Interest Rate Speculations, and Housing Supply Targets

This week’s top real estate stories.

By  Jared Lindzon | 2 minute read

Sep 29

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Economists Warn High Interest Rates Likely to Linger 

Halloween came early this year for Canada’s variable-rate holders, those approaching renewal, and first-time homebuyer hopefuls. That’s because interest rates are expected to stay higher for longer. Canada’s pandemic recovery has been rocky, to say the least, and recent data has economists adjusting their predictions for when rates will finally start dropping, and by how much. Spoiler alert: the news isn’t great. BMO has dropped its prediction of a 0.75% drop in 2024 down to just 0.5%, and moved its timeline for easing from Q2 to Q3, while Scotiabank warned that more hikes can’t be ruled out, either. 

“The CMHC says Canada needs to build 3.5 million homes by 2030 to bring affordability back to 2004 levels.”

The Case Against Toronto’s Housing Industry

Toronto’s housing market mess has many culprits, but a class-action lawsuit points the finger at the city’s top brokerages and industry associations, and this week a federal court ruled the case can move forward. The lawsuit, brought by Toronto resident Mark Sunderland, alleges that the Toronto Regional Real Estate Board (TRREB), Canadian Real Estate Association (CREA), and seven major brokerages conspired to inflate commission fees. Specifically, the lawsuit says CREA and TRREB’s requirement for buyers to pay a commission to the seller’s brokerage in order to be included in Toronto’s MLS® system amounts to an “illegal arrangement.”

Why Canada’s Housing Affordability Targets Are Becoming a Joke  

The Canada Mortgage and Housing Corporation says Canada needs to build 3.5 million homes by 2030 to bring affordability back to 2004 levels. A recent report by BMO says there ain’t no way that’s gonna happen (in slightly different words). The aptly titled “Pie in the Sky on Housing Supply” report notes that hitting the target would require adding 500,000 units yearly, which seems far-fetched when you consider that the country’s record of 273,00 was set all the way back in 1976. “In other words,” write the authors, “the bar is not going to be approached, let alone cleared.” 

Greenbelt Battle Comes to an End… for Now 

This is how the Greenbelt saga ends — not with a builder’s bang, but a Premier’s whimper. After one year, two bombshell investigations, four high profile resignations over $8.3 billion worth of land, the Greenbelt is back to where it started. Late last week Premiere Ford announced a reversal of his decision to dish out high value land to connected developers, and now the provincial legislature is debating the best way to ensure it remains protected. That doesn’t mean the bickering is over, as opposition leaders demanded answers over a related adjustment to Hamilton’s city limits that benefitted connected developers.   

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Toronto Graduates from “Bubble” to “Overvalued” 

Toronto’s housing market might be bad, but it’s not the worst in the world — at least not anymore. One year after ranking first on UBS’s Global Real Estate Bubble Index, the Six is now  the world’s seventh riskiest housing market, dropping from “bubble” territory to a slightly less scary “overvalued” designation. The firm notes that higher interest rates have brought stability back to the market, ending Toronto’s three-year reign among the top-three most overheated markets within the 25 included in the report. That puts its risk levels above Vancouver’s, but well behind the bubbly markets of Zurich and Tokyo


Jared Lindzon

Wahi Writer

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