Canada’s typical home price is 41 per cent more expensive than in January, 2020, and individual investors are increasing competition for properties.DARRYL DYCK/The Canadian Press
As home prices spiral out of control, Canada’s federal Housing Minister said his government does not want to do anything that would harm “mom and pop” real estate investors.
“Small-time landlords do add to the rental stock,” Ahmed Hussen, the Minister of Housing and Diversity and Inclusion, said in a recent interview. “They provide rental stock to Canadian families and individuals. And so we don’t want to negatively affect them because they are actually providing a rental service to a lot of people.”
Individual investors are responsible for 20 per cent of all home purchases in the country, according to recent data from the Bank of Canada, and many of them rent out their properties for income.
But with the country’s typical home price 41 per cent more expensive than in January, 2020, individual investors are increasing competition for properties and contributing to the rise in home prices.
Mr. Hussen said “a lot of those Canadians” turn around and “rent their newly acquired properties and provide more rental units that make it possible for Canadian families and individuals to rent.”
“There’s nothing wrong with that,” he said.
As part of the federal government’s attempts to slow home price increases, it is reviewing down payment requirements for investors. The Liberal Party unveiled that plan during last year’s election campaign.
Asked whether the down payment requirement for rental properties should be higher than 20 per cent of the purchase price, Mr. Hussen said he could not answer that question and said he did not want to “prejudge” the budget process.
The federal budget is expected to provide details on how the Liberal Party’s 2021 campaign platform will be turned into government policy. It is not known when the budget will be unveiled.
The bank regulator, the Office of the Superintendent of Financial Institutions, does not have specific rules for investment properties, but an OSFI spokeswoman said the regulator expects banks to “accurately measure and underwrite the risks they may take on.”
The federal mortgage insurer, Canada and Mortgage Housing Corp., only provides mortgage insurance on investment properties if borrowers make a down payment of at least 20 per cent on rental properties that have two to four units and cost less than $1-million. Two of the large Canadian banks, Royal Bank of Canada and Bank of Montreal, said they require investors to make a 20-per-cent down payment on rental properties.
The federal government and Housing Minister have been looking for ways to slow the quick rise in home prices and help young Canadians buy homes.
Mr. Hussen has been directed by Prime Minister Justin Trudeau to work on a temporary ban on purchases by foreign buyers, as well as an anti-flipping tax on home buyers who sell a property within 12 months of purchasing it.
“This will reduce speculative demand in the marketplace and help to cool excessive price growth,” the minister’s press secretary, Arevig Afarian, said in an e-mailed statement.
Over the past three decades, individual investors have been providing the majority of Canada’s new rental homes. They helped fill a shortfall in rental properties when the supply of homes that were specifically built to rent started to decline in the 1990s.
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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.
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.
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