Bravo festival condos review. The end of the Canadian real estate boom? Since taking office four years ago, Bank of Canada Governor STEPHEN POLOZ has been warning Canadians that they are heavily in debt to buy high-priced homes.Please Visit: Bravo festival condos review to Get Your VVIP Registration Today!
At first he used banking jargon, pointing out that there was a risk of “household imbalances”. Recently, as household debt in Toronto and Vancouver hit record highs and house prices continued to rise, he began to be very straightforward. “now is the time to remind people that house prices can go up and fall,” he said. ”
Governments at all levels have been trying to rein in house prices (but Mr Poloz encourages raising them by keeping interest rates low). The federal government has tightened conditions for mortgage insurance policies for lenders. Last year, the government of British Columbia levied a 15 per cent tax on foreign buyers. Ontario also put forward its own version this year.
These measures have a slow impact on the market. House prices in Toronto rose at a record annual rate of 26.3% in April, according to the Teranet National Bank Index. Prices in Vancouver have risen by 9.7%. Household debt (2/3 of which is mortgages) is by far the highest. For every dollar of disposable income, Canadians owe $1.67 (see chart).
Now there are signs that the market may have reached its peak. The real estate agency in Toronto says the number of houses that used to attract more than a dozen bidders has now been reduced to just a few. Google search for the term “housing bubble” has soared. There are more “for sale” signs and less actual sales. These are signs of a turning point in the market. The question now is whether the turning point is a smooth soft landing or a scary decline.
Even before the collapse of the housing market in 2007, which caused the global financial crisis, observers saw similarities between Canada and the United States. Home Capital, Canada’s largest subprime lender, was hit hard this month. Ontario’s stock market regulator said no possible fraud had been found. The debt-to-income ratio of Canadian households looks higher than at its peak in the United States. On May 10th Moody’s, a rating agency, downgraded Canada’s six biggest banks.
However, the danger in Canada is less than that in the United States a decade ago. Now the housing boom is concentrated in only a few big cities. Institutions like Home Capital, which provide home capital to borrowers who do not meet normal bank credit standards, account for only 11 per cent of mortgages. Others are regulated by federal and provincial governments (mainly banks).
The comparison between the debt-to-income ratio of the United States and Canada is misleading because the two methods of calculation are fundamentally different. Despite its downgrade, Canada’s well-capitalised banks are still one of the most creditworthy in the world. “We don’t think the sky is falling,” said David Beattie, an analyst at Moody’s.
But the mild housing boom could also be hurt. Builders, lawyers and any company that sells goods to people tend to make money when house prices rise, when people feel richer. As a result of consumer spending and residential investment, the Canadian economy was growing at an annual rate of 2.6% in the fourth quarter of 2016.