Time for your weekly cheat sheet on the most important stories in real estate.
Canadian Real Estate
The Bank of Canada (BoC) interest rate hikes may seem small, but add up to big fees for mortgage borrowers. Using the BoC’s average 5 year fixed rate, we run the numbers to see how much interest borrows will pay on a $1,000,000 loan over a 30 year amortization.
At the all-time low of 4.64%, you will have paid $854,135 in interest on that million dollar loan by the end of the term. At 4.99%, which is where we are now, you’re looking at $930,358 in interest payments. This time 5 years ago, we were at 5.24%. That would work out to $985,704 on a million dollar mortgage. Yup, you almost paid 2 million on a million dollar house if your average interest rate was 5.24% over 30 years. That might seem pricey, but these are all-time lows so historically people have paid significantly more.
We take a look at a growing trend of people using shell corporations to dodge land transfer taxes. Then we ask the provinces of BC and Ontario if this could be used to skip paying a foreign buyer tax. Turns out the sale of a shell corporation may not result in any land transfer, which may result in no taxes payable at all. Some provincial politicians have even been complaining about this, but it’s been falling on deaf ears for some time.
The Great Canadian real estate buying spree has led Canadians to rack up over 5,686,576 residential mortgages. The number based on calculations made from Statistics Canada Census 2016 data, shows 7.66% growth from Census 2011. This occurred despite a decline in the rate of homeownership, which fell to 67.8%.
Toronto Real Estate
Toronto detached homes are seeing price growth quickly taper. The benchmark price of a detached home across the Greater Toronto Area (GTA) was $921,200 in October, a 5.43% increase compared to the same time last year. That’s a big difference from the double digit gains that were being posted just a few months ago.
The average sale price of a detached home across the GTA has actually gone negative for the first time in years. The average sale price in October was $1,008,207, 2.5% decrease compared to the same time last year.
Toronto condo prices are getting closer to detached units, so we wanted to take a look to see if that’s out of the ordinary. In September, a the benchmark price of a condo was $460,200. The price of a detached home was $872,500. The condo benchmark is 52.74% of the price of a detached home. The long-term trend places this number at a median rate of 56.87%, so we’re 7.26% lower than that. If the ratio balances, this likely means higher condo prices or lower detached prices.
Vancouver Real Estate
Vancouver home price growth is starting to accelerate… again. The benchmark price of a typical home reached $1,042,300, up 12.4% from the same time last year. This is significantly higher than the 7.89% 12 month gain posted in June. Is the city getting ready for another climb, or do these numbers just look a little odd compared to last year’s post-foreign buying tax sales.
Vancouver has one of the highest rates of homeownership in the country, so it’s no surprise there’s a huge number of mortgages. Calculations based on 2016 numbers show that the Greater Vancouver Area had ~366,672 mortgages. That’s up 7.13% from the previous Census, conducted in 2011. This explosive mortgage growth occurred despite a decline in the rate of homeownership, which fell 2.74% over the same period, to 63.7%.
Montreal Real Estate
Montreal residents are placing an increasing emphasis on homeownership, and that’s sending the number of mortgages soaring. Census 2016 numbers show the city now has 622,494 mortgages, a 12.96% increase from Census 2011 numbers. The rate of homeownership in the city also climbed to 55.7%, a 1.27% increase over the same period. The city is one of the few regions in the country to see homeownership numbers rise.
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