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This Week’s Top Stories: Bank of Canada’s Real Estate Spin & Speculators Turn To Arson

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Time for your cheat sheet on this week’s top stories.

Canadian Real Estate

Last week, the Bank of Canada (BoC) claimed the country has a long-standing housing supply issue. This ticked off a number of experts that have been following this issue, including the economists at BMO. Prior to 2020, housing outpaced household formation and shelter costs were considered affordable across the country. Even the central bank’s housing affordability index demonstrates 20 years of near-record affordability that only ended with a low rate shock that fueled a speculation frenzy.

Canada’s aggressive pursuit of international students is currently under scrutiny. As social media fills with posts of international students sleeping in tent cities and using food banks, the government is feeling pressure to act. A few days ago the first measure was launched—raising the minimum amount of funds required to study in Canada. However, they mentioned nothing about caps on permits or limits on schools to regions with adequate housing. Apparently the only issue policymakers saw is, those on study permits paying 5x more than domestic tuition, simply aren’t wealthy enough.

FINTRAC, Canada’s financial crime watchdog, announced compliance fines for RBC ($7.5 million) and CIBC ($1.33 million). During a routine audit, the agency found a number of gaps in the bank’s respective anti-money laundering (AML) reporting procedures. FINTRAC has been working to try and correct its image after BC’s AML inquiry found the agency to be an unreliable resource.

 

Canadian insurer Northbridge Insurance has warned that arson of new homes may rise as the economy slows. This comes as investors in pre-construction homes become desperate due to changing market conditions. The firm suggests increased security measures to prevent and document the incidents, as well as to help reduce insurance premiums. If premiums rise, the cost of housing may also go up.

Canadian policymakers are floating the idea of capping international students. They may not need to, since the most recent data for study permit applications shows a 20% decline for the month of September. This is primarily driven by a big pullback in Indian applications, which have slowed since April. Word is spreading fast that Canada’s international students are struggling to find the opportunities promised, leading to fewer applications. Canada threatening limits is simply policymakers trying to save face, attempting to get ahead of data showing it’s struggling to attract students.

 

Toronto Real Estate

Toronto real estate prices are still falling, and have rolled back a couple of years of progress. Prices fell $20k in November, as sales fell and inventory continues to suddenly build. Economists at National Bank, one of the country’s “Big Six” banks, took note of how quickly this market broke down. By their calculations, it’s one of the fastest loosening of market conditions in Toronto real estate history.

 

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Greater Toronto home sales jump in October after Bank of Canada rate cuts: board

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TORONTO – The Toronto Regional Real Estate Board says home sales in October surged as buyers continued moving off the sidelines amid lower interest rates.

The board said 6,658 homes changed hands last month in the Greater Toronto Area, up 44.4 per cent compared with 4,611 in the same month last year. Sales were up 14 per cent from September on a seasonally adjusted basis.

The average selling price was up 1.1 per cent compared with a year earlier at $1,135,215. The composite benchmark price, meant to represent the typical home, was down 3.3 per cent year-over-year.

“While we are still early in the Bank of Canada’s rate cutting cycle, it definitely does appear that an increasing number of buyers moved off the sidelines and back into the marketplace in October,” said TRREB president Jennifer Pearce in a news release.

“The positive affordability picture brought about by lower borrowing costs and relatively flat home prices prompted this improvement in market activity.”

The Bank of Canada has slashed its key interest rate four times since June, including a half-percentage point cut on Oct. 23. The rate now stands at 3.75 per cent, down from the high of five per cent that deterred many would-be buyers from the housing market.

New listings last month totalled 15,328, up 4.3 per cent from a year earlier.

In the City of Toronto, there were 2,509 sales last month, a 37.6 per cent jump from October 2023. Throughout the rest of the GTA, home sales rose 48.9 per cent to 4,149.

The sales uptick is encouraging, said Cameron Forbes, general manager and broker for Re/Max Realtron Realty Inc., who added the figures for October were stronger than he anticipated.

“I thought they’d be up for sure, but not necessarily that much,” said Forbes.

“Obviously, the 50 basis points was certainly a great move in the right direction. I just thought it would take more to get things going.”

He said it shows confidence in the market is returning faster than expected, especially among existing homeowners looking for a new property.

“The average consumer who’s employed and may have been able to get some increases in their wages over the last little bit to make up some ground with inflation, I think they’re confident, so they’re looking in the market.

“The conditions are nice because you’ve got a little more time, you’ve got more choice, you’ve got fewer other buyers to compete against.”

All property types saw more sales in October compared with a year ago throughout the GTA.

Townhouses led the surge with 56.8 per cent more sales, followed by detached homes at 46.6 per cent and semi-detached homes at 44 per cent. There were 33.4 per cent more condos that changed hands year-over-year.

“Market conditions did tighten in October, but there is still a lot of inventory and therefore choice for homebuyers,” said TRREB chief market analyst Jason Mercer.

“This choice will keep home price growth moderate over the next few months. However, as inventory is absorbed and home construction continues to lag population growth, selling price growth will accelerate, likely as we move through the spring of 2025.”

This report by The Canadian Press was first published Nov. 6, 2024.

The Canadian Press. All rights reserved.

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Homelessness: Tiny home village to open next week in Halifax suburb

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HALIFAX – A village of tiny homes is set to open next month in a Halifax suburb, the latest project by the provincial government to address homelessness.

Located in Lower Sackville, N.S., the tiny home community will house up to 34 people when the first 26 units open Nov. 4.

Another 35 people are scheduled to move in when construction on another 29 units should be complete in December, under a partnership between the province, the Halifax Regional Municipality, United Way Halifax, The Shaw Group and Dexter Construction.

The province invested $9.4 million to build the village and will contribute $935,000 annually for operating costs.

Residents have been chosen from a list of people experiencing homelessness maintained by the Affordable Housing Association of Nova Scotia.

They will pay rent that is tied to their income for a unit that is fully furnished with a private bathroom, shower and a kitchen equipped with a cooktop, small fridge and microwave.

The Atlantic Community Shelters Society will also provide support to residents, ranging from counselling and mental health supports to employment and educational services.

This report by The Canadian Press was first published Oct. 24, 2024.

The Canadian Press. All rights reserved.

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Here are some facts about British Columbia’s housing market

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Housing affordability is a key issue in the provincial election campaign in British Columbia, particularly in major centres.

Here are some statistics about housing in B.C. from the Canada Mortgage and Housing Corporation’s 2024 Rental Market Report, issued in January, and the B.C. Real Estate Association’s August 2024 report.

Average residential home price in B.C.: $938,500

Average price in greater Vancouver (2024 year to date): $1,304,438

Average price in greater Victoria (2024 year to date): $979,103

Average price in the Okanagan (2024 year to date): $748,015

Average two-bedroom purpose-built rental in Vancouver: $2,181

Average two-bedroom purpose-built rental in Victoria: $1,839

Average two-bedroom purpose-built rental in Canada: $1,359

Rental vacancy rate in Vancouver: 0.9 per cent

How much more do new renters in Vancouver pay compared with renters who have occupied their home for at least a year: 27 per cent

This report by The Canadian Press was first published Oct. 17, 2024.

The Canadian Press. All rights reserved.

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