fbpx

HOMEPORTAL

Menu

Blogs

Toronto and Vancouver Home Prices Rise Like Mortgage Credit

Blogs / / / , , , , , , ,

Toronto and Vancouver Home Prices Rise Like Mortgage Credit Home prices increased dramatically last month in Canada’s two most populous real estate regions. In April, home values in both Toronto and Vancouver increased. There has been a gain in sales and a decrease in inventory in both markets, but this probably hasn’t led to the same level of expansion in both locations. More likely to blame are falling mortgage rates, which introduced leverage proportional to the price rises The Value of a Toronto Home Increased by 2.4% in the Past Month Although they are still down from a year ago, Greater Toronto real estate prices increased last month. In April, the median price of a home, or the composite benchmark, increased by 2.4%, or $27,200, to $1,145,700. This is the third consecutive monthly increase, and it follows a gain of 2.5% the month before. Even though home prices are still down dramatically from last year, they are recovering quickly.  It’s a huge increase, and once you consider Canada’s other major and expensive market, the word “unusual” takes on further significance. The Value of a Home in Vancouver Increased by 2.4% Previous Month After hitting rock bottom in January, property prices in the Greater Vancouver are also rising rapidly. The index rose for the third month in April, increasing by 2.4% ($27,400) to $1,170,700. While prices are still lower than this time last year, at the current rate the difference will be made up in less than three months. Today’s experts from both locations didn’t waste any time blaming a lack of stock for the problem. Similar price increases indicate that supply shortages were a factor in both cities. Lower mortgage rates have provided a similarly powerful source of leverage Probably more The easing of credit standards in Canada may be to blame. Borrowers have moved toward fixed rate mortgages as the Bank of Canada (BoC) has kept rates steady. The average fixed mortgage rate dropped by 0.3 percentage points from March to April, increasing the borrower’s leverage by about 2.6% assuming the borrower maintains the same income. It’s also important to remember that the monthly installments won’t change. The standard property purchased in March using a conventional mortgage is essentially the same in April, despite a significant rise. Home prices ate up any “savings” from the reduced interest rate. Both Toronto and Vancouver saw similar results. Price increases in response to rising demand are capped by what can be afforded in terms of servicing existing debt. When the cap is on, squeezing a tube of toothpaste doesn’t accomplish much. It can spread out and take up more space after the top is removed. For the same reason, despite Canada’s record population growth, home prices have fallen due to a lack of mortgage credit. It wasn’t until mortgage rates started going down that prices started going up in tandem with the economy’s growth. Isn’t that shocking? It shouldn’t be, according to Bank of Canada (BoC) studies. Lower interest rates, according to the former Deputy Governor, did not increase affordability because housing values simply adjusted to absorb the decrease. Either that, or your local think tank is correct, and buyers evaluated economic trends, immigrant patterns, and liquidity before concluding that prices should absorb the payment discount from lower rates. Related posts 05 May 2023 Toronto and Vancouver Home Prices Rise Like Mortgage Credit 29 April 2023 To Avoid Defaults, Canadian Banks Extend Amortisations 35 Years To Avoid Defaults, Canadian Banks Extend Amortisations 35 Years What is Canada’s secret for having… 24 April 2023 Canada’s Cheap Mortgage Credit Drives Real Estate Prices… Again Canada’s Cheap Mortgage Credit Drives Real Estate Prices… Again Everyone in Canada is trying to determine… 14 April 2023 Canada maintains 4.5% interest rate, What’s next Canada maintains 4.5% interest rate, What’s next? The Bank of Canada will reveal its decision on… 11 April 2023 TRREB: GTA Competition increases due to tight market conditions  TRREB: GTA Competition increases due to tight market conditions In March 2023, the Greater Toronto Area… 08 April 2023 Why Canadian Homeowners Aren’t Selling Why Canadian Homeowners Aren’t Selling There hasn’t been the usual rush of vendors at Canada’s… 08 April 2023 Toronto Real Estate Correction Pauses, Prices Upto $27k Toronto Real Estate Correction Pauses, Prices Upto $27k Is the Greater Toronto real estate market overpriced?…

Toronto and Vancouver Home Prices Rise Like Mortgage Credit Read More »

To Avoid Defaults, Canadian Banks Extend Amortisations 35 Years

Blogs / / / , , , , , ,

To Avoid Defaults, Canadian Banks Extend Amortisations 35 Years What is Canada’s secret for having such low delinquencies despite its high-interest rates? Evidently, they never paid off those enormous mortgages. A significant portion of mortgages had remaining amortizations of 30 years or more in Q1 2023, according to reports from Canada’s Big Six banks. Most of the Big Six reported that at least 30 years of payments would still be made on at least 25 percent of their portfolio. The share was almost nonexistent only a year ago Suddenly, the Big Six Banks of Canada have a large number of mortgages with lengthy remaining terms The majority of mortgages with 30 or more years left to pay off are held by more than half of the Big Six banks. With over a third (32.4%) of its portfolio still in existence as of Q1 2023, BMO topped the list. RBC (27%), TD (29.3%), and CIBC (30.0% of its portfolio) were close behind. It’s important to emphasise that these aren’t 30-year mortgages. They are mortgages with a minimum remaining repayment term of 30 years. Before we go, it’s crucial to understand that not all banks are experiencing this issue. The market shares at National Bank (1%) and Scotiabank (1%) are unchanged from year to year. This indicates that the problem is isolated to those particular institutions and is, at the very least, not a general banking issue. For Canadians, even interest-only mortgages could have been too much How in the world can you ever qualify for a mortgage that long? To receive a loan that long, a specialist product is often needed. The explanation is negative amortisation, which is what lenders are attempting to prevent with borrowers who purchased an excessive amount of real estate. The majority of variable-rate mortgages in Canada have a set monthly payment. Therefore, although the amount applied to the principal varies, borrowers still receive the predictability from month to month. If interest rates drop, more money is put towards the principal of the mortgage and less towards interest. It is a pleasant surprise and generally what occurred over the 30 years before 2021. Renewal borrowers often discover they paid back more than they anticipated. It’s also true that higher rates have a negative impact on principal and a positive one on interest. A sudden rate increase may indicate that the borrower isn’t making enough payments to cover interest. This is negative amortisation, in which the payback period is lengthened. On a long enough time horizon, anyone can afford anything, but it comes at a high interest cost. Some people are prepared to make that compromise in order to manage their payback plan. Canadian Homebuyers Want Lower Payments and Longer Terms Usually, the maximum amortisation is 35 years, but it seems that banks do not believe that is sufficient. The portfolios of the aforementioned institutions still have at least 35 years remaining in them. In the first quarter, there are still at least 35 years of amortisation on almost a quarter (27.4%) of TD’s Canadian residential portfolio. RBC (26%), and CIBC (27%), are not far behind. For almost 30 years, BMO did not break out amortisations. Long Mortgage Terms Almost Didn’t Exist To see how rare this circumstance is, one merely has to compare it to the same time period the previous year. In the first quarter of 2022, just three banks—Scotiabank (1.4%), National Bank (1.3%), and TD (0.3%)—had amortisations greater than 30 years. Seeing two points would have been concerning, but more than one-fourth of mortgages at certain institutions hardly draw attention. Although delinquency rates may continue to be low, this does not guarantee that the nation is safe. A significant portion of wealth has already been diverted from the “productive” economy by the housing sector. If the debt is prolonged for repayment, an economic slowdown caused by more debt would only worsen. Related posts 29 April 2023 To Avoid Defaults, Canadian Banks Extend Amortisations 35 Years 24 April 2023 Canada’s Cheap Mortgage Credit Drives Real Estate Prices… Again Canada’s Cheap Mortgage Credit Drives Real Estate Prices… Again Everyone in Canada is trying to determine… 14 April 2023 Canada maintains 4.5% interest rate, What’s next Canada maintains 4.5% interest rate, What’s next? The Bank of Canada will reveal its decision on… 11 April 2023 TRREB: GTA Competition increases due to tight market conditions  TRREB: GTA Competition increases due to tight market conditions In March 2023, the Greater Toronto Area… 08 April 2023 Why Canadian Homeowners Aren’t Selling Why Canadian Homeowners Aren’t Selling There hasn’t been the usual rush of vendors at Canada’s… 08 April 2023 Toronto Real Estate Correction Pauses, Prices Upto $27k Toronto Real Estate Correction Pauses, Prices Upto $27k Is the Greater Toronto real estate market overpriced?… 05 April 2023 Canadian real estate prices will “rip” higher: SCOTIABANK Canadian real estate prices will “rip” higher: SCOTIABANK Canadian real estate may be sluggish…

To Avoid Defaults, Canadian Banks Extend Amortisations 35 Years Read More »

Canada’s Cheap Mortgage Credit Drives Real Estate Prices… Again

Blogs / / / , , , , , ,

Canada’s Cheap Mortgage Credit Drives Real Estate Prices… Again Everyone in Canada is trying to determine why real estate prices have suddenly increased. However, the data from the Bank of Canada (BoC) points to a more direct explanation: witchcraft. In reality, it’s the return of easy access to debt and the resulting increase in leverage. The decrease in new mortgage interest rates in February provided leverage comparable to that seen in March’s increase in home prices. Interest rates for Canadian mortgage borrowers are dropping Lenders in Canada are benefiting from a flood of new home loans with reduced interest rates. In February, rates on new loans were 5.53%, down from 5.63 in January. The current rate is 3.14 percentage points more than it was this time last year, and it is higher than January. That’s more than in the previous month but less than in the same period last year. This is a crucial reminder as we continue to analyze the data. There Is Minimal Effect At This Point On Canada’s Mortgage Stress Test At present levels of mortgage debt in Canada, changes in interest rates are felt quite keenly. Canadian banking watchdog  OSFI has a stress test for mortgages called Guideline B-20. Borrowers will be able to pay either 5.25% interest (the maximum allowed by the Guideline) or the contract rate plus 2 percentage points. It performs an excellent job of limiting credit up to the 5.25% line, but thereafter leverage starts swinging wildly. The amount people are able to borrow responds extremely instantly to changes in the interest rate. It’s important to note that not all mortgage lenders are subject to the stress test Non-stress-tested lenders have their own methods of reducing exposure to risk. If the interest rate is over a certain threshold, then the quoted rate is used for the computation. This morning, I opened my go-to mortgage app to find that helpful hint waiting for me. There’s no harm in reminding folks that they have more leverage than they realize, right? So, are you any closer to understanding the stress test now? Imagine you were able to negotiate a 6.00% interest rate on your mortgage (by the way, your mortgage broker is lousy) and an 8.00% stress test rate. Now let’s say your pal decides to borrow a month from now and locks in a mortgage rate of 5.75 percent. They’ve also gotten an additional 0.25 percentage points off their stress test rate.  It didn’t matter much when mortgage points were 2 and the minimal stress test rate was 4.75%. The floor was put in place, reducing the impact on everyone other than those with big pockets. The Effects of Interest Rates and Borrowing in Canada You need to know that leverage is related to housing prices in order to appreciate the significance of this. This is common knowledge, as evidenced by a recent explanation from a former BoC Deputy Governor on how low interest rates encouraged borrowers to spend more money on the same home. Interest savings due to lowering rates were formerly widely accepted. Over the past 30 years, historically, low-interest rates have not benefited purchasers, but given sellers more bargaining power. For thirty years, prices rose to compensate for the shortfall, until someone eventually did the math. To borrow money, or use leverage, is to squander the fruits of your future effort right now. A certain way to drive up housing costs is to provide incentives for individuals to buy what they need and then allow them to borrow more and more of their future earnings to pay for it. This is Canada’s housing catastrophe, and it was made this way on purpose. Recent Home Price Growth in Canada Is Reflected in Falling Mortgage Rates Take another look at the uninsured mortgage rate. Although a 0.12-point decline in February may not seem like much, it would increase a buyer’s purchasing power by about 1.2%. That’s an additional $11,500 in debt for a couple making $200,000 annually. It’s extremely close to the $12,300 gain that the median house saw in March. It is quite likely that the whole growth was due to the use of leverage. For the return of low-cost leverage, the Bank of Canada should just ease off on quantitative tightening. Government bond liquidity has not been tightened, thus falling fixed mortgage rates continue to stimulate demand. Related posts 24 April 2023 Canada’s Cheap Mortgage Credit Drives Real Estate Prices… Again Canada’s Cheap Mortgage Credit Drives Real Estate Prices… Again Everyone in Canada is trying to determine… 14 April 2023 Canada maintains 4.5% interest rate, What’s next Canada maintains 4.5% interest rate, What’s next? The Bank of Canada will reveal its decision on… 11 April 2023 TRREB: GTA Competition increases due to tight market conditions  TRREB: GTA Competition increases due to tight market conditions In March 2023, the Greater Toronto Area… 08 April 2023 Why Canadian Homeowners Aren’t Selling Why Canadian Homeowners Aren’t Selling There hasn’t been the usual rush of vendors at Canada’s… 08 April 2023 Toronto Real Estate Correction Pauses, Prices Upto $27k Toronto Real Estate Correction Pauses, Prices Upto $27k Is the Greater Toronto real estate market overpriced?… 05 April 2023 Canadian real estate prices will “rip” higher: SCOTIABANK Canadian real estate prices will “rip” higher: SCOTIABANK Canadian real estate may be sluggish… 05 April 2023 After just 86 days, Canada quietly reversed sections of its foreign buyer ban After just 86 days, Canada quietly reversed sections of its foreign buyer ban After hours of enforcement,…

Canada’s Cheap Mortgage Credit Drives Real Estate Prices… Again Read More »

Canada maintains 4.5% interest rate, What’s next

Blogs / / / , , , ,

Canada maintains 4.5% interest rate, What’s next? The Bank of Canada will reveal its decision on the benchmark interest rate it will use going forward. Even if the economy performs better than projected, most economists believe the central bank will maintain its key interest rate at 4.5 percent. The economy started the year strong, even with interest rates at a record high, and unemployment around record lows. The Bank of Canada has stated that it would like to see an additional economic slowing in order to return annual inflation to its objective of 2%. For the second month in a row, February’s inflation rate of 5.2% was lower than expected. Today’s monetary policy report will also include the Fed’s most recent growth and inflation forecasts. The prime interest rate has increased dramatically during the past year, from near zero to its highest level since 2007. The Bank of Canada issued its eighth straight rate increase in January and said that it plans to keep its key interest rate unchanged if economic growth continues in line with its projections. Most economists believe the Bank of Canada will keep its benchmark interest rate unchanged on Wednesday, arguing that further rate hikes would come too soon. The central bank’s goal of dampening economic activity has been aided by the general trend of the economy. “There really were no significant surprises here,” said Douglas Porter, chief economist at BMO. The Federal Reserve in the United States has recently indicated that it intends to continue raising interest rates. Still, the Bank of Canada’s policy is beginning to diverge from that of the Fed. Stephen Gordon, an economics professor at Laval University, argued that the United States’ monetary policy does have consequences in Canada. The Canadian dollar may weaken and import costs may rise if investors decide to move their money to the United States in response to higher interest rates there. “It’s not an automatic thing of,” Gordon said, “the (Bank of Canada) has to follow the Fed.” The Canadian economy stalled in the fourth quarter, and inflation dropped to 5.9% in January, according to recent figures. Although “the labor market remains very tight,” the central bank stated conditions should improve and wage growth should slow. Suppose the 150,000 jobs added in January were a one-time occurrence or a sign of underlying strength in the labor market. In that case, we should learn more from the February labor force survey, which will be released on Friday, according to Porter. The Bank of Canada maintains its forecast that annual inflation in Canada will decline to around 3% by the middle of the year. There will need to be a “surprise” for the Bank of Canada to act again in the form of an interest rate hike, according to Gordon. Inflation in Canada is predicted to remain low this year due to base year effects, barring any unforeseen developments. The influence of price changes from the previous year on the determination of the annual inflation rate is referred to as the base-year effect. Price increases accelerated in the first half of 2022 as fears of a Russian invasion of Ukraine materialized, but analysts anticipate that the annual inflation rate will continue to decline in the coming months. The rate of inflation is currently declining, as Gordon has stated. Further time is required for the economy to react to past interest rate hikes, which can take as long as two years. The Bank of Canada reports that international economic growth is trending roughly as predicted. However, it noted that “upside risks” that could increase inflation include the robustness of China’s economic recovery and the impact of Russia’s war in Ukraine. In the future, Porter predicts that the Bank of Canada will have “limits” in its ability to diverge from the Federal Reserve. Because of their interconnected economies and shared stresses, he continued, both countries would benefit from higher interest rates. “If the U.S. economy is really showing more underlying strength and greater inflation pressures, those will probably get reflected eventually in Canada as well,” he added. The Bank of Canada is scheduled to release its next interest rate decision and quarterly monetary policy report on April 12. Related posts 14 April 2023 Canada maintains 4.5% interest rate, What’s next TRREB: GTA Competition increases due to tight market conditions The Bank of Canada will reveal its decision… 11 April 2023 TRREB: GTA Competition increases due to tight market conditions  TRREB: GTA Competition increases due to tight market conditions In March 2023, the Greater Toronto Area… 08 April 2023 Why Canadian Homeowners Aren’t Selling Why Canadian Homeowners Aren’t Selling There hasn’t been the usual rush of vendors at Canada’s… 08 April 2023 Toronto Real Estate Correction Pauses, Prices Upto $27k Toronto Real Estate Correction Pauses, Prices Upto $27k Is the Greater Toronto real estate market overpriced?… 05 April 2023 Canadian real estate prices will “rip” higher: SCOTIABANK Canadian real estate prices will “rip” higher: SCOTIABANK Canadian real estate may be sluggish… 05 April 2023 After just 86 days, Canada quietly reversed sections of its foreign buyer ban After just 86 days, Canada quietly reversed sections of its foreign buyer ban After hours of enforcement,… 31 March 2023 Non-Canadians can buy property more easily Non-Canadians can buy property more easily Certain limitations on foreigners buying residential property…

Canada maintains 4.5% interest rate, What’s next Read More »

TRREB: GTA Competition increases due to tight market conditions 

Blogs / / / , , , , , ,

TRREB: GTA Competition increases due to tight market conditions In March 2023, the Greater Toronto Area (GTA) housing market tightened. Compared to March 2022, sales accounted for a higher percentage of listings, indicating that buyer rivalry is increasing. For the first time since May 2022, the average selling price exceeded the average list price in Toronto. “As the first quarter progressed, Toronto Regional Real Estate Board (TRREB) members increasingly reported that buyer competition was heating up in numerous GTA neighborhoods.” “The most current numbers support this,” TRREB President Paul Baron remarked. “Latest consumer polling also indicates that demand for owning homes will remain strong this year.” As high average rents come more nearly in line with the cost of ownership, expect first-time buyers to lead this rebound.” In March 2023, GTA REALTORS® reported 6,896 sales through TRREB’s MLS® System, a 36.5 per cent decrease from March 2022. Actual and seasonally adjusted sales increased month over month. New postings were likewise falling year over year, albeit at a significantly higher yearly pace. This indicates that market conditions are tighter than they were last year. “Lower inflation and financial market uncertainty have caused medium-term bond rates to trend downward.” This has resulted in decreased fixed-rate borrowing rates this year and will continue to do so. Reduced borrowing rates will assist with affordability, particularly when tighter market circumstances push up selling prices in the second half of 2023,” TRREB Chief Market Analyst Jason Mercer said. The composite benchmark for the MLS® House Price Index was down 16.2 percent year over year, but up month over month on both an actual and seasonally adjusted basis. Similarly, the average selling price fell 14.6% year on year to $1,108,606. On both an actual and seasonally adjusted basis, the average selling price increased month over month. “As population growth accelerates due to immigration, first-time buyer intentions will stay robust.” Since the quantity of available properties for sale is projected to remain limited, a considerable rental supply will be required. Sadly, we do not have this option at the moment. “Over the next several years, we need to see a policy emphasis on bringing more purpose-built rental units online,” TRREB CEO John DiMichele said. Related posts 11 April 2023 TRREB: GTA Competition increases due to tight market conditions  08 April 2023 Why Canadian Homeowners Aren’t Selling Why Canadian Homeowners Aren’t Selling There hasn’t been the usual rush of vendors at Canada’s… 08 April 2023 Toronto Real Estate Correction Pauses, Prices Upto $27k Toronto Real Estate Correction Pauses, Prices Upto $27k Is the Greater Toronto real estate market overpriced?… 05 April 2023 Canadian real estate prices will “rip” higher: SCOTIABANK Canadian real estate prices will “rip” higher: SCOTIABANK Canadian real estate may be sluggish… 05 April 2023 After just 86 days, Canada quietly reversed sections of its foreign buyer ban After just 86 days, Canada quietly reversed sections of its foreign buyer ban After hours of enforcement,… 31 March 2023 Non-Canadians can buy property more easily Non-Canadians can buy property more easily Certain limitations on foreigners buying residential property… 21 March 2023 What You Should Know About the Toronto Vacant Home Tax What You Should Know About the Toronto Vacant Home Tax The Toronto Housing Affordability Task Force has…

TRREB: GTA Competition increases due to tight market conditions  Read More »

Why Canadian Homeowners Aren’t Selling

Blogs / / / , , , , , ,

Why Canadian Homeowners Aren’t Selling There hasn’t been the usual rush of vendors at Canada’s popular Spring market thus far. Investors may have a greater issue than slow sales, BMO Capital Markets said. They point to many causes but ultimately conclude there is no incentive to sell. Less than a year after the Canadian real estate market started falling, the government is implementing a series of stimulus measures. Homeowners in Canada aren’t rushing to put their properties on the market Most Canadian homeowners wait until the spring market to put their home up for sale, but activity has been modest thus far. Toronto (-44%) and Vancouver (-34%), two market leaders, decreased in new listings in March. Although data from other areas has yet to be reported, brokers from throughout the nation say the data from the middle of the month will reveal that sellers were limited in all markets. Toronto may have a greater problem than slow sales, according to BMO economist Robert Kavcic. Investors, he said, should be aware that last month was the region’s slowest for new listings since 2001. Following are some of his observations that might explain the slowdown: They are not obligated to sell in such a poor market. This is not a recession, with its accompanying layoffs and forced home sales, but rather a correction in asset prices. As a result, most homeowners in today’s market aren’t under significant payment pressure. As a result of OSFI’s buyer stress testing, no transactions were ever forced. People are remaining put because of the high price of relocating or trade. The rental sector provides solid returns for investors. There must be a reason to buy or sell an asset All valid arguments, incentives, in particular, seem to be at the heart of most. Asset holders in any given market will do so for as long as they see a benefit in doing so. Would you part with a mystical piece of paper that guaranteed you $20,000 per month? Very likely not. You’ll probably attempt to use the worth of the paper to get even more “magic” paper. Several financiers are buying homes with negative cash flow. This occurs when the speculator/landlord must supplement the tenant’s rent in order to meet the property’s carrying expenses. In this case, investors still made money despite a small inconvenience by increasing rents. Holding back causes a severe scarcity in the market, which in turn drives up the price. As prices rise, there is less of a surplus to store, which causes supplies to become even more limited. While prices are dropping, an unexpected influx of stock is common. The motivation to avoid having your gains wiped away lies in the fact that you don’t earn any money until you sell. The cheaper pricing made possible by the larger inventory encourages even more buying. Major trend shifts are more likely to occur with a financialized asset when there is momentum in either way. Most people treat real estate as if it were an investment vehicle, analyzing market forces like supply and demand. There are x persons in need of a home, thus they will place bids on y properties. Investments don’t function that way; rather, their value is determined by how much cash they can be converted into. Due to investors seeking returns through asset inflation, there will never be enough “affordable” homes built. House prices tend to fall as interest rates rise because buyers can’t take advantage of as much debt. In times of crisis, central banks are expected to step in as a “lender of last resort.” Governments shouldn’t offer economic stimulus just because they can, but rather when there has been a sustained shortage of investment. Since the 2008 financial crisis, that is not how things have worked. As expected, rising interest rates stifled lending and drove down housing prices. Nevertheless, Canada lacks the stomach for tough love less than a year later. As a financial liquidity crisis bolstered moral hazard by suggesting credit stimulus was on the horizon, the market is now salivating. The Federal government has also recently increased subsidized demand while also opening the market to international investment only days after deciding it was essential to limit such activity. The message to potential investors is clear: Canada is essentially a house-trading hub. In other words, the motivation to hang onto your inventory is larger than any correction factor at this time since it couldn’t endure a complete year without providing stimulation. Why would anybody sell before your government, which is basically an army of real estate speculators, buys up all the available properties? They are incentivised to artificially inflate the asset in which they have a financial stake. Related posts 08 April 2023 Why Canadian Homeowners Aren’t Selling Toronto Real Estate Correction Pauses, Prices Upto $27k There hasn’t been the usual rush of vendors… 08 April 2023 Toronto Real Estate Correction Pauses, Prices Upto $27k Toronto Real Estate Correction Pauses, Prices Upto $27k Is the Greater Toronto real estate market overpriced?… 05 April 2023 Canadian real estate prices will “rip” higher: SCOTIABANK Canadian real estate prices will “rip” higher: SCOTIABANK Canadian real estate may be sluggish… 05 April 2023 After just 86 days, Canada quietly reversed sections of its foreign buyer ban After just 86 days, Canada quietly reversed sections of its foreign buyer ban After hours of enforcement,… 31 March 2023 Non-Canadians can buy property more easily Non-Canadians can buy property more easily Certain limitations on foreigners buying residential property… 21 March 2023 What You Should Know About the Toronto Vacant Home Tax What You Should Know About the Toronto Vacant Home Tax The Toronto Housing Affordability Task Force has… 18 March 2023 Canadian real estate prices rise for the first time in almost a year The fundamentals of the underutilised housing tax The real estate market in Canada has been experiencing…

Why Canadian Homeowners Aren’t Selling Read More »

Toronto Real Estate Correction Pauses, Prices Upto $27k

Blogs / / / , , , , , , ,

Toronto Real Estate Correction Pauses, Prices Upto $27k Is the Greater Toronto real estate market overpriced? The composite benchmark, or average house, had a price increase in March, according to statistics from the Toronto Regional Real Estate Board (TRREB). Despite the uptick, home sales have been dismal, and that isn’t expected to change anytime soon, according to industry analysts. For a second consecutive month, though, purchasers drove prices significantly higher. Home values in the Greater Toronto Area increased by $27,000 in only one month A year after interest rate rises, property prices in the Greater Toronto Area have surged. In March, the TRREB standard surged 2.5% (+$27,200) to $1,118,500. Toronto’s benchmark also increased, reaching $1.101 million (a gain of 2.2%, or +$24,100) from the previous month. The BoC’s annual inflation objective is 2%, therefore, this month’s rise was higher than that. Real estate prices in the Greater Toronto Area may have reached bottom Real estate prices in the Greater Toronto Area are still falling, but they may be bottoming out. Prices in TRREB have decreased by 16.2% (-$216,200) and in the City of Toronto by 13.1% (-$167,500) during the last year. But, the worst of the last year’s decline is over, and prices have risen by around 1 point relative to each benchmark. There is no sign of a rebound in the Greater Toronto Area’s housing market There was no increase in house sales to blame for the price increase. March existing home sales in the Greater Toronto Area dropped 36.5% to 6,896 units. That’s down considerably from the previous year and the lowest level seen in at least the past five years. There won’t be a dramatic shift in sales, according to industry experts. According to National Bank of Canada analyst Daren King, “despite these early indications of stabilization, sales remain significantly below their historical norm, having plummeted by 49.8 percent from their previous high in February 2022.” (NBF). Nevertheless, “…the possibility of a rebound in the housing market remains modest since we estimate the Bank of Canada to hold its policy rate at the present restrictive level for most of 2023,” they write. So, in the future months, sales should continue to be below their long-term average. The Supply of Preexisting Properties Declines Reduced stock levels may be attributed to retailers responding to improved credit availability. According to King, March’s drop in new listings followed a 24% drop in February. As a result, the number of active listings (as opposed to the total number of listings) has dropped by 21%. According to King, “as a consequence, market conditions in Toronto are somewhat tighter than the historical norm,” as measured by the active-listings-to-sales ratio.The Canadian real estate market, which is driven by moral hazard, has come to believe that a poor economy is beneficial to property values. Although King may be correct that sales will be flat for most of the year, investors are looking forward to lenient loan terms as a result of the worldwide financial crisis. The current narrative is that the state’s attempts to foster low-cost development will lead to a spike in property prices. Whether or whether they are incorrect is unclear at this time. Related posts 08 April 2023 Toronto Real Estate Correction Pauses, Prices Upto $27k 05 April 2023 Canadian real estate prices will “rip” higher: SCOTIABANK Canadian real estate prices will “rip” higher: SCOTIABANK Canadian real estate may be sluggish… 05 April 2023 After just 86 days, Canada quietly reversed sections of its foreign buyer ban After just 86 days, Canada quietly reversed sections of its foreign buyer ban After hours of enforcement,… 31 March 2023 Non-Canadians can buy property more easily Non-Canadians can buy property more easily Certain limitations on foreigners buying residential property… 21 March 2023 What You Should Know About the Toronto Vacant Home Tax What You Should Know About the Toronto Vacant Home Tax The Toronto Housing Affordability Task Force has… 18 March 2023 Canadian real estate prices rise for the first time in almost a year The fundamentals of the underutilised housing tax The real estate market in Canada has been experiencing… 18 March 2023 The fundamentals of the underutilised housing tax The fundamentals of the underutilised housing tax There has been some confusion over who will be required…

Toronto Real Estate Correction Pauses, Prices Upto $27k Read More »

Canadian real estate prices will “rip” higher: SCOTIABANK

Blogs / / / , , , , , , ,

Canadian real estate prices will “rip” higher: SCOTIABANK Canadian real estate may be sluggish right now, but a major bank believes it will “rip” shortly. According to a recent Scotiabank study, the Federal government is at conflict with the Bank of Canada’s (BoC) aims. The country’s central bank is attempting to restrict demand and thereby inflation, while the Fed is doing everything possible to stimulate excess demand. As a result, devising a better strategy to boost housing prices would be difficult. Let’s break into what Scotiabank is on about. Pressure creates diamonds, but dead things are required first According to the bank, and the BoC has been attempting to reduce demand while the Fed has been attempting to increase it. The labor deficit in Canada is one of the most severe in decades. The bank views this as inevitable, given that the Fed has added 420,000 jobs since 2020. That is nearly similar to Halifax’s population and 51% of employment creation. It’s an unusual option for the Fed to boost its own employment program amid a labor shortage. According to Scotiabank, the same rationale is being applied to housing. The Fed says it wants to lower house prices but is actively attempting to raise them. “In a larger public policy perspective, Ottawa’s housing approach remains perplexing,” argues Derek Holt, VP and head of Scotiabank’s Capital Markets.”The Bank of Canada is attempting to limit inflationary pressures and cool previously blazing home prices.” The Fed has opened the floodgates to immigration into a market with no supply, while another tax subsidy to housing begins on Saturday in the shape of the first-time homebuyers tax-free home savings account, which enables one to store up to $40k tax-free with yearly payments of $8k. Housing will rip after a brief retrenchment, and so will the BoC’s efforts.” If you are not fluent in Bankster, this may need some unpacking to properly comprehend what is going on. Canada’s immigration policy is generous in the same way as the British West Indies were to India One of the most effective and mutually beneficial connections was Canada’s immigration program. Immigrants have always been quite successful in Canada. Regrettably, it is not the circumstance they are in right now. High-skilled immigrants are underemployed and living in substandard housing. There is a continual emphasis on how much immigration Canada needs, yet the government does not even have a plan for basic shelter. It’s evident that this is about increasing demand rather than a mutually beneficial development opportunity. Scotiabank is not alone in this regard. RBC, Canada’s biggest bank, has expressed similar sentiments. They said immigration is the quickest way to solve Canada’s demographic challenge. But it takes time; you can’t suddenly ratchet up the numbers and expect turnover. The bank cautioned that an increasing number of people without a strategy for work and housing would lead to increased inflation and higher housing prices. If you still believe this is 1980 and that immigrants gain by it, you are misinformed. Recent immigrants in Canada report feeling mislead, with two out of every five planning to return home. The government is governed like a sleazy business that exploits employees through a nefarious temp agency. They don’t care whether you can satisfy your fundamental necessities; they simply need someone to occupy the seat. A shady factory, on the other hand, may generate profits. Higher rents are a significant victory in this scenario. As borrowing rates fall, this may lead to greater housing prices. This weekend marks the start of Canada’s new tax subsidy to boost home prices Another artificial demand-side pressure described by Holt is the tax subsidy. In case you missed it, the First-Time Homebuyers Tax-Free House Savings Program begins tomorrow. It is a registered account, similar to your RRSP, RESP, or TFSA, that provides tax advantages for putting money aside for housing. Opponents felt that it was a flawed approach from the start. It is not intended to replace the current Home Buyers Programme (HBP), which enables first-time purchasers to borrow up to $35,000 from their RRSP. It also exists to encourage further home investment. How many Canadians have informed you that their house is their greatest investment? It most likely was. Since all the incentives are geared toward housing, they most likely made minor investments. As a result, Canadians have been investing less in production and more in non-productive asset trading. It’s become so terrible that Canada currently owns the OECD forecast slot originally held by Greece during the Great Recession. The siphoning of tax-based incentives had a significant part in driving up American property prices in the early 2000s. It also had a big impact on driving up Canadian property values after the 2019 election. The role of the asset holder in a market is to collect as much money as feasible. If the federal government is pushing you to invest more money into a property, the responsibility of the seller is to grab that extra cash. That’s how markets function, particularly regarding housing, which Canada regards as a bond you live in. Shelter and Financial Issues Also, additional leverage is being introduced into the real estate market. The price of an item is decided by what someone is prepared to pay, not by how many people desire it. Since housing in Canadian real estate market is mortgage-dependent, the role of finance has a significant effect in the price of a house. To appreciate this, you must first grasp how wrong economists were about interest rates. Lower interest rates, it is often assumed, decrease the cost of housing. The common myth among central bankers is that lower interest rates indicate more money flows to principle. The demand for available supply has a direct impact on home prices. Even the BoC has recognized it was a huge mistake. A BoC executive discovered that consumers adjusted their spending to credit after reviewing 30 years of data. They just continued to spend the same proportion of their income on the asset

Canadian real estate prices will “rip” higher: SCOTIABANK Read More »

After just 86 days, Canada quietly reversed sections of its foreign buyer ban

Blogs / / / , , , , , , , , ,

After just 86 days, Canada quietly reversed sections of its foreign buyer ban After hours of enforcement, Canada’s restriction on sales to the foreign buyer should be relaxed. The nation discreetly eased limits on non-resident investors and temporary residents only 86 days after adopting limitations on non-resident purchasers. The prohibition was probably only a diversion from the rumors circulating within the House. Foreigners may once again purchase undeveloped land in Canada Canada is changing its policy and will now sell the residential and mixed-use empty property to foreign purchasers. The nation claims this would increase the availability of houses, but the amendments make it clear that the property may be utilized for “any purpose.” It’s clear that progress is beneficial, but are there any drawbacks? They obviously haven’t considered the implications in one crucial area, land banking, with just two months to go and no information on beneficial ownership yet. The term “land banking” refers to the practice of accumulating land for future development. Due to the lack of a definitive timeframe, the phrase is in quotation marks. While land banking has been a concern since its inception, its prevalence has increased dramatically after the 2008 financial crisis (GFC). Since low-interest rates coincided with the movement of money throughout the globe, wealthy people from all over the world started buying property nearly everywhere to reduce their reliance on any one market. Vancouver was recommended as a safe haven for the money of Asian oligarchs by BlackRock itself. The influx of foreign cash into the market may be beneficial if everyone involved is on the same page. It’s an unusual decision that may put upward pressure on house prices to invite non-resident capital to use your unoccupied property as a deposit certificate to redeem (i.e. develop) without a timeframe in a nation that claims to be experiencing a housing crisis and a dearth of vacant land. Canada’s Real Estate Regulations Are Eased for Foreign Corporations The restrictions on foreign corporations buying property in Canada are being relaxed. This exemption applies to publicly traded Canadian corporations with foreign ownership or control. No need to fear; the regulations apply equally to private corporations. The previously established cap of 3% on non-resident ownership has been raised to 10%. A primary shareholder not located in the country where the company is incorporated would be legal under this scenario. Canada Relaxes Requirements for Visiting Foreigners to Purchase Permanent Residence Temporary residents with work permits will no longer be subject to the law. Every visitor to the nation who has at least 183 days remaining on their work visa may now legally purchase the property. It is important to note that this is the number of days remaining on their permit, not the minimum number of days they must spend in the country. Formerly, a foreign buyer could buy homes so long as they met certain requirements, such as having paid taxes for the previous five years, being physically present in the nation for at least 244 days each year, and the property’s worth not exceeding $500,000. Buying a property on your first day is possible if your work visa is valid for at least 183 days, a huge jump from the previous requirement of five years of residence. It seems that a sizable and unjustly punished market consists of purchasers seeking to acquire property on a temporary visa before paying taxes in Canada The laws for a non-resident purchasing property in Canada have not been altered in any other way. Recreational or vacation properties, as well as multi-unit structures, are still legal for a foreign buyer to own. However, it only applies to census areas with populations above 100,000, therefore, the vast majority of the nation was free of any limitations. In addition, there are still very few regulations placed on property-like acquisitions. While a pre-sale assignment, for instance, is not a house until the development is finished, it may still be purchased and resold before the end of construction. The buyer gets exclusive assignment rights to the subject property. When the residence is finished being built and transferred, non-resident speculation taxes do not apply to assignments. Since the “foreign buyer mini-bubble” in 2017-2018, which was mostly centered in Greater Toronto and Vancouver, there has been little indication that non-resident speculation has been a substantial portion of the market. There have been very few purchases recorded in British Columbia’s beneficial ownership register. Very low-interest rates and a surge in domestic investors drove price increases to record highs throughout the epidemic. Notwithstanding the fact that 38% of federal elected officials have such an investing plan, the prohibition was a useful distraction during the past election. The headline-making statement was also a chance to boast about keeping one’s word. The elected speculators are obviously attempting to build a market now that no one is paying attention, and rate cuts are expected by year’s end. Or at least a big enough market to stimulate home-market demand and raise prices Related posts 05 April 2023 Scotiabank predicts Canadian real estate prices will “rip” higher due to Fed 05 April 2023 After just 86 days, Canada quietly reversed sections of its foreign buyer ban Non-Canadians can buy property more easily After hours of enforcement, Canada’s restriction on… 31 March 2023 Non-Canadians can buy property more easily Non-Canadians can buy property more easily Certain limitations on foreigners buying residential property… 21 March 2023 What You Should Know About the Toronto Vacant Home Tax What You Should Know About the Toronto Vacant Home Tax The Toronto Housing Affordability Task Force has… 18 March 2023 Canadian real estate prices rise for the first time in almost a year The fundamentals of the underutilised housing tax The real estate market in Canada has been experiencing… 18 March 2023 The fundamentals of the underutilised housing tax The fundamentals of the underutilised housing tax There has been some confusion over who will be required… 07 March 2023 Is the Buggy Light Justified? Is the Buggy Light Justified?

After just 86 days, Canada quietly reversed sections of its foreign buyer ban Read More »

Non-Canadians can buy property more easily

Blogs / / / , , , , , , ,

Non-Canadians can buy property more easily Certain limitations on foreigners buying residential property were loosened by the government mere months after the new laws went into effect. Residential property can now be purchased by non-Canadians with a work permit or legal authorization to work in Canada. To qualify, they must have at least 183 days remaining on their work permit or work authorisation and only buy one home. In June of 2022, Parliament approved the Ban on the Acquisition of Residential Property by Non-Canadians Act, which made it illegal for foreign nationals to buy homes in Canada. Starting at the beginning of this year, foreign nationals will be unable to purchase a primary residence in Canada due to a new rule. In response to soaring property prices, the Liberals promised these restraints during the 2021 federal election campaign. Any foreign worker legally authorised to work in Canada may now also buy a home in the country. Work permit holders must not already be homeowners and must have at least 183 days remaining on their permit at the time of purchase. For development purposes, non-Canadians and foreign enterprises can now buy residential property and unoccupied land zoned for residential or mixed-use. In its original form, the law exempted people with temporary work permits from having to work full-time or file tax returns for at least three of the prior four years. Some people at the time worried that the policy would “create hurdles” for immigrants to Canada because the exemptions were so narrow. But, with these revisions in place, requirements like tax returns and prior employment histories no longer apply. Minister of Diversity and Inclusion Ahmed Hussen made the announcement on Monday. The Canadian Mortgage and Housing Corporation (CMHC) issued a press release saying the new policies would be implemented immediately. With these changes, “newcomers will be able to put down roots in Canada through home ownership, and businesses will be able to generate jobs and build homes by increasing the housing supply in Canadian communities,” Hussen stated in a press statement. To prevent homes from being utilised as speculative investment by foreign investors, these changes “find the correct balance.” Modifications to the foreign control, threshold and purchase of vacant land Vacant land in residential and mixed-use zones will no longer be subject to the prohibition under the new regulations. This opens up the possibility of residential development on the land to non-Canadian buyers. Another exception is being established to enable overseas investors to purchase residential land for the construction of new homes. The changes make this exemption valid for Canadian publicly traded corporations created by foreigners who do not have majority voting rights. The federal government has proposed four adjustments, the last of which concerns raising the threshold for foreign control of a corporation. If a non-Canadian owns at least 10% of a corporation, the law currently considers it foreign-controlled. In the past, 3% was considered sufficient. The original three per cent criterion impeded home developers that foreigners partially owned, the Canadian Home Builders’ Association (CHBA) said in a press release issued in February. The new changes were called “extremely needed” by the CHBA in a separate press release released on March 28. Many Canadians still worry about whether or not they will be able to purchase a home, despite the fact that the national average price has declined since its peak nearly a year ago. According to a new survey by Mortgage Professionals Canada, an all-time high proportion of renters in the country are pessimistic about ever becoming homeowners. Some market analysts believe that the prohibition will increase Canadians’ access to housing by making the market less competitive for foreign buyers of residential homes. Yet, CMHC data collected in 2017 shows that foreign buyers only bought a small number of homes in different Canadian cities. In addition, the impact of the laws on Canada’s housing market has been met with conflicting opinions from real estate specialists. Related posts 31 March 2023 Non-Canadians can buy property more easily Non-Canadians can buy property more easily Certain limitations on foreigners buying residential property… 21 March 2023 What You Should Know About the Toronto Vacant Home Tax What You Should Know About the Toronto Vacant Home Tax The Toronto Housing Affordability Task Force has… 18 March 2023 Canadian real estate prices rise for the first time in almost a year The fundamentals of the underutilised housing tax The real estate market in Canada has been experiencing… 18 March 2023 The fundamentals of the underutilised housing tax The fundamentals of the underutilised housing tax There has been some confusion over who will be required… 07 March 2023 Is the Buggy Light Justified? Is the Buggy Light Justified? Everyone knows that bugs that fly are drawn to light. We can’t stand… 07 March 2023 Three common components tips for new homeowners Three common components tips for new homeowners The convenience of having a low-maintenance lifestyle… 01 March 2023 Want to Build on Your Own Land? Here Are Five Things You Can Count On From Your Contractor Want to Build on Your Own Land? Here Are Five Things You Can Count On From Your Contractor If you want…

Non-Canadians can buy property more easily Read More »