Time for your cheat sheet on this week’s most important stories.
Canadian Real Estate
Bank Of Canada’s Mortgage Buying Is A Quarter The Size Of New Mortgage Credit
Canada’s central bank kicked into action during the pandemic… by flooding the mortgage market with cheap cash. The central bank held $513 million worth of CMBs in March, rising to $7.45 billion at the end of June. The increase of 1,351% over 4 months is as insane as it sounds. This translates into an injection of about $1 for every $4 in new mortgage credit growth. In other words, the bank spent an enormous amount of cash to suppress rates, for a relatively small amount of growth.
Canada’s Drop In GDP Made The Economy Even More Dependent On Real Estate
Canada’s residential investment declined, but not nearly as much as general GDP. Residential investment as a percent of GDP reached 7.48% in Q2 2020, up 7.25% from last year. This means the Canadian economy is even more dependent on real estate as a driver of GDP. Despite the climb, this is still down significantly from the record high of 8.69% in Q2 2016. Short-term, it’s an increase – but on a longer horizon there’s still a downtrend.
RBC: Canadian Immigration Recovery Unlikely Near Term, May Impact Real Estate
Canada’s largest bank sees the slowdown in immigration impacting real estate prices. Permanent resident arrivals dropped to 34,000 in Q2, down 67% from the same quarter last year. Applications for permanent residency were also down 80% in Q2. Since applications actually take 18-24 months to process, they believe this will result in a second wave impact to immigration.
Most Of Canada’s Condo Markets Are Down From Peak Prices
Canadian real estate markets are booming, but condo markets are mostly down from peak. CREA’s benchmark price for a condo apartment reached $477,900 in July, down 0.31% from the peak reached in April 2020. Despite real estate prices rallying around the country, about two-thirds of markets are down from peak pricing. Some haven’t seen their peak price in over a decade.
Canada’s Largest Real Estate Markets Are Still Seeing Large Immigration Declines
Canada’s largest real estate markets are seeing significantly less immigrants. Toronto, the largest single region in Canada for permanent residents, saw arrivals drop 41.6% from last year. Vancouver did slightly better, and Montreal did much worse – building on a multi-year trend.
Toronto Real Estate
Toronto New Home Sales Drop Over 40%, But 905 Demand Surges Higher
Greater Toronto new home sales made a big increase, except in the actual City of Toronto. Despite a massive increase in new home sales across the region, the City saw new home sales fall 43%. The decline was primarily driven by a soft condo apartment market, which has extended to resales.
Toronto Condo Sellers List At The Fastest Pace In Over 5 Years, New Listings Rise 57%
Greater Toronto condo sellers are hitting the market at a much faster pace than buyers. TRREB reported 2,432 condo sales in July, up 6.7% from last year. Meanwhile, new listings for condo apartments reached 5,349 new listings in July, up 57.74% from the same month last year. The rise in inventory is enough that analysts typically expect prices to drop without a spike in new buyers.
Vancouver Real Estate
Greater Vancouver New Home Inventory Jumps 40%, But Only 31 Units Sell
Greater Vancouver new home sales are still lagging, and it may be causing inventory delays. There were 31 sales in July, down 46.7% from last year. Only 221 units launched in July, but it was still a 40.8% increase from last year. Despite the increase, the number of units released is actually 66.5% lower than expected. Soft sales are likely causing inventory delays or cancellations. Even so, this ratio of launches to sales is enough that analysts typically expect price declines.
Vancouver Condo Sellers Are Listing At The Fastest Pace In Over Half A Decade
Greater Vancouver condo sales increased, but not nearly as fast as new sellers hit the market. REBGV reported 1,400 sales in July, up 12.6% from last year. New listings on the other hand reached 2,964 in July, up a whopping 35.9% from last year. The rapid increase in listings is helping to stave off any increase in prices.
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