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CMHC’s Canadian Real Estate Price Forecast Shows Big Drops In Ontario and BC

Canada’s national housing gave the Canadian real estate industry a further peek at what they expect for prices. The Canada Mortgage and Housing Corporation (CMHC) explained last week that price declines are expected across the country. Now they’ve provided a breakdown of the forecast, and how it impacts individual provinces. Prices are expected to start […]

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Only 5% of Greater Toronto’s New Homes Sold Last Month

Greater Toronto new home sales finally got the pandemic message last month. Altus Group data shows sales made a dramatic drop in April. The segment had bucked the slowing market in March, but is now finally responding. The result has been a mixed movement for prices. New Single-Family Prices Fall, While Condo Apartments Rise The […]

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TransUnion Warns A “Severe” Scenario Likely In Canada, Mortgage Defaults To Jump

One of the “Big Three” credit agencies warned they expect a big jump for insolvencies. TransUnion gave the industry a look at recent macroeconomic and consumer credit activity this week. During the presentation, the firm’s analysts highlighted various deteriorating macro events. They warned lenders to expect a rising wave of defaults, as a “severe” risk […]

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CIBC: Challenges To Canadian Real Estate Will Be “Coming In 12-18 Months”

One of Canada’s largest banks sees turbulence for real estate markets, but doesn’t expect it this season. A CIBC research note released earlier this month sees real estate markets temporarily frozen. Once the economy begins movement again, and mortgage deferrals expire, they see things starting to change. Once this happens, the bank is forecasting lower […]

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Most of Canada’s Insured Mortgages on Deferrals Projected To Be Underwater Soon

Canadian homeowners on insured mortgage deferrals are starting to feel the heat. The Canada Mortgage and Housing Corporation (CMHC) updated the federal government on the state of housing last week. During this update, they warned first-time homebuyers to be extra careful purchasing. To highlight this, they ran through a scenario on how a small downturn […]

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This Week’s Top Stories: Canadian Mortgage Deferrals Soar, As Government Warns Young Homebuyers

Time for your weekly cheat sheet on this week’s most important stories. Canadian Real Estate CMHC Warns Canadians: “Support For Homeownership Cannot Be Unlimited” The CMHC, Canada’s national housing agency, had a warning for young homebuyers: Be realistic about your debt. As a cautionary tale, the agency’s CEO walked the federal government through a scenario […]

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National Bank of Canada: Real Estate Prices Rise, But Could Change With The Recession

Canadian real estate prices climbed according to another index, but it had a limited impact on sentiment. The Teranet – National Bank of Canada House Price Index (TNBC HPI) made a substantial climb in April. Despite the big increase for prices, the Big Six bank warned a rapidly changing macro environment could change the direction […]

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Wow! – CMHC CEO Evan Siddall Points To Unsustainable Debt & Calls For 18% Drop In Housing Prices – [which of course would mean a lot more off]


According to CMHC estimates, the ratio of household debt to GDP in Canada could reach 130 per cent in the third quarter of this year, a sharp increase from around 99 per cent before the pandemic. Debt as a share of disposable income, meanwhile, could also rise precipitously to 230 per cent in the third quarter, up from 176 per cent.

Siddall said those ratios are well over a critical 80 per cent threshold, above which “the Bank for International Settlements has demonstrated that national debt intensifies the drag on GDP growth.” Such high debts risk future economic growth by “effectively converting future consumption into debt service payments,” he said, at a time when households and governments are increasingly leveraged.

Adding to real estate concerns amid COVID-19, the agency also sees housing prices plummeting in the next calendar year.

“The resulting combination of higher mortgage debt, declining housing prices and increased unemployment is cause for concern for Canada’s longer term financial stability,” Siddall said.

The CMHC sees housing prices declining between nine and 18 per cent over the next 12 months. Those estimates are loosely in line with an earlier projection by DBRS Morningstar, a credit rating agency, says which says housing prices could fall between 10 and 15 per cent by 2022.

By way of comparison, the owner of a $300,000 home at a five per cent down payment could lose around $45,000 if housing prices fell by 10 per cent, Siddall said.

He said the agency is “debating whether we should change our underwriting policies” as a result of the pandemic, potentially restricting the future lending environment as debt levels soar.

“Our support for home ownership cannot be unlimited,” he said. “It’s like blood pressure, you can have too much, [but] you need some.”

– excerpt from ‘Bloody terrifying’: COVID-19 will raise household debt levels and ‘drag on GDP growth,’ CMHC warns’, Jesse Snyder, 19 May 2020, National Post

Remarkably straight talk from the organization that has played such a large part in extending rope to participants over the last 20 years. And we’d guess that ‘18%’ is just a best guess estimate of the first step. As we’ve postulated over the years, when the bubble bursts, few are going to step in and overextend themselves to go into debt to buy assets that are falling in value yet still very overpriced by every metric. The Vancouver market has been predicated on prices that only go up, and the result has been prices that are about three times those determined by fundamental utility value. Once the drops start, we see no way of this all bottoming at 18%-off. In Vancouver, the direct and indirect economic effects of a drop of 18% in RE would alone almost definitely guarantee a larger drop.
– vreaa

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One In Five of Canada’s Insured Mortgage Deferrals Are In Ontario

Canadians are suddenly short on cash for their jumbo sized mortgages. Canada Mortgage and Housing Corporation (CMHC), the country’s national housing agency, estimates over a tenth of insured mortgages are now on payment deferrals. The agency also added they expect the ratio of deferrals to nearly double over the next few months. Quebec Has The […]

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Canadian Real Estate Faces A New Problem: Deflation

Canadian households are facing a problem they didn’t think was possible a few weeks ago – falling consumer prices. Statistics Canada (Stat Can) data shows the consumer price index (CPI) fell in April. The deflationary move is the first seen in Canada, in over a decade. A month isn’t a trend, but if it continues, […]

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