Your Weekly 411: Canada Needs 4.2 Million Homes by 2035 | Real Estate Bankruptcies Hit Record High | Calgary Tops Luxury Home Sales

The Weekly 411:

Today we're covering

💸 Calgary Tops Canada's 2024 Luxury Home Sales

🏗️ Canada Needs to Build 4.2 Million Homes by 2035

🌇 Toronto Condo Inventory Soars as Buyers Retreat

😣 Canadian Real Estate Bankruptcies Hit Record Highs

📈 Canadian Mortgage Delinquencies on The Rise

🤔 WTF of The Week

Read Time: 4 minutes

💸 Calgary Tops Canada's 2024 Luxury Home Sales

• Sales of homes $1 million or more increased by 46% year-over-year from January to June.

• Most luxury sales (91%) in Calgary are in the $1-2 million range.

• Strong interprovincial migration and a booming economy are driving the luxury market.

• The city gained 26,662 people from interprovincial migration, while the population of Toronto and Vancouver decreased.

Why This Matters: Calgary's economy is growing stronger and becoming a popular destination for wealthy individuals, which could change the face of Canada's population and economy. The city is seeing a surge in luxury home sales, indicating a significant change in the real estate market. Notably, Calgary is now outperforming traditionally sought-after cities like Toronto and Vancouver.

(source)

🏗️ Canada Needs to Build 4.2 Million Homes by 2035

• Oxford Economics estimates Canada must build 4.2 million new homes between 2024 and 2035 to meet housing demand.

• This equates to 420,000 homes annually, about 70% more than recent construction rates.

• From 2014 to 2021, housing accounted for 34.1% of total investment in Canada versus 18.5% in the US.

Why This Matters: Affordability is expected to improve gradually over the next decade in most areas, except for Toronto and Vancouver. However, increased supply in expensive markets could stimulate more demand, offsetting affordability gains.

🌇 Toronto Condo Inventory Soars as Buyers Retreat

• Investors, who typically bought smaller units, have largely disappeared from the market.

• Many available condos are small, investor-oriented units that don't appeal to end-users or first-time buyers.

• Well-designed, larger units are still selling when priced appropriately.

• Some sellers are holding out for better prices, while others are selling at a loss or continuing to rent their properties.

• Experts suggest it may take 1-3 years for the market to improve for sellers.

Why This Matters: As interest rates eventually lower, buyers are expected to benefit initially from increased choices and more affordable mortgages. Long-term concerns include potential inventory shortages and mismatches in available unit types, which could lead to price increases.

​(source)​

😣 Canadian Real Estate Bankruptcies Hit Record Highs

• Real estate bankruptcies in Canada are rising rapidly, on track to surpass levels seen during the 2008-2009 global financial crisis.

• From January to May 2024, an average of 20 real estate, rental, or leasing companies filed for insolvencies in Canada each month.

• The real estate sector accounts for 55% of receiverships, up from 30% in 2023.

• Construction costs in major Canadian cities are now 81% higher than in 2017 and 107% higher in Toronto.

Why This Matters: A surge in insolvencies may create opportunities, with distressed properties potentially available at lower prices, but also increased chances of project delays or cancellations, especially in pre-construction projects.

​(source)​

📈 Canadian Mortgage Delinquencies on the Rise

• Canadian mortgage delinquencies increased in Q1 2024, reaching 0.18%.

• While still low historically, the rate has been climbing sharply in recent quarters.

• The problem appears concentrated in expensive regions like Toronto and Vancouver.

• Toronto's delinquency rate has reached an 8-year high.

​(source)​

🤔 WTF of The Week