Time for your cheat sheet on this week’s most important stories.
Canadian Real Estate
Canada Doubled Down On Real Estate In 2005. Now It’s The Biggest Bubble The G7 Has Ever Seen, And It’s Getting Bigger Canadian real estate prices have grown rapidly, but it’s not clear how much more rapidly it grew than its peers. The typical home across Canada increased 88.0% from 2005 to 2020, almost 3x the amount of the next closest G7 country. Over the same period, US real estate prices only increased 3%. While the recent narrative on price growth focuses on population growth post 2015, it doesn’t quite make sense. Canadian prices were already up 50.5% from 2005 to 2015, more than 10x faster growth than any other G7 country. By the time the population growth narrative starts, the horse already left the barn. Read More
Canada’s National Housing Agency Discreetly Sent Banks A Memo That Warns Defaults Are Coming Canada’s national housing agency sent a confidential memo to lenders requesting they curb lending to risky borrowers. The memo warns they have always expected defaults to rise when government support measures expire. Further, the rapid expansion of lending will create a significant drag on economic growth, making it more difficult for the economy to exit the recession. They warned the combination of measures can leave even first-time buyers that can pay their bills, with negative equity. Read More
Canadian Immigration Slows Further, As New Permanent Residents Drop Over 44% Immigration has been one of the key drivers of Canadian real estate price increases, but that’s come to a sudden halt. The number of permanent residents admitted fell to 19,175 people in June, down 44.2% from last year. The decline is fairly consistent across the country, but Ontario is going to see the biggest shift in real estate demand as a consequence. Read More
Canadian Mortgage Credit Growth Makes A Slight Dip, Previous Month Revised Lower Canadian mortgage credit slowed in growth, and it may have seen its peak for the year. The balance of mortgage credit outstanding hit $1.68 trillion in June, up 5.59% from the same month last year. There’s substantial growth but it’s important to remember 16% of mortgages aren’t being paid. This means the numbers are accelerating much faster than they typically would if payments were wearing down the balance. The result is this acceleration may not be as important as it would be under normal circumstances. Read More
Canadian New Home Starts Rise To Highest Level Since 2017, Pandemic Be Damned Canada is starting to build more homes than it has in the past few years, in the middle of a pandemic. There were 245,604 new home starts, seasonally adjusted at the annual rate in July. This is an increase of 11.1% compared to the same month last year. The number of starts is the highest level since November 2017, according to Canada’s national housing agency. Read More
Toronto Real Estate
Toronto Real Estate’s Latest Problem Is Soaring Rental Inventory Toronto real estate was one of the tightest rental markets in North America, but just saw a sudden surge of inventory. There were 8,346 new listings for rentals in July, up 82.1% from last year. The number of leased units increased to 4,415 in July, up 11.5% from the same month last year. This is the most new listings for rentals in at least half a decade, and the number keeps rising. Read More
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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.
