The Bank of Canada opted to keep its benchmark interest rate at 0.5 per cent on Wednesday, the same level it’s been at for more than a year. The central bank, led by Governor Stephen Poloz, said Wednesday that underlying economic conditions don’t warrant a change in policy at this time. The central bank said the risks for inflation have “tilted somewhat to the downside” though remained roughly in line with its expectations, with total inflation below the two per cent target and measures of core inflation around two per cent.
How much financial comfort are home buyers willing to risk to win a bidding war?
— as much as hundreds of thousands of dollars more — to emerge victorious.
A poll for the Real Estate Council of Ontario (RECO) found that 57 per cent of Toronto-area buyers would exceed their set maximum, compared to only 41 per cent province-wide.
Toronto home prices and sales showed no signs of slowing their climb last month in the face of dwindling listings, with 9,813 homes sold last month, a 23.5 per cent increase over August 2015, the board said Wednesday. Even adjusting for an extra two working days in August this year, volume rose by 13 per cent. The average home price rose 17.7 per cent to $710,410 across the region last month, with the biggest percentage gains in the 905-area communities outside the city.
In such a market, buying a home can be difficult. In the Toronto region’s take-no-prisoners real estate market, more than half of consumers said they would consider going up to 10 per cent over their budget House hunters must save for a down payment, may face bidding wars and even forgo conditions once considered staples of a home purchase offer, such as financing or an inspection. As such, a foreign buyers tax may not be far away for Metro Toronto as sales in August jumped 23.5 per cent from a year earlier. With the major decline in Vancouver sales in August following the advent of the tax, Toronto realtors have stated they will study the issue in the coming months as their sales skyrocket.
Meanwhile, Canada’s largest real estate board is still waging battle over control of its listings, as it readies to appeal a Competition Tribunal ruling that would make those listings far more public.
“Canada’s housing market nears ‘extreme bubble,’ warns ex-Lehman Brothers trader,” screams another. “Fear and loathing in the Vancouver property market,” warns the CBC. It’s enough to leave the impression that property values in Vancouver’s sky-high real estate market could be collapsing. Indeed, if you dig into the latest statistics released on Friday by the Real Estate Board of Vancouver, you’ll find that the average price of a home in the region has actually fallen — drastically.
Public outcry over British Columbia’s sizzling real estate market pushed the province’s Liberal government to introduce a foreign-buyers’ tax last month, but uncertainty around the policy leaves little room for political manoeuvring before next year’s election, once the impact of the tax is better understood, experts say. Max Cameron, a political scientist at the University of British Columbia, said the prospect of housing affordability turning into an election issue is “undoubtedly” what motivated the Liberals to step in with the tax.
But, the foreign buyer tax may not have had the impact BC Liberals were hoping for. Juwai, China’s largest international property portal, has seen a surge in inquiries for homes. Huh? I know what you’re thinking, demand is down – but it’s not down in the way you would think. Foreign buyers are making less risky investments, and that will likely drive low-end prices higher.
Regionally, the total number of transactions for detached homes, attached homes and apartments for Coquitlam, Port Coquitlam and Port Moody dropped 29% over the summer, falling from 501 in July to 351 in August. The Tri-City numbers follow what is being seen in the rest of the region, where demand has fallen from its record-breaking pace seen last spring. The number of residential property sales in August 2016 fell 26% from the 3,362 in August of 2015 and a 22.8% decline from the previous month’s sales.
The shifting real estate market in Vancouver led Canada’s consumer confidence index lower for a second week, telephone polling shows. The share of respondents who see local real estate prices falling has almost doubled in the last two weeks, rising to 22.5 percent in the latest survey, up from previous readings of 20.5 percent and 12 percent. The share of those who see higher prices fell to below 40 percent for the first time since April.
Rising real estate values have pushed the average net worth of Metro Vancouver households up over $1 million, making it Canada’s first “city of millionaires,” according to a study. The Environics Analytics study claims the average net worth of Vancouver households rose 7.1 per cent last year to hit $1,036,202 by the end of 2015. The study ranked Metro Toronto households in second, with an average net worth up 5.4 per cent to $962,993
But the rising costs of rental units and critically low vacancy rates in Vancouver have created a housing crisis in a city where home ownership has been out of reach for many residents. Perhaps real estate professionals could help their clients if they revealed a bit more about the composition, causes and remedies of real estate bubbles.
4.But Hey, There Are Other Place in Canada to Buy a Home.
Housing starts in the St. John’s metro area trended upwards for this August as compared to July. Statistics released Thursday by the CMHC detail an increase in row and duplex construction in the city, based on a six-month trend of seasonally-adjusted annual rates for housing starts.
Sarnia-Lambton real estate sales were down 10 per cent last month compared to the same time last year, according to the local realtors’ association. Despite the sales dip, total dollar value for sales increased to $41 million from $38 million – or a nine per cent increase – for the month of August.
It was another banner month for real estate sales in Winnipeg. The number of properties sold and the amount they were sold for both increased by 7% in August, year over year. The amount of money changing hands in property sales are now 7% above its record pace for any given year, with four months left in 2016.
The price of new homes in Saskatoon continues to slowly decline, according to new numbers released by Statistics Canada Thursday. Nationally, the New Housing Price Index rose 0.4 per cent during July. The Bridge City, however, saw a 0.2 per cent decrease. Regina’s prices, meanwhile, saw a slight increase of 0.1 per cent in July. Year over year, the Queen City saw a bump of 0.3 per cent.
Edmonton’s real estate market held steady in August despite a continuing economic slowdown in Alberta. Numbers released Friday by the Realtors Association of Edmonton show modest year-over-year declines in home prices and sales for the month, typically one of the busiest periods of the year for real estate activity. But, Edmontonians are unprepared for a coming real-estate crash, warns the author of When the Bubble Bursts: Surviving the Canadian Real Estate Crash.”
New home construction in Calgary remained sluggish in August as multi-family starts plunged by almost half from a year earlier, Canada Mortgage and Housing Corp said Thursday. The agency reported 742 units, including 331 single-detached homes, were started last month, down 35 per cent from 1,134 a year earlier. Multi-family construction fell to 411 units, from 804 in August 2015.
The upward trend for new home construction in Prince George continued in August, according to Canada Mortgage and Housing Corporation numbers release this week. Over the month, there were starts on 19 single-family homes, up from 11 for the same month last year. Year-to-date, the total now stands at 113, seven more than by the same point last year.
5.Talking Real Estate with the Banks and CMHC
Canadian new housing prices rose more than expected in July, climbing 0.4 per cent from June on continued strength in the hot market of Toronto, Statistics Canada data indicated on Thursday. The monthly increase, the 16th in a row, was greater than the 0.2 per cent advance forecast by analysts in a Reuters poll. But, Canada Mortgage and Housing Corp. says the pace of housing construction slowed in August, mostly because of a decline in multi-unit projects.
In other CMHC news, the head of Canada’s housing agency is warning there simply will not be enough money available for Ottawa to meet expectations for a national strategy to tackle the wide-ranging problems in the housing market.
Evan Siddall, the president and CEO of the Canada Mortgage and Housing Corp., said on Tuesday that consultations for a national housing strategy will intensify this week, but he cautioned that demands for new spending clearly exceed what will likely be in the 2017 federal budget.
The latest housing market report from Royal Bank of Canada says there is a “low probability” for a major downturn in Canada’s housing market in the next 12 months but signals the country’s two biggest cities as areas of concern for overheating. Though the report shows a somewhat healthy outlook for Canada, the affordability of housing nationwide showed that Canadians may be dealing with a “greater-than-average” market stress for home buyers.
Toronto-Dominion Bank is not pulling back on involvement in the domestic mortgage market, despite slowing growth relative to peers and concern some pockets of the market may be overheated. Meanwhile, a new Canadian bank led by a former Bank of Nova Scotia mortgage executive is hoping to seize a share of the Chinese-Canadian market.
There are, however, worries from the mortgage industry that proposed federal government measures to cool Canada’s hottest local housing markets could have unintended consequences of making it harder for borrowers in some parts of the country to qualify for affordable loans.
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Gavin is a media relations consultant and news junkie based out of Collingwood, Ontario.