Headline of the week: Canadian real estate posted $ 150 billion in excess sales, lenders warned about prices
It’s time for your weekly cheat sheet on this week’s best stories.
Canadian real estate
Canada bets on real estate with “surplus” home sales reaching 6% of GDP: BMO
Canada has gambled on home sales to the point where surplus home sales now represent 6% of its GDP. Existing home sales hit $ 500 billion in annualized sales in October. BMO estimates that this is an excess demand of $ 150 billion, which is pushing up prices. It should stop as soon as the central bank wants, Big Six Bank said.
Ontario real estate most overvalued in Canada, slow growth expected: Moody’s
Canadian home prices are generally overvalued, according to a credit rating giant. Moody’s latest models show that urban cities are overvalued by 22.6%. After this year’s massive surge, they don’t expect a booster to follow next year. Average annual growth is expected to be just 1.3% over the next two years. Provinces that have experienced slow growth (such as Alberta) should reverse this trend.
Canadians invest less in real estate and more in U.S. stocks and bonds
Canadians invest more in foreign stocks and less in real estate. A net increase of $ 17.2 billion was injected into foreign stocks in September, up 33% from the same month a year earlier. At the same time, dollar volumes of existing homes reached $ 34.9 billion, down 5.9% from the previous year. These data points are worth watching over the next few months. Investors are major home buyers, which is driving demand. If they are looking for returns in other segments, that may mean less money to push up home prices.
New home price growth in Canada slows after peaking since 1989
New home price growth in Canada is slowing after hitting a three-year high for annual growth. New housing prices rose 0.9% in October and 11.5% more than the previous year. This is one of the fastest annual growth rates in history, but lower than the recent peak reached in August. Historically, growth has not spent much time at this level and is followed by a period of weak to negative growth. If the trend starts to cool off, it could be followed by slow growth. This is a trend that the industry largely expects.
Real estate prices in Canada saw a ‘typical’ house rise to $ 78,000 last month
Canadian home prices are skyrocketing as a sudden surge in demand was met by a complete lack of inventory. The benchmark price in Canada reached $ 762,500 in October, up 2.34% ($ 17,400) from the previous month. That’s the national figure, with some cities seeing house prices rise as much as 5.4% ($ 73,100) in a month. Either way, the Bank of Canada (BoC) thinks this is an environment that needs more credit stimulus.
Canadian inflation peaked in 18 years at 4.7%, but is much higher in some provinces
Canadian inflation is nearly two decades old, and some provinces are worse off. The annual growth of the consumer price index (CPI) reached 4.7% in October, against 4.4% the previous month. This was the highest reading since 2003, but still lower than most provinces. This is especially true in the Maritimes, where annual growth is now over 6% in some provinces.
Canadian immigration data shows the most important month in at least a century
Canadian immigration may have gone through a lull, but it is back with a new record. There were 45,040 permanent resident arrivals in September, up 19% from the previous month. This is the largest month of arrivals in over 100 years of data. However, this may not translate into immediate demand for housing. Permanent residents of Canada come from outside and within the country.
Canadian new home starts collapse now as inflation forces builders to pause
New housing starts in Canada collapse as inflation forces builders to pause. The number of housing starts fell to 236,554 housing starts in October, down 5.3% from the previous month. That number has now fallen 29% from its peak in March, during the wood and building craze. Technically, having fallen by more than 20% means that it is a “crash” in the number of starts.
Toronto Real Estate
It’s official. Canada’s Largest Real Estate Board Builds For-Profit Business
Canada’s largest real estate board has released more details on its for-profit entity. The Toronto Regional Real Estate Board (TRREB) is launching PropTx Innovations Inc. It will be a for-profit entity wholly owned by the board. By starting the entity, the nonprofit board hopes to capitalize on its proprietary data.
Real Estate in the United States
New home in US begins to go down, permits enter correction territory
In the United States, new housing and permit starts have trended downward in recent years. Housing starts fell to a seasonally adjusted annual rate (PHI) of 1.52 million in October, down 8.3% from the recent peak in December 2020. New permits, which lead the way. under construction, reached a SAR of 1.65 million, down 12.4% from January. These numbers tend to go down, but not because of a lack of demand, it’s because of inflation. Material shortages and volatile costs are forcing some builders to take a break from new projects.