Record Debt Service & Unaffordability
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Market Highlights
Mixed emotions: 2023 brought us the slowest November since the Global Financial Crisis and the slowest October since the 1990’s recession - when looking at number of homes sold. Seasonally, the 2 slowest months of the year are December and January. This means that there is a solid chance that the cyclical low in home sales volume is about to take place over the next 2 months, and after this, we likely won’t test those lows again for another cycle. All annual TRREB sales are visualized below since 1994. Chart from Chartography.ca
Stat Central
🏠 40%
The proptech collective just released a great report on over 500 tech companies that aim to disrupt and change the real estate inustry and 40% of these companies have been founded within the past 5 years
💸 1.5 billion
The amount that just over 500 Canadian proptech companies have raised in funding and investment since June of 2022.
📉 3.1%
The annual inflation rate in Canada fell to 3.1% in October of 2023 from 3.8% in the previous month, slightly below market expectations of 3.2%. The result was softer than the BoC’s forecast that inflation is likely to remain close to 3.5% through the middle of next year, but whats causing inflation? As a result of rental inflation and mortgage interest costs, shelter is the leading cost of inflation in both components:
Mortgage interests costs at 30.6%
Rental rates at 8.0%
Headlines
Mortgage interest payments up nearly 90% since start of BoC rate hikes: StatCan Figures released today by Statistics Canada show that as of the third quarter, mortgage interest payments are up 89.6% since March 2022. Over the same period, the amount of mortgage principal paid has fallen 16.8%.
Here’s What 400k can get you in Toronto Real Estate Vs. Other Ontario Cities the price of the average Ontario home is around $856k — down from an even higher peak of nearly $930k in May — Point2 says that most properties are still "very much out of the financial league of at least half the buyers in Toronto, not to mention the less expensive cities in the province," even with this year's slight price drops.
Driving this point home is how much square footage someone with $400k to spend on a home could actually get around the province, starting with a meagre 395 square feet in Toronto.
'A buyers' market with no buyers': CIBC economist on housing market Some home sellers are struggling to find buyers amid high mortgage costs, according to an economist who says Canada’s housing market is in the midst of “a very healthy correction.”
“We have more supply and less demand. This is becoming a buyers’ market – a buyers’ market with no buyers,” Benjamin Tal, deputy chief economist at CIBC World Markets
Tweets & Charts
What we’re reading
PROPOSED ENHANCEMENTS TO THE CITY’S HOUSING ACCELERATOR FUND APPLICATION - The City of Toronto published their response to Minister Sean Fraser’s requests, and they were met with much criticism from the industry.
Provincial goal of building 1.5 million homes will not be realized without adequate land supply (2 parts) - A new study by Malone Given Parsons Ltd. (MGP), commissioned for the Building Industry and Land Development Association (BILD) and the Ontario Home Builders’ Association (OHBA), identifies that there is insufficient land within municipal official plans in the Greater Golden Horseshoe (GGH) and Greater Toronto Area to meet mid- and long-term population growth. This will jeopardize the provincial objective of building 1.5 million new homes and undermine efforts to address housing supply and affordability.
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Catch ya next week!
-Padder