Time for our roundup of the most important real estate stories of the week. This week we broke down how interest rates, and shadow banking impact speculation. Looked at Toronto’s domestic speculation problem, and how Vancouver’s rental situation might deteriorate further.
Canada
The Bank Of Canada Is Full Of S**T, Here’s How Interest Rates Impact Speculation
Bank of Canada (BoC) governor Stephen Poloz boldly claimed “I don’t think even a five percentage point difference would take you away from [speculation].” The word think, it sounds like he didn’t do that math – so we did. We ran the numbers and built a model to determine capital flow. Turns out a five percent rate hike would actually drop prices by about 30%.
Now should he raise rates? Doesn’t really matter to us. Just don’t say it wouldn’t change prices, because there’s well documented models that show it would.
Canada’s $1.1 Trillion Shadow Banking Sector Is Now Half As Large As Banks
Canada’s addiction to credit has created a massive shadow banking sector. Total liabilities now exceeds $1.1 trillion, making it half the size of Canadian banks. If that number sounds massive, it is. That makes Canada’s shadow banks 5x larger per capita than China.
Toronto
Foreign Buyers Or Domestic Greed? Over 121,000 Toronto Homeowners Own Multiple Homes In The City
New data from the Ministry of Finance shows that Toronto real estate has a bigger problem than foreign buyers—speculators from Toronto. Property registries show same city sales of property increased 14.46% in 2016, the fastest year on record. That’s larger than Vancouver’s foreign buyer problem in case you’re curious.
Toronto Homeowners Look To Cash Out In March As Detached Listings Soar
Toronto real estate saw a sharp increase in new detached homes listed in March, setting a new single month record. The rapid increase in supply is showing sellers are more than willing to cash out at this level, but the real question is, are there enough buyers?
Vancouver
Vancouver Detached Homes Get First Price Increase In 8 Months
Detached homes stopped their 8 months slide, with a pretty solid uptick in prices. Now one month isn’t a trend reversal, but it may show signs of a stabilizing market.
Renting In Vancouver Just Turned Into “The Hunger Games”
The CBC just reported over 130 people lined up for a shot at renting a single apartment, and things could get worse for Vancouver renters. A decade of poor planning, and a 34% decline in rental construction are expected to apply additional pressure to the city’s notoriously low rental vacancies. Add to the mix a record number of people moving to the city, and there’s serious issues on the horizon.
