Top Stories

This Week’s Top Stories: Canadian Households Get Closer To A Monster Debt Record, While New Home Demand Drops

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

Canadian Real Estate

Canadian Households Are Just 0.01 Points From The Mother Of All Debt Records
Canadian households are paying a near record amount to service their debt. The debt service ratio (DSR) reached 14.87% in Q4 2018, up 5.46% from last year. This is just 0.01 points below the record high, reached in Q4 2007. Despite being near a record low for interest rates, almost half of these payments are going to interest on the debt.
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Canadian Real Estate Demand Slips Further In February
The ratio of sales to new listings is dropping, indicating slipping demand for real estate across Canada. The ratio fell to 46.2% in February, down 2.4% from last year. The slide was mostly led by major markets in BC, where sales are at multi-year lows. The ratio indicates the market is “balanced,” but has been slipping closer to a buyer’s market.
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Canadian Reverse Mortgage Debt Has Almost Tripled In 5 Years
House-rich, cash-poor Boomers are turning to reverse mortgage debt. The outstanding balance of reverse mortgage debt reached  $3.51 billion in January, up 30.44% from last year. The annual pace of growth is slowing, but still huge – and likely to get larger with Canada’s aging population.
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Toronto Real Estate

Toronto New Home Sales Fall To Lowest Level Since Great Recession
Toronto’s new home sales are falling, as demand slips to the lowest level since the Great Recession. There were 1,411 sales in February, down 33.14% from last year. Most declines are in condo apartments, which are showing weak absorption. The drop in sales is the fewest we’ve seen for February since 2009.
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Toronto Condo Prices Reach All-Time High, Sales Drop To 6 Year Low
Toronto condo prices reached an all-time high according to the proprietary benchmark price. TREB reported the benchmark for condo apartments reached $516,500 in February, up 7.92% from last year. There were 1,536 sales in February, down 5.7% from last year and is the slowest February since 2014. Unlike many previous highs, the benchmark was the only price indicator at a record high. Both the median and average sale price are printing below their records, seen last year. This may be a sign the low volume of sales have distorted the benchmark, which is known to lag the market.
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Vancouver Real Estate

Vancouver Condo Pre-Sales Hit A Multi-Year Low For Absorption
Greater Vancouver condo pre-sale sales are falling, leaving more inventory than expected.  Only 15% of new units released were absorbed in February, down 78.57% from last year. This is the lowest level going back to data available up to 2017, and likely earlier. The absorption rate means the market is now a buyer’s market, when prices are expected to decline.
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Vancouver Condos See Biggest Decline In Prices And Sales Since 2009
Vancouver condo resales are also experiencing a much slower market. REBGV reported the benchmark price fell to $660,300 in February, down 4% from last year. Sales of units fell to 759 units, down 35.9% from last year. The price decline is the largest seen since 2009, and it’s also the fewest units sold since then as well. Recession level sales in a non-recession is interesting.
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