We know you’re busy, so here’s your cheat sheet on the most important real estate stories of the week.
Canadian Real Estate
The Bank of Canada’s rate hike might seem like a small number, but it means big changes for buyers. The 5 year fixed rate was raised from 4.99% to 5.14%, which reduces borrowing power by ~1.68%. For example, a household earning $100,000 at a rate of 4.99%, would have been able to borrow ~$534,594 for a mortgage. The new hike to 5.14% would mean that same household would only be able to borrow $525,577. The $9,017 decline is just one of the hurdles, that are going to get worse as rates climb.
Starting to wonder why so many people are complaining they aren’t benefiting from the “booming” Canadian economy? World Economic Forum (WEF) researchers are wondering the same thing. Turns out the primary method of economic success, measuring the change in Gross Domestic Product (GDP), is a terrible way to do it. WEF researchers devised a new method called the Inclusive Development Index (IDI), which measures how that GDP translates to wealth for the general population. Turns out, when Canada is measured by IDI, it ranks in the bottom fifth of advanced economies for economic inclusiveness.
Canadians are borrowing against their real estate at a rapid pace. Loans secured for non-business purposes hit a new record for growth. The total balance is $250.37 billion as of November, a 0.35% increase from the month before. That brings the 12 month gain to 6.4%, the largest annual gain in recent history. To put this in dollar terms, the balances grew $877 million from the month before, and a total of $15.072 billion more compared to the year before. Is this peak growth? Probably not, but it is the highest it’s ever been.
Toronto Real Estate
The price to rent in Toronto is higher than last year, but is coming down slightly. A 1 bedroom now costs $1,970 per month according to TREB, a 10.9% increase from the same quarter last year. However, the big jump is also 0.3% lower than the previous quarter. Rental lease prices typically drop from the third to fourth quarter every year, but this size is about five times as large as normal. Supply to the rescue?
Toronto condo prices moved higher, but now there’s questions about how the prices have been calculated. While the benchmark price rose in december, the median price fell. Some agents have been arguing that the benchmark is “delayed,” meaning it doesn’t accurately represent numbers in the near term. This would make a little more sense, since sales have fallen 9.76%, and inventory has soared 44.18%.
Vancouver Real Estate
Vancouver condos printed a new all-time high. The benchmark price is now $655,400 as of December, a 1.11% increase from the month before. This represents a 25.89% increase when compared to the same time last year. Yes, the single month price increase of $7,200 is more than most households in Vancouver make in a month. Nothing broken there.
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