Time for your weekly cheat sheet on this week’s most important stories.
Canadian Real Estate
Insured Mortgages On Canadian Real Estate Fall Almost 10%
The balance of insured mortgages on Canadian real estate is falling. There were $456.35 billion of insured mortgages in January, down 9.37% from last year. The average cost of carrying these increased to 3.01%, up 8.27% from last year. Less insured debt, but at a higher carrying cost.
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Canadian Home Prices Fall For 6th Consecutive Month, First March Outside Of Recession
Canadian real estate prices fell for a sixth consecutive month. Prices in Canada’s largest city fell 0.31% in March, but remain 1.53% higher than last year. The index still shows prices are down 1.74% from the peak hit in September 2018. Only one month since the Great Recession printed a smaller annual gain.
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Canadian Household Debt Is Growing Much Faster Than Asset Values
The debt to asset (DTA) ratio in Canada is rising, indicating debt is rising faster than asset prices. The DTA hit 17.28% in Q4 2018, up 3.1% from the quarter before. This represents a 4.4% increase from the year before, the largest increase since 2009. As this level rises, households may be less flexible to deal with economic shock. The last increase of this size was last seen 2 quarters before the Great Recession. It increased very quickly from here last time around.
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Canadian Real Estate Prices Down 7% From Peak, But Still 52% Above G7 Peers
Canadian real estate prices are down, but still far above other G7 countries. Canadian prices fell 1.14% in Q4 2018, or 1.58% lower than the same time last year. Prices are now down 7.17% from the peak reached in Q2 2017, but are still up 83.8% from 2005. The cost of a home increased 53.3% more than Germany, home to the second fastest rising prices in the G7.
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Toronto Real Estate
Toronto Real Estate: Detached Homes See Demand Fall In The City, Rise In The 905
Toronto detached real estate prices are flat, and demand is rising in the suburbs but falling in the City. TREB reported the cost of a typical detached home hit $923,000 in March, up 0.08% from last year. The price of a detached home is virtually unchanged across the board.
Relative demand increased in the 905, while falling in the City of Toronto proper. Across TREB there were 2,320 sales in the month, up 3.72% from last year. The City of Toronto represented just 671 of those sales, down 4.95% from last year. Inventory also experienced a similar trend. TREB active listings fell to 9,361, down 3% from last year. The City represented 1,750 of those listings, up 6.57% from last year. Prices aren’t doing a whole lot, but sales are dropping in the city, and increasing in the suburbs. Inventory is also rising in the city, while falling in the suburbs.
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Vancouver Real Estate
Greater Vancouver Detached Real Estate Sales Just Keep Printing New Lows
Greater Vancouver detached real estate prices tumbled while sales dropped and inventory popped. REBGV reports the price of a typical home fell to $1,437,100 in March, down 10.5% from last year. Sales of detached homes fell to 529 units for the month, down 26.7% from last year. Inventory reached 5,649 units for sale, up 11.37% from last year. The sales decline makes it the slowest March in over 20 years of data. The rise in inventory makes it the highest level since 2014.
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Greater Vancouver house prices still has a long way downwards to go before affordability returns. The stress test saved a lot of young or potential new home buyers from going under water. Sellers are not yet convinced to lower asking prices as this great run up in real estate has come to an end. Credit cycle is also tightening which will make it more difficult for stubborn sellers next year. Until house price to income ratio normalizes this decline will continue in its current environment.
Canada is screwing it self by allowing housing prices to inflate. Very soon talented young people will realize they are paying high taxes to keep boomers alive and taking on million dollar mortgage and starving their own family for a house the boomer bought for 200k. Not to mention high housing cost will lead to increase in cost of living and labour.
And worst of all, will create huge political instability. Canada have one of the lowest population densities in the world. This needs to stop or we are going to turn into one of those South American counties or European P.I.G countries
If it makes you feel any better we’re way past the “Allowing the bubble to inflate”. That was 2005-2019, they could have put in measure when Vancouver houses went from 350k to 750k but the wealth effect was too good to pass up.
Next up? “Pushing on a string” followed by “Trying to reinflate the bubble”. That’s until inflation becomes a hot political issue.
A great time to find some bargains and buy!