Time for your weekly cheat sheet on this week’s top stories.
Canadian Real Estate
CMHC: Vancouver Has The Most Indebted Households In Canada, Toronto Not Far Behind
Vancouver, Toronto, and Victoria are the country’s most indebted cities. Vancouver led the pack with a debt to income ratio (DTI) of 242% in Q2 2018. To put that another way, households in the city owe $2.42 for every $1 in disposable income they earn. Toronto came in second with a DTI of 208%, up from 189% just three years ago. Victoria came in third with a DTI of 189%, the same level it was three years ago. To contrast, the national average is 171%, which makes Canada the most indebted country in the OECD.
Teranet-National Bank: Only 3 Small Canadian Real Estate Markets See Prices Rise
Canadian real estate prices fell 0.28% in November, from the month before. The monthly decline isn’t normally a big deal, but it is this month. A monthly decline has only occurred 4 times in the past 20 years.
That doesn’t seem like a lot, but it helps us to understand this year’s annual price change. Analysts from National Bank noted that last year this time, prices made an abrupt and fast decline. When comparing this year to last, the November decline was smaller, making it look like price gains were accelerating. In actually, prices are still down from peak.
It Costs A Whole Lot More To Use A Variable Rate Mortgage In Canada
The cost of using a variable rate mortgage in Canada is rising quickly. The Bank of Canada estimates the typical rate reached 2.72% on December 6, up 25.52% from last year. The increase doesn’t just mean new borrowers will have to pay more. It also means existing borrowers on a variable rate are contributing a lot less to principal. Moving the goal post is always fun.
Toronto Real Estate
Toronto Detached Real Estate Sales: Worst November Since The Great Recession
Toronto detached prices are flat, but sales fell to Great Recession levels. TREB reported the typical detached home price hit $910,100 in November, down 0.28% from last year. The number of detached homes sold fell to 2,665, down 14.2% compared to last year. The decline in sales makes it the worst November for detached sales since 2008.
Over 82% Of Toronto’s Household Debt Is Tied To Residential Real Estate
Toronto is the country’s second most indebted city, and it’s due mostly to real estate. The debt to income ratio reached 208.08% in Q2 2018, up 10.2% over the past 3 years. The mortgage DTI is 145.2%, and HELOC DTI were 24.6%. That’s 169.8 out of 208 points related tied to real estate. That makes the region extremely vulnerable to interest rate hikes.
Vancouver Real Estate
Vancouver Detached Real Estate Prices Drop The Most Since The Great Recession
Greater Vancouver’s detached home prices fell the most since the Great Recession. The benchmark price of a detached home fell to $1,500,100 in November, down 6.5% from last year. The decline was accompanied by just 516 sales in the month, down 38.6% from last year. The price drop is the largest seen since July 2009.
Vancouver’s Household Debt Is A Whopping 86% Residential Real Estate
Vancouver is the country’s most indebted city, and it’s due almost entirely to real estate debt. The DTI for the city’s households reached 242.11% in Q2 2018, up 7.1% over the past 3 years. The mortgage DTI alone is 176.9%, with HELOC DTI representing another 30.9%. That’s 207.8 out of 242.11 points, related to housing.
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