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Deposit Protection Eases Homebuying Stress

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Deposit protection eases homebuying stress Putting down a sizable deposit to secure the purchase of a new-construction house or condominium is a significant step in the home-buying process. Similar to the rising cost of housing, the cost of making a deposit has also increased dramatically. If you make a down payment on a new house but are unable to close the deal because the builder declares bankruptcy or otherwise materially breaks the purchase agreement, your deposit may be protected by a government agency. Even if situations like these don’t arise often, it’s comforting to know you’re covered. If you end the purchase agreement due to a legal requirement, your deposit may still be protected. FREEHOLD PROPERTY DEPOSIT Deposits on freehold properties signed before January 1, 2018, are covered up to a maximum of $40,000. For contracts signed on or after January 1st, 2018, the amount of your security deposit insurance will be proportional to the price of your new house. In the case of a new freehold home costing $600,000 or less, for instance, a deposit of up to $60,000 would be compensated. You are covered for up to 10% of the purchase price, or $100,000, whichever is greater, if the total price is more than $600,000. Payment plans for condos The buyer of a condo can choose between two different deposit protection levels. To begin, the Condominium Act mandates that all deposits be held in trust by the developer. This ensures that your money is safe. The developer has 10 days to return your entire deposit if the purchase agreement is cancelled. Additional features and enhancements Putting money into enhancements and accessories for your new house can increase its resale price. Hardwood floors, quartz or granite countertops, upgraded cabinetry, and tiled bathrooms are all examples of popular renovations. Features like central air conditioning and fireplaces are possible upgrades. The deposit protection has been extended to include any payments made to the builder for improvements or extras, allowing you to rest easy knowing your money is safe. When it comes to deposits, what exactly is not protected? If you put down money to hold a reservation on a new construction house or condo before signing a purchase agreement, that money is not safe. If this is the case, you should request that the contractor hold the payment in escrow and acquire a receipt. Buying a brand-new house or apartment complex is a substantial financial commitment, perhaps the biggest of your whole life. It’s reassuring to know that the money you put down on a house is safe, giving you less thing to fret over in your hunt. Related posts. How does a home warranty differ from an insurance policy? Read More Deposit Protection Eases Homebuying Stress Read More Importance of the performance audit Read More How can Home Warranty Guard You Against Unexpected Expenses Read More Canada hopes to welcome half a million immigrants by 2025, but can the country keep up? Read More Canadian Real Estate Prices Fall 30%, Recession Starts: Ox Econ Read More

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Importance of the performance audit

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IMPORTANCE OF PERFORMANCE AUDIT If you have recently joined the board of a newly-registered condominium building, you will certainly encounter a number of unfamiliar procedures and terms. The “performance audit” is one of these. The performance audit is a crucial component of the warranty on the common aspects of the project, which you and the other board members will be responsible for managing. Moreover, since the performance audit starts within the first year, it is advisable to become familiar with it as soon as feasible. The following is an overview to help you get started. What is Performance Audit? A requirement of Section 44 of the Condominium Act, the performance audit is a detailed evaluation of a project’s common features to detect any problems, such as water infiltration or fire safety issues, that need to be corrected. The first-year performance audit should be undertaken within six to ten months of the project’s registration, and the resulting report must be delivered by the end of the eleventh month after registration. The expert who performs the performance audit on behalf of the condominium association is known as the performance auditor. The performance auditor should possess the following credentials: Be in possession of a certificate of authorization under the Professional Engineers Act, or be in possession of a certificate of practise under the Architects Act. The condominium association is responsible for hiring and paying the performance auditor. What occurs throughout the Performance Audit? During the performance audit, all key building components, including the foundation, parking garage, elevators, and mechanical, electrical, and fire suppression systems, are examined. The performance auditor will also analyse any final reports required and conduct a poll of unit owners to assess whether damage to individual units may have been caused by a flaw in the common elements. In addition to the performance audit findings, the performance auditor will provide the builder with a performance audit monitoring summary (or PATS). The PATS, which contains a list of all items discovered during the performance audit, is used to keep track of repairs and facilitates communication between the condominium organisation and the builder. Every 90 days, the condominium organisation updates the PATS. From the first anniversary of the condominium project’s registration date, the builder will have 18 months to repair or resolve all items specified on the PATS that are protected by the warranty. Related posts. Sustaining a Safe and Sound Environment at Home Read More Smaller houses lead to bigger problems Read More Five Questions To Ask Your Builder Prior To Purchasing A New Home Read More How does a home warranty differ from an insurance policy? Read More Deposit Protection Eases Homebuying Stress Read More Importance of the performance audit Read More

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How can Home Warranty Guard You Against Unexpected Expenses

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How can Home Warranty Guard You Against Unexpected Expenses After moving into a brand new house or condo, the last thing you’re expecting is an unexpected emergency like a complete lack of heat or a huge plumbing leak. After all, the home’s essential systems and components are all spanking new, and the house was thoroughly evaluated at crucial points in its development. Unfortunately, however, crises do arise occasionally. Emergency situations that can be traced directly to the builder’s work or supplies are covered by the Tarion-administered new home warranty. WHAT DOES IT MEAN WHEN WE SAY THERE’S AN EMERGENCY? To qualify as an emergency under Ontario’s new home warranty, the problem must arise during the guarantee term and be caused by a warranted defect that, if left unresolved, would result in serious damage to your home, condominium unit, real estate property or condominium common features. Likewise, if your health or safety is in jeopardy or if your home is rendered inhabitable, you may be facing an emergency situation. Standard breakdowns that may be covered by a warranty include: Any of the following conditions exist no heat between September 15 and May 15; a gas leak; no electricity; no water; no sewage disposal; a plumbing leak so severe that the entire water supply must be turned off; a major collapse of any part of the exterior or interior structure; water penetrating the interior walls or ceiling; a pool of standing water inside the home; and/or the presence of unacceptable levels of hazardous substances i.e. mould, gas, and electricity. Keep in mind that the builder’s warranty does not apply in the event of an emergency caused by factors outside the builder’s control, such as the failure of municipal or utility services. IN A DIRE SITUATION, WHAT STEPS SHOULD YOU TAKE? Due to the fact that you are in charge of handling the home warranty, you should call your builder first in the event of an urgent matter. Once you’ve done that, you have up to 24 hours for your builder to fix the problem, make your home safe, and stop any additional damage. No one anticipates or hopes for unexpected problems to detract from the excitement of moving into a new house. If they do occur, though, you can be assured that plans are in place to get you back to enjoying your new home as soon as possible. Related posts. How does a home warranty differ from an insurance policy? Read More Deposit Protection Eases Homebuying Stress Read More Importance of the performance audit Read More How can Home Warranty Guard You Against Unexpected Expenses Read More Canada hopes to welcome half a million immigrants by 2025, but can the country keep up? Read More Canadian Real Estate Prices Fall 30%, Recession Starts: Ox Econ Read More

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Canada hopes to welcome half a million immigrants by 2025, but can the country keep up?

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CANADA HOPES TO WELCOME HALF A MILLION IMMIGRANTS BY 2025, BUT CAN THE COUNTRY KEEP UP?​ Policymakers say increased immigration is needed to boost Canada’s economy and reduce labour shortages, yet population expansion causes growing pains. Canada increased by 700,000 inhabitants in a year, about the same as Mississauga. Canada adds a big city each year. The population has spread, especially to urban areas but also to suburbs and remote communities. They work, learn, and improve their lives here. Canada’s population increased by 285,000, 0.7 per cent, from July to September, the highest increase since Newfoundland joined Confederation in 1949. Over the past year, Mississauga, Canada’s seventh-largest city, has gained 700,000 residents. The federal Liberal Party accelerated the trend. Since 2016, the country has expanded nearly twice as fast as its G7 peers. Immigration mostly drives that increase. However, a population surge has growing pains. 220,000 homes were built last year. The greatest ratio since 1991 was 3.2 new inhabitants per home. Most places are losing affordability. The population boom is exacerbating the residential supply-demand gap. Canadian governments struggle to provide fundamental services. Overcrowded hospitals cancel surgeries. Newcomers to Canada have trouble finding family doctors. Cash-strapped cities can’t fix their infrastructure quickly enough. People are fleeing cities due to affordability issues. Teachers, nurses, and construction workers manage those cities. Ottawa accelerates in this tense situation. The federal government wants 500,000 permanent residents in 2025 after admitting 405,000 last year. Only part of the migrant wave: Last count, 1.4 million residents have temporary employment or study visas. Canada is adjusting. Due to rising loan rates and declining profitability, developers are cancelling or postponing home projects. If more homes are required, fewer are built. How immigrants are building jobs in Canada despite challenges Immigrants shield us from the worst political and economic risks. When so many social infrastructure pillars are failing, economists wonder why the federal government will increase service demand. They worry that Ottawa is too focused on immigration targets and not enough on assimilating newcomers. The federal government says increasing immigration solves many of these issues. They want foreign physicians, nurses, and homebuilders. Recent immigrants waited years for entry. They arrive over decades of rising inflation and diminishing economic growth. Skilled immigrants should adjust well. Others are finding the Canadian dream expensive and possibly not what they expected. According to the last census, a narrow majority of new immigrants prefer Toronto, Vancouver, and Montreal, but more are moving elsewhere. As migrants flood other cities, prices are rising fast. As per Rentals.ca data, the average rent in Calgary has increased 18% to $1,720 a month. London, Ontario, rose 26%. 21% Halifax. The affordability crisis makes it hard to recruit and retain key workers. Aled ab Iorwerth, deputy chief economist of the Canada Mortgage and Housing Corp., mentioned that large cities face considerable economic risks if housing costs are not controlled. “These cities are becoming pricey, making it harder to attract qualified and even highly-skilled workers.” Huge work awaits. Canada would need to build 3.5 million more houses than planned by 2030 to return affordability to 2003 and 2004 levels, according to CMHC. This year, the federal government pledged billions to double house building over the next decade. Higher borrowing rates kill that plan. Labor is another issue. CMHC reported a shortage of trained labour to build badly needed homes. Shaun Hildebrand, president of real estate firm Urbanation, stated, “Even under more ideal conditions, I don’t think we have the capability to construct at a rate that balances the demand through population increase that we’re witnessing. Related posts. How does a home warranty differ from an insurance policy? Read More Deposit Protection Eases Homebuying Stress Read More Importance of the performance audit Read More How can Home Warranty Guard You Against Unexpected Expenses Read More Canada hopes to welcome half a million immigrants by 2025, but can the country keep up? Read More Canadian Real Estate Prices Fall 30%, Recession Starts: Ox Econ Read More

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Canadian Real Estate Prices Fall 30%, Recession Starts: Ox Econ

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Canadian Real Estate Prices Fall 30%, Recession Starts: Ox Econ Neither the real estate market nor the economy in Canada looks particularly promising at the moment. This week, Oxford Economics issued a warning to its clients saying that a recession was starting to take shape. Higher interest rates meant to curb inflation are instead significantly lowering property prices and extending the recession. In addition, high inflation makes it unlikely that we would see a stimulus windfall, as it would work against efforts to reduce the economy’s temperature. EXPECTED 30% DROP IN CANADIAN REAL ESTATE PRICES WILL ERASE RECENT GAINS There will likely be more drops in Canadian real estate prices, but the gains made before the pandemic should survive. The business forecasts prices plummeting 30% from peak-to-trough, after surging more than 54% since March 2020. Those who bought in March would have seen their investment rise at a compound annual rate of about 2.3%, for those who don’t have a calculator handy (CAGR). Not quite the windfall some had hoped for, especially when rising prices are factored in. The percentage of GDP accounted for by new real estate is also predicted to decline, namely residential investment. In this year, the market declined by 10% from Q1 to Q3 because of rising interest rates. The firm predicts a further 8% fall in the coming year, which isn’t too hard to see with declining new construction sales. CANADIANS MIGHT EXPECT A DEEPER AND LONGER RECESSION THAN USUAL Early indicators of a recession have already developed, and this next recession is projected to be lengthier than typical. During this recession, homebuyers have cut back and businesses have become more cautious about spending money. The business is projecting a 2% fall in real GDP from Q4 2022 to Q3 2023. You can probably predict that the effect won’t be the same. Tony Stillo, the company’s director of economics, said, “This recession is slightly longer but milder than the average recession since 1970.” Canadians with large amounts of debt and overpriced homes will feel the effects the most. IMPORTANT BOOST NOT LIKELY AND COUNTERPRODUCTIVE Looking at the current economic downturn as a stimulus bonanza? Stillo advises against putting any stock in that possibility. The slump won’t be too terrible, and the completion of long-awaited infrastructure projects will ease its effects. However, excessive inflation has become a constraining factor. “To avoid undermining the Bank of Canada’s attempts to contain inflation, any fresh fiscal stimulus is unlikely unless the recession is severe,” said Stillo. Related posts. How does a home warranty differ from an insurance policy? Read More Deposit Protection Eases Homebuying Stress Read More Importance of the performance audit Read More How can Home Warranty Guard You Against Unexpected Expenses Read More Canada hopes to welcome half a million immigrants by 2025, but can the country keep up? Read More Canadian Real Estate Prices Fall 30%, Recession Starts: Ox Econ Read More

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Most Canadian peak purchasers with a low downpayment are underwater

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Most Canadian peak purchasers with a low downpayment are underwater Peak purchasers in Canada are in for a difficult time as the real estate bubble bursts swiftly due to rising interest rates. According to the latest numbers released by the Canadian Real Estate Association (CREA), the national market peaked that year, in March. We calculated how much equity purchasers from that month would have accrued as of the present. Most people who bought a house at the pinnacle of the market last month are already underwater. NEGATIVE EQUITY MORTGAGES AND LOAN-TO-VALUE RATIOS RATIOS When the mortgage’s LTV is more than the property’s current value, the borrower is said to be “underwater.” In layman’s terms? In the event of default, the home’s worth wouldn’t be enough to pay out the mortgage. The situation is complicated for the lenders because they have no collateral for their loans. Canadian mortgage borrowers typically have large amounts of equity, leading to low loan-to-value (LTV) ratios. A fee must be paid by underwater homeowners in order to sell their property. No matter what the value of the home used as collateral for the loan, they are still responsible for paying down the remaining balance. Lenders must make up the difference by providing additional funds. That doesn’t take into account any ancillary expenses associated with the sale (such as commissions for real estate agents, legal fees, moving charges, etc.). Our focus today is on the markets where first-time peek purchasers would be at a significant disadvantage. In this case, we use the all-time high in the country, which occurred in March of 2022, just before rates of interest began to climb. The majority of our mortgages are high-ratio loans that require little to no down payment. Markets where the median price of a property is over $1 million often require a traditional mortgage down payment of at least 20%. Increased safety net for creditors and debtors during economic downturns. INDICATIVE OF A NORMAL SUMMIT PURCHASER NEARLY 10% UNDERWATER ON CANADIAN PROPERTY Since peaking in March, the price of a composite benchmark home has dropped significantly. In October, the average home’s price dropped to $735,400, a drop of 15.3% (-$132,900) from its peak. If they bought at the peak, a buyer who only put down the minimum would be 9.7 per cent ($71,100) in the red. To get out of the agreement, they would need to pay higher than they first put down. When looking at the key indices, the majority of the Canadian real estate markets (55%) share the same boat. If the same trend seen in October continues into November, investors who bought into 75% of the major indexes would be in the red. Homebuyers in Ontario should anticipate spending up to six figures if they need to cover repairs on a property they’re purchasing. When it comes to real estate, Ontario was once at the forefront, but now it’s at the bottom. The average buyer in Kitchener-Waterloo was $146,500 in the red in October. In second and third place, respectively, were Cambridge (-$140,000) and London-St. Thomas (-$137,000). Making six figures by selling a house in a small city at least an hour from Toronto sounds, to put it mildly, painful. CANADA PROPERTY VALUES A market’s lack of negative equity is no guarantee of success. Vancouver ($138,100), the Lower Mainland ($100,600), and the rest of British Columbia ($99,700) indexes would have the highest remaining equity. Even still, in March of 2022, the average home in those areas cost well over a million dollars. That means the bare minimum required for a down payment was $200,000. However, the amount of equity is less than what is required for a typical mortgage, therefore it is not necessarily a profit. That can create complications if you decide to switch mortgage lenders. SOME CHEAPER MARKETS HAVE CONTINUED TO GROW AS CREDIT HAS BEEN MADE MORE AVAILABLE THERE Despite the general trend downwards in the real estate market since March, not all major areas have experienced declines. Equity contributions increased in Prince Edward Island, Bancroft, and Newfoundland. All of these communities have median home prices that are less than $500,000, making them accessible to a wide range of buyers. It’s debatable whether it’s worth that much. *Markets, where the composite benchmark price was over $1,000,000 in March 2022 just, weren’t eligible for high-proportion mortgages, and consequently required a 20% downpayment, leaving most of Canada’s peak real estate buyers underwater. The only people who should be worried about a company with negative equity are the investors. Large mortgage companies rarely evict customers who are current on their payments. They are only interested in the interest payments, not the actual residence. Default is not a major problem if you want to stay in the house for 10 years or more. The banks are safe too because the loans are typically guaranteed with only a modest down payment. It’s an inconvenience, but the borrower forked over a fat insurance premium to cover the bank. However, the borrower is still responsible for the entire balance. If the investors’ business case shifts, they are in much more of a bind. Many would-be landlords chose negative equity investments with the expectation that future gains would cover initial outlays. Rising rents should assist, but interest rates are rising and equity is being eroded at an alarming rate. As a result, some investors may decide to cash out or double their bets. Since investors accounted for a quarter to a third of the market, substantial losses are possible. Especially considering additional obstacles, such as international mortgage legislation and increasing interest rates. The Bank of Canada issued a warning about the increasing difficulty of navigating the current level of risk just yesterday. It won’t be a massive problem, but it also won’t be simple. Related posts. How does a home warranty differ from an insurance policy? Read More Deposit Protection Eases Homebuying Stress Read More Importance of the performance audit Read More How can Home Warranty Guard You Against Unexpected

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The influence of Toronto’s property market on the rest of Canada

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The influence of Toronto’s property market on the rest of Canada Families have been fleeing the Greater Toronto Area (GTA) to places like Kitchener and Woodstock, or even smaller areas in the province, since the middle of the 2010s due to Toronto’s housing crunch. Since people still had to commute to the GTA prior to the pandemic, this phenomenon was confined to an area within 100 kilometres. There has been a significant increase in the number of families relocating to Alberta and Atlantic Canada as distant work has become the norm. Since the pandemic began, the population of Nova Scotia has nearly quadrupled as 8,166 Ontarians have relocated there between 2019 and 2020, and another 15,862 are expected to do so in 2021 and 2022. In the same time period, the number of Ontarian emigrants to Alberta increased from 14,550 to 29,422. As an additional note, this is the first year since 2014 in which the influx of Ontarians into Alberta has outweighed the outflow of Albertans into Ontario. As a result of the migration, housing costs in the Greater Toronto Area (GTA) and the rest of Southern Ontario have risen at an alarming rate in recent years. For example, in Kitchener-Waterloo, where price increases began to be seen, the benchmark price of a single-family home in April 2017 was $518,900, up 35% from the previous year’s $381,700. The Canadian Real Estate Association reports that home prices in Halifax have increased by 15% over the past year, from an average of $434,700 in September 2021 to $499,900 in September 2022. The truth is that even a relatively small influx of families into rural Nova Scotia or Prince Edward Island can have a significant impact on the property market there. Communities all around Canada need to get ready for the impact of what we saw in Southern Ontario, a phenomenon I call the “Great Canadian Convergence.” About 75,000 people have moved out of the Greater Toronto Area, the York Region, and the Peel Region in the past year. Larger effects on the region can be expected as a result of rising housing prices outside of the Greater Toronto Area. If young Torontonians can’t afford to buy homes in the city, where will the next generation of educators, healthcare professionals, and tradespeople live? What plans does the region have to reduce the gap between the wealthy and everyone else? More house construction is the ultimate answer. More families can be kept in the Greater Toronto Area if more affordable housing is built there. Each of the four major parties in Ontario’s previous election promised to work toward a goal of 1.5 million new houses in the province over the next decade. We need to figure out how to recruit enough trained labour to build these dwellings and how to adjust zoning restrictions to boost density. Meanwhile, the trend of families fleeing the Greater Toronto Area has had some good effects on Ontario towns, with the migration to smaller centres sparking rehabilitation efforts all around the province. Forty years of effort have gone into finding ways for rural Ontario communities to maintain their educational systems; now, with an influx of new students, several of these schools are obtaining portables. The entire country of Canada is about to go through the same thing. The good news is that. what’s the bad news? There has been a lot of upheaval due to housing costs. Well-off families, many of whom work for Toronto-based companies but live elsewhere, drive up housing costs for the rest of the population. Many people, including some who responded to my initial tweets about the Great Canadian Convergence, have suggested that encouraging workers to return to the office will help to reverse this trend. That’s a big if in my book. Especially in light of the current labour scarcity, it will be challenging for employers to insist on in-person employment: “If I can’t work remotely for you, I’ll go remote for someone else.” Businesses and cultural institutions in Canada’s smaller cities and towns have a great chance to thrive thanks to the Great Canadian Convergence, which will also lead to the creation of additional jobs. However, cities must prepare for the arrival of new families if they want to avoid housing shortages and rising prices. Duplexes and triplexes can be built in areas where zoning restrictions are less stringent, and the conversion of the unused shop and office space into housing is also helpful. For instance, in Calgary, a former office building has been transformed into eighty-two units of low-cost housing, while in Ontario, a new law has been introduced that would permit the construction of three dwellings on the site of a single-family home. When the population increases more quickly than expected, cities might run into trouble. The city of Ottawa has set a 10-year housing target of 75,839 in its official plan. But the Smart Prosperity Institute has found that by 2031, Ottawa will require more than 100,000 new dwellings to accommodate its growing population. There is a growing population in Ottawa, but not enough homes to accommodate them; 5,500 individuals left the city for the counties surrounding it in 2021, up from 400 persons in 2015. A growing number of people are relocating to smaller communities like Carleton Place, located just 40 minutes south of Ottawa, in order to work there. That leads to sprawl, pollution, and extra infrastructure construction for the city of Ottawa at no additional cost. While the Great Canadian Convergence has the potential to revitalise communities across the country, doing so without proper planning could drive up housing costs for locals and exacerbate income disparities. It would be a good idea for the mayors of Alberta and Atlantic Canada to pay a visit to these Ontario communities that have recently seen a population boom. Speak with the natives. Find out what has altered and what they have discovered as a result. Related posts. How does a home warranty differ from an insurance policy? Read

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Bank of Canada STATED: lower home prices are necessary for economic stability

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Bank of Canada STATED: lower home prices are necessary for economic stability Topping the list of Canada’s 99 concerns is it’s over $2 trillion in mortgage debt. Earlier today, Senior Deputy Governor of the Bank of Canada (BoC) Carolyn Rogers responded to worries over the country’s financial stability. She summed it up by focusing on two issues that have been around for a while but are mounting: consumer debt and the property market. She cautioned that homeowners may feel the effects of these measures over the next several months, but that they are important to bring the country’s markets back into equilibrium. RESIDENTIAL REAL ESTATE AND CONSUMER DEBT ARE A MAJOR RISK TO CANADA’S ECONOMIC GROWTH AND STABILITY When speaking about threats to financial stability, the senior deputy governor of the Bank of Canada zeroed primarily on consumer debt and housing prices. They stressed that neither issue is a recent development, pointing out that it has been discussed in central bank studies as far back as 2006. Despite the fact that no major catastrophe has occurred as of yet, growing systemic vulnerability is cause for alarm. What would have been a manageable problem in 2006 has ballooned into a major crisis because the Canadian economy is so dependent on the housing market. Prior to the epidemic, Rogers said, there were serious worries about cost and investor speculation. Issues that had previously only been affecting Toronto and Vancouver became national crises as the pandemic spread. In most markets, home values increased by over 50% in just over two years. She noted that “housing activity,” measured by the number of homes bought and sold, was roughly 30% greater than pre-pandemic levels. An essential clarification, as this wasn’t a time of low activity that low rates were attempting to boost. The market keeps adding fuel to the fire of stimulation provided by historically low-interest rates. FRONT-LOADING RATE INCREASES WILL LOWER RATES The simplest approach to guarantee a larger inflation spike is to pump the gas while the economy is thriving. Inflation had already reached sky-high levels before the invasion of Ukraine. A crisis exacerbated the difficulty of moving slowly, making swift action necessary. In order to quickly calm the economy and keep inflation expectations anchored, we have raised interest rates significantly. said Rogers, “greater rises in the future can be avoided.” She didn’t go into detail, but this is basic monetary policy. Inflationary pressures from interest rates will increase the longer it takes to raise them in an effort to rein in overheated demand. The resulting cycle of inflation and countermeasures is dubbed an “inflationary spiral” and is difficult to reverse. There are preliminary indicators that the monetary policy is having the desired effect, but we still have a ways to go until inflation returns to its target level. Sadly, there are unpleasant consequences to this transition. And we’re aware of that,” she said. FOR AN ADEQUATE BALANCE, CANADIAN HOME PRICES MUST FALL Canadian homeowners, especially those who were duped into assuming that current low-interest rates would persist for much longer, have been dealing with the aftermath. She pointed out that, while not a huge percentage of households, a larger than usual number had chosen to obtain mortgages with adjustable interest rates. Buyers today face interest rates that are substantially higher than they had bargained for, with interest eating up a growing portion of their original payments. Borrowers with fixed rates won’t feel the effects of rate hikes until it’s time to renew their loans. In a nutshell, property prices are going up significantly. Furthermore, a toxic market has developed due to the excessive lending that initially boosted investor demand and housing prices. To return to her original point, the 50% increase in property prices has exacerbated the affordability crisis that prospective buyers were already confronting. It’s not only in major cities like Toronto and Vancouver; it’s happening all around the country. Today, the Bank of Canada (BoC) unexpectedly acknowledged that housing prices are technically overvalued and would need to fall. The deputy governor has stated, “We need reduced house prices to restore balance to Canada’s housing market and make home ownership more attainable to more Canadians.” And he continued, “But reduced housing prices may increase stress for individuals who purchased recently. They’ll have less equity, which could make it harder for them to refinance. The least disruption will be seen by short-term end users because they won’t be leaving their current role for a long time. However, there may be instant liquidity difficulties for investors who considered extremely immediate bets. Especially if they’re part of the pre-sale market and haven’t yet taken possession of the home they’ve purchased. Related posts. How does a home warranty differ from an insurance policy? Read More Deposit Protection Eases Homebuying Stress Read More Importance of the performance audit Read More How can Home Warranty Guard You Against Unexpected Expenses Read More Canada hopes to welcome half a million immigrants by 2025, but can the country keep up? Read More Canadian Real Estate Prices Fall 30%, Recession Starts: Ox Econ Read More

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BMO: Canada’s housing construction is at a record high

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IMPORTANCE OF PERFORMANCE AUDIT Canada’s home market could feel some relief from the influx of new inventory expected in the coming months. According to the CMHC, the number of housing construction projects started in September remained at a record high. BMO Capital Markets emailed investors to report a record number of apartments are now being built. Since it takes time for construction to be finished, expect a flood of new inventory to hit the market in the coming months. Numerous new residential developments are now under construction in Canada. Starts on new Canadian homes have dropped from a record high, but they are still around all-time highs. New housing starts in September were at a seasonally adjusted annual rate (SAAR) of a million. It’s lower than the all-time high, but it’s still rather high. BMO senior economist Robert Kavcic called it “a reminder that there is plenty of homebuilding going on in Canada.” A Historic Number of Housing Units Are Being Built in Canada The bank noted the new record of nearly 500,000 units that are now being built. This is, after accounting for population growth, one of the largest construction booms in history. Not since the 1970s has Canada had a construction boom on this scale One major distinction between the 1970s and the present is the prevalence of single-family dwellings in the former era. These days, most of these are multi-family dwellings, which take a lot longer to complete. The anticipated surge in supply resulting from the ongoing disaster aid is not yet here, but it will certainly come all at once. When compared to the 1990s, when the two markets were somewhat even, there are now about 5 times as many multis being built. Kavcic noted that the growing gap between starts and finishes on the graph from the early 2000s parallels the rise in the number of dwelling units being constructed. He further added, “we continue to develop pretty much all that we can and those units take more time to complete than in the past.” As home prices in Canada decline, new construction homes will become available Costly borrowing and less borrowing power are two ways in which rising interest rates are dampening consumer spending. Investors, who now make up a sizable portion of the market, are seriously put off by this. They make up over half of the condo market in hotspots like Toronto. As a result, we anticipate a moderate slowing in the pace of future acquisitions. The fact that so much aid is on the way should be considered a major victory. Home prices will fall as a result of monetary policy, and then it will fall to the ground. Financial institutions like BMO and RBC have already warned that rising interest rates will cause a revaluation of the market. Following such a price adjustment, an influx of supply may help to maintain current low prices. Related posts. How does a home warranty differ from an insurance policy? Read More Deposit Protection Eases Homebuying Stress Read More Importance of the performance audit Read More How can Home Warranty Guard You Against Unexpected Expenses Read More Canada hopes to welcome half a million immigrants by 2025, but can the country keep up? Read More Canadian Real Estate Prices Fall 30%, Recession Starts: Ox Econ Read More

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BMO predicts a 76% correction in Canadian real estate markets by 2023.

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BMO predicts a 76% correction in Canadian real estate markets by 2023. Canadian real estate prices are falling, but the bubble hasn’t burst yet. BMO told investors over the weekend that housing prices might diverge by 76% in Q1 2022. Home prices add a tiny premium to wage growth and interest rates. Canada’s divergence is the largest in 40 years. The bank forecasts a correction by 2023. Canadian home prices are wildly inflated Canadian real estate bucked the trend, indicating a bubble. BMO thinks actual property prices have risen 3% annually since 1980. This represents actual growth in wages and interest rates, according to the bank. That’s changed. Southern Ontario’s Bubble Is Worst The bank says that the majority of the country has experienced exuberant gains. As of Q1 2022, Ontario home prices are 55.4% above trend. Southern Ontario is the most overvalued, with Toronto (+41%) and its exurbs (+76.3%) Cottage country (+63.6%) is likewise overvalued and won’t enjoy realizing its genuine value. The bank notes that while Toronto prices were 41% above trend, exurbs were more than 70% ahead. Atlantic Canada (+34.7%), Quebec (+32.6%), and BC (+21.4%) also exhibit steep trend deviations. If normalization occurred and a third of price gains were cut, you wouldn’t be thrilled. Not all provinces are overvalued. Manitoba (+12.3%), Saskatchewan (-3.4%), and Alberta (-5.0%) all rose or fell somewhat. There’s less to fix. Canadian prices are correcting Canadian real estate values are decreasing, which is impossible. Many local markets are significantly lower than the national average. BMO told investors, “Canadian house prices are correcting, and several local markets are down 20%.” We expect the adjustment to last through most of 2023 as the market absorbs higher borrowing prices and a broader economic slowdown weighs on demand. Related posts. Importance of the performance audit Read More How can Home Warranty Guard You Against Unexpected Expenses Read More Canada hopes to welcome half a million immigrants by 2025, but can the country keep up? Read More Canadian Real Estate Prices Fall 30%, Recession Starts: Ox Econ Read More Most Canadian peak purchasers with a low downpayment are underwater Read More The influence of Toronto’s property market on the rest of Canada Read More

BMO predicts a 76% correction in Canadian real estate markets by 2023. Read More »