Time for your cheat sheet on this week’s top stories.
Canadian Real Estate
Buy/sell, rent/lease residential &
commercials real estate properties.
Last week, the Bank of Canada (BoC) claimed the country has a long-standing housing supply issue. This ticked off a number of experts that have been following this issue, including the economists at BMO. Prior to 2020, housing outpaced household formation and shelter costs were considered affordable across the country. Even the central bank’s housing affordability index demonstrates 20 years of near-record affordability that only ended with a low rate shock that fueled a speculation frenzy.
Canada’s aggressive pursuit of international students is currently under scrutiny. As social media fills with posts of international students sleeping in tent cities and using food banks, the government is feeling pressure to act. A few days ago the first measure was launched—raising the minimum amount of funds required to study in Canada. However, they mentioned nothing about caps on permits or limits on schools to regions with adequate housing. Apparently the only issue policymakers saw is, those on study permits paying 5x more than domestic tuition, simply aren’t wealthy enough.
FINTRAC, Canada’s financial crime watchdog, announced compliance fines for RBC ($7.5 million) and CIBC ($1.33 million). During a routine audit, the agency found a number of gaps in the bank’s respective anti-money laundering (AML) reporting procedures. FINTRAC has been working to try and correct its image after BC’s AML inquiry found the agency to be an unreliable resource.
Canadian insurer Northbridge Insurance has warned that arson of new homes may rise as the economy slows. This comes as investors in pre-construction homes become desperate due to changing market conditions. The firm suggests increased security measures to prevent and document the incidents, as well as to help reduce insurance premiums. If premiums rise, the cost of housing may also go up.
Canadian policymakers are floating the idea of capping international students. They may not need to, since the most recent data for study permit applications shows a 20% decline for the month of September. This is primarily driven by a big pullback in Indian applications, which have slowed since April. Word is spreading fast that Canada’s international students are struggling to find the opportunities promised, leading to fewer applications. Canada threatening limits is simply policymakers trying to save face, attempting to get ahead of data showing it’s struggling to attract students.
Toronto Real Estate
Toronto real estate prices are still falling, and have rolled back a couple of years of progress. Prices fell $20k in November, as sales fell and inventory continues to suddenly build. Economists at National Bank, one of the country’s “Big Six” banks, took note of how quickly this market broke down. By their calculations, it’s one of the fastest loosening of market conditions in Toronto real estate history.