Time for your weekly cheat sheet on this week’s top real estate stories.
Canadian Real Estate
Canadians are increasingly tapping their home equity for short-term loans. Total HELOC balances reached $284.64 billion in outstanding debt. That means Canadians racked up an extra $994 million more than the month before. Great that they’re looking for a low-cost loans, but it’s leaving a gaping hole in their equity.
Canadian real estate sales are slowing down dramatically. April saw 36,297 sales through the MLS, a 19.73% decline compared to last year. This is the slowest April since 2009, and the largest decline since 2010. The majority of major markets are seeing sales drop, as stress tests and higher interest rates take their toll.
Teranet, the land registry behemoth, and NBC are noting tapering price growth. Analysts from a partnership observed April saw a 0.2% increase in prices. This is the fourth smallest increase for an April in 20 years.
On an annual basis, price climbed a huge 5.62%, but Vancouver and Victoria were the only markets above that mark. To contrast, prices in Toronto are “only” up 1.89%, on track to fall below inflation.
Looking at Canada’s money supply is complicated, but yields interesting observations. The M1+, which is basically cash in circulation, saw the annual growth rate fall to 6.7% in March 2018. This is the slowest pace of growth for a March since 2003.
The declines are most likely a sign that higher interest rates are doing their job. As rates rise, so does the cost of debt. This results in more people paying it down, or variable rate debt need more cash to service. Great to see debt being tackled, but the deceleration is also a sign of slowing economic growth.
Toronto Real Estate
Toronto condo prices reached a new all-time high. TREB reported the benchmark, which is the price of a typical apartment, hit $495,600. This represents a 10.17% increase from the year before.
The annual increase is huge, but is rapidly tapering from peak growth of 30.6%, hit last June. The meanline regression is occurring, is also happening while inventory rises, and sales drop.