This Week’s Top Stories: Canadian Unemployment Tops G7 Along With Real Estate Price Growth, and Toronto Investors Look to Exit - Better Dwelling | Canada News Media
Canada has the fastest growing real estate prices in the G7… and the highest level of unemployment. The country’s rate is now 9.4% in January, up 67.86% from the same month last year. The average for G7 countries and the OECD is 39.19% and 32.98% lower than Canada’s rate, respectively. Despite real estate prices soaring, Canada’s economy trails its advanced economic peers.
Income mobility in Canada is further tied to parents economic status these days. A Stat Can study shows parents in the 1960s had the lowest level of income inequality in decades. Their children’s income status also showed the least correlation. This means children were more likely to move up income brackets. It gets worse until the last cohort analyzes – kids born in the early 80s. The latter’s parents had the worst inequality, and children with the most correlation. In plain english, they were more likely to earn a similar income to their parents.
Canada’s unemployment rate is high, but the youth rate is almost double the national rate. National unemployment came in at 9.4% in January, up 8.8% from the previous month. Youth unemployment in the country comes in at 19.7%, up 10.67% over the same period.
The rate isn’t just high for Canada, it’s high compared to other economic peers. Both the G7 and OECD average are significantly lower than Canada. The faster rising youth rate shows an uneven recovery for youth. This is likely to lead to even more generational inequality in the not so distant future.
Canadian real estate prices made one of the biggest jumps in history, according to Stat Can. Their 6-city index shows prices increased 2.5% in Q4 2020, the fastest rise since 2017. The gains were almost exclusively detached homes.
Detached homes saw prices rise over 3.5% in the final quarter of 2020. To contrast, condo apartments increased just 0.16% over the same period. Cheap financing due to the pandemic created a ton of incentive to buy. Unemployment contained largely to low income people, created fewer condo buyers though.
Toronto real estate has been soaring, but not every segment is hot. Local board data shows a typical detached home reached $1,134,600 in January, up 17% from the same month last year. The monthly increase alone comes in at $32,500. The price of a typical condo apartment, to contrast, reached $575,500 – up just 1.7% from the year before. The monthly increase was less than a mortgage payment on a unit of that cost. Detached homes are soaring, while condos are fairly soft.
Toronto’s new short-term rental rules have many operators getting out of the market. The local real estate board’s survey shows only 32% of operators felt this would not impact them. Another 40% of owners have decided they’ll sell in the next year. A smaller, but still substantial, 26% of owners have decided to find long-term tenants. The rule changes may result in thousands of units of housing supply coming to market, in just a few months.
Toronto real estate investors are looking to sell, says a local board’s latest survey. The survey found 67% of investors were considering selling over the next 12 months. Those “very likely” to sell, came in at 29% of investors that currently own.
The pandemic isn’t entirely responsible either. The survey also found 51% of investors said it had no impact on their decision. It would appear a lot of investors are just looking to cash in on the huge gains they’ve made recently.
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.
