Sold house prices in Toronto

With Mongohouse shut down due to ongoing dispute with the Toronto Real Estate Board, there are some alternatives to get sold listings data.

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New CMHC shared equity mortgages are a bad idea

You probably heard in the news about a new shared equity mortgages program announced in 2019 budget.

It will provide a first time home buyer with additional 5% downpayment on resale properties and 10% on new builds.

Again, they release a program without a clear guidelines on how it will work.

The rules as we know so far:

  • Must be insured by CMHC
  • First time home buyers only
  • Household income under $120,000
  • Maximum mortgage amount $480,000

Leaves many questions unanswered.

  • Must pay back 5-10% of the future sale price or initial amount?
  • What happens if the sale price is lower?
  • Will they pay part of property taxes, maintenance or condo fees?
  • Any improvements will increase value, how will that be reflected?
  • Clients still pay full closing costs and land transfer taxes?
  • CMHC is not the only mortgage isurer, will the other insurance companies be able to participate?

Still too early to tell, but we don’t expect it to have a significant impact on GTA.

NDP wants to reintroduce 30 year amortizations to insured mortgages

NDP Leader Jagmeet Singh announced another step in his plan to take real action to address the housing crisis. When it comes to tackling the housing crisis, NDP Leader Jagmeet Singh and the NDP team are on the side of Canadians with solutions that will make it easier to own a home now.

“For too many Canadians, the dream of owning a home seems further away than ever. First time buyers are struggling to get into the market as they watch prices spiral upward, putting home ownership more and more out of reach,” said Singh. “Trudeau’s Liberals haven’t done anything to make home ownership more accessible for young Canadians. They simply don’t get it. We must take immediate action to put the dream of home ownership within reach for more Canadian families.”

New Democrats led the way in calling for bold action to build more affordable and social housing across the country. Now it’s time to do the same for home ownership for the next generation. Jagmeet Singh is calling on Trudeau’s Liberal government to re-introduce 30-year terms to CMHC insured mortgages on entry level homes for first time home buyers and provide resources to facilitate co-housing, and to ease access to financing by offering CMHC-backed co-ownership mortgages. These measures are in addition to what the NDP has previously called for in the next budget to bring immediate relief to the families that need it, and address the housing crisis in the long term.

Mortgage Professionals Canada supports a simple increase from the current 25 year maximum to 30 years because it helps aspiring homeowners in three key ways:

  1. It helps renters become owners, helping many younger Canadians nationwide move into housing more suitable for young families;
  2. It gives them flexibility to get the same size mortgage but with lower payments, allowing them greater capacity for saving, spending, and investing;
  3. It specifically targets assistance to first time buyers, allowing them to better compete financially against investor purchasers.

Aspiring Millennial and Generation Y homebuyers have been telling policymakers that they are frustrated, and that they want Housing Affordability brought front and center. We have some technical concerns about the structure of Mr. Singh’s pledge today, but we are very encouraged to see 30-year amortizations as a component of the NDP support plan for would-be first-time buyers.

Bank of Canada increases target rate by 0.25%

Bank of Canada increased overnight target rate by 0.25% to 1.75% on October 24, 2018. Prime rates at the banks expected to increase by 0.25% to 3.95%. It will affect variable rate mortgages and lines of credit.

The global economic outlook remains solid. The US economy is especially robust and is expected to moderate over the projection horizon, as forecast in the Bank’s July Monetary Policy Report (MPR). The new US-Mexico-Canada Agreement (USMCA) will reduce trade policy uncertainty in North America, which has been an important curb on business confidence and investment. However, trade conflict, particularly between the United States and China, is weighing on global growth and commodity prices. Financial market volatility has resurfaced and some emerging markets are under stress but, overall, global financial conditions remain accommodative.

The Canadian economy continues to operate close to its potential and the composition of growth is more balanced. Despite some quarterly fluctuations, growth is expected to average about 2 per cent over the second half of 2018. Real GDP is projected to grow by 2.1 per cent this year and next before slowing to 1.9 per cent in 2020.

The projections for business investment and exports have been revised up, reflecting the USMCA and the recently-approved liquid natural gas project in British Columbia. Still, investment and exports will be dampened by the recent decline in commodity prices, as well as ongoing competitiveness challenges and limited transportation capacity. The Bank will be monitoring the extent to which the USMCA leads to more confidence and business investment in Canada.

Household spending is expected to continue growing at a healthy pace, underpinned by solid employment income growth. Households are adjusting their spending as expected in response to higher interest rates and housing market policies. In this context, household credit growth continues to moderate and housing activity across Canada is stabilizing. As a result, household vulnerabilities are edging lower in a number of respects, although they remain elevated.

Source: Bank of Canada

Canada’s largest real estate board sues listings website for $2M

The Toronto Real Estate Board is suing property listings website Mongohouse for $2 million, alleging that the anonymously-run page is illegally accessing, copying and distributing proprietary data.

The board, which is the largest in Canada and represents more than 50,000 realtors across the Greater Toronto Area, filed the lawsuit last month in Federal Court asking for an immediate and permanent injunction for the popular website to be taken down.

In the statement of claim, TREB alleges that Mongohouse participates in an “orchestrated strategy to avoid and elude” the board’s multiple attempts over the past two years to shut it down.

It claims the website is infringing on the board’s copyrights by “employing various techniques to illegally data scrape” information that it provides to its fee-paying members through its internal multiple-listings service (MLS). This includes data such as new property listings, descriptions, sold prices and photography.

It goes on to allege that Mongohouse is profiting from advertisers by its daily “unauthorized access” of this information, which it then displays on its website for free.

The board said Thursday it could not comment further on the legal action because the issue was now before the courts.

Meanwhile, efforts to contact Mongohouse were unsuccessful. A statement of claim has not yet been filed with the Federal Court.

In the filing dated Sept. 12, TREB says it doesn’t know how its information is being accessed, but it believes it is the source because it placed “unique information” in its system and saw it appear on the Mongohouse website within 24 to 48 hours.

“All of the information on the Mongohouse website for this purpose is only available from the TREB MLS system,” said the claim. “There is no other means available for Mongohouse to obtain the information that is available and made publicly accessible through the Mongohouse website.”

The board argues that it has spent “tens of millions” of dollars to create and maintain its MLS system and that it suffers “injury and irreparable harm” when Mongohouse “continues to pass itself off as offering the same services…”

In addition to naming and in its lawsuit, the claim also names the website’s unknown operators (John and Jane Doe); web server Digital Ocean Canada Inc. and its U.S. based subsidiaries, as well as Sheng Lan Mai who is also known as Maxim Mai, of Richmond Hill, Ont.

The board claims that Mai is a software engineer at IBM and “appears to be the original author and creator of Mongohouse.” It is unclear whether he is currently the operator of the website.

The lawsuit is asking that the court order all information related to the operations of Mongohouse be turned over, including financial dealings and communications.

TREB is claiming $2 million in damages and an additional $100,000 for copyright infringement, as well as legal costs.

The court documents detail the elaborate efforts by TREB to take down Mongohouse since it became aware of its existence in September 2016.

The Mongohouse website, which has a reported 50,000 registered users, uses a map function to display new listings and sold prices across the Greater Toronto Area. It also provides property photos and descriptions of listings. Users had to log into with passwords to access the information.

The website has been offline since Oct. 1.

“ is unavailable until further notice. At the moment, Mongohouse is unable to comment and/or share more information until further instructions given,” said the message.

In August, the Supreme Court of Canada announced it would not hear a case where TREB was fighting to prevent home sales data from being posted on realtors’ password-protected websites.

TREB had argued for seven years at three judicial bodies that allowing the data to be released would create privacy and copyright concerns, but the Competition Bureau insisted keeping the numbers under wraps was anti-competitive and stifled innovation.

Since then, a handful of realty brokerages have made sales price data available on their websites.

Source: BNN

Home Trust shareholder urges company to buy back its shares

A shareholder of Home Capital Group Inc. is urging the alternative mortgage lender to spend $60 million to buy back its shares.

In a letter to Home Capital chief executive Yousry Bissada, Kingsferry Capital Management Group Ltd. says it believes the company's shares are undervalued on the stock market.

Kingsferry says it owns a 2.9 per cent stake in Home Capital.

It says it first acquired the shares shortly after the company's liquidity crisis last year.

The investment firm wrote that it believes Home Capital shares are trading at a discount because its balance sheet is over-capitalized, resulting in low return-on-assets and return-on-equity.

It also says Home Capital shares have suffered from low market liquidity.

Source: CBC

Average Canadian house sold for $481,500 last month

July marked the first time this year that average house prices eked out an annual increase, the Canadian Real Estate Association said Wednesday, as the impact of tougher mortgage rules implemented earlier this year is starting to wane.

“This year’s new stress test on mortgage applicants continues to weigh on home sales, but its effect may be starting to fade slightly in Toronto and nearby markets,” said Barb Sukkau, the realtor group’s president. “The degree to which the stress test continues to sideline home buyers varies depending on location, housing type and price range.”

After years of annual increases that frequently touched the double digits, Canadian house prices have cooled considerably in recent months, especially after the implementation of the new mortgage stress test rules that hold borrowers to higher income standards, which has resulted in less borrowing or taking some people out of the market entirely.

Prices inched higher but July saw the total number of homes sold during the month decline compared to last year, by 1.3 per cent. But after a big plunge at the start of the year, the monthly sales figure has now ticked up for three months in a row.

For economist Doug Porter with the Bank of Montreal, the housing market numbers released Wednesday paint a picture of what economists call a “Goldilocks” market.

“The main takeaway is that the housing market has ceased to be a major source of concern for policymakers — neither too hot, nor too cold, at least for now,” Porter said.

Average prices inched up on an annual basis for the first time since the start of the year.

But CREA says the average isn’t the most accurate way of assessing house prices because it’s skewed by activity in big cities like Toronto and Vancouver, and by certain types of housing. So it calculates another number — called the Multiple Listings Service Housing Price Index (MLS HPI) — that is says is a better gauge of the overall market because it strips out all the volatility.

By that metric, house prices in Canada have increased slightly in the past year, by 2.1 per cent up to July.

Source: CBC

Changes for self employed Canadians

Recently CMHC (mortgage default insurer) announced they will make it easier for self employed clients to qualify for a mortgage. New rules will take effect October 1, 2018. We will have to wait and see what kind of impact it will have on real world transactions.

Changes aimed at giving lenders more guidance and flexibility to help self-employed borrowers:

  • Providing examples of factors that can be used to support the lender’s decision to lend to self-employed borrowers who have been operating their business for less than 24 months, or in the same line of work for less than 24 months such as acquiring an established business, sufficient cash reserves, predictable earnings and previous training and education; and
  • Providing a broader range of documentation options to increase flexibility for satisfying income and employment requirements when qualifying self-employed borrowers such as the Notice of Assessment (NOA) accompanied by the T1 General, the CRA Proof of Income Statement and the Statement of Business or Professional Activities (T2125) to support an “add back” approach for grossing up income for sole proprietorship and partnerships.

We expect other insurers to follow with similar policies.

Source: CMHC


28% of Canadians fear bankruptcy

Twenty-eight per cent of respondents to a new survey, which was conducted on behalf of MNP from June 15 to June 19, said another rate increase will hurdle them toward bankruptcy, while 42 per cent say if rates rise much more they’d fear for their financial well-being. While both readings were down modestly from the previous quarterly survey, that’s not lessening the alarm.

“When you look at the staggering number of people who are teetering on the edge, it’s clear that we are going to start seeing a rise in delinquencies as rates rise,” said MNP President Grant Bazian in a release.

The Bank of Canada has raised interest rates three times since last summer, and investors overwhelmingly expect the bank will boost its target for the overnight rate to 1.5 per cent on Wednesday.

Canadians have been warned for years that the cost of borrowing is bound to rise in this country; indeed, the MNP survey suggests some are paying heed, with 61 per cent of respondents saying they believe their debt situation has improved.

But there’s still a significant proportion of consumers who are struggling under the weight of their balance sheet.

Twenty-seven per cent of respondents to the survey said they have no wiggle room after covering their monthly obligations; meanwhile, 44 per cent say they’re within $200 of insolvency every month.

“Make no mistake about it, the level of household indebtedness in Canada is still very concerning,” Bazian said. “For those who are in debt and already struggling to make ends meet, slowly pumping the brakes on spending isn’t going to be enough at this point.”

Source: MNP, BNN Bloomberg

Canadian delinquencies will likely rise this year says Equifax

Canadian delinquency rates, which have been declining since the last recession, will probably reverse and begin to climb by the end of 2018 as the central bank presses ahead with interest rate increases, according to the country’s largest credit reporting firm.

Regina Malina, senior director of analytics at Equifax Canada, predicts late payments on the country’s $599 billion of credit card, auto and other non-mortgage consumer debt will begin to move “modestly higher” by the end of this year.

“Our prediction is that we will start to see delinquency rates inching up a little bit, and debt probably slowing down,” Malina said last week in an interview.

The delinquency rate — which measures the number of payments on non-mortgage debt that were more than 90 days past due — was 1.08 percent in the first quarter, up slightly from the fourth quarter but still close to the lowest level since the 2008-09 recession.

The Toronto-based analyst declined to estimate how high delinquencies will climb, saying it depends on the pace of interest rate increases and what happens in the trade battle between the U.S. and Canada. She cited the experience in Alberta, where delinquency rates rose in some instances 20 percent or 30 percent on a year-over-year basis after the oil-price collapse. Such an extreme case, however, isn’t what Equifax is predicting. “It will only happen if we start seeing deterioration in employment numbers,” she said, adding delinquencies should remain “still very low,” and “they’re just going to start inching up a little bit, probably not double digits.”

Household credit has ballooned to unprecedented levels in Canada, as in many other developed countries, amid historically low interest rates. That hasn’t posed too many difficulties so far, because the economy and the labor market have generated solid growth, allowing people to handle servicing costs. But with the Bank of Canada intent on raising rates and the U.S. and Canada engaged in a tit-for-tat tariff fight, that could change.

A red flag in the Equifax data was a decline in the share of people who completely pay off their credit cards each month. The 56 per cent who did so in the first quarter matched the fourth-quarter number and was down from as high as 59 per cent last year. It’s a small but important detail, according to Malina.

“The changes aren’t big, but when they’re consistent and we see it for two or three quarters, we start to believe it,” she said. “Given that less people are making their credit card payments in full, and those people are usually people with lower delinquency rates, we might be seeing overall delinquency rates deteriorating.”

Consumer debt including mortgages was $1.83 trillion in the first quarter, up 0.4 per cent from the end of 2017 and 5.7 per cent from the same quarter a year earlier, Equifax said.

Source: Equifax, BNN Bloomberg