The Weekly 411:

Today we're covering

🧑‍🌾 The Rise of Investor-Owned Farms

💸 Canada Bails Out Developers with 55-Year Mortgages

👧 Millennials and Gen-Z are Broke

🏦 Canada's Mortgage Market: Debt Up 7.4%

Read Time: 3 minutes

❗ Bank of Canada Cuts Interest Rates by 0.25%❗ 

📈 Toronto Home Prices Soar 119% in 10 Year

The average home price in the GTA (Greater Toronto Area) rose from $484,743 in 2013 to $1,061,645 in 2022.

• Toronto: 125% increase

• York Region: 133% increase

• Peel Region: 122% increase

• Durham Region: 114% increase

• Halton Region: 108% increase

🏔️ Calgary Market Update

2024 vs 2023 Highlights:

• Sales: 3,092 units (-0.8% YoY)

• Benchmark Price: $605,300 (+9.5% YoY)

• New Listings: 4,333 (+18.7% YoY)

• Inventory: 3,402 (+5.9% YoY)

• Days on Market: 19 days (-20.2% YoY)

🏦New Rules to Protect Home Buyers in Ontario

• New freehold home buyers will now have 10 days to cancel a purchase agreement for a new home, without penalty.

• Buyers are protected from debt collection actions by builders or vendors, related to purchasing a new home.

• Builders must now publicly disclose if they cancel a purchase agreement with a buyer.

• The government will ban the registration of Notices of Security Interest (NOSIs) for consumer goods on the Land Registry, and any existing NOSIs will be deemed expired. 

  • Explaination: It's a notice that a business can register on the Land Registry against a property, indicating that they have a security interest in certain goods or equipment installed on that property.

💸 Canada Bails Out Developers with 55-Year Mortgages 

• The Canadian government is increasing its involvement in the mortgage insurance market for residential property developers.

• Effective June 24, 2024, the maximum amortization period for new construction market projects will be extended from 40 to 55 years.

• Critics argue these changes are primarily a bailout for developers aimed at maintaining land values and investor returns.

Longer amortization periods could increase housing costs in the long run due to higher interest payments. The typical lifespan of a residential building is 50-60 years, raising concerns that many homes won't even exist by the time these extended mortgage terms are paid off.

🧑‍🌾 The Rise of Investor-Owned Farms

• Farmland values in southwestern Ontario have risen 60% from 2020 to 2023, reaching an average of $35,000 per acre.

• Ontario's rural population has declined slightly since 1966, while the urban population has doubled.

• Investors ultimately drive up land prices, making land acquisition difficult for smaller and newer farmers.

• Investors are drawn to farmland as a stable investment against inflation and stock market volatility.

• There are concerns that the rising cost of farmland could outpace its productive value, leading to potential market corrections.

🧑‍🌾 BoC and Fed Divergence: Will it Hit the Canadian Dollar?

• The Bank of Canada (BoC) and Federal Reserve (Fed) are expected to diverge on interest rates, with the BoC cutting rates and the Fed holding steady.

• This divergence could pressure the Canadian dollar, potentially causing it to fall.

• A 100 basis point difference in interest rates between the two countries has historically been the "comfort zone", but the gap has sometimes been wider.

• A wider gap could lead to a decline in the Canadian dollar, making imports more expensive and fueling inflation.

• The Canadian dollar has historically been sensitive to changes in interest rates and monetary policy.

Current Rates:

• Bank of Canada Overnight Rate: 4.75%

• Federal Reserve Federal Funds Rate: 5.00%-5.25%

• Canadian Dollar (CAD) exchange rate: 1 CAD = 0.74 USD ( 2024-06-05 subject to change)

🤔 WTF of The Week

The real estate world can be a wild place. That's why we created "WTF of the Week" – a weekly dose of the most unbelievable, outrageous, and downright funny stories.