Fair value would score -0.5 to 0.5 on UBS’s bubble index. Over-valued scores between 0.5 and 1.5. The city, where the average house price is $1,012,506, has a 1.96 rating. That is nearly four times as high as New York, which UBS calls over-valued at 0.56.
Among the most at-risk cities in the world, Toronto falls just behind Munich and Frankfurt. They score 2.35 and 2.26, respectively. And Toronto is at a greater risk for a “sharp correction” than Hong Kong (1.79) and Paris (1.68).
The only other Canadian city on the UBS index is Vancouver. Like Toronto, the west coast city was designated an at-risk bubble in 2018 with a 1.92 score. But Vancouver prices are milder now. In 2020, Vancouver is overvalued at 1.37, according to UBS. It’s still has a higher score than fellow “over-valued” cities like London, Tokyo, Los Angeles and San Francisco.
Dubai, Singapore, Milan and Madrid are among the cities the UBS index deems fair-valued.
Toronto real estate decline?
The report from UBS is the most recent warning that Toronto real estate prices could see a sharp decline.
The Canada Mortgage and Housing Corporation’s spring outlook suggested that the average Toronto house price could bottom out at $739,000 in 2021. A recent report from Moody’s made a more conservative prediction that Toronto home prices could fall nine per cent next year.
These predictions repeatedly warn that the COVID-19 impact on employment and immigration will make home prices a little more humble.
The Canadian government and banks are delaying the COVID-19 impact with low mortgage rates, deferrals and financial assistance via CERB and other programs. But the UBS report argues that a decline in the rental market and the rapid inflation of pricing from the previous dozen years are reasons to expect a correction. The rising Canadian dollar will also disincentivize foreign investment.
But the hot Toronto real estate market repeatedly shrug off such sky is falling concerns.
Average house prices in Toronto broke ceilings in June, July and then August. We do not yet have data for September.
Radheyan’s first assignment for NOW was reviewing the Ice Cube heist comedy First Sunday. That was back in January 2008. Born in Sri Lanka and raised in Scarborough, Rad currently lives in Leslieville with his wife and two adorable kids.
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.
