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Canadian Real Estate Sellers Surge, and Bad News For Mortgage Rates

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

Canadian Real Estate

Canadian Real Estate Prices Slipped, Inventory “Jumps” In April

Canadian real estate didn’t move much last month, but the data still hints at an interesting Spring. The price of a typical home slipped 0.3% lower in March. The month also showed a mild increase in sales, as well as an inventory pullback. Diving into more detail, the distribution is the interesting part—new listings began to surge towards the end of the month. CREA made a point to note the first week of April saw a flood of new listings. The question now is whether those listings can be absorbed by the market.

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Bank of Canada Just Delivered Bad News For Mortgage Rates, Yields Surge

Canada was expecting its central bank to deliver good news for mortgages, but they got the opposite. The Bank of Canada (BoC) confirmed expectations by holding its key interest rate. They also warn that issues such as geopolitical tensions, have slanted inflation risks to the upside. Bond markets responded by sending yields significantly higher, applying pressure to drive fixed rate mortgage interest costs higher.

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Canada To Cut Interest Rates Before US As Labor Market Erodes: BMO

The US is Canada’s largest trade partner, so they tend to move together closely. This is one of those exceptions, according to BMO, one of Canada’s largest banks. The US has been on a tear, adding jobs and chasing massive economic growth. At the same time, Canada has seen rising unemployment, moving closer and closer to recession. As a result, Canada is expected to cut interest rates before the US, in an attempt to kickstart its economy. That puts a new inflationary problem square and center—a weaker loonie.

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Canada Tries To Bail Out Real Estate Developers With 30-Year Mortgages

The Government of Canada (GoC) is announcing more demand-side stimulus for first-time buyers. In response to soft new home sales, the GoC will allow 30-year mortgage amortizations to increase potential activity. They’re also dramatically increasing the amount first-time buyers can withdraw from their registered retirement funds to provide a downpayment. The changes are good news for those selling homes, but risks concentrating the economy into housing even further. Especially the last part, since they’re literally encouraging people to withdraw retirement funds from capital markets and put it towards housing.

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Canadian Mortgages Just Had One of The Slowest Quarters Ever 

Canadians seemed addicted to mortgage credit but apparently higher rates were the cure. Residential mortgage credit at institutional lenders rose just 0.47% in Q4 to $1.8 trillion. It was the slowest quarter since 2019, and the slowest growth for any fourth quarter since 2008. Higher interest rates are working their magic—limiting what can be borrowed, incentivizing people to pay off their debt, and diverting capital to more productive uses. Don’t worry, experts see rate cuts coming soon and the universe will return to its natural state.

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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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