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- Your Weekly 411: Toronto Home Prices Grew for the First Time in 7 Months | Rate Cuts May be Delayed | Mortgage Delinquency Rates Spike
Your Weekly 411: Toronto Home Prices Grew for the First Time in 7 Months | Rate Cuts May be Delayed | Mortgage Delinquency Rates Spike
Mortgage Delinquency Rates Spike
Urban 411
December 07, 2023
The Weekly 411
TLDR:
📈 Toronto Home Prices Grew for the First Time in 7 Months
🤑 Canadian Home Prices More Than Doubled Over Past Decade
⏰ Rate Cuts May be Delayed Amid Strong Housing Market
💸 Bank of Canada Holds Rate at 5% for 5th Straight Month
😣 Ontario Mortgage Delinquency Rates Spike
📈 Toronto Home Prices Grew for the First Time in 7 Months
In February, Toronto home prices increased for the first time in seven months, with the benchmark price rising by 0.2% to C$1.09 million.
Despite the price increase, home sales in Toronto fell in February, following two months of growth.
New listings remained relatively unchanged.
This marks the first monthly price increase since July 2023
Why This Matters: The market is transitioning amid changing dynamics, with buyers and sellers adjusting to these shifts ahead of a typically busy period in the real estate market. Interest rate cuts in 2024 will boost demand in the Toronto housing market.
🤑 Canadian Home Prices More Than Doubled Over Past Decade
Home prices in Canadian cities have doubled over the past decade, with the benchmark single-family price increasing by 86.8% from 2013 to 2023.
Southern Ontario cities like London-St. Thomas saw the biggest jumps, with prices more than doubling.
Prairie cities saw the most stable growth, with Regina's benchmark only increasing by $18,800 over the decade. Edmonton and St. John's also had modest growth of around $50,000.
The Greater Toronto Area benchmark hit over $1 million for the first time, now at $1,273,300.
Vancouver's benchmark is now $1,964,400 despite having the highest prices already.
Why it Matters: The price boom reflects immigration increases, interest rate changes, economic fluctuations, and the pandemic's impact in the past decade. Due to higher home prices and rising interest rates, monthly mortgage payments have increased substantially over the past ten years.
💸 Bank of Canada Holds Rate at 5% for 5th Straight Month
The Bank of Canada keeps the interest rate unchanged at 5%.
The bank's next interest rate decision is scheduled for April 10
Economists believe an April rate cut is possible as core inflation and concerns over expectations are easing
⏰ Rate Cuts May be Delayed Amid Strong Housing Market
The Bank of Canada may delay rate cuts due to a potentially strong spring housing market, pushing the timeline for rate cuts back to the fall
Economists suggest that rate cuts in April would be unwise given the expected strong housing market and additional government spending.
Based on ongoing disinflationary trends, most analysts expect rate cuts to start in June.
Scotia Bank forecasts the first rate cut to be delivered in September, considering temporary softness in core inflation.
Why This Matters: The Bank of Canada is waiting for the April monetary policy report before deciding their next move. Ignoring the effects of shelter price inflation could jeopardize the Bank of Canada's credibility, as household expenses drive shelter inflation, not just interest rates.
😣 Ontario Mortgage Delinquency Rates Spike
Mortgage delinquency rates in Ontario increased by 52.3% in Q4, with delinquency rates surpassing pre-pandemic levels.
Renewing mortgages and payment shocks are contributing to missed payments, especially among homeowners who are 36 and younger.
The number of consumers missing payments on credit products has surpassed 2019 levels.
Why This Matters: Higher interest rates and inflation are impacting consumers, leading to missed payments on mortgages and credit cards. Younger consumers have relatively higher mortgage amounts owing and less savings, making it difficult to handle financial stress.
