This Week’s Top Stories: Canadian Real Estate Prices Forecasted To Fall Next Year, and Debt Problems To Get Worse - Better Dwelling | Canada News Media
A Bay Street firm is warning institutional clients of falling real estate prices. The firm’s latest model suggests prices may fall up to 11% at the national level, starting next year. In Vancouver, the declines can peak at a much higher 17%. Toronto may see the biggest dip, with declines of up to 26%. The firm joins other risk advisors, as well as the CMHC, in forecasting price drops next year.
Canada’s state-owned mortgage insurer explained why debt ratios are so low. The debt to income ratio across Canada has been dropping to multi-year lows. While that typically implies households are improving their debt situation, that didn’t happen. Programs like CERB replaced twice the amount of income that was lost. This makes it appear like the debt to income fell, but in reality it should shoot up when those programs expire.
Canadians have a big pile of cash waiting on the sidelines, according to one of the country’s big banks. CIBC analysts estimate households have $90 billion in savings above the forecasted amount. The bank believes this is due to government transfers replacing more than the income that was lost. By the bank’s estimate, the government replaced every $1 of income lost, with $2.25 in benefits. An unusual, and unprecedented event during a recession.
Canadian real estate sales slowed for the first time since the beginning of the pandemic. CREA data shows 56,186 seasonally adjusted sales in October, down 0.7% from the month before. Unadjusted, there were 59,159 sales in the month, up 32.1% from the same month last year. The unadjusted numbers show sales are significantly higher than last year. However, the industry’s seasonally adjusted sales show this is due to the shifted period.
Canada’s tax agency clarified a rumor – people that didn’t file taxes last year are still eligible for CERB. The rumor, perpetuated by some politicians, comes from a misunderstanding of the qualification criteria. Over 800,000 people who applied for the benefit, hadn’t yet filed taxes for 2019. However, the tax agency clarified filing taxes was not a requirement at this point. People can still qualify just on this year’s taxes. The agency then added they expect to verify eligibility next tax season, when they have the data to do so. Those found ineligible, will be asked to pay it back – potentially with penalties.
Canada’s CERB program was utilized by tens of thousands of people who earned six-figures last year. CRA data shows 90,720 people applied for CERB that had an income between $93,259 to $147,667 in 2019. Another 23,900 applicants filed taxes that showed they made between $147,667 and $210,371 last year. In the highest disclosed bracket, 14,070 applied for CERB that made over $210,371 last year. This implies a major disruption of income to households, who make considerably less on the income benefit.
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.
