This Week’s Top Stories: The Cost of Borrowing For Real Estate Is Rising, While Inventory Jumps In Toronto and Vancouver

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

Canadian Real Estate

Canada’s National Housing Agency Is Forecasting An 11% Drop In Buying Power
The Canada Mortgage and Housing Corporation (CMHC) is forecasting a decline in borrowing power. Analysts from the Crown Corp are projecting the 5 year fixed rate will rise to 6.5% in 2020, a 21.72% increase from today. That could translate to a 11.69% drop in the size of mortgage you were expecting to get by then.
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Canadian Banks Raise Borrowing Rates To Highest Levels Since The Great Recession
Banks are raising the cost of borrowing a little faster than interest rates are rising. The effective rate for households reached 3.91% on October 26, an increase of 2.62% from the week before. Compared to last year, consumers are facing a 14% increase in borrowing costs. That’s right, almost a fifth of the increase in costs was over that one week.
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BoC: Canadian Real Estate Affordability Improved This Year
Believe it or not, Canadian real estate is actually more affordable. The Bank of Canada estimates borrowers need 34.8% of their income in Q2 2018, down 1.97% from the last quarter. The ratio is down just 0.57% from the same quarter last year though. Housing is more affordable across the country, just not by a whole lot.
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Canadian Real Estate Sales Likely To Drop Further As Money Growth Slows
The M1+, a broad measurement of Canadian money, is seeing slowing growth. The M1+ increased 4.7% in September, growth having decelerated 44% from last year. We’re now at the slowest pace of growth for September since 2003. Slowing of this measure typically precedes a slowdown in large asset financing. Since people usually finance their home, that could mean a further slowdown in sales.
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Toronto Real Estate

Toronto Real Estate Board Sales Jump, Most October Inventory Since 2012
Toronto real estate prices are moving higher, even with an increase in inventory. The price of a typical home reached $766,300 in October, up 2.64% from last year. Meanwhile TREB is reporting 18,926 active listings, up just 0.35% from last year. However, the increase makes it the most inventory for an October since 2012. Finally, there’s plenty of inventory. Now, can people afford to buy it?
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Vancouver Real Estate

Vancouver Real Estate Sales Hit 6 Year Low, Inventory Rises To 4 Year October High
Greater Vancouver real estate prices are decelerating, while inventory pops to new highs. The price of a typical home cost $1,062,100 in October, up just 1% compared to the same month last year. Sales fell to 1,966 for the month, down 34.9% from last year. The board noted that sales are 26.8% lower than the 10 year average. Inventory meanwhile reached 12,984 active listings, up 42.1% from last year. This marks the most inventory for the month of October in 4 years.
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