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This Week’s Top Stories: Canada Has The Most “Overvalued” Homes, and Late Mortgage Payments Fall To Pre-Crash Levels In Ontario

This Week’s Top Stories - Canada Has The Most “Overvalued” Homes, and Late Mortgage Payments Fall To Pre-Crash Levels In Ontario

Time for your weekly cheat sheet on the most important stories impacting real estate.


IMF: Canada Has The Most Overvalued Homes In The G7, Fourth Globally
The International Monetary Fund (IMF), the monetary policy arm of the UN, has Canada amongst the highest ranking countries for home price growth. It’s not a good thing. One of the most interesting indicators from the IMF is the House Price-To-Rent, which ranks Canada as the fourth highest tracked by the organization, and the only G7 to rank this high. We scored a ratio of 132%, which means home prices have a major detachment to rental prices across the country. That was wordy, so what’s the takeaway? If it were a purely financial decision, buying a home is currently a worse deal than renting.

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Foreign Buying Of US Real Estate Surges Over 32%
The United States saw a massive increase in foreign buying in the year long period ending in March 2017. The National Association of Realtors (NAR) tracked over US$153 billion in purchases, and 284,455 homes. The majority of buying was for resident buyers, which are immigrants that bought a home to occupy on a majority basis. Since these numbers are mostly 2016 numbers, it’s not really safe to assume this is major growth. Major changes starting in January 2017 created a vastly different environment for foreign investors. It is still interesting the size and scale of people chasing the American dream…or looking to make a buck off of it.

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Over 1 In 10 Dollars Made In Canadian Real Estate Goes To Foreign Companies
Foreign owned firms are looking to make a few bucks on the Canadian real estate industry. Foreign owned firms took in over $14.21 billion of revenue in 2015, a 34% increase from the year prior. The majority were US owned companies, that took in $11.5 billion of those dollars.

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Canada Sees Largest Drop In Real Estate Sales Since June 2010
Canadian real estate is seeing a seasonal drop in sales, and then some. Sales in June 2017 came in at 39,979, an 11.4% drop from the same time last year. This was also a 6.7% decline from the month before. As stated, there normally is a seasonal drop going into June. However, this is the largest single month drop since June 2010.

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Ontario’s Late Mortgages Are Now At The Same Level Before The 1990 Crash
Ontario’s total mortgages in arrears fell to 0.11%, the lowest it has been since January 1990. This may be a sign that the market has become overly liquid, since almost anyone can list a home and sell before falling behind on their payments. Overly liquid is a technical term meaning the market has become bubbly, since any place, regardless of location and quality, is selling in almost no time. One of our writers also explained the mechanics of this, bucking traditional economic models that used low arrears as a sign of market health.

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Toronto Condos Get An Over 50% Price Hike In Some Neighborhoods
Toronto’s detached market is cooling, but condos are still trading a huge premiums. The benchmark condo price in the city is now $467,400, a 30.6% increase from the same time last year. While that sounds steep, the gap between neighbourhoods once considered affordable and the general market is closing really fast. The neighbourhoods of Malvern, and Birchmount saw prices climb over 50%.

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BC Late Mortgage Payments Fall 29% In April
Late mortgage payments across the province of BC made a 29% decline compared to the same month last year. Generally the lower it goes, the more liquidity real estate markets have. The higher it goes, the less liquidity the market has. If we’re at a new low, the market may be considered bubbly. Despite high home prices, the market is actually somewhere in the middle. A price reversal at this ratio would be the highest ratio prices have ever reversed, which would be highly unusual. Although BC is a highly unusual market right now, so I wouldn’t entirely discount that possibility.

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Vancouver Homeowners Should Be Cheering A Crash, Not A Correction
You’re a homeowner and you’re hoping for a correction and not a crash? You might actually lose more money if history repeats itself. Vancouver’s most recent crash took only 9 months for prices to recover, before hitting new inflation adjusted highs. The most recent correction on the other hand, took a whopping 9 years for prices to recover. It’s a lot easier to ride out 9 months than it is to ride out 9 years in our opinion.

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Vancouver Condo Prices Move Up To $135,000 Higher In A Single Month
Last year Vancouver’s detached real estate market soared out of reach for most locals. Rather than give up on the dream of homeownership, locals are scrambling for new condos. The increased pressure on pricing sent the cost of a benchmark condo up 2.9% in just one month. This represents a 17.6% increase from the same time last year. While that seems steep, West Vancouver saw prices increases by a massive $135,000 from the month before. Price increases aren’t bad, but I guess it’s a good thing they aren’t West Vancouver bad.

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