Time for your weekly cheat sheet on this week’s most important stories.
Canadian Real Estate
Canadian Household Debt Is Back Above US Great Recession Numbers
Canadian household debt to income ratio (DTI) are now above peak US levels. Household DTI reached 166.79% in Q3 2018, up 0.15% from last year. That might seem low if you’re used to reading Canadian news, but that has to do with methodology. The numbers Statistics Canada release need to be adjusted to match US numbers. Without the adjustment, it seems like Canada breached this level a few years ago. Using the same method, however, breaching this level is much more recent.
The Bank Of Canada Officially Began Buying Canadian Mortgage Bonds
The Bank of Canada (BoC) said they would buy Canada Mortgage Bonds (CMB) in November, when the time was right. Turns out the time that was right was literally the next auction, about 3 weeks later. The central bank bought $250 million worth of CMBs at a 2.55% coupon rate, about 4.5% of the total auction. The buy doesn’t impact monetary policy, since it was to help the central bank provide liquidity. However, the move likely suppressed borrowing rates in this segment. No impact on monetary policy is not the same as no impact on the mortgage market.
Canadian Household Borrowing Rates Make Unusual Stall For 4 Weeks
Canadian household borrowing rates made an unusual stall for four weeks. The effective borrowing rate, a “typical” rate, reached 3.98% on December 28, a level held for the previous 4 weeks. The rate is up 16.71% from last year, so it already has made a big climb. The 4 week stall is still unusual considering the full impact of the last interest rate hike should not have hit the market already.
Toronto Real Estate
Toronto Real Estate Sees Fewest December Sales And 2nd Most Inventory Since 2012 Slump
Toronto real estate prices are making conservative moves higher, but sales are still dropping off a cliff. The price of a typical home reached $764,200 in December, up 2.98% from last year. However, December only saw 3,781 sales, a 25.22% drop from the same month last year. That makes it the slowest December since the 2012 slump, with lower December sales only seen 5 other times in 20 years. One time was during the Great Recession, and the 4 other times in the late 1990s. For those that need a real estate history lesson, the late 1990s were not fun for Toronto. It was off of the bottom of Toronto’s most significant price correction ever.
Vancouver Real Estate
Vancouver Real Estate Officially Enters A Bear Market For The First Time Since 2013
Vancouver real estate prices slipped lower, but the drop in sales are the big issue last month. REBGV reported the price of a typical home fell to $1,032,400 in December, down 2.7% from last year. Sales of homes however fell to 1,072 for the month, a 46.82% decline compared to last year. The board itself noted this is 43.3% lower than the 10 year average for December.
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