It’s time for your cheat sheet on this week’s top stories.
Canadian real estate
Higher rates lower your cost of living, ‘We know it’s hard’: Bank of Canada
The Bank of Canada knows that higher rates are “hard” for you, but they will improve the cost of living. Seriously. The central bank made this argument on its twitter account, but left a little aside on the mechanics of the market. No problem, we’re more than happy to explain how higher rates improve affordability. Although that raises a lot of questions about what they were doing before, doesn’t it?
Real estate prices in Canada will fall more than expected, according to Desjardins
Another of Canada’s major financial institutions is lowering its forecast for real estate. The Desjardins group previously predicted that house prices would fall by 15%, but we are already almost there. The market is deteriorating faster than expected, so they are now seeing house prices drop by up to 25%.
Canada eliminated its real estate bubble by revising the data. He already hit a new one
Canada’s real estate bubble was inflating and then suddenly was gone. The US Federal Reserve’s Exuberance Index showed Canada was in a bubble for 6.5 years in 2021. By the first quarter of 2022, most of this bubble had been retroactively eliminated. The central bank said it was the biggest overhaul it had ever seen.
Canadian real estate affordability hits worst level since 1990s, says Bank of Canada
The Bank of Canada’s Housing Affordability Index has reached a new multi-decade high. An average household needed 42.8% of their income in the first quarter of 2022 to take out a mortgage. This was the highest needed income share since the housing bubble of the early 1990s.
Real Estate in Toronto
GTA detached house prices fell $178,000 last month
GTA detached house prices fell sharply in July, falling by 6 figures. The benchmark single-family home fell to $1,455,000 in July, down 4.5% (-$68,600) in the month. The most extreme decline occurred in King, where prices fell $178,200 in just one month. Considering the price increases over the previous two years, that’s just a scratch. However, there are few signs that the rapid declines will stop soon.