Archive for August, 2022

PM announces over $2B investment in affordable housing

Wednesday, August 31st, 2022

Trudeau announces major housing investment

Ephraim Vecina
other

The federal government will support the development of thousands of new affordable housing units nationwide

Amid the persistent supply crunch in major Canadian urban markets, Prime Minister Justin Trudeau has announced a new $2 billion in investments towards the development of more affordable housing across the country.

The tranche will primarily go towards the development of 17,000 new homes, intended to fulfill the need for lower-cost housing in Canadian markets

“Over the past years and the past months, I’ve talked with many people who are worried about being able to afford a place to live,” Trudeau said in a press conference in Kitchener, Ontario. “This is as true for people looking to buy a home as for those who live in rental housing. We’re seeing prices going up across the country.”

Read more: Canada home prices – how far could they fall next year?

The funding will also support a new stream of the Affordable Housing Innovation Fund, with a new rent-to-own program opening opportunities for hopeful home owners. The 2022 federal budget has previously allocated $200 million towards a rent-to-own plan.

“When people have stable homes, they can build more stable lives,” Trudeau said. “We know that there is a need that is not going away anytime soon… We need to make sure we are rapidly creating more spaces for people to actually get that stability and that security.”

 

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47% of Canadian businesses reported rising input costs as major roadblock to expand their respective workforces

Wednesday, August 31st, 2022

Labour market struggles weighing on purchasing power, says RBC

Ephraim Vecina
other

Fewer business owners are expecting an increase in profitability or employment count over the next three months

While global supply chain pressures have already shown signs of easing, growth in purchasing power seems to be plateauing as more businesses are reporting challenges when it comes to recruiting and retaining skilled employees, according to a new study by the Royal Bank of Canada.

RBC’s Q3 release of its regular Canadian Survey on Business Conditions showed that more than two-thirds of businesses remain at least somewhat optimistic about the outlook for the next year. On the other hand, fewer business owners are expecting an increase in profitability or employment count over the next three months.

Approximately 47% of Canadian businesses reported rising input costs as the major roadblock in their attempts to expand their respective workforces.

Read more: Mounting job vacancies strengthen case for further BoC hikes

“The amount of businesses reporting difficulties in acquiring inputs (domestically and from abroad) and maintaining inventories also dropped, in line with falling commodity prices and persistent moderation in supply chain conditions in recent months,” RBC said.

“Concerns about labour supply were also especially acute among businesses operating in recreation and leisure services, where the employment shortfall relative to pre-pandemic remains large.”

However, despite these challenges, only a minority (11%) of Canadian businesses are exploring the likelihood of adapting automation and digital technologies to cut down on the need to hire more people.

 

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Volumes decrease for transactional homeowner and multi-unit products on an annual basis

Tuesday, August 30th, 2022

CMHC releases latest quarterly results

Ephraim Vecina
other

The Crown corporation has been weathering the significant market shifts seen over the past few months

Dramatic shifts in market conditions, most notably higher interest rates, had a significant impact on the Q2 results of Canada Mortgage and Housing Corporation.

The quarter saw the Crown corporation’s unit volumes decrease for transactional homeowner and multi-unit products on an annual basis. This is because the market is in the process of adjusting to rate hikes and mounting unaffordability, CMHC said.

“House prices are also contributing to higher insured loan amounts than prior year and lower insurance provisions,” CMHC added. “Paid claims remain low for all products and the national mortgage arrears rate decreased to 0.25%, from 0.28% at December 31, 2021.”

Read more: CMHC launches $4.8 million in research grants

Net income for Q2 was $431 million, down from $460 million in the same quarter last year.

“Increased volatility due to inflation and interest rates are impacting interest-sensitive assets and liabilities,” said Michel Tremblay, chief financial officer and senior vice president of corporate services at CMHC. “We continue to monitor market changes and assess any potential impact on our current and projected financial results.”

Q2 was also the first full quarter of CMHC’s new multi-unit mortgage loan insurance offering (MLI Select), with the Crown corporation insuring 7,823 units of MLI Select during the period.

“MLI Select incentivizes the preservation and creation of rental supply and helps address the need for affordable, accessible, and climate compatible housing,” CMHC said.

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Data from CREA is pointing the beginnings of downward trend

Tuesday, August 30th, 2022

Canada home prices – how far could they fall next year?

Ephraim Vecina
other

A new report by TD sheds light on the troubling signs becoming apparent in the market

By the first quarter of 2023, the average home price across Canada could fall anywhere between 20% and 25% from its record high seen earlier this year, according to a new report by TD Bank.

This would wipe out a significant chunk of the price gains seen over the past two or so years – essentially bringing prices to more reasonable levels despite being the greatest decline since the late 1980s, TD said.

“Our forecasted decline in national home prices would only partially retrace the 46% run-up over the course of the pandemic,” said TD economist Rishi Sondhi. “As such, our forecast can be more aptly described as a recalibration of the market, instead of something more severe.”

Data from the Canadian Real Estate Association is pointing to the beginnings of this downward trend, with prices declining by 5% annually to reach $629,971 in July.

Read more: StatCan highlights slowdown in home price growth

Fortunately for the market, the impacts will be far from the dreaded housing crash, mainly due to the palliative effects of much stronger consumer purchasing power, pandemic-era savings, and moderated activity due to depleted inventories in housing markets.

“Our forecasted peak-to-trough decline in Canadian home sales falls well within the range seen in past housing downturns and was surpassed by the global financial crisis sales tumbled by 38%,” Sondhi said.

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Canadian housing market is now close to entering “bear” territory, according to a leading bank economist

Tuesday, August 30th, 2022

Canada housing market what direction is it headed in?

Fergal McAlinden
other

Storm clouds are brewing, but there’s some cause for optimism

 It’s been on a pronounced cooldown for much of the year – and the Canadian housing market is now close to entering “bear” territory, according to a leading bank economist.

Doug Porter, chief economist at Bank of Montreal (BMO), indicated in a research note that aggressive moves by central banks had contributed to a rise in the inventory of unsold homes in Canada, a clear sign that the market is returning to its calmer pre-pandemic state.

Just before the COVID-19 pandemic struck in Canada, the inventory of unsold homes stood at slightly higher than four months’ supply, a figure it’s now rapidly approaching after recently rising to 3.4 months (seasonally adjusted) compared with 1.7 at the beginning of the year, Porter noted.

Of greater concern appears to be the ratio of sales to new listings, which is now hovering slightly above the 50 level – well below the highs it set during last year’s market boom.

That’s an ominous portent, especially in Ontario, where that ratio has plummeted to levels not seen since the global financial meltdown of 2008/09. “Prices have famously started to drop in many Ontario cities in recent months, including in the GTA,” Porter said, “but they’re still up a tad from a year ago. This ratio says there is more weakness coming, and soon.”

Still, there may be some signs of a slightly busier fall market. Miguel Oliveira (pictured top), a mortgage agent with Dominion Lending Centres Clear Trust Mortgages, told Canadian Mortgage Professional that anecdotal evidence from realtor partners suggested a recent uptick in activity.

Read next: Market “trending upwards” for mortgage brokers in Canada

“I hear traction from my realtors that they’re becoming busier, and there are more viewings – maybe not as many offers, but there are more showings on their listings,” he said. “So that’s positive news.”

Another interest rate hike by the Bank of Canada is looming in its next policy rate announcement, scheduled for September 7. Still, Oliveira said he didn’t foresee as dramatic a jump as the central bank’s last move, which saw that rate rise by a full percentage point – and that there was cause for optimism for brokers moving into the fall.

“I think [the market] is going to start speeding up, and as long as [brokers] keep their activities going and keep seeing people’s faces, they should be OK,” he said.

‘I think what’s top of mind is making sure that they’re getting back to their COIs and keeping them updated on what we’re seeing on our end. Being informative, both on the realtor side and the mortgage broker side, is huge, and key to success.”

Oliveira, named among Canada’s top 75 brokers by CMP this year, said he and his team were prioritizing those relationships with realtor partners, with mutual education and information sharing essential to navigate the current market.

Read next: What should a mortgage holder do if they lose their job?

“We get so much support from our real estate agents. Especially speaking about my team, we always want to make sure that we’re giving back to them [and keeping them updated on] rate, the market, new policies, the banks, and staying top of mind so they know who they can rely on,” he said.

Bank of Canada rate hikes in 2022 to date have had a significant impact on variable mortgage rates across the country, with many agents and brokers having reported that variable-rate clients are contemplating locking into a fixed-rate mortgage as a result.

Recent research by Canada Mortgage and Housing Corporation (CMHC), the country’s national housing agency, showed that variable-rate options had surged in popularity throughout last year because of their affordability compared to fixed rates, although it also noted that trend appeared to be coming to an end in the early months of 2022.

Still, even despite another impending hike in September, Oliveira said he was still putting forward the argument to clients that variable options were best suited to the current market environment.

“I’m still recommending the variable,” he said. “I think the discount on the variable right now is good compared to the fixed, and I don’t see the rates going up too much that they’re going to pass the current fixed rate.

“So I’m still going variable. Flexibility is very key on a mortgage, and variable gives you the flexibility for most clients that are needed.”

 

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$2 billion housing plan will help to develop new homes across the country

Tuesday, August 30th, 2022

Canada to fund ‘rent-to-own program under $2-billion housing plan

Ismail Shakil and Steve Scherer
other

The funding would go toward creating some 17,000 new homes across the country

 A condo building under construction in downtown Victoria, British Columbia. Photo by James MacDonald/Bloomberg files

OTTAWA — Canada is moving ahead with a “rent-to-own” housing program, Prime Minister Justin Trudeau said on Tuesday, as he set out $2 billion worth of spending toward a previously announced plan to double homebuilding over the next decade.

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The funding, earmarked in previous budgets, would go toward creating some 17,000 new homes across the country, including more rapid housing for the homeless or those at risk of becoming homeless, along with affordable and market-rate housing projects.

The program would also help housing providers develop and pilot a new rent-to-own model, aimed at creating a path for Canadians transition from renting to buying their first home, Trudeau said at a news conference in Kitchener, Ontario.

“For a lot of renters, saving to buy a home is increasingly difficult. Through this new program we’ll work with housing providers to help families go from renting to owning their home,” the Canadian leader said.

Canada’s home prices surged more than 50 per cent during the COVID-19 pandemic, buoyed by rock-bottom interest rates and booming demand. But recent sharp increases in interest rates by the Bank of Canada, which is aiming to curb high inflation, have cast a chill on the housing market.

Although home prices are softening, higher mortgage qualifying rates are keeping some would-be-buyers out of the market.

“Tackling housing affordability is a complex problem … simplistic solutions are simply not going to solve the problem,” Trudeau said.

Canada’s national housing agency has said the country needs to build millions of new homes by 2030 to restore affordability, and Trudeau’s Liberal government has pledged to double the pace of homebuilding over the next decade.

But achieving an affordable housing market may prove difficult, as home construction is already at a multi-year high and the construction industry faces a dire shortage of skilled workers.

© Thomson Reuters 2022

The number of home sales will fall 35% over the same time based on their report

Monday, August 29th, 2022

Canadian home prices could drop up to 25% by early 2023: TD

Canadian Press
The Vancouver Sun

Projected price drop represents an unprecedented decline at least going as far back as the late 1980s

TD estimates estimates the number of home sales will fall 35 per cent by early 2023. Photo by Dan Janisse/The Windsor Star

TORONTO — A report by TD Bank suggests the average price of a home in Canada could fall 20 to 25 per cent from its peak seen earlier this year to the first quarter of 2023.

 

The report also estimates the number of home sales will fall 35 per cent over the same time period.

TD economist Rishi Sondhi says the projected price drop represents an unprecedented decline at least going as far back as the late 1980s, when the data began, but it follows an unequally unprecedented rise during the pandemic.

The report notes the drop in national home prices would only partially retrace the 46 per cent gain over the course of the pandemic.

As such, Sondhi writes that the forecast can be more aptly described as a recalibration of the market, instead of something more severe.

Long term, TD remains more positive on the outlook for housing because it says population growth should remain healthy, underpinning fundamental demand for housing.

© 2022 Vancouver Sun

4.07 acres industrial sells for $13.25M located in 4046 96th Avenue SE, Calgary

Saturday, August 27th, 2022

Four acre, 426-unit Calgary self-storage sells for $13.25 million

Western Investor Staff
Western Investor

There is expansion potential for the Alberta Storage Place site in southeast Calgary

NAI Commercial, Langley, B.C., for Western Investor

 

Property type: Self-storage/industrial

Location: 4046 96th Avenue SE, Calgary

Number of locker units: 426

Property size: 43,396 square feet

Land size in acres: 4.07 acres

Zoning: IG (Industrial general)

Sale price: $13.25 million

Brokerage: NAI Commercial, Langley, B.C.

Broker: Ken Kiers

 

© 2022 Western Investor

Average rental in GTA surge 19% in July

Friday, August 26th, 2022

GTA rental market sees a July surge

Ephraim Vecina
other

Accelerated demand was prominent in downtown Toronto, new report says

Average monthly rents in the Greater Toronto Area grew by $400 (approximately 19%) year over year in July, with average rents in the city of Toronto increasing by 25% annually, according to a new report from Bullpen Research & Consulting and TorontoRentals.com.

On a monthly basis, average rents were up 3.3% in the GTA in July. This built on similarly strong monthly increases of 3.1% in June and 5.7% in May. For perspective, in other major cities, average rents have not tended to increase by 3% in a 12-month period, the report said.

Accelerated demand was prominent in downtown Toronto, which is expected to feed into continued rent growth across the GTA.

Read more: Canada home sales feel impact of rate hikes

Throughout the region, Toronto had the highest average monthly rents for condo rentals and apartments in July, at $2,667 (up by nearly 25% annually). This was followed by Mississauga at $2,308 (up by 16.4%), and by Vaughan at $2,292 (up by 2.8%).

“The average rent in the GTA in July of $2,482 per month has now topped the previous market-high recorded in November 2019 of $2,460,” said Ben Myers, president of Bullpen Research & Consulting.

“With further interest rate hikes coming, uncertainty in the ownership market, and the high-demand fall rental season upcoming, expect further outsized rent increases over the next few months.”

 

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Canadian mortgage debt reached more than $1.6 trillion in Q2 2022 | CMHC

Friday, August 26th, 2022

Canada’s outstanding mortgage debt now exceeds $1.6 trillion

Ephraim Vecina
other