Alfonso Peccatiello of The Macro Compass joins the show for an epic conversation on the current state of the economy and financial markets. Recession, inflation, foreign currencies, real estate, and much more are covered as Alfonso applies his decades of expertise to provide you with actionable information that can assist in your own investment portfolio. Here is a direct video link.
As prices rose, industry participants urged policymakers to stimulate supply with tax incentives and enable demand with easy credit; now that home prices are falling (as they should), the same people are urging policymakers to help prop prices up. 😊 Quick profit, not affordability, was always the goal and that golden goose is now dead.
The giveback phase is a whole new world. As with many asset markets today, power rests with those who watch from the sidelines with low leverage, patience, defined rules and cash.
John Pasalis, President of Realosophy Realty, joins BNN Bloomberg to discuss the latest Toronto housing data that show home sales in July plunging 47% from last year. Pasalis says the transmission of monetary policy into the housing market is destroying demand, and sees sluggishness continuing into the fall. He expects more stability in the market with fewer distress sales. He says it’s now a buyers’ market, but adds buyers should watch out for quick price drops. Here is a direct video link.
Steve Saretsky, a Vancouver realtor at Oakwyn Realty, joins BNN Bloomberg to discuss the July 2022 data for Vancouver home sales that showed a plunge in sales. He says home sales tend to drop precipitously when mortgage rates move north of 3.5%, as there is too much indebtedness and leverage in the housing market. Saretsky says there’s very weak demand and low inventory in the Vancouver market right now and he doesn’t see an imminent rebalancing. Here is a direct video link.
Note: Saretsky states that just 34% of homeowners have a mortgage. In fact, the latest Statistics Canada data shows that, as of 2016, approximately 30% of Canadian households were mortgage-free. The confusion may be that some two-thirds of Canadians are homeowners, and half of them (about 33% of Canadians overall) reported being mortgage free.
Incomes are higher than the national average in the Greater Toronto and Vancouver areas, but so are property prices. According to a Forum Research Inc. survey, of those with a family income of $100,000 and higher, 62% had a mortgage.
In 2019 (see here) , the median mortgage owed was $200,000, and nearly 9 in 10 Canadian homeowners aged 25 to 44 (88%) had mortgages. On top of this, about 13% of Canadians had an outstanding balance on a home equity line of credit (HELOC) attached to their primary residence. Nearly three-quarters of Canadians (73.2%) had some type of outstanding debt.
As home prices ballooned since 2019, indebtedness and mortgages also ballooned. See more recent stats here.
The housing bust is not just happening in Canada…
The housing market is turning as interest rate hikes spook buyers – and in bad news for those who don’t own, those rate hikes are also pushing up rents. Here is a direct video link.
