This Week’s Top Stories: Canadian Real Estate Compared To Past Bubbles & Lender Losses Surge

Time for your cheat sheet on this week’s top stories.

Canadian Real Estate

Canadian Mortgage Lenders See Larger Loan Losses, Average Value Soars 68%

Canadian mortgage lenders are reporting significantly higher average loan losses. The average loss reached $96,000 in Q3 2022, up a whopping 68.4% (US$39,000). This indicates liquidity is falling for sellers, which is expected as interest rates rise. While the share of defaults is still low, a loss of liquidity typically precedes a reversal of that trend.

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An “Ultra Violent Cult” Is Stealing Cars & Using Canadian Real Estate To Launder: FINTRAC

Canadian intelligence may have found another transnational crime group laundering through housing. A FINTRAC analysis into “Black Axe” found the group cornered the market on car theft rings and exports. They found 1 in 5 suspicious transactions associated with the group involved real estate. Laundering in real estate doesn’t just invite more crime into your neighborhood. It pushes prices higher.

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The Current Economic Cycle Is Similar To Previous Bubbles, But Which One?: BMO

Canada’s real estate bubble is similar to previous bubbles, but which one? A breakdown from BMO Capital Markets shows there’s 70s-style inflation, a late 80s housing bubble, and post-war amounts of government debt. This time is different, but only because history doesn’t repeat—we just make similar mistakes.

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Canadian Real Estate Prices Slip Once Again, Worst October For Sales Since 2010

Canadian real estate prices continue to slide, dropping another 5-figures last month. The benchmark price of a home reached $735,400 in October, down 1.4% (-$10,600), with prices now 0.8% (-$6,000) lower than last year. It’s not a big drop at first sight, but it wiped out some of those massive gains seen at the beginning of the year.

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