From the Desk of Faisal - Real Estate News for the Week of Nov 19th - Nov 25th
Welcome to Properties Ontario’s weekly update. Our team goes through numerous articles and summarize them for you! Please do not hesitate to contact me if there are any topics you would like to discuss further. If you have any questions about buying, selling, or leasing residential or commercial space, we’re the team for you. For current listings in the marketplace, check out our website www.propertiesontario.com
CMHC Mortgage Consumer Survey
Canada Mortgage and Housing Corporation (CMHC) conducted a mortgage survey to determine Canadians’ loan arrangement trends and preferences. Approximately 15% of Canadians refinanced to consolidate their debt which outranked home improvements. Also 69% of respondents said they are comfortable with their current level of debt with 63% mentioning that if they run into financial problems, they do have another asset they can tap into. Even though the survey showed 68% were satisfied with their broker and 79% were satisfied with their lender, borrowers would like to receive more information regarding their interest rates. Of the total refinancers, 24% were Generation X (aged 35 to 44) while 35% were Baby Boomers (55+). Furthermore, 61% are employed full-time, 7% are self-employed, and 17% were retired. Out of the self-employed segment, refinancers and repeat buyers represented the highest proportion. Lastly, 72% owned a single family detached home with 23% having a household income between $60,000 to $90,000.
Sales to New Listings Ratio (SNLR)
A useful tool to determine the speed of the market is SNLR metric. It simply measures the sales compared to the new listings that come onto the market. A ratio above 60% would depict a rapid moving market, hence a seller’s market. On the other hand, a ratio below 40% would illustrate a slower market or a buyer’s market. Any ratio in between 40 to 60%, would be a balanced market. Windsor-Essex region had the highest SNLR at 75.8 in October 2018. London was second with a ratio of 75.7. However, both Windsor and London saw a decline of SNLR from last year. The third place city was Ottawa at 69.4 and they were one of the only two cities that showed an improvement from last year. The other city that had it’s ratio improved was Montreal. The lowest ratios were in Edmonton (45.3), Calgary (47.4) and Vancouver (48.4). In comparison, Toronto is at 49.4, dropping 9.69% from October 2017. The real estate market in Canada is evidently cooling but due to its high demand is still forcing it towards a balanced market.
Canadian Confidence Report
Bloomberg/Nanos Canadian Confidence Index is a weekly survey done across Canada to determine how Canadians feel about key economic issues. The confidence index is down one point to 57.05 due to weaker confidence in job security and personal finances. However, more than 40% of respondents believe real estate prices will be higher in six months compared to 16% who expect them to decrease. The decrease in confidence was seen across all regions, age groups, owner vs renters, and income levels. The only province to have a consumer confidence gain was Quebec due to its strong real estate market in Montreal. Overall Canadians are becoming more and more cautious as interest rates rise and money is allocated to service debt.
Canadian Real Estate Increased 44% in the Last Five Years
Numerous analysts are discussing about how the real estate market slowing down. It is evident that the market is slowing down but it is important to note that it is actually moving back to an equilibrium. In the last five years, Canadian real estate prices appreciated 44.04% across the nation. A lot of this appreciation was exuberance and did not follow market fundamentals such as income and population growth. The benchmark price of MLS reached $623,000 in October 2018, increasing 2.33% annually. This brought the total to 44.04% in the last five years. The most expensive neighbourhoods were Vancouver ($1,062,100), Oakville ($958,700), and Fraser Valley ($853,600). The least expensive neighbourhoods were Moncton ($182,600), Regina ($277,100), and Saskatoon ($295,100). The fastest rising neighbourhoods were Guelph (+9.33% to $562,300), Victoria (+8.5% to $696,600), and Fraser Valley (+6.84% to $853,600). Hamilton and Ottawa followed Fraser Valley for the 4th and 5th highest annual gains in their benchmark price.
October 2018 Condo Statistics
GTA Condo Statistics October 2018 (October 2017 comparison in brackets)
- Benchmark Price: $507,700 (+9.56%)
- Median Price: $495,000 (+8.79%)
- Average Price: $562,523 (+7.5%)
- Number of Sales: 2,127 (+5.5%)
- New Listings: 3,401 (+1.25%)
- SNLR: 62.54 (seller’s market)
- Inventory: 3,702 (-4.41%)
- Months of Inventory: 1.74 if no new listings came on the market
Toronto Condo Statistics October 2018 (October 2017 comparison in brackets)
- Benchmark Price: $538,300 (+10.92%)
- Median Price: $535,000 (+9.63%)
- Average Price: $603,153 (+8.6%)
- Number of Sales: 1,519 (+2.8%)
- New Listings: 2,381 (+5.33%)
- SNLR: 64.79 (seller’s market)
- Inventory: 2,470
- Months of Inventory: 1.63 if no new listings came on the market
Further Investment by UPS in Canada
UPS is investing $200 million in building its largest Canadian facility to be located in Caledon. This announcement is after the company approved investing into their other Canadian facilities in Montreal, Edmonton, Brampton, London, and Kanata. The Caledon facility will be fully automated but offers plenty of new jobs for the town. It is projected to sort more than 35,000 packages per hour and have 200 cars in its fleet. UPS is one of many companies continuing to expand into Canada because of a strong economy. More investment in industrial, retail, and office space will occur in the next five years as Canada is poised to continue its growth.
USA October Sales Statistics
After six months of monthly sales declines of resale homes in the US, October finally had a rise of 1.4% from September. This brought the seasonally adjusted rate to 5.22 million homes as three out of the four regions produced increases in sales. However, if we are to view sales on an annual basis, they decreased 5.1% from October 2017. The median existing home price for all housing types increased 3.8% to $255,400 from October 2017. Inventory fell from September 2018 (1.88 million) to 1.85 million in October 2018. For reference, October 2017 had an inventory of 1.80 million homes for sale. As North America enters into the winter season, transactions typically slow down. In addition, the growth in inventory is required as price appreciation for certain homes needs to slow down. Further inventory will help create a less frenzied buying atmosphere as well.
Canadian Loans Secured by Residential Real Estate
When Canadians secure loans with residential real estate, they tend to use it for two broad purposes: personal or business. Personal loans are home equity lines of credit (HELOC) and are regularly used for personal consumption such as home improvements, vacation, purchasing a car, etc. Business loans which are secured by residential real estate are regarded as productive loans because they are used to expand the business which in turns provides a ripple effect in the economy. The total balance of loans secured by residential real estate reached $292.3 billion in September 2018. This is an increase of 0.45% from August or up 4.53% from September 2017. Personal loans accounted for $263.3 billion of the total, increasing 0.48% monthly or 6.19% annually. On the other hand, business loans totalled $28.9 billion during September. This has increased monthly by 0.24% but decreased annually by 8.49%. The negative growth in business loans has continued since April of this year. Despite interest rate increases, personal loans are still climbing which isn’t good for the economy. It is crucial, clients budget themselves effectively to avoid financial strain when repaying their debt obligations.