Time for your cheat sheet on this week’s top stories.
Canadian Real Estate
Higher Rates Lower Your Cost of Living, “We Know It’s Difficult”: Bank of Canada
The Bank of Canada knows higher rates are “difficult” for you, but they’ll improve the cost of living. Seriously. The central bank made this argument on its twitter account, but left a little out on market mechanics. Not a problem, we’re more than happy to explain how higher rates improve affordability. Though this does bring up a lot of questions about what they were doing before, doesn’t it?
Canadian Real Estate Prices To Fall More Than Expected: Desjardins
Another of Canada’s major financial institutions are lowering their forecast for real estate. Desjardins’ group previously anticipated home prices would fall 15%, but we’re almost there already. The market is deteriorating faster than expected, so they now see home prices falling as much as 25%.
Canada Eliminated Its Real Estate Bubble By Revising Data. It Hit A New One Already
Canada’s real estate bubble was going strong and then suddenly didn’t exist. The US Federal Reserve Exuberance Index showed Canada was in a bubble for 6.5 years in 2021. By Q1 2022, most of that bubble had been eliminated retroactively. The central bank explained it was the largest revision they had ever seen.
Canadian Real Estate Affordability Hits Worst Level Since The 90s: Bank of Canada
The Bank of Canada Housing Affordability Index reached a new multi-decade high. An average household needed 42.8% of their income in Q1 2022 to carry a mortgage. It was the highest share of income needed since the early 90s real estate bubble.
Toronto Real Estate
Greater Toronto Detached Real Estate Prices Dropped As Much As $178k Last Month
Greater Toronto detached real estate prices took a sharp dive in July, falling up to 6-digits. The benchmark detached home fell to $1,455,000 in July, down 4.5% (-$68,600) in the month. The most extreme drop happened in King, where prices fell a whopping $178,200 in just one month. Considering how much prices rose in the previous two years, tis but a scratch. However, there’s few signs the rapid declines will let up soon.