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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