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This Week's Top Stories: Canadian Mortgage Debt Is Rising Fast, Inventory Falls In Major Real Estate Markets – Better Dwelling

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

Canadian Real Estate

Canadian Mortgage Credit Growth Is Rapidly Accelerating, While Consumer Credit Slows
Canadian household debt growth is accelerating once again, but only in one segment. The balance of debt reached $2.27 trillion in December, up 4.2% from last year. Mortgage debt is behind the acceleration, representing $1.63 trillion of the debt – up 4.9% from last year. Consumer debt represents the other $641 billion, up just 2.4% from a year before. When adjusted for inflation, the consumer debt is getting close to zero annual growth. Mortgage debt is entirely responsible for the acceleration of household debt growth.
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Canada’s First-Time Home Buyer Incentive Receives Cold Reception
Canada’s First-Time Home Buyer Incentive (FTHBI) is receiving a cool reception. The program delivered just $51.3 million in funds from September 2 to December 9, 2019. Quebec residents made use of it the most, representing $18.74 million of those funds. Alberta had the second largest segment of users, representing $16.30 million of the funds. Just those two provinces represented more than half of all funds disbursed.
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Canadian Mortgage Credit Rips To Highest Growth In Nearly 2 Years
Canadian mortgage credit is growing at the fastest pace in nearly 3 years. The outstanding balance reached $1.63 trillion in December, up 4.9% from last year. Not only is this a new all-time high, the 12-month rate of growth is also large. Mortgage credit growth is rising at almost the pace it was prior to the B-20 Guidelines.
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Only A Third Of Applications For Canada’s First-Time Buyer Incentive Were In Major Cities
The FTHBI was supposed to help make it cheaper to live, but it may have had the opposite impact. Very few applications for the program are in Canada’s largest markets. Only a third of the total actually, despite more than half of the population residing in these cites.
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Toronto Real Estate

Toronto Real Estate Sales And Price Growth Are Back Above Pre-B-20 Levels
Toronto real estate sales are rising quickly, at a time when inventory is scarce. TRREB reported 4,581 sales in January, up 14.27% from last year. Active listings fell to 7,772 in the same month, down 35.03% from last year. Sales are 6.09% higher than the 5-year median volume for the month. Active listings are 33% below the 5-year median volume for the month. Winter months are prone to distortion, so there may be inventory improvements as the year goes on. However, last month was a very tight market – even by historic standards.
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Vancouver Real Estate

Vancouver Real Estate Prices Stabilize As Inventory Drops
Vancouver real estate prices are seeing losses slow, as inventory makes a sharp drop. REBGV reports the price of a typical home reached $1,008,700 in January, down 1.2% from last year. There were 8,617 active listings in the month, down 20.3% from a year before. Inventory was 13.7% lower than the 10-year average for January, which helps explain why prices are starting to firm up. The 12-month rate of decline was the smallest since November 2018.
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Canadian Real Estate Correction Is Becoming The Deepest In Half A Century: RBC – Better Dwelling – Better Dwelling

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Canadian Real Estate Correction Is Becoming The Deepest In Half A Century: RBC – Better Dwelling  Better Dwelling



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Real estate prices continue to fall in Waterloo region – CTV News Kitchener

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The average sale price for all residential property types in Waterloo region continues to fall. The newly formed Waterloo Region Association of Realtors (WRAR) says the average price across all property types in July was $752,301.

This represents a 4.9 per cent decrease compared to June 2022, and a 1.2 per cent decrease from prices seen in July 2021.

“In the wake of July’s interest rate hike, home sales in Waterloo region continued to slow,” says Megan Bell, president of WRAR, in a media release. “We’re seeing a clear shift in the market and what people can afford to purchase or are willing to pay. On the bright side for buyers, it’s not the extreme sellers’ market it was.”

This is the fifth straight month the average home sale price in Kitchener-Waterloo has fallen.

Monthly sales by property types. (WRAR)
  • In July, the average sale price for all residential properties in Waterloo Region was $752,301. This represents a 1.2 per cent decrease compared to July 2021 and a 4.9 per cent decrease compared to June 2022, according to WRAR.
  • The average price of a detached home was $842,241, representing a decrease of 7.0 per cent compared to June 2022 and a 6.0 per cent decrease from July 2021.
  • A townhouse’s average price is $642,750, representing a decrease of 3.3 per cent compared to June 2022, but a 3.6 per cent increase from July 2021.
  • The average sale price for an apartment-style condominium was $521,731. This represents an increase of 4.1 per cent compared to June 2022 and an increase of 20.4 per cent from July 2021.
  • The average sale price for a semi was $661,087. A decrease of 5.4 per cent compared to June 2022, but an increase of 1 per cent compared to July 2021.
Average sale price in July across Waterloo Region. (WRAR)

Real estate sales in Waterloo region also saw a major decline in some property types.

Leading the way was semi-detached homes with a drop of 41 per cent in sales and only 36 sold, followed by a 39.3 per cent drop in condominium units with 65 sold. Townhouse sales dropped 32.9 per cent with 112 sold. Detached home sales dropped 30.4 per cent with 337 sales.

In total, 550 residential homes were sold through the Multiple Listing Service System of the WRAW.

LOCAL REALTOR ASSOCIATIONS MERGE

WRAR is an amalgamation of the Cambridge Association of Realtors (CAOR) and the Kitchener-Waterloo Association of Realtors (KWAR). The groups announced their amalgamation on Wednesday.

The amalgamation of the two means housing prices from Cambridge will now be included in the average monthly sales and prices of properties. Prior, KWAR only included the sales and prices of homes in Kitchener and Waterloo.

Bill Duce, who has served as KWAR’s Executive Officer since 2008, is the Chief Executive Officer of the new regional association.

“Bringing these two associations together just makes sense,” says Duce in a media release. “As one board, we can better serve the needs of our Realtor members and stakeholders and give a voice to the region’s real estate market.”

The board of directors of WRAR appointed Megan Bell as president, Christal Moura as president-elect, and Val Brooks as immediate past president as officers of the new entity.

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GTA home sales tumble nearly 50% from last year, real estate board says – CBC.ca

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The moderation of the Greater Toronto Area’s housing market intensified last month as the region’s real estate board found July sales fell 47 per cent from the same time last year and 24 per cent from this past June.

The Toronto Regional Real Estate Board revealed Thursday that last month’s 4,912 sales were almost half of the 9,339 homes that changed hands the July before and are an indication that the market is easing from the frenzied pace seen in the first half of the year and at the end of 2021.

The board and real estate agents have attributed much of the moderation to the increased cost of carrying a mortgage after Canada’s key interest rate was increased by one percentage point in mid-July, making it the largest hike the country has seen in 24 years.

The hike has encouraged people to rethink their housing intentions. Prospective buyers are holding out for further drops they and brokers anticipate could materialize in the fall, while sellers are debating making what they can from their home now or waiting for the market to turn in their favour again.

Some sellers are even terminating their listings to take advantage of the hot rental market, where vacancies are dropping and prices are up.

While January’s hot market saw 380 terminated condo listings in the GTA, real estate company Strata said June brought 2,822 — a 643 per cent increase.

The moderation taking shape within sales is taking longer to appear in home prices.

TRREB found the average home price was $1,074,754 last month, a one per cent hike from $1,061,724 in July 2021, but a six per cent drop from $1,145,994 in June 2022.

The composite benchmark price was more than $1.1 million, up by 12.9 per cent year-over-year.

Detached home prices were down three per cent on a year-over-year basis to $1,362,598 last month, while their sales dropped by 46 per cent to 2,203.

Prices of semi-detached homes were up by nearly five per cent from last July to $1,077,750, while sales fell 45 per cent to 474.

Townhouse prices crept up by six per cent to $903,899 as their sales fell by 52 per cent to 816, and condo apartment prices saw a seven per cent leap to $719,273 and a 48 per cent fall in sales to 1,365.

The market also saw a drop in new listings, which amounted to 12,046 last month, down four per cent from a year ago.

TRREB felt the numbers necessitate government intervention, including boosting housing supply and reviewing mortgage policies.

Data firm Urbanation Inc. said Tuesday that it expects almost 10,000 GTA condo units to be delayed this year as increasing mortgage rates weigh on home sales.

“Many GTA households intend on purchasing a home in the future, but there is currently uncertainty about where the market is headed,” said TRREB CEO John DiMichele, in a release.

“Policymakers could help allay some of this uncertainty.”

He recommended the government review the Office of the Superintendent of Financial Institutions’ stress test. The mandatory test set the qualifying rate on uninsured mortgages at either two percentage points above the contract rate, or 5.25 per cent, whichever is greater.

Kevin Crigger, TRREB’s president, echoed DiMichele’s plea, saying longer mortgage amortization periods of up to 40 years on renewals and switches should be explored.

“With significant increases to lending rates in a short period, there has been a shift in consumer sentiment, not market fundamentals,” he said, in a release.

“The federal government has a responsibility to not only maintain confidence in the financial system, but to instill confidence in homeowners that they will be able to stay in their homes despite rising mortgage costs.”

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