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Home prices in Toronto rise to record levels and here’s what experts say will happen next 🏡📈

The frenzied pace of home buying Toronto experienced in 2020 has waned but prices continue to increase. As anyone searching for a home knows, it is difficult to find a decent home under $1 million unless you want to live in a shack or run-down bungalow. And it is not just in Toronto. Across Canada, home sales dipped -0.5 percent from July and -14 percent compared to 2020’s scorching summer market but it’s still the second-best August in history for real estate transactions, according to a new report from Zoocasa. “Canadian housing markets appear to be stabilizing somewhere in between pre-and peak-pandemic levels – which is to say, still extremely unbalanced,” said Canadian Real Estate Association senior economist Shaun Cathcart. Across the GTA benchmark home prices are up 17.3 percent year over year to $1,059,300, the report states. The main factor behind the price increase is the lack of homes on the market. “Greater Toronto buyers continued …
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August market update: Low inventory continues to be the main issue in Kitchener/Waterloo

The real estate market in Kitchener/Waterloo experienced record low inventory all summer and August, unfortunately, was no exception.  The average number of active listings was down 51% compared to August 2020, which, admittedly, was an exceptionally busy month. The months of inventory is now down to just 0.4, a figure that is slightly lower than last month and much lower than the 1.2 months of inventory recorded last August. The good news for sellers is that 85% of properties are selling for over the list price, a number that is up slightly from last month when it was 79%. On average, homes are selling for 14% over asking. Despite this low inventory, prices have remained flat from last month, at around $733,000. The only category to see a slight increase in average sale price was condos and apartments, up 3%. For now, the focus is on September, and the hope …
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Annual Inflation In August Rises to 4.1% in Canada–But Are We Close To The Peak?

Today’s release of the August Consumer Price Index (CPI) for Canada posted another uptick in the year-over-year (y/y) inflation rate, but hidden in the details was some support for the Bank of Canada’s position that the spike in inflation is transitory. The Bank has long suggested that the rise in prices will prove to be the result of base effects (y/y comparisons that are biased upward by the temporary decline in prices one year ago), supply disruptions, and the surge in pent-up demand accompanying the reopening of the global economy. This morning’s Stats Canada release showed that consumer price inflation surged to a 4.1% y/y pace last month, above the 3.7% pace recorded in June, and the 3.1% pace in May. This is now the fifth consecutive month in which inflation is above the 1%-to-3% target band of the Bank of Canada. The good news, however, is that the monthly …
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Top Risks and Trends in Canada’s Mortgage Market🏡

Ben Rabidoux, a real estate analyst and founder of Edge Realty Analytics, recently participated in a webinar hosted by Mortgage Professionals Canada where he outlined some of the key trends that could impact mortgage rates. From rising inflation and falling consumer confidence to changing real estate preferences, Canada’s mortgage market could be impacted on multiple fronts. Over the course of the pandemic, there’s been a flight of homebuyers out of the cities looking for single-detached homes with more space and privacy. As a result, places like Bancroft, North Bay, have seen annual home-price appreciations of more than 64% and 48%, respectively. To read for of the discussion, click here

Bank of Canada maintains key interest rate🏡

In today’s scheduled press release, the Bank of Canada announced that they will be maintaining the overnight benchmark rate at 0.25% The Bank is maintaining its extraordinary forward guidance on the path for the overnight rate. This is reinforced and supplemented by the Bank’s quantitative easing (QE) program, which is being maintained at a target pace of $2 billion per week. The global economic recovery continued through the second quarter, led by strong US growth, and had solid momentum heading into the third quarter. However, supply chain disruptions are restraining activity in some sectors and rising cases of COVID-19 in many regions pose a risk to the strength of the global recovery. Financial conditions remain highly accommodative. The Bank continues to expect the economy to strengthen in the second half of 2021, although the fourth wave of COVID-19 infections and ongoing supply bottlenecks could weigh on the recovery. Decisions regarding …
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Bank of Canada maintains key interest rate

In today’s scheduled press release, the Bank of Canada announced that they will be maintaining the overnight benchmark rate at 0.25%. It is projected that interest rates will not rise until the second half of 2022. In a statement accompanied by the release of its quarterly Monetary Policy Report, the Bank rate remained steady at 0.5% with the deposit rate also left unchanged at 0.25%. The Bank also announced a further tapering of its bond program, reducing its weekly purchases of government bonds to $2 billion – a decrease of one-third. In its statement, the Bank noted that while the global economy is recovering strongly from the COVID-19 pandemic, that recovery is still “highly uneven, and remains dependent on the course of the virus.” The Bank’s Monetary Policy Report indicated that growth should rebound strongly as the economy reopens after COVID-19’s third wave. Growth of around 6% is forecast this …
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What will happen next with Canada house prices?

Original Source:  Mortgage Broker News With the rate of homebuying in Canada cooling in recent weeks and house prices having declined nationally for two consecutive months, there’s been much conversation around the questions of whether bidding wars will die down and prices will continue moderating. While some believe that the federal government’s action on the mortgage stress test rate has had its desired effect – easing the trend of frenetic bidding far above list price – others in the mortgage industry have seen little evidence of that change in their markets. Tracy Valko (pictured), principal mortgage broker and owner of the Kitchener, ON-based Valko Financial, told Mortgage Broker News that the pace of bidding remained relentless in that region, continuing to expose what she said was a significant supply issue in the housing market. “What the government was looking to do in slowing down the market, and in trying to …
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Mortgage credit rising, but non-mortgage debt dropping like a rock.

Contrary to the common belief that debt among Canadians is rising during the pandemic, non-mortgage debt had significantly dropped during 2020. Have a look at the graphs below, provided by Statistics Canada. Household Debt in Canada decreased to 167.70 percent of gross income in 2021 from 169.87 percent in 2020. Source: Statistics Canada Household Saving Rate in Canada increased to 13.10 percent in the first quarter of 2021 from 12.70 percent in the fourth quarter of 2020. Source: Statistics Canada From the provided statistics, two main points were uncovered: Canadian Household Savings Rate is 13.10% vs <5% prior to the pandemic, a significant increase. The debt to Income ratio is a universal calculation that measures a countries overall consumer’s financial health.  At 167% it’s much lower than the approximately 173% we saw prior to the pandemic. So yes Canadians are taking out more mortgages.  This is true. But they’re also saving …
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Stress Test Rule Changes Confirmed

Breaking Mortgage News The current rule for mortgage approvals is that you must qualify as if the interest rate is 4.79% or your contract rate plus 2%, whichever is higher. This is known as the stress test rate. Its purpose is to determine if someone can still afford their home even if rates were to rise. Effective June 1st, 2021, the stress test rate is being raised to 5.25% on both insured and uninsured mortgages. It is estimated that this increase will decrease homebuyers’ purchasing power by around four to five percent. Unfortunately, as of June 1st, most pre-approvals under the previous stress test will no longer be accepted and you must qualify at the new rate. If you currently have a pre-approval with Valko Financial, please call our office at (519) 745-8019 to review the amount that you are qualified for. We are still committed to arranging mortgage financing for the purchase of your …
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Weak April Jobs Report Reflects Canadian Lockdown

Original Source:  Dr. Sherry Cooper, DLC   Canada’s Jobs Recovery Impaired by Third-Wave Virus Restrictions   This morning, Statistics Canada released the April 2021 Labour Force Survey showing a major deterioration in the jobs market following the third-wave Covid containment measures. Employment fell by 207,100 (-1.1%) in April, and the unemployment rate rose 0.6 percentage points to 8.1%.Employment declined in both full-time (-129,000; -0.8%) and part-time (-78,000; -2.3%) work. The number of employed people working less than half their usual hours increased by 288,000 (+27.2%). The number of Canadians working from home grew by 100,000 to 5.1 million. Total hours worked fell 2.7% in April, driven by declines in educational services, accommodation and food services, and retail trade. The labour underutilization rate, which captures the full range of available people who want to work, rose 2.3 percentage points to 17.0% in April. The number of Canadians unemployed for 27 weeks or more–the long-term unemployed–increased to 486,000. This group might well be the most scarred by the pandemic in terms of their job prospects and …
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