Time for your cheat sheet on this week’s most important stories.
Canadian Real Estate
Canada’s Housing Agency Warned First-Time Buyers. Now They’re Getting Slaughtered
Condo buyers were warned not to make the smallest downpayment possible, but some did anyway. Now they’re facing the potential of negative equity. In Toronto, buyers of a benchmark condo in May would have lost 31.93% of their downpayment by June. In Vancouver, they would have lost about 16.6%, but more in the City. That would leave just 3.4% and 4.1% equity respectively. Despite the claims of a “hot” market since the pandemic, prices have been sliding since the onset.
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Canadian Cities Slow New Home Building, But Toronto Starts Rip Over 40% Higher
Housing starts dropped across most cities, but Toronto was a major exception. There were 177,825 new home starts seasonally adjusted at the annual rate in Q2 2020, down 14.2% from last year. In Toronto however, that number jumped to 44,210, up 40.9% over the same period. While the rest of the country slows down, Toronto’s condo boom is kicking into a multi-year high.
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Bank Of Canada: Business Optimism Falls To Great Recession Levels
The Bank of Canada’s latest business outlook survey shows businesses expect things to get worse. The business sentiment score reached -7 in Q2 2020, the lowest since 2009. More important is the rate of deterioration, which showed a rapid drop into the end of Q2 2020. Typically a deterioration in sentiment precedes adjustments to spending and staffing, which is when things get worse for the general economy.
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Canadian Consumer Credit Is Contracting For The First Time Since The 1980s
Canadian household debt has actually been accelerating, but it’s entirely due to mortgages. The balance of household debt reached $2.29 trillion in May, up 3.6% from last year. Consumer debt however has been seeing negative growth, the first time since the early 1980s. This means virtually all credit growth in Canada is now driven by mortgage borrowing.
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Toronto Real Estate
Toronto Real Estate Prices Slide From Peak High, As Growth Rapidly Cools
Toronto real estate sales may be back to almost normal levels, but prices peaked in April. Both TRREB and the City of Toronto benchmark price have slid since May. The rate of price growth has also decelerated in both segments as well. Most forecasts had stated they believed the market would see prices slide into the second half of the year. That’s exactly what appears to be happening so far.
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Vancouver Real Estate
Vancouver Real Estate Sales Are Back, But Prices Still Falling From Peak
Greater Vancouver real estate sales are almost at last year’s levels, but prices are slipping. The region reported 2,443 sales in June, up 17.62% from last year. Prices however made an annual peak in March, and have been sliding since. The all-time high was in June 2018, and prices are getting further away from that.
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