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This Week’s Top Stories: Canada’s State-Owned Mortgage Insurer Warns Home Buyers To Remain Skeptical of Higher Prices, and Tightens Borrowing

Time for your cheat sheet on this week’s most important stories.

Canadian Real Estate

CMHC Head Warns Homebuyers To Question Motives Of Those Saying Prices Will Rise
The head of the CMHC is warning home buyers to be skeptical of anyone saying real estate prices will rise. He followed the warning with a series of negative economic indicators, including gross domestic product, crude prices, and income support applications. This follows the organization’s forecast seeing prices making a significant correction, and preceded the organization’s tightening of credit.
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Canadian Mortgage Credit Is Seeing Growth Surge, Despite Slow Real Estate Sales
Canadian real estate sales have been slowed down by the pandemic, but mortgage credit is on the rise. There was $1.65 trillion in mortgage credit outstanding in April, up 5.8% from last year. This is the highest rate of annual growth since August 2017. The disconnect directs attention to mortgage deferrals. Over one in ten mortgages are no longer making payments, and just accumulating interest.
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Toronto And Vancouver Real Estate Inventory May Get A Boost From AirBNB Slowdown
National Bank of Canada (NBC) see’s Canada’s big cities getting an inventory boost if travel doesn’t pick up. The bank estimates if just 25% of AirBNB operators decide to sell as a result of low traffic, Toronto would see real estate inventory rise 34%, Montreal 27%, and Vancouver 12%. That’s a lot of inventory, and most of it would be in the condo apartment segment. For this reason, NBC warns of potential “exacerbation” of oversupply in the future.
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Canada’s National Housing Agency Tightens Lending Ahead Of Forecasted Price Declines
CMHC, Canada’s state-run mortgage insurer, is tightening the qualifications for insured mortgages. The most notable impact is for debt service, which will see GDS fall to 35% and TDS to 42%. This should translate to a drop of 11% in maximum buying power. The organization is lowering taxpayer risk, ahead of anticipated price declines.
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Canadian Personal HELOC Growth Rate Nearly Triples In A Month
Canadian’s are back to raiding their home equity, with annual growth multiplying. The balance of credit secured by homes reached $309.32 billion in March, up 3.24% from a year before. Most of it was personal debt, which represented $272.16 billion, up 1.91% from last year. The total annual rate of growth is almost 2x the rate just a month before, and for personal HELOCs it is almost 3x.
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Toronto Real Estate

Toronto Real Estate Sales Crater Causing Prices To Remain “Virtually Unchanged”
Toronto real estate sales dropped abruptly, stalling price growth. The price of a typical home is now $870,000 in May, up 9.4% from last year. The benchmark price remains unchanged from the previous month, with the rate of year-over-year growth declining.
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Vancouver Real Estate

Vancouver Real Estate Prices Slide, With Typical Home Dropping $7,600 Last Month
Vancouver real estate prices are higher than last year, but falling from the month before. REBGV reported the benchmark price of a typical home hit $1,028,400 in May, up 2.9% from last year. This number, while higher on a year-over-year basis, is about $7,600 lower than the month before.
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