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This Week’s Top Stories: What Did Canadian Real Estate Do After The Last Rate Hike, and The Difference Between A Correction and A Crash

This Week’s Top Stories - What Did Canadian Real Estate Do After The Last Rate Hike, and The Difference Between A Correction and A Crash

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

Global

Evading Chinese Capital Controls 101, With Bitcoin Expert Dr. Joseph Wang
Mainland Chinese buyers spent over US$100 billion on international real estate last year. Due to improved capital controls rolled out by the Chinese government, this number is expected to drop more than 20% in 2017. While that sounds like a lot, we wanted to find out how exactly the other US$80 billion is going to get out of the country? We connected with Dr. Joseph Wang, a Hong Kong based financial expert to walk us through the methods being used, and how much they cost. Smuggling money out of the country is surprisingly cheap.

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Here’s The Difference Between A Real Estate Correction And A Crash
People are throwing down the terms correction and crash interchangeably, so we thought we’d explain the difference. A real estate correction is when prices on the home price index fall less than 10% from the 52 week high. A real estate crash is when prices on the home price index fall more than 10% from the 52 week high. Check out the full article for recent examples, and where the term “fire sale” comes from, which also has its origins in real estate.

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Here’s What Canadian Real Estate Did After The Last Interest Rate Hike
Slashing interest rates has a well known correlation with rising home prices. Naturally, raising them should put an end to that, right? Not exactly. Despite the droves of economists and experts claiming that higher interest rates cool real estate markets, it looks like no one actually ran the numbers. Turns out raising interest rates historically has only cooled prices for a few months. In Toronto and Vancouver, prices regained lost ground in less than a year. Slashing rates sends prices higher, but historically buyers somehow find money after a few weeks of higher rates. The mechanics of interest rates in Canada are weird.

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Toronto

Toronto Detached Real Estate Sees Inventory Soar 118%
Toronto is having a rough June, but the segment of homes hit hardest is detached homes. There were 3,450 detached sales in June, a 45% decrease from the same time last year. This helped contribute to stronger than normal detached inventory, with active listings reaching 11,245. This represents an over 118% increase from the same time last year. 3 out of every 5 homes listed for sale acros TREB are now detached units.

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Is Toronto’s High Cost Of Shelter Leading To Explosive Growth In Job Vacancies?
In the first quarter of 2017, Toronto saw job vacancies explode. There were 97,930 job vacancies, a 20.56% increase from the year before. Economists typically think of this as a good thing, but there’s increasing evidence that these jobs aren’t being filled because the wages being offered just plain suck. At the average wage being offered, the employees would have to spend 57% of their post tax income on rent. Not exactly a huge incentive to move to the region for employment.

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A Breakdown Of Toronto’s Foreign Real Estate Buyers
Toronto just began monitoring foreign buying last month, and the Ontario Ministry of Finance has released the first set of numbers. The City of Toronto saw 429 sales to non-resident buyers last month, which is 7.2% of all sales. The only other region that saw a higher ratio in the Greater Toronto Area is York Region, which saw 9.1% of sales go to non-residents.

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Vancouver

Bài Bài Vancouver, BC Has A New Foreign Buying Capital
Vancouver is no longer the foreign buying capital of BC when it comes to the ratio of non-resident buyers. Richmond, BC saw 7.8% of sales go to non-resident buyers in May. Over the past year, 10.5% of all transactions involved non-residents. That’s a whopping 1 in 10 homes, and before you say it – the city is one included in the foreign buying tax. So it apparently had little impact in the region.

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Vancouver Real Estate Saw Only 36 Homes Go To Foreign Buyers
Property transfers records show that the City of Vancouver only saw 36 property transfers to foreign buyers in May. Are foreign buyers disappearing, or is the British Columbia government not doing enough to monitor the situation? The fact that foreign buying in Richmond is spiking could just mean that non-resident buyers are looking for better value returns.

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Detached Real Estate Prices Are Falling In These 5 Areas Of Greater Vancouver
The aggregate price across the Real Estate Board of Greater Vancouver (REBGV) is at an all-time high, but not all regions are benefiting. Five REBGV regions are now in negative territory year-over-year – Burnaby North, Ladner, Richmond, Tsawwassen, and West Vancouver.

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Vancouver Detached Real Estate Is Rising Below The Rate Of Inflation
Vancouver real estate is hitting all-time highs, but the detached market is now rising at a pace lower than inflation. The benchmark price of a detached home is now $1,587,900, a 1.4% increase from the same time last year. The Bank of Canada targets inflation at 2%, and averaged 1.5% over the past 5 years. This means cash is losing value at a faster rate than Vancouver’s detached home prices are rising.

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