Home of the Week, 130 Carlton St., Toronto.Anton Mardirossian/Anton Mardirossian/TRE Media
Here are The Globe and Mail’s top housing and real estate stories this week, with the lowest mortgage rates available in Canada today, commentary from our mortgage expert and one home worth a look.
Banks seeing decline in borrowers adding unpaid interest to their mortgage balances
Lenders are seeing outstanding loans grow as borrowers’ monthly payments don’t cover the total amount of interest. These mortgages – that increase in size instead of reducing in size – are known as “negative amortization.” Three of Canada’s major banks offer mortgages that allow their borrowers to go into negative amortization – a product that the federal bank regulator is now calling “dangerous,” writes Rachelle Younglai. The billions of dollars that quickly accumulated in negative amortizations has been a clear sign of the stress borrowers are facing when they are required to increase their monthly payments to get back on track with paying down their mortgages.
Potential Canadian homebuyers stand pat, expecting prices to slide further
TD economist Rishi Sondhi is now forecasting that the average national home price will drop 10 per cent through the early part of next year from the third quarter of 2023, leading potential buyers throughout the market to hold off in case prices have farther to fall, writes Carolyn Ireland. New listings have recently flooded the market in Ontario, which Mr. Sondhi says appears to be due to some condo investors in Toronto and Hamilton exiting the market. The climb in condo units for sale in those and other cities suggests that over-leveraged investors are choosing not to hold on to their properties.
This week’s lowest available mortgage rates
Tens of thousands of Canadians are camping out for real estate discounts, waiting for the housing market to slap big red “On Sale” signs on front lawns this winter, or pull the trigger on buying their first home, writes Robert McLister in his weekly column. But consider this: If average mortgage rates fell merely one percentage point, all it would take to cancel out that nationwide affordability improvement would be a $63,000 bounce in the $656,625 price of an average home. That kind of gain can happen in two months, as it did last spring.
Ontario real estate law gets an update with open bidding option
The new rules, which took effect Friday, include improvements to broker and brokerage disclosures, and ways to avoid conflicts on multiple representation. But the biggest change is the option for sellers to use an open bidding process, which gives the seller the choice to disclose submitted bid prices to potential buyers, something they were previously banned from doing. Provincial and federal politicians have advocated for open bidding, saying it could help bring down skyrocketing home prices. However, some experts say there’s little research on how blind bidding affects prices, and a move to open bidding could lead to negative effects for sellers.
Home of the week: Gordon Pinsent’s Toronto condo still bears his mark
This three-bedroom penthouse was formerly owned by the late Canadian actor Gordon Pinsent, and his impact on the space can still be felt – one of his original paintings is included in the sale, for starters. The open-concept space includes a dining and living area with a vaulted ceiling that soars to nearly 16 feet, and a modernized kitchen with stainless-steel appliances. A spiral staircase leads to the second-floor loft, which is open to the living room below. Doors open to a terrace with 1,086 square feet of outdoor space. The loft was used as Mr. Pinsent’s office and studio, which his daughter says inspired much of his creativity.
What do you think is the asking price for the property?
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.
