Welcome to Properties Ontario’s weekly update. Our team goes through numerous articles and create summaries for you! Please do not hesitate to contact me if there are any topics you would like to discuss further or if you have a general question about buying, selling, or leasing residential or commercial space. For current listings in the marketplace, check out our website www.propertiesontario.com
Slower Growth in Canada’s Loan Industry
Growth in the Canadian loan industry slowed down in the second quarter of 2018. The total growth for the quarter reached $19.6 billion which down from the $22.2 billion increase achieved in the first quarter. Of the loan decrease, $3.6 billion was related to mortgage loans. Seasonally adjusted household debt to service ratio reached 14.2% at the end of the quarter. Debt to service is the percentage of disposable income used to pay off your debt. Total unadjusted debt reached 2,166 billion with mortgages accounting for $1,415 billion of that. This translated into 169.1% debt when compared to a person’s disposable income. Another important figure that was released was the increase of total national wealth to $11,119.4 billion at the end of the second quarter. This was an annual increase of 1.9%. This is $298,777 of wealth per capita.
GTA Condo Statistics for August 2018 (August 2017 comparison in brackets)
- GTA Condo Statistics
- Benchmark price: $505,500 (+9.94%)
- Median price: $478,889 (+8.33%)
- Average price: $541,106 (+6.4%)
- Total Sales: 2,000 (+0.7%)
- New Listings: 2,961 (+1.61%)
- Sales to New Listings: 67.54% (seller’s market)
- Active Listings: 3,592 (no growth)
- Months of Inventory: 1.80 if no new listings came on the market
- Toronto Condo Statistics
- Benchmark Price : $533,600 (+11.6%)
- Median Price: $518,944 (+10.41%)
- Average Price: $585,355 (+8.3%)
- Total Sales: 1,388 (-5.6%)
- New Listings: 2,013 (+1.05%)
- Sales to New Listings: 68.95% (seller’s market)
- Active Listings: 2,307 (-1.95%)
- Months of Inventory: 1.66 if no new listings came on the market
Canadian Home Sales Statistics for August 2018
Canadian Real Estate Association (CREA) reported a 0.9% increase in sales for the month of August when compared to July. Non-adjusted sales which are essentially actual sales fell 3.8% year over year. The prices increased nationally 1% annually. If no new listings came onto the market, the inventory would finish in 5.4 months. MLS aggregate Home Price Index finds out the price for typical home increased 2.5% year over year. Largest year over year price gains were in apartments (+9.5%), then townhomes (+4.3%). One-storey single family homes barely increased (0.4%) and two-storey family homes decreased slightly by 0.4%. TD Economics stated the largest gains were in Toronto (+2.2%), Montreal (+2.8%), and Edmonton (+5.4%). Largest decreases were in Halifax (-8.2%), London (-1.2%) and Winnipeg (-1.0%). These figures represent a slower phase of recovery due to government regulations. For 2019 CREA is forecasting 2.1% increase in national sales and the average price to be $508,400.
Mid-September Home Sales Release
Zoocasa analyzed their own data along with TREB for the first half of September 2018. What they found out was that detached home sales went up by 11% in Toronto and 9% in the GTA. Semi-detached home sales went up by 9% in Toronto and 5% in the GTA. Condo sales rose 7% in Toronto while increasing 8% in the GTA. Condo townhomes went down by 25% in Toronto but increased 6% in the GTA. These figures are compared to September 2017 first half of the month. Even though sales are up, inventory has increased for all types, shifting from a more balanced market in August to a buyer’s market in the first half of September 2018.
TransUnion Report on New Mortgage Creations
TransUnion findings revealed in the first quarter of 2018 that the age bracket of 73 to 93 had 63% more mortgages created when compared to last year. For baby-boomers the mortgage volume increased 18%. It was a clear indication that the older generation are not the ones affected the tighter mortgage rules. Millennials and first-time buyers mortgage volume had a decrease of 19% in the 24 to 38 age bracket. The age bracket of 18 to 23 decreased 22%. Overall new mortgage volume declined in Q1 2018 by 3.4% year over year, following an 8% annual decline the previous quarter. Years of equity growth has helped the older generation but the younger cohorts must save more.
American Homes Sales for August 2018
Sales during August 2018 were unchanged keeping on its forecasted pace of 5.37 million. They are currently at 5.34 million for the year. Median sale prices were at $264,800 at the end of August, representing a 4.6% year over year increase. Total inventory available is at 1.92 million, a 2.7% annual increase. This was the first increase in inventory in three years. At this pace it would take 4.3 months to sell all the homes in the market if no new listings entered. During the same time last year, this figure was at 4.1 months of inventory. Single family home sales pace was unchanged at an annual rate of 4.75 million while condos and co-op units were also unchanged at the 590,000 annual pace. The average days on market for each listing was 29 days compared to 30 days a year earlier. Existing home sales accounted for 90% of sales and are calculated when a contract closes. The remaining 10% of sales were new construction purchases which are calculated at the signing of the contract.
Interest Rate Increases Cause Canadians Debt to Service Ratio (DSR) to Increase
During quarter two of 2018, Canadians spent the largest amount to service their debt since 2008. The debt to service ratio is the percentage of disposable income used to pay your loan (principal and interest). To further elaborate, disposable income is money after taxes and non-discretionary spending. Canadians had a DSR of 14.15% in Q2 2018, up 2.68% from last year. The interest segment of the DSR is at 6.87%, a 7.84% rise from last year. The mortgage DSR is at 6.51% which illustrates a 3.33% increase annually. The interest segment of the mortgage DSR was 3.55% representing an 8.89% increase from the year before.