Kaushik’s specialty.
“I was talking to one of my builder partners when they told me they’re completely out of existing home inventory, which means there’s no quick possession left.”
This summer has also been a whirlwind for YEG Pro Realtor Reanna Bowden.
“It’s extremely busy,” she said. “I’ve been a realtor in Edmonton for 15 years and by far this is the busiest June [and] July I ever saw.
“It’s 16-hour days — non-stop — to get my clients to where they want to be.”
As for Bowden’s take on the sudden jump in home sales?
“I think our spring buyers that were maybe on the fence, not buying in the spring, just jumped on top of our June [and] July buyers, so it was a frenzy.”
In a single month, Bowden said her clients found themselves in multiple-offer situations four times.
One of those clients was Hana Price. She was one of five people to place an offer on a particular house in west Edmonton in June.
“I thought that the real estate market was not going to be that hot, especially with COVID(-19),” she laughed.
Price said her boyfriend’s house sold pre-pandemic, but they weren’t comfortable shopping when COVID-19 hit.
“There’s uncertainty with employment at that time,” she explained.
“And just kind of not really wanting to leave your house and go into somebody else’s house.”
Price ended up getting the house she wanted, but had to pay $25,000 over the asking price.
She said if you’re interested in buying, she has some advice.
“Move quick. Don’t think about it for too long, because you might lose out.”
© 2020 Global News, a division of Corus Entertainment Inc.
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