Time for your cheat sheet on this week’s top stories.
Canadian Real Estate
Canadian Real Estate Prices Will “Rip” Higher Due To The Fed: Scotiabank
One of the country’s largest banks sees government policy driving home prices higher. Scotiabank warned investors that Federal policy is being rolled out to stimulate demand. Meanwhile, it’s contrary to the Bank of Canada (BoC) goal of slowing demand to temper inflation. In the near-term, the bank expects home prices to “rip” higher, as the BoC tries to keep up.
Canada Quietly Rolled Back Parts of Its Foreign Buyer Ban After Just 86 Days
Canada made headlines around the world for banning foreign real estate investors. Just 86 days later, they quietly rolled back many of the restrictions to “help” with housing. Non-resident investors can resume buying vacant land, and take larger stakes in private companies. Temporary residents are also seeing regulations loosen, dropping mandatory tax returns and residency. Instead, temporary residents can buy a home as long as their visa has 183 days or longer left at the time of purchase. It’s getting hard to argue Canada isn’t trying to stimulate demand before Spring.
The Canadian Mortgage Variable Rate Boom Is Now A Bust
Canada’s fling with variable rate mortgages is over. Fixed rate interest costs are falling, and borrowers have begun to opt for more predictable payment terms. Just last year, variable rate loans made up the majority of new loans. That’s changed as variable rate borrowers were hit with the fastest climbing rates in a generation.
Canadian Mortgage Rates Pull Back Ahead of Spring Market
Canadian mortgage rates are pulling back, just in time to help fuel the Spring market. A 5-year fixed rate mortgage fell for a second consecutive month in February. The bank liquidity crisis last month likely drove March numbers even lower. Costs have climbed significantly over the past 12-months, but the climb has been brief. If they begin to reverse course before the mindset cools, expect inflation and prices to ramp up again. Probably not what the BoC is hoping to see, but it’s a very big risk at this point.
Toronto Real Estate
Greater Toronto New Home Prices Are Finally Coming Down
Greater Toronto new home prices have been sticky, but they’re finally starting to slip. Over the past year, home prices have dropped for both single-family homes (-5.4%) and condo apartments (-5.5%). Rising inventory and falling sales indicate further risk is slanted to the downside.
Global Real Estate
Global Banks May See Large Losses On Commercial Property: Oxford Econ
Global banking issues might sound like a repeat of 2008, but it’s not even close at this point. Global forecasting firm Oxford Economics’ latest analysis reminds investors that not every bank failure is a financial crisis. The economy is in a much different place than it was in 2008, and is handling the liquidity crisis well. However, that doesn’t mean it’ll be painless—they see big losses for commercial real estate. It’s not often that mega institutions default on loans, and more than a handful show stress.
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This is not complicated the banks over invested in housing and now they have no equity in their holdings ..these paper shuffles need to stop ..the banks will collapse because of greed please stop the paper shuffles get back to reality
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