A permanent generation of middle-class renters?

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This week's housing newsletter was written by HuffPost Canada senior business editor Daniel Tencer. To no one's surprise, Canada’s mortgage industry really, really doesn’t like federal regulators' new mortgage stress tests. Its principal industry association, Mortgage Professionals Canada, released a report a few weeks ago on the impact of the tests that is almost apocalyptic in tone. It blames the stress tests for this year's housing market slowdown, estimating that the reduced real estate activity will mean Canada will create 200,000 fewer jobs over the next three years than it otherwise would have. C2About 18 per cent of prospective homebuyers in Canada would fail the stress test on their desired home, the report found, meaning they would have to buy a less expensive home or save up for a larger down payment. On average, these buyers will now be short nearly $29,000 for their purchase, economist Will Dunning estimated in the report. (He was much more forward in a report last month for his own economic research firm, in which he called the mortgage stress tests “truly stupid” and “unnecessarily and ridiculously dangerous to the economy.”) In the view of many in the industry, the stress tests — which require borrowers to qualify at a rate that’s some two C3percentage points higher than what’s being offered on five-year fixed mortgages — are excessive. Mortgage Professionals Canada is suggesting Canada’s banking regulator reduce the test to 0.75 percentage points above offered rates. But the group’s report goes further than that. It suggests that the tougher new federal regulations risk creating “a permanent generation of middle-class renters … as the ability to own homes and generate long-term equity becomes more and more difficult.” "More and more young people are getting used to the idea that they may never own a home and become permanent renters." - Mortgage Professionals Canada What's more, it sees the growing phenomenon of buyers taking money from “the bank of mom and dad” as a bad sign for the future of home ownership. “This means that there will be ‘rationing’ in the housing market,” Mortgage Professionals said in a press release. “The ability to purchase will be increasingly determined by the buyers’ C4opportunities to get help from parents. The actual circumstances of prospective buyers ... will become less important than the circumstances of their parents.” The report may have a point there. But the mortgage industry is pointing the finger of blame at the wrong target. It’s years of eroding affordability, not mortgage stress tests, that created this problem. Long before the stress tests came along, some experts were warning of exactly this. “Parents will only be able to help if they themselves are wealthy homeowners, so you could have a landed wealth-owning class perpetuating through the generations,” author Max Rashbrooke told HuffPost Canada in 2016. “At that point being born into the right family matters a lot.” This 2017 chart from the OECD shows Canadian households have some of the highest debt levels in the world. The single biggest contributor to the problem is house prices rising faster than incomes. The Mortgage Professionals report notes that since 2000, house prices in Canada have tripled on average, growing twice as quickly as incomes. To cover the difference, Canadians have taken on increasingly large amounts of debt, which today sit near record levels. The point of the mortgage stress tests is to ensure that borrowers can afford to carry that debt, even in a high-interest rate environment. They are designed to reduce the risk to lenders and to homeowners. If they also happen to put a halt to runaway house price growth, that might just solve the housing inequality problem the mortgage industry is so worried about.   Source: Huffpost Canada.

Category: Starion Blog

A permanent generation of middle-class renters?

C1

This week’s housing newsletter was written by HuffPost Canada senior business editor Daniel Tencer.
To no one’s surprise, Canada’s mortgage industry really, really doesn’t like federal regulators’ new mortgage stress tests. Its principal industry association, Mortgage Professionals Canada, released a report a few weeks ago on the impact of the tests that is almost apocalyptic in tone. It blames the stress tests for this year’s housing market slowdown, estimating that the reduced real estate activity will mean Canada will create 200,000 fewer jobs over the next three years than it otherwise would have. Continue reading ..

Canada’s sudden population ‘boomlet’ boosts housing

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This week’s housing newsletter was written by HuffPost Canada senior business editor Daniel Tencer, who’s a little worried about what strong population growth means for Canada’s clogged freeways. Many Canadian homebuyers are sitting on the sidelines these days, wondering if the slowdown in home sales this year is a sign of lower prices ahead.
Don’t bet on it, is the message coming from Bank of Montreal economists. Canada’s population growth has accelerated, and that means upward pressure on the housing market, and potentially higher-than-expected interest rates as well. In an analysis issued Thursday, economists Doug Porter and Robert Kavcic noted that Canada’s population passed the 37 million mark in the second quarter of this year, having grown by about 506,000 over the past year. It’s the fastest percentage growth Canada has seen since 1991, making it the fastest-growing country in the G7.

P2                                                                Chart: Bank of Montreal

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CMHC makes favourable announcement regarding self-employed borrowers

CMHC is giving lenders more guidance and flexibility on determining whether a self-employed person qualifies for a mortgage

 

Unknown-1OTTAWA — Canada Mortgage and Housing Corp. is making changes intended to make it easier for the self-employed to qualify for a mortgage.

The national housing agency says it’s giving lenders more guidance and flexibility to help self-employed borrowers.

Self-employed Canadians may have a harder time qualifying for a mortgage as their incomes may vary or be less predictable.
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Pickering to open Huge Casino, Retail District, Hotel and Waterpark called DurhamLive

More than 10,000 jobs are expected to be created in Pickering after the Durham Live site was chosen for a casino and waterpark to open in 2019.DL1

Great Canadian Gaming, the company selected to operate casinos in the Greater Toronto Area, made the announcement.

That means Casino Ajax, the facility that’s been operating since 2006, will close.

Ontario Gaming GTA LP, a partnership between Great Canadian Gaming and Brookfield Business Partners, will operate the Pickering casino, which will be built at Church and Bayly streets.

The Durham Live proposal includes hotels, convention space, an indoor water park and film studios, along with the casino. Ontario Gaming GTA LP says the site would create more than 10,000 jobs.

The casino itself would have about 2,000 employees, including 1,700 new jobs. Continue reading ..

Which factors could influence Ontario’s housing market this spring? Experts give their take

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You’ve probably heard plenty about how a new mortgage stress test and an interest rate hike are affecting the Ontario housing market. But these are only some of the factors that could affect the market in coming months.

A provincial election, slippery debt levels, and surge of homebuyer demand could all play a role in where the market ends up this spring.

BuzzBuzzNews has rounded up the latest commentary from industry experts to make sense of the many elements that could affect the market in the spring.

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Canadian jobs market ‘on fire’ | Unemployment falls to 41-year low

 

Job creation in 2017 reached a pace not seen in a calendar year since 2002, reduced the unemployment rate to its lowest mark in more than 40 years — and surely came as a profound relief to Canada’s embattled federal finance minister.

Statistics Canada’s job numbers Friday offered a year-end look at a healthy 2017 performance. The surprisingly strong run was capped off by a December report that led some forecasters to cement, or even move up, their predictions that the Bank of Canada would raise its benchmark interest rate, possibly as early as this month. Continue reading ..

Canada goes on ‘hiring splurge’ | Unemployment rate down 5.9 Percent

OTTAWA – A wave of job creation last month knocked the unemployment rate down to 5.9 per cent — its lowest level in nearly a decade. Statistics Canada says the economy churned out another 79,500 net new jobs in November and drove the jobless rate down 0.4 percentage points from 6.3 per cent the month before.

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Toronto-York subway extension is now officially open

The opening marks the first expansion of Toronto’s subway route since the Sheppard line opened in 2002. To celebrate the TTC is free on Sunday.

Amidst cheers and flashing cameras, Charles Levi quietly scribbled into his small, green notebook, documenting theVMC4
first ride on the Line 1 extension Sunday morning that took passengers beyond Toronto’s border and all the way to Vaughan.
“I came here for the opening just as I did when the last station opened 15 years ago. I stopped along every new station,” said Levi, who works at the Archives of Ontario, which is now just a subway ride from downtown. “It’s my day off and it has been a remarkable morning.”

The new extension is the first expansion of Toronto’s subway system in 15 years. Transit was free across the entire TTC network Sunday to celebrate the occasion. The $1.2 million cost for the free service will be fully covered by the Ontario government. Construction work on the extension began in February 2010 and was jointly funded by the federal government, Ontario, Toronto and York region.

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CMHC Releases 2017 Third Quarter Financial Report

Canada Mortgage and Housing Corporation (CMHC) has released its 2017 third quarter financial report, as well as supplemental data on its Mortgage Loan Insurance, Securitization, and Covered Bonds business activities. New this quarter is the addition of Assisted Housing supplemental data.

“CMHC continues to deliver results for Canadians. The Government, through CMHC, is making unprecedented investments to help Canadians in housing need as part of the National Housing Strategy. Commercially, we continue to manage our mortgage loan insurance and securitization operations in the best interests of long-term financial stability.”

Wojo Zielonka, Chief Financial Officer and Senior Vice-President, Capital Markets

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10 Stats that show Canadian Rental Demand is out of control

Photo: James Bombales
TowerPicsRental vacancy rates across Canada plunged this year, as demand for rental units outpaced supply.

According to the Canada Mortgage and Housing Corporation’s (CMHC) 2017 Rental Market Survey, the national vacancy rate for purpose-built rental apartments fell from 3.7 to 3.0 per cent in 2017, the first decline in the last two years.

“Nationally, increased demand for purpose-built rental apartment units outpaced growth in supply,” CMHC senior market analyst Gustavo Durango said in a statement. “Demand can be attributed to historically high levels of positive net international migration, improving employment conditions for younger households and the on-going aging of the population.”

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