This Week’s Top Stories: Over Half of Toronto and Vancouver Can’t Afford A One-Bedroom Rental, and Foreign Buyers Are Disappearing

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

Canadian Real Estate

Canadian Real Estate Sales Make A Small Gain, Weighed Down By Vancouver
Canadian real estate sale made a small climb this year. There were 47,755 sales according to CREA, up 0.30% from last year. The number is higher than the year before, but the number fell 10.47% below the median for the past 5 years. It’s an improvement, but still not quite back to normal.
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Canadian Household Borrowing Rates Have Nearly Fallen Back To Last Year’s Levels
Borrowing rates are falling, but are still far from levels seen during the real estate boom. The typical household effective borrowing rate fell to 3.75% by July 5, down 1.31% from the month before. The rate is still up 1.63% from last year though, on top of the 21.78% increase it made from the year before. Rate growth is softer, but we’re far from falling back to where we were two years ago.
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Canadian Mortgage Delinquency Rates Are 8x Higher At Alternative Lenders
Mortgage delinquency rates are much higher in a rarely discussed segment of lender. Over 75% of Canadians hold their mortgages with a bank, which has a delinquency rate of 0.24%. This number jumps up to 1.93% at mortgage investment entities (MIEs). MIEs are a small segment of the total market. However, they are overrepresented in newer mortgages in Toronto and Vancouver.
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Canadian Cities Are Now Too Expensive For Minimum Wage Employees To Rent
Canadian real estate is now so expensive, minimum wage employees can’t afford to rent. The average one-bedroom now requires a wage of $20.20 per hour to be considered affordable. In 25 of the country’s 36 largest cities, there are zero neighborhoods considered affordable to local minimum wages. Yes, Canada has officially become a country where working full-time is not enough to live on your own. Must be because they’re running out of space.
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Toronto Real Estate

Over Half Of Toronto Can’t Afford To Rent An Average 1 Bedroom By Themselves
Toronto is notoriously expensive – that’s not news. However, half of the city couldn’t afford a one-bedroom if they had to go at it on their own. The average one-bedroom requires a wage of $27.74 per hour, or $57,700 per year – far above the median in the region. Maybe there’s a tiny poor area you can move to? If you make less than $20 per hour, or $41,600 per year, there’s only four neighborhoods affordable. Only two of them are in the City of Toronto.
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Vancouver Real Estate

Half Of Greater Vancouver Can’t Afford A One Bedroom Rental
Less than half of Greater Vancouver can afford a one-bedroom rental apartment today. A new study revealed a wage of $26.72 per hour, or $55,600 per year, is required to afford an average one-bedroom in the city. Those making less than $20 per hour can only afford a one-bedroom in six neighborhoods. Only one is in the City of Vancouver proper.
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US Real Estate

Foreign Buyers Of US Real Estate Drops Over 31%, Fewest Chinese Buyers In 10 Years
Foreign buyers aren’t as interested in the US real estate market these days. NAR reports only 183,100 homes were bought by foreign residents in the past year, down 31.37% from last year. Foreign buying of US real estate peaked in 2017, and the annual number of sales has fallen 35.64% from that peak. The past year is one of the slowest for foreign buying in years.

The reduction in foreign buyers provides an interesting insight to Canadians. The US created no new restrictions on foreign buyers in 2017. However, the reduction they observed is similar to the volume declines seen in Canada. This lends more weight to the fact local measures did little to reduce foreign buyers in Canada. Overseas measures such as capital export controls likely played a bigger role.
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