Time for your weekly cheat sheet on this week’s most important stories.
Canadian Real Estate
Canada Is Considering A Risky Move To Fund More Mortgages With Foreign Capital
Covered bonds are an increasingly popular method banks use to fund mortgages. Virtually non-existent in Canada before the Great Recession, they now fund 9% of mortgages at the Big Banks. The bonds represent between 2.9% and 3.3% of assets at the banks that issue them, near the cap of 4%. Instead of forcing banks to grow their assets before rapidly issuing debt, regulators are mulling over a move to increase the cap. This could have some pretty interesting consequences.
Canadians Are Borrowing At The Highest Mortgage Rates In Over 5 Years
Higher mortgages rate are definitely showing up at the borrowing table. The average uninsured mortgage rate was 3.4% in April, up 63 bps compared to last year. The average insured mortgage rate was 3.54%, up 67 bps compared to last year. Paying more on interest means households can borrow less. The increase reduces a household’s buying power by roughly 6% compared to the same time last year.
Canadian Real Estate Prices Make The Smallest Advance Since 2009
Canadian home prices made insane gains last year, and are coming back down to reality. The price of a typical home across Canada fell to $636,700, up just 0.9% from last year. This is the smallest gain since 2009, when Canada was remerging from the Great Recession.
Canadian Real Estate Sales Drop Over 11%, BC Home To Biggest Declines
Canadian real estate sales continue to slide, especially in Western Canada. CREA reported 47,413 sales in June, an 11.12% decline compared to last year. The decline was led by markets in British Columbia, where Fraser Valley, Vancouver, and Victoria scored the biggest declines in sales.
Toronto Real Estate
Toronto Condo Prices Hit A New High As Inventory Rises Back To 2016 Levels
Toronto condo prices hit a new all-time high, as inventory swelled back to 2016 levels. The price of a typical condo rose to $502,400 in June, up 7.52% from last year. Even with the rise, sales fell to 2,234 sales, a decline of 5.3%. This sent inventory to 4,005 active listings, up 2.5% from last year. Despite the record high price, sales are falling, and inventory increased to the highest level since August 2016.
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This article is misleading. Number of sales are down due to inventory. Prices in most areas are up. e.g. Niagara prices are up 10% from 2017. GTA North, Pickering, etc. region prices are down.
The time to sell is this fall and into 2019 if there’s an economic downturn. If economy stays strong, then prices will creep up further.
That’s just not true. Log into CREA, SNLR across Canada is down over 8% on the YTD.