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The “B” word has started floating back into discussions about Canada’s housing market.  The latest numbers from the Canadian Real Estate Association help to explain why worries about a bubble are on the rise. Sales activity in February jumped nearly 40% compared to a year earlier, setting a new record.  Sales rose nearly 7% compared to January.  The national average price surged by 25% year-over-year.  New listings rebounded month-over-month in February but inventories remain at record lows.  Nationally there is just 1.8 months of supply. The Bank of Canada has expressed concerns about overheating.  Governor Tiff Macklem has noted that there are signs that real estate speculation is on the rise. "What we get worried about is when we start to see extrapolative expectations, when [...]

Home sales and home prices are breaking records. Housing starts are beating expectations. The Toronto and Vancouver housing markets occupy prominent places on a new, global list of least affordable cities.* Now, Bank of Canada Governor Tiff Macklem says there are early signs Canada’s housing market is overheating.  During a session with an Alberta business audience Macklem said there are signs of “excess exuberance” in the housing market. So far, he said, the move toward bigger houses further away from city centres has not been speculation.  The BoC sees it as a response to a need for more working and family space for people who no longer need to go in to the office.  The Bank supports its argument by pointing to the fact that [...]

Current conventional wisdom has it that the latest wave of home sales is being powered by “move over” and “move up” buyers. These are people who are motivated by a desire for more space, largely prompted by the shift to remote work/work-from-home that has been triggered by the pandemic. If it is sustained, it could be seen as a societal shift: urbanization evolving to suburban/ex-urbanization.  But that sustainability is being called into question by at least one prominent Canadian economist. Benjamin Tal, who has a propensity for bold statements, points out that the trend has been around for a while, and it has been accelerated by current circumstances.  But he recently told BNN/Bloomberg he does not think it will last. “I believe that this trend [...]

The desire for home ownership remains strong in Canada.  The latest home buying sentiment poll by one of the country’s big banks suggests nearly 60% of Canadians aspire to own a home.  Just over half of those people are looking for a detached home. Affordability continues to be a key concern with roughly 60% of respondents saying homes in their area are unaffordable.  According to the survey the average home buying budget in Canada stands at $445,000.  The Canadian Association of Realtors (CREA) puts the average price of a home (all types) at $607,000. Not surprisingly a significant portion of those polled – 45% – expect they’ll have to leave their current city to buy a bigger house.  Changing housing needs and the desire for [...]

In a year where pretty much all things economic and financial have been stood on their heads, here is another anomaly brought on by the coronavirus pandemic.  Household debt is on the rise again and a lot of it is mortgages. The latest tally by Statistics Canada shows that the Canadian Household Debt-to-Income ratio crept back up to 170.7% in the third quarter.  That is, on average, Canadian households owe $1.71 for every dollar of disposable (after tax) income.  That is a significant bump from $1.63 in the second quarter, but significantly less than the $1.81 at the start of the year. The drop in Q2 is largely attributed to government support payments, mortgage deferrals and other debt relief that saw Canadians spending much less, [...]

Fast moving, ever changing and, often, contradictory information is making it hard to predict what’s coming for the economy.  But, a couple of recent reports may be offering some hints about where residential real estate and mortgages are heading. A recent survey by the brokerage Properly seems to reinforce current notions that people – particularly millennials – are looking for more space both inside and outside their homes, as a result of being cooped-up by the COVID-19 pandemic and the desire to maintain the option to work from home. According to the Properly survey more than half of millennials are unhappy with their current homes.  Their preferences have shifted towards: - Detached housing, 45%             - ample square footage, 44% - Better home offices, 28%           [...]

It appears Canadians’ enthusiasm and optimism about their homes and the housing market remain very resilient. Part three of the “Rapidly Evolving Expectations in the Housing Market” report, being produced by Mortgage Professionals Canada, suggests 90% of homeowners are happy with their decision to buy, while just 2% regret their purchase decision. Non-homeowners have seen a significant increase in optimism.  The number who expect to buy in the near future has nearly tripled to 20%, from 7% at the beginning of the year. It should be noted that the survey samples used for the report are narrow, focusing on just two groups: mortgage holders, and non-homeowners who are looking to buy within the next three years.  Current conventional wisdom says purchases are being driven by [...]

Canadians’ confidence in the economy moved back to the optimistic side of the ledger in the third quarter. The Bank of Canada’s latest Canadian Survey of Consumer Expectations suggests the outlook has turned positive compared to the second quarter, but cautiously so. Among the key findings in the third quarter report is a return to expectations that home prices will continue to increase.  During the second quarter those expectations plunged to near zero, now they are back to just slightly below pre-pandemic levels. The survey also suggests a change in the type of housing preferred by buyers, with a shift to “less crowded and more remote environments.”  In other words, bigger homes away from urban centers.  Many market watchers attribute this directly to the pandemic [...]

Another report and another round of startling numbers from Canada’s housing market. The Canadian Real Estate Association is reporting its best September ever.  Sales rose nearly 46% compared to a year ago.  That is 20,000 units more than the previous September record. The average price for a home in Canada hit an ominous, record high as well, at $604,000 – a 17% increase y-o-y.  Toronto and Vancouver continue to have a heavy influence on the average price.  With those two markets factored out, the national average drops to $479,000, which is a 20% increase from a year ago. CREA’s Aggregate Composite Home Price Index – which is seen as a truer measure of home prices – showed a 10% increase y-o-y. The increases appear to be driven [...]

Canada’s uncertain economy has not dampened home ownership optimism among millennials and the young, first-time buyer cohort. In fact, the current coronavirus disruption is seen as a driver of the desire for home ownership among the 18 to 34 year-old demographic. A recent survey by one of the big banks suggests the pandemic and its restrictions have nearly 20% of 18 to 34 year-olds accelerating their plans to purchase a home or investment property.  The thinking is, rules which have confined people to their homes have sparked a realization that they need a bigger, more functional living space. Historically low interest rates continue to have an outsized influence on homebuying optimism.  The Bank of Canada has clearly stated that its rates will remain low until [...]