Last year was an interesting one for the Canadian new and resale housing markets. The introduction of the mandated mortgage stress test set out by the Office of the Superintendent of Financial Institutions (OSFI) had a significant effect, in that both new and resale home sales were down. First-time buyers were especially affected, as most either avoided entering the market or rescinded their offers because they could not pass the test. The stress test requires all people (new and renewal) borrowing from federally regulated lenders such as banks to prove that they can afford future mortgage payments even if interest rates rise substantially. This applies even for mortgages requiring more than a 20 per cent down payment.[Read Me…]

It’s getting (a little) cheaper for banks to finance mortgages.

TORONTO — Royal Bank of Canada has lowered its posted five-year fixed rate by 15 basis points from 3.89 per cent to 3.74 per cent.

Mortgage rate comparison website founder Robert McLister says RBC is the first of the Big Six banks to cut its advertised five-year fixed rate after a fall in five-year bond yields.[Read Me…]

Canada’s population growth ‘exceeds expectations,’ but newcomers are struggling and some rental markets are ‘in crisis.’

Population growth in Canada has accelerated in the past few years, thanks to higher federal immigration targets meant to help Canada cope with an aging population and a labour shortage.

And while experts generally agree that this will be a boost to Canada’s economy in the long run, in the short run the population boom is causing a rental crisis in Greater Toronto, and it appears the country continues to waste the talents of many of its skilled immigrants.

Population growth is “exceeding even the most optimistic demographic projections,” Benoit P. Durocher, the senior economist at Quebec’s Caisse Desjardins, wrote in a report issued Monday.

Some 413,000 people arrived in Canada in the 12 months to July, a growth rate of 1.4 per cent, the fastest among G7 countries. The population passed the 37-million mark earlier this year, according to Statistics Canada.

“Canada has close to double the growth of the second-ranked country, the United States,” Durocher wrote.[Read Me…]

Canadian real estate markets are still cooling around the country. Canadian Real Estate Association(CREA) numbers show only two markets saw SNLR improvements in October. The indicator, used as a gauge of demand, fell fastest in some of Canada’s largest real estate markets.

Sales To New Listings Ratio

The sales to new listings ratio (SNLR) is a quick way to gauge real estate market demand, and is used by CREA. It sounds fancy, but it’s just the ratio of sales to the number of new listings. The concept is, by measuring same month absorption, you can tell how hot or not a market is.

Reading it is straightforward. If the ratio rises above 60%, it’s a “seller’s market” – when a seller can ask for more. When the ratio falls below 40%, it’s a “buyer’s market” – when a buyer can ask for more. Anything between, and it’s considered “balanced.” One should exercise caution when the ratio is moving fast. Sometimes a fast moving ratio only makes a “pit stop” in balanced, before flipping higher or lower.[Read Me…]

Continued economic growth will drive Montreal’s housing upswing to 2020, according to the latest Housing Market Outlook report from the Canada Mortgage and Housing Corporation (CMHC).

The report also forecasts that the Montreal construction boom will continue its growth, with new projects coming off the ground in the next few months.

“In the condominium segment, construction will increase thanks to a steady demand supported by employment growth and also to significantly lower inventories of new and existing condominiums for sale,” said CMHC.

CMHC also expects prices for property and rental rates to continue to rise, while supply is expected to steadily drop. “In 2018 and 2019, rental housing demand will increase slightly faster than supply, which will put some downward pressure on the vacancy rate,” said CMHC.

“Demand will be supported by rising net migration over the forecast horizon, mainly as a result of the significant numbers of immigrants and non-permanent residents who will settle in Montreal.”

“As for supply, many new units will be added to the rental housing stock from now until 2019, given the high levels of starts that have been observed for more than two years now.”

“It’s a global city, a world-class city, that is continuing to come into its own,” Brad Henderson, CEO of Sotheby’s International Realty Canada, told the Montreal Gazette. “When people look at the price of real estate in Toronto and Vancouver and other cities around the world, people realize what a bargain it is in Montreal.[Read Me…]

Two Toronto-area startups are betting that a combination of technology, regulatory changes and consumer behaviour have created the conditions necessary to finally bring about a transformation of the country’s traditional real estate model.

Regan McGee, chief executive of startup Nobul (which he describes as a marketplace platform where potential buyers and sellers get bids for service from realtors), says that, in recent years, accumulation of anti-trust and competition regulations in the United States and Canada have pushed the industry to a tipping point. “They created an environment where a company like us could exist. [Before now] it would have been really hard. This is the way everything is going,” he said.

“The industry is changing, and I could feel the change coming,” says Vicki Schmidt, co-founder and broker of record for Justo, a new twist on the online discount brokerage.

These two companies are just a few of the real estate-focused startups popping up or expanding across the country, but they have one thing in common: The market opportunity they sense is to put more negotiating power, and perhaps more cash, in the hands of the real estate buyers and sellers. That could also put pressure on the traditional commission structure and service offering from agents.

Justo’s idea is mainly a tech-enabled update on an old idea: the discount brokerage. Founded by Daphne De Groot, an Israeli immigrant on a startup visa (who has dabbled in real estate developing, reality television and marine biology in an interesting career path) who partnered with Ms. Schmidt to try to build something more like the real estate model in her home country.

“In Israel, when you go buy a house, you have something like Kijiji. You go on the site, you pick a house you like, you just buy it directly … you don’t do it with an agent, just a lawyer and that’s it,” Ms. De Groot said. “When I tried to do it here myself, I had no access to any of the data: who bought the house, when, comparables.”[Read Me…]