‘No one wants to buy a house’ in Canada’s overheated market – Paul Chiasson
Market turmoil is gripping the housing market, as prices and interest rates are spiraling.
Here are some of the key points: 1.
Prices are soaring.
The average price of a detached home in Vancouver rose 15 per cent in the past month, according to Re/Max.
Interest rates are on the rise.
Interest on the five-year fixed-rate mortgage rate has jumped to 1.75 per cent from 1.4 per cent on Tuesday, the highest rate in more than six years.
In some parts of the country, rates are going up faster than inflation.
Prices in Calgary climbed to $1.9-million in June, the strongest price growth in more a decade.
The Toronto area saw prices increase by 10.5 per cent, according, according a Re/max report.
In Canada’s largest cities, prices are up in every city except Toronto.
In Vancouver, they are up by an average of 6.4 points per month.
In Toronto, they were up 8.6 per cent.
Some markets are already underwater.
Vancouver’s price index was down 3.8 per cent for the month ended June, according Toorak University’s Real Estate Institute.
The B.C. area, which is one of the most expensive markets in the world, was also down 3 per cent over the same period.
The Ontario region, which includes Toronto, was down by 7.4 percent.
Prices and interest costs are out of whack.
Interest payments on five- and 10-year mortgages have gone up by nearly 25 per cent since the last recession, and mortgage rates have gone down by more than 40 per cent across Canada.
The trend is likely to continue as the economy improves and as prices continue to rise.
Investors are leaving the market.
Investors have been pulling back from the market in recent months.
The International Monetary Fund recently lowered its forecast for economic growth in the U.S. to 1 per cent and forecast that the global economy will shrink by 0.4 percentage points in 2017.
The real estate market is slowing.
The housing market has been in an overheated state for years.
Prices have increased 10 times over the past 20 years, according the Real Estate Board of Greater Vancouver.
But prices have been on a downward trend since 2007.
The Real Estate Market Insight Report, released earlier this year by Re/Mortgage Guru, said that in 2015, prices were up 2.6 times faster than the national average.
Prices were up 9.5 times faster in 2017, and 9.8 times faster over the first six months of 2018.
Home prices are rising.
Home sales are rising at a faster rate than rents, according Re/MAX.
The report showed that average prices in July jumped to $829,600, up 14.4 times over a five-month period, the most since 2012.
Vancouver is one market with more to lose.
Prices there are soaring, but the rest of Canada is seeing their prices fall.
The median price in Toronto is up 10.8 percent over the last 12 months, according TOOZ.
In Calgary, prices fell 2.5 percent last year.
The national average price for a detached house is up 2 percent over that period.
In Quebec City, prices dropped 1.5 to 2.7 per cent last year, according RealEstate.
In Montreal, the median price fell 0.8 to 2 per cent during that period, according RE/MAX’s report.
Investors in Canada are fleeing.
Many investors are staying put and not moving to other markets in Canada.
RealEval has been tracking the number of investors in Canada for the past two years, and the data shows that investors are leaving Vancouver and Toronto for markets like Ontario and British Columbia.
The study also shows that investor interest in Canada is on the decline.
The Canadian economy is weak.
Real Estate Guru reported that Canada’s economic growth was 0.6 percent in the first quarter of 2018, down from 1 percent the previous quarter.
The economy has also been weaker than other developed countries.
In the past six months, GDP shrank by 0,844 billion Canadian dollars, or 5.2 percent, according data from Statistics Canada.
Canada’s economy is expected to shrink by 1.7 percent this year, and by 2.3 percent in 2018.
It is not expected to expand by more.
The data also showed that there are fewer Canadians in the workforce than a year ago.
The stock market is hurting.
The benchmark S&P/TSX composite fell 8.7 points in June to 1,095.43, a level not seen since 2007, according Reuters.
The Standard & Poor’s 500 index fell 1.6 points to 1 5,742.70, the worst reading since 2008. The Nasdaq