This Week’s Top Stores: How Money Laundering Sends Real Estate Prices Soaring, and Canadian Buyer Exuberance Crashes

Time for your weekly cheat sheet on this week’s most important stories.

Canadian Real Estate

How A Little Money Laundering Can Have A Big Impact On Real Estate
There’s no way there’s enough money laundering in Canadian real estate to affect prices, right? We take a dive through how asset prices are born, and how money laundering has a ripple effect in the market. The reality is any asset market can be manipulated with not a whole lot of money – including real estate.
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Canada’s Largest Banks See Mortgage Numbers Print Another Negative
Canada’s largest banks reached a historic moment – they’re holding fewer mortgages. They held 4,759,706 mortgages in November 2018, down 0.18% from the year before. This is the first year-over-year decline for November, going back to at least 1990. Prior to 1990, comprehensive data is not available.
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Canadian Real Estate Buyer Exuberance Is Crashing
The US Federal Reserve Bank of Dallas’ homebuyer exuberance index is falling for Canada. The index fell to 1.323 in Q4 2018, an 11.86% decline from the previous quarter, and below the critical value. Falling below the critical value means price irrational acceleration is over. Now the market only has to deal with 15 quarters of irrational price increases.
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Canadian Seniors Rack Up Almost $3.5 Billion In Reverse Mortgage Debt
Canadian seniors are rapidly turning to reverse mortgages to tap their home equity. The balance of reverse mortgage debt reached $3.45 billion in February, up 0.84% from the month before. The annual pace of growth hit $28.56% from last year, when compared to the same month last year. The pace of growth makes it one of, if not the, fastest growing segments of debt in Canada.
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Canadian Real Estate Demand Slips Further In March
The sales to new listings ratio (SNLR), a measure of market balance for Canadian real estate moved lower. The SNLR across Canada fell to 54.6%, down 2.6% from the same month last year. The move indicates markets across the country are moving closer to a balanced equilibrium. When we break that down however, some of the country’s largest markets are pushing towards a buyer’s market.
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