This Week’s Top Stories: Government Cash Sends Canadian Real Estate Prices Higher, and Mortgages Are Now Mostly Interest Payments

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

Canadian Real Estate

Canadian Real Estate Prices Reach A New All-Time High Ahead Of Government Cash
Canadian real estate price growth has stopped decelerating, at least for now. The C11, a price index for Canada’s 11 largest markets, showed an increase of 0.41% in August. The index is now 0.61% higher than the same month last year. In case you didn’t notice, that means over two-thirds of price growth was in August alone. Prices are back to an all-time high, with only a few markets not marching higher.
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Canadian Real Estate Sales Rise 5%, Falling From Peak 2019 Growth
Canadian real estate sales made an unusual drop from the month before, but are up from last year. CREA reports 43,478 sales in August, down 9.0% from the month before. This represents an increase of 5.7% compared to the same month last year. The monthly decline is ~50% higher than typically observed. Overall, the market still displayed growth, but the abrupt volume drop is worth noting.
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Canadian Households See Borrowing Rates Fall To 14 Month Low
Cheap money is returning to the Canadian market, as borrowing rates fall to the lowest level in years. The effective interest rate paid by households fell to 3.7% on September 6, down 0.8% from the month before. The effective rate is now down 2.89% from a year before, and down 7.96% from the 2019 peak. Money hasn’t been this cheap to borrow since June 2018, and it’s trending even lower.
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Canadian Mortgages Are Now So Large, The Benefit Of Low Rates Is Minimal
Supersized Canadian mortgages are no longer benefiting from super low rates. Over $93.15 billion in payments were made on mortgage debt in Q2 2019, up 7.70% from the same quarter last year. Of that total, over $53.55 billion went towards interest, up 14.66% over the same period. The rate of growth for interest is rising at twice the rate of total payments. Now a total of 57.49% of money paid towards debt servicing went towards interest – the highest level since 2014.
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Toronto Real Estate

Toronto Condo Prices Reach A New All-Time High, As Sales Jump
Toronto condo prices pushed higher last month, accompanied by a jump in sales. TREB reported the condo apartment benchmark price reached $545,900 in August, up 7.97% from last year. There were 2,067 condo apartments sold in August, up 3.35% from last year. Prices are at a new all-time high for condos, but sales are under the volumes we observed just a few years ago.
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Vancouver Real Estate

Vancouver Condo Prices Are Where They Were Almost Two Years Ago
Greater Vancouver condo apartment prices are falling, but sales are seeing improvement. The benchmark price reached $654,000 in August, down 7.4% from last year. There were 1,116 sales for the month, up 8.87% from last year. Prices are now back to the same level as two years ago. Sales, while improved from last year, are still 16.9% below the 5-year median number for the month.
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