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This Week’s Top Stories: Money Laundering and Home Equity Are Now Important Parts of The Canadian Economy

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

Canadian Real Estate

Bank Of Canada Staff Warn Home Equity May Be Concealing Financial Distress
Bank of Canada staff have released an analytical note, examining new home equity data and its growth. Stand-alone home equity line of credit (HELOC) debt fell to $63 billion in Q4 2018, down 7.6% from the year before. Combined HELOC-mortgage debt reached $509 billion in the same quarter, up 6.7% from the year before.

To contrast, traditional mortgages are grew at just 2% during the same period. Households are increasingly opting to combine their HELOC with their mortgage. This means people are paying higher mortgage rates, for the ability to withdraw mortgage payments as HELOC debt soon after making them.
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Canada Would Be In A Recession Without Money Laundering
Canada has a money laundering problem, and it’s officially larger than the growth rate of GDP. The BC government estimates that $41.2 billion was laundered in a year, up 9% from 5 years prior. This represents 2.13% of GDP, a fairly consistent number over a 5 year period. From 2011 to 2015, the amount laundered is estimated at over $200.5 billion. The Canadian economy may now be so dependent on money laundering, that a crackdown would put a serious dent in growth.
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Canadian Real Estate Prices Stall In April For The First Time Outside Of Recession
The Teranet-National Bank of Canada House Price Index (TNB HPI) made a historic move last month – and not a good one. Home prices on the index were virtually flat in April, up 1.24% from the year before. Price are now down 1.77% from the peak reached in September 2018. This was the eighth consecutive month the index hasn’t seen an increase on a monthly basis. It’s also the first April to not see a monthly increase in the past 21 years, outside of recession.
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Recovery Or Dead Cat Bounce? Canadian Real Estate Sales Rise Unexpectedly
Canadian real estate sales made a sudden rebound from last year, but were still weaker than usual. CREA reported 48,461 sales in April, up 4.2% from the year before. Compared to 2017 however, sales are still at a 9.96% decline. The increase was mostly a bounce after the large abrupt decline last year. Over the past 5 years, 2018 was the only April with fewer sales than last month.
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Toronto Real Estate

Toronto Detached Real Estate Sales Rise, But Still Second Weakest April In 10 Years
Toronto detached real estate sales are higher than last month, but still weak compared to normal volumes. TREB reported the price of a detached home hit $934,500 in April, up 1.04% from last year. There were 4,173 sales in the month, up 20% from last year. The increase may look like a huge increase, but last month was still the second weakest April since 2009.
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Vancouver Real Estate

Vancouver Detached Real Estate Sales Drop To 20 Year Low, Prices Roll Back 3 Years
Vancouver detached real estate is seeing prices and sales drop. The price of a typical detached home in Greater Vancouver fell to $1,425,200 in April, down 11.1% from last year. Only 586 detached sales occurred last month, down 27.02% from last year. The decline in prices put them right back where they were 3 months ago. The decline in sales makes it the fewest for the month of April in at least 20 years.
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