Time for your cheat sheet on this week’s top stories.
Canadian Real Estate
Canadian Home Building Investment Has Officially Gone From A Correction To A Crash
Canadian home building investment has officially gone from a correction to a crash. Seasonally adjusted real residential construction investment fell to $8.4 billion in September. This is a drop of 22.1% from the peak reached in April. Declines of more than 20% in 12 months are considered to be a “crash.”
The trend is likely contributed to more home builders delaying projects. Unpredictable labor and material costs have made it difficult to price their projects. Earlier this month we heard the industry say inflation has delayed over half of projects. Rising rates should also fix this, as it cools some material demand.
Canadian Mortgage Borrowers Are Betting Against Rising Rates, Despite Warnings
The majority of Canadian mortgage borrowers are opting for variable rates. Lenders advanced $24.6 billion in variable-rate mortgage debt in August. This represents 54.3% of mortgage funds they delivered in the month, more than double the rate seen last year.
This segment was just a minority of lending prior to the pandemic, but the low cost has become a big attraction. Experts warn the overnight rate will rise next year, which means the variable rate mortgages won’t be as cheap as thought.
Mutiny At Canada’s Largest Real Estate Board? Brokers Want An Inquiry Into MLS Data
Brokers at Canada’s largest real estate board are demanding a management inquiry. TRREB, Toronto’s real estate board, is launching a for-profit entity. As a non-profit, they’re restricted from pursuing for-profit activities, such as data monetization. This has irked brokers who claim they haven’t been notified. The author of the letter demands to know if any leadership will profit from the decision.
The Threshold To Being One Of Canada’s Wealthiest Households Has Been Falling
Making enough to be one of Canada’s top-earning households is easier than it used to be. The threshold for a household to be considered in the top 0.1% hit $790,000 in 2019, down 4.4% from five years before. Similarly, the threshold to being in the top 0.01% fell to $2,973,200 in 2019, down 18.2% from 5 years prior.
No, this isn’t because the country’s wealthiest are making less. Canada’s population boom is mostly in the lower-income brackets. The top 0.10% of the population is now larger, including more people with a wider range of incomes.
It Now Takes Up To 36 Years To Save A Down Payment For Canadian Real Estate: NBC
Canadian home prices are still soaring, as are the hurdles to ownership. National Bank estimates it now takes a median household 9 years to save a downpayment. That’s the weighted average for all cities — Toronto is 28 years and Vancouver hit 36 years. Nearly everywhere in Canada is now significantly elevated from historic norms. This either means labor is underpriced or housing is overpriced.
Canadian Border Agents Seized $166 Million In Undeclared Cash From Travelers
A lot of people are trying to sneak undeclared cash into Canada these days. Canada seized over $166.13 million in cash from travelers who failed to disclose the money. Importing more than $10,000 in currency requires a declaration. There is no consequence for importing large sums of money, but people are still hiding it upon entry. Sometimes even in false containers — like any normal person would.
Commercial Real Estate Is Still Contracting In Tech Hubs, Yet To Stabilize: CBRE
North American commercial property is in a contraction phase of the market cycle. CBRE, a commercial property brokerage giant, released its Tech 30 market assessment. The 30 biggest tech markets are still seeing office space contract. This makes it an ideal time to lease, but not so much hold. Their research shows it took the market 2 years from this point to recover during the last cycle.
Canadian Interest Rates Started To Rise At This Rate Of Unemployment Last Cycle: BMO
Think the unemployment rate is still too low for higher interest rates? Think again. A BMO analysis shows the unemployment rate at this level when interest rates last began to climb. The unemployment rate is also at its pre-pandemic level when the overnight rate was 7x higher. This supports the idea that the central bank has the right environment to cut stimulus.
RBC Sees The Bank Of Canada Hiking Rates During The Busy Spring Real Estate Market
Soaring inflation will force the central bank to hike rates. Canada’s largest bank sees this happening in April, the first month the BoC said it was a possibility. This would put it smack at the beginning of the busiest time for home sales. Potentially good news for home buyers, but bad news for sellers.
Australian Real Estate
Australian Real Estate Prices Are Inflated By Money Laundering, Hears The Senate
Australia is in a money-laundering inquiry and hearing how it impacted home prices. Transparency International Australia tabled a study on housing being used to launder money. Due to weak global standards, people with big red flags encountered little to no scrutiny.
They use high-profile cases to highlight their point. One was a Sudanese general who bought a $1.5 million home in his son’s name. He had been earning $60,000 at the time. A Malaysian banker convicted in Singapore bought $8.2 million through holding companies. The biggest case was a Chinese billionaire who bought A$37 million in homes, some of which they never used. He was recently banned from Australia on national security grounds. Homebuyers are competing for housing used by launderers to move money.
