Time for your cheat sheet on this week’s most important stories.
Canadian Real Estate
Canada’s largest bank is forecasting mortgage defaults are still coming, just a little later. RBC is forecasting rising defaults in Q3 or Q4 of 2021. The reason? Programs like EI, CERB, and CRB have delayed defaults. With those programs set to expire in March or April, the bank expects people to use the 4 to 6 months of mortgage payment deferrals to carry them for a few months. After that, those that haven’t transitioned back to regular employment, may be stuck defaulting.
Eliminate single-family zoning, and people can then buy half to a quarter of a house. Sounds like a great plan, to increase the number of owners right? Not exactly. Since an increase in zoning inflates the value of land, it instantly raises the value of all housing. All without having constructed any additional homes on the property. It’s not just common sense taught in the industry, it’s been proven. However, that’s not the story politicians are going with.
Canadian real estate, with a few exceptions, has been increasing in value during a pandemic. This is happening despite increasing unemployment, and rising vacancy. Turns out, the increase is about the size of credit the central bank has injected. Existing buyers are keeping the same payment size to buy the same houses, but paying inflated total values. Cheap credit fueling higher prices, despite worsening fundamentals. It’s a familiar story.
Greater Toronto is seeing condo listings in the city rise very quickly. The City of Toronto has seen 134% increase in condo listings in September. To contrast, Vancouver has seen an increase of 21%, and Montreal 41%. There’s more condo inventory across the country, but Toronto is 6x the growth of Vancouver.
Canada’s national statistics agency is seeing new condos get scooped up by non-resident owners. Greater Toronto saw 7.7% of condos made after 2016 go to non-resident owners. The segment was even more popular in Greater Vancouver, where 13.6% of these units were non-resident owners.
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