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This Week’s Top Stories: The US Fed Thinks Canadian Real Estate Buyers Are “Exuberant,” and The CMHC Says Toronto and Vancouver Are Vulnerable

This Week's Top Stories - The US Fed Thinks Canadian Real Estate Buyers Are Exuberant, and The CMHC Says Toronto and Vancouver Are Vulnerable

Time for your weekly cheat sheet on the most important stories in real estate.

Canadian Real Estate

US Federal Reserve Indicators Show Canadian Real Estate Buyers Still “Exuberant”

Exuberance in the Canadian real estate market is lower than it was last year, but is still very high. The US Federal Reserve Bank of Dallas monitors real estate markets across the world. The bank looks for signs that prices are accelerating faster than fundamentals warrant. If a market rises too quickly, it passes their “critical threshold.” If it passes the critical threshold, and remains there for 5 quarters, the market is “exuberant.” That’s banker speak for a “bubble.” Canadian real estate has been in this territory for an 11th straight quarter.

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CMHC Finally Says Vancouver Is Too Expensive For Local Incomes. Toronto Overvalued

The Crown corp in charge of mortgage liquidity is sounding alarm bells in a few markets. The CMHC is warning Toronto and Vancouver are seeing the cheapest units rise in price, while higher priced units are stalling. The rising floor of prices is resulting in a spike in their “overvaluation” indicators.

The agency also notes Vancouver is facing affordability challenges for “households with average local incomes.” Hm… what could that mean? 🤔

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Canadian Mortgage Defaults Haven’t Been This Low Since 2006

Record high home prices aren’t causing payments to fall behind… yet. Canada saw the rate of arrears fall to 0.24%, the lowest it’s been since 2006. Both Ontario and BC are just off of their all-time low as well, with Ontario inching up just 0.01 points. That is often misread as real estate markets are healthy. However, it usually just means, liquidity for Canadian real estate is too high. Click through to find out more.

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Canadians With Reverse Mortgages Can Lose Their Homes If They Miss A Tax Payment

Reverse mortgages are exploding in growth, but just a reminder they’re still debt. Court records show a reverse mortgage borrower in Toronto missed a tax payment on their home, resulting in the home becoming “very briefly” in default. The result? The court awarded the home to the lender, as well as partial legal fees. Read those terms and conditions carefully.

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Toronto Real Estate

A Third Of Toronto Condo Buyers Might End Up Paying Double The Sticker Price

Near record low interest rates have made borrowing cheaper than ever, but not all Toronto real estate buyers are benefiting. Numbers from CIBC Economics and Teranet, the Ontario land registry operator, show 30.6% of owner-occupied new condo buyers are paying over 6% interest. Of those borrowers, over 17.4% are paying over 9%. Those steep interest rates will add up over time. Click through to find out how much these borrowers might need their condo prices to rise in order to just break even.

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