Feds Announce New Mortgage Rules, and the War on Inflation May Be Over

This week’s top real estate stories.

By  Jared Lindzon | 2 minute read

Every Friday, Wahi brings you the most important real estate stories from the past week.

Canada’s Housing Crop Is Diversifying; Buyer Preference Isn’t

Despite their best efforts, Canadians have grown up to become their parents — at least when it comes to their housing preferences. Even after massive changes to the economics and makeup of the country’s housing — from prices and interest rates to the condo boom — most still dream of that detached home in the suburbs, according to the results of Wahi’s latest survey. Overall, 64% of Canadians put a single-family home as their top choice, and 38% want to live in the suburbs, while 34% prefer city-living and an additional 28% choose rural life. Furthermore, 43% prefer a three-bedroom setup, and 64% want something freshly renovated.

Housing Market Frozen on Loading Screen 

Someone please check the remote control because Canada’s housing market appears to be stuck on pause. Lower interest rates and prices have done little to reboot the market, with national home sales up just 1.3% last month compared to last August, according to a new report from the Canadian Real Estate Association. Month-over-month inventory increased by 1.1% in August, while prices remained basically unchanged, but down 3.9% since last year. Despite similar predictions in recent months that didn’t quite pan out, CREA nonetheless remains confident that more rate cuts will unjam that pause button in the months ahead.

Victory Declared in the War Against Inflation

Don’t be alarmed if you see politicians, economists, business owners, and mortgage holders dancing in the streets this week. That’s because the long war against inflation appears to have been won. So suggests the latest reading of Statistics Canada’s Consumer Price Index, which measures changes in the cost of goods over time. The inflationary indicator showed a 2% annual price increase in August, the slowest pace recorded since February of 2021. It’s also smack dab in the middle of the Bank of Canada’s target range. The agency credits the significant drop in price growth to lower fuel, travel, and clothing and shoe costs. While interest rates have been dropping at a slow-and-steady pace, the sudden decline in inflation has experts predicting a “supersized” rate cut before the end of the year.

New Mortgage Rules, Who Dis?

Albert Einstein once defined insanity as “doing the same thing over and over again and expecting different results.” If he were here today, the famed theoretical physicist might label Canada’s new mortgage rules a promising step towards sanity. This week, the federal government announced what it says are the “most significant mortgage reforms in decades.” These changes include raising the insured-mortgage limit from $1 million to $1.5 million and expanding access to 30-year amortizations to all first-time buyers. The government says the changes are intended to make homeownership more affordable, especially among younger Canadians.

August Drop in Housing Starts Negates July Gains

Like those used at a ground-breaking ceremony the many shovels that went into the ground last month appear to have made no impact on actual construction. Last month the Canada Mortgage and Housing Corporation announced a massive 16% jump in monthly housing starts in July, but it appears those gains were just as quickly undone — and then some — after housing starts dropped 22% in August. While more homes are being built in Alberta, Quebec and the Atlantic provinces CMHC reports significant declines in new home construction in Ontario and B.C., suggesting even greater and longer-term supply challenges in those markets.  

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