This Week’s Top Stories: Canadian Mortgage Growth Slows To 2001 Levels, and Real Estate Prices Are Synching Across The World

Time for your weekly cheat sheet on the most important real estate stories.

Canadian Real Estate

Canadian Mortgage Growth Grinds To A Halt, Slowest Growth Since 2001

Mortgage debt growth is slowing very quickly across Canada. Bank of Canada numbers show mortgage debt stood at $1.528 trillion, up $2 billion from the month before. This represents a 4.9% increase from the same time last year. The annual pace of growth is now at the slowest pace since 2001.

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Ka-Ching! Canadian Households Hit $2.13 Trillion In Debt, Adding Almost $3 Billion In April

Bank of Canada numbers show Canadians added nearly $3 billion of debt in April, setting a new record. The total balance of outstanding debt is now $2.132 trillion, up $2.964 billion from the month before. Households now owe $99 billion more than the same month last year.

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CMHC Finds Millions Worth Of “Ineligible” Mortgages At A Canadian Bank

Laurentian Bank is buying back another whack of mortgages. A routine audit by CMHC found $125 million in mortgages were inadvertently portfolio insured. The Crown corporation has cancelled the insurance, and the Bank is agreeing to buy back between $125 to $150 million of mortgages. This is in addition to the previously announced mortgage buybacks.

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Canada’s Credit Problem Is Different This Time, Just Look At The Money Supply

The Bank of Canada’s primary measurement of “cash” is seeing slowing growth. The annual rate of M1+ growth fell to 5.6% in April, 49.09% slower than the same month last year. This is the lowest pace of growth since December 2003. Slowing M1+ is a sign of slowing economic activity, especially after a rise in interest rates. People are dedicating more money to servicing and paying down debt, leaving less “cash” floating around.

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Global Real Estate

Global Real Estate Prices Are Synchronizing & Creating A Real Estate Supercycle… That’s Bad

IMF researchers found real estate prices in advanced economies are synching at both the city and country level. Similar monetary policies, and cross-border capital flows have pushed prices higher in many of these countries. That sounds like a good thing, but if you understand how real estate works, it’s not so great. Prices synching on the way up means across the globe real estate will likely move together on the way down. Just like synching on the way up boosted the global economy, moving lower together will make the next recession worse.

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