Time for your cheat sheet on this week’s top stories.
Canadian Real Estate
Canada’s real estate industry complained about mortgage stress testing being too burdensome. However, the current data shows it may have been insufficient. BMO Capital Markets warns a significant share of borrowers weren’t stress tested for rates this high. They don’t see it as a problem at this point, but there isn’t much more of a buffer for many recent home buyers.
Former Bank of Canada governor Stephen Poloz dropped by virtually to chat. The team asks him about home prices, the upcoming recession, and inflation problems. He also tells us about the Fourth Industrial Revolution, which is about to change everything. Not always for the better, in the short-term.
Greater Toronto new home sales were largely bought by real estate investors. Now that rates are surging higher, they’ve completely dropped out of the market. Single-family home sales across Greater Toronto dropped around 90%. Home prices are falling as inventory reaches healthier levels. However, new project launches are tapering, meaning it’s unclear how long this can last.
Greater Toronto real estate prices have finally made a year-over-year plunge lower, and it’s going to have a significant psychological impact. The price of a typical home across the region fell to $1,098,200 in October, down 1.34% ($15,600) from last year. This was the first annual decline in four years, and prices are now down 17.3% (-$236,800) since peaking in March 2022. People had been dismissing price declines with “at least it’s higher than last year.” That’s no longer the case.
Saving our Stephen Poloz interview for another time? Here are five of the most important insights he shared.