This Week’s Top Stories: Delinquencies on Toronto and Vancouver Real Estate Rise, and So Do Mortgage and HELOC Payments

Time for your weekly cheat sheet on this week’s most important stories.

Canadian Real Estate

Toronto And Vancouver Real Estate See Mortgage Delinquencies Start To Climb
Mortgage delinquencies in Toronto and Vancouver are off an of all-time low, especially on larger loans. Delinquencies on mortgages over $400,000 at origination in Toronto CMA increased 28.75% from the low observed in Q4 2017. In Vancouver, the same segment of loans increased 11.11% from the low observed in Q2 2018. The overall rate of delinquencies remains relatively small, but these numbers aren’t heading in the right direction.
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Canadian Borrowing Rates Are Climbing, But Growth Is Slowing
The typical rate consumers pay to borrow from institutional lenders is climbing. The typical rate on a household loan reached 3.99% on February 15th, up 11.14% from a year before. This is the fifth week it’s stalled at this level, the highest number since 2009. Prior to 2016, it was very rare for the rate to stall this long – higher or lower.
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The Dollar Volume Of Canadian Real Estate Sales Off To A Weak Start In 2019
Declines in real estate sales are putting a drag on dollar volumes. CREA reported $10.9 billion in sales in January, down 9.4% from last year. The declines dragged the month to the second weakest number in at least 3 years. The weakest was this past December. The BC market reported some of the worst numbers, leading the market lower.
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Canada’s Largest Real Estate Markets See Mortgage And HELOC Payments Soar
Canada’s largest real estate markets are seeing homeowners hit with larger mortgage and HELOC payments. Toronto households with a mortgage are paying an average $1,710 in Q3 2018, up 5.95% from a year before. Vancouver is up to $1,734, up 6.34% from same quarter last year. Montreal was a more conservative $1,081, up 3.44% from the year before. A similar trend was also observed with HELOC payments, which had an even higher pace of growth.
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Toronto Real Estate

Only 1 In 10 New Homes In Greater Toronto Were Bought Last Month
Greater Toronto new home sales are cooling as inventory keeps rising. There were only 1,362 sales in January, up 14% from the year before. That sounds good, until you realize last year had the fewest sales since 2009. A major difference this time is inventory stood at 15,530 new homes in January, up a massive 32% from last year. The result is a sales to listings ratio of just 8.77%, meaning prices are too high for the rate of absorption. If sales don’t pick up soon, expect the excess inventory to push new home prices lower.
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  • Zenity 5 years ago

    What most people don’t realize about high housing price are the following:

    1. When local wages are not increasing but housing cost increase. Its actually a net negative for the economy as a whole. It drains resources from all other industries. it’s simple, if young families are forced to save a lot of money for their down payment they are not spending on dining out, new cars new clothes etc. So consumer and retail industry will be hit first. Now once they have enough for down payment their mortgages will continue to drain their income, they have less to spend on their children and other services, for example a new car. High housing price basically becomes a leech that sucks the life blood from other industries. Remember now, no national became advance industrial powers by being good at piling low tech wood and concrete together. For Canada to compete internationally we need high tech industry not low tech real estate.

    2. Toronto is not Vancouver, Toronto is Canada’s biggest talent reserve. We are forcing young professionals with in demand skills to make a choice. People with choices leave first. Losing native Canadian talent is a horrible hit for Cansda. Canadians subsidie our education system heavily, so when our young people leave Toronto for the states not only we lose all the 30years of taxes they will pay, our investment in their education is basically given to the states for free. And for what? so we protect speculators? most people who are not speculators don’t care if their homes on paper value went down.

    3. We have a longer living, ageing Be health care depend population. We need young professionals to support our tax system. Our younger generation will soon realize they are young and healthy. All their taxes are paid to support these older folks. When the older generation bought their homes for 250k and now young families have to take on million dollar mortgages. They will realize we are draining their life blood. Basically current Canadian setup is to saddle young families with high housing cost only the older generation benefits from and pay taxes to keep them alive. No wonder they want to leave, in fact I will tell my own son to leave Canada if housing prices become unaffordable. I’m sorry no one should get screwed like our younger generation.

    I waste too much time here, people who make decisions don’t care about the future. Most of them probably have skin in the real estate game. Greed is ruining our country, in 10-20 years Canada will successfully push all out needed talent away and the whole country will become third world. Between taxes and high housing cost I don’t know why people with choice would want to stay. Toronto is not Vancouver, we lose Toronto’s talent pool we lose Canada’s future. We have so much land there is no justification for these house prices. We should use what we have plenty of (land/space) to trade / attract / retain tax generating young talent. Not allowing high housing cost to push our young tax paying talent to the states. In case you don’t know this, they are competitors and we lose twice when our people leave.

  • Bernie 5 years ago

    Zenity, you aren’t wrong. I’m a US citizen living in Toronto. I moved here to be with my girlfriend at the time, and now my wife, in 2014. I am going to wait and see what transpires in the next 5 years or so but I’m already trying to plan an exit strategy back to the US.
    There are benefits to living here, like the free (I know, I pay taxes) healthcare. It proved very beneficial for our first child who has had a number of allergist and orthopedic specialist appointments. I just feel lucky that she’s now a normal kid with some allergies, but those resources are fantastic for a growing family. Also I wonder about the cost of college in the states and if it can even be afforded to an upper middle class family. Its much cheaper to send a kid to college in Canada.
    But really my decision on where to take my family will rely heavily on the housing market and economy. If Toronto rolls back a little more in the next year maybe we will stay. For me it’s all about quality of life. What’s the point of having a top 5% household income if everything goes towards your home. That’s no way to live, I want to have great experiences with my family, not subsidize some boomer’s retirement. This housing market went crazy the last few years. Here’s hoping it returns to normal.
    Oh, and as a relative newcomer to Toronto, this city is not special. There is no architecture, it’s ugly as hell with the street car cables running everywhere, and the traffic is miserable. The best part is the availability of ethnic food. It seems to me to be a landing pad for rich immigrants. That part is special, the number of young kids driving $100k+ cars.

  • FBoomers 5 years ago

    The bernie guy is right, in my neighbourhood seeing young asian kids in 300k cars is the norm. The shoebox i rent costs almost 500k but my rent is cheap due to earning in USD.

    Canada is basically a money laundering front for asian bribe money.

    As a high income millenial I have been planning my exit for a while. Why should I pay such high taxes while foreigners pay 0 due to being “students” and washing daddys bribes.And I sure as hell am not going to subsidize some boomers retirement / asian speculators safety deposit box at these insane prices.

    I will actually be moving to asia and doing the same thing as these foreigners do but in their jurisdiction. My income is mobile lol.

    Thanks for the subsidized education and say goodbye to 30 years of taxes from me.

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