Fallingbrook 4 Bedroom - 2017 4th Quarter Sales Stats
Fallingbrook 4 Bedroom - 2017 3rd Quarter Sales Stats
Fallingbrook 4 Bedroom - 2017 2nd Quarter Sales Stats
Fallingbrook 4 Bedroom - 2017 1st Quarter Sales Stats
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The Bank of Canada pushed forward with another quarter-point interest rate increase and said more hikes are likely coming, even as it cautioned it isn't in any rush to return rates to more normal levels.
Policy makers led by Governor Stephen Poloz increased the benchmark overnight rate to 1.25 percent, the highest since the global recession and their third hike since July. The move is a nod to a red-hot economy running up against capacity with a jobless rate at the lowest in more than four decades.
At the same time, central bank officials repeated their dovish language about moving ahead cautiously and warned they expect the economy will require continued stimulus to remain at capacity.
“While the economic outlook is expected to warrant higher interest rates over time, some continued monetary policy accommodation will likely be needed to keep the economy operating close to potential and inflation on target,” the Bank of Canada said Wednesday in a statement from Ottawa. “Governing Council will remain cautious in considering future policy adjustments.”
Key Takeaways
Canada becomes the first major central bank to move ahead with a rate increase in 2018. Investors have spent the early days of the year watching central banks around the world for signs the period of extraordinary stimulus is coming to an end. The Bank of Japan jolted bond markets with a surprise change to its purchasing program, while some European Central Bank officials have called for their bond-buying program to end in September.
Striking Balance
For months, Poloz has been trying to strike a balance between gradually bringing interest rates back to more normal levels amid faster-than-expected growth and an employment boom, without triggering a slowdown.
A recent run of strong economic data has made that task more difficult, and the improved outlook was evident throughout Wednesday's rate statement and monetary policy report.
The central bank painted a picture of an economy with inflation already close to target, output largely at capacity, a stronger- than-expected housing sector, and a faster-than-expected reduction in labor market slack.
That prompted officials to increase their projections for inflation in 2018, and growth over the next two years.
The reasons to remain cautious are less tangible, centered around growing concerns about the outcome of Nafta negotiations.
“Uncertainty surrounding the future of the North American Free Trade Agreement is clouding the economic outlook,” the central bank said.
Rate Sensitivity
There are also questions about the economy's sensitivity to interest rate increases and whether its potential growth could be accelerating. The bank said wage gains remain modest, even with a recent pickup.
The Bank of Canada forecast a bigger hit on exports and business investment due to worries about Nafta, and incorporated an increased sensitivity of interest rates because of the country's high household debt levels.
The rate increase was expected by 26 of 27 economists surveyed by Bloomberg News and investors had almost fully priced in a hike.
Questions remain about how quickly the central bank will raise from here and where rates will eventually settle. Markets had been pricing in at least three increases this year, which would bring the benchmark rate to 1.75 percent.
The Bank of Canada retained its estimate that its so-called neutral rate -- a sort of Goldilocks rate that keeps the economy neither too hot nor too cold -- is at about 3 percent. But the comments on the need for continued accommodation at full capacity could suggest policy makers aren't anticipating a return to neutral any time soon.
The central bank also increased its forecast for how quickly the economy could grow without triggering inflation -- to an average of 1.6 percent over the projection horizon. The central bank said it is monitoring the extent to which strong demand could boost potential growth further.
“In this respect, capital investment, firm creation, labor force participation, and hours worked are all showing promising signs,” it said, adding that wages have picked up by less than what “would be typical” for a labor market without slack.
Copyright Bloomberg News
January 4, 2018 -- Toronto Real Estate Board President Tim Syrianos announced that Greater Toronto Area REALTORS® reported 92,394 sales through TREB's MLS® System in 2017. This total was down 18.3 per cent compared to the record set in 2016.
Record sales in Q1 were followed by a decline in Q2 and Q3 after the Ontario Fair Housing Plan (FHP) was announced. The pace of sales picked up in Q4, as the impact of the FHP started to wane, and some buyers arguably brought forward their home purchase in response to the new OSFI stress test guidelines effective January 1, 2018.
"Much of the sales volatility in 2017 was brought about by government policy decisions. Research from TREB, the provincial government and Statistics Canada showed that foreign home buying was not a major driver of sales in the GTA. However, the Ontario Fair Housing Plan, which included a foreign buyer tax, had a marked psychological impact on the marketplace. Looking forward, government policy could continue to influence consumer behavior in 2018, as changes to federal mortgage lending guidelines come into effect," said Mr. Syrianos.
The average selling price for 2017 as a whole was $822,681 – up 12.7 per cent compared to 2016. This annual growth was driven more so by extremely tight market conditions during the first four months of the year. In the latter two-thirds of 2017, fewer sales combined with increased listings resulted in slower price growth. In December, the MLS® Home Price Index (HPI) Composite Benchmark was up by 7.2 per cent year over year, and the overall average selling price was up by 0.7 per cent year over year.
"It is interesting to note that home price growth in the second half of 2017 differed substantially depending on market segment. The detached market segment – the most expensive on average – experienced the slowest pace of growth as many buyers looked to less expensive options. Conversely, the condominium apartment segment experienced double-digit growth, as condos accounted for a growing share of transactions," said Jason Mercer, TREB's Director of Market Analysis.
January - 2018
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Jason Mercer - Director, Market Analysis, discusses the Market Watch Report for November 2017.
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It didn’t take long for the impact of rising rates to hit the market. People rushed to lenders Thursday to lock in contracts and get pre-approved mortgages after the Bank of Canada raised its overnight lending rate the day before.
While the short-term impact of rising rates usually means a temporary buzz of sales activity, the larger concern is what two hikes in the overnight lending rate in two months – another one is possible in October – will do to a housing industry that has seen its largest market in the Toronto area already under siege from provincial rule changes that targeted investors and foreign buyers.
On the horizon in terms of tighter credit regulations is a new rule from the Office of the Superintendent of Financial Institutions that would target home buyers with down payments of more than 20 per cent with a tough new stress test: they would have to qualify based on a rate 200 basis points above their contract.
“It could be the biggest rule change of all-time,” said Rob McLister, the founder of ratespy.com. The housing market has already been adjusting to changes in the insured market, instituted in 2016, which forced homeowners with less than a 20 per cent downpayment to qualify based on the Bank of Canada five-year qualifying rate as opposed to the one on their contract. That rate is now 4.84 per cent.
All these changes come as the Toronto housing market continues to show no signs of stopping its free fall which started after the province instituted 16 changes to cool the market, including extending rent control across Ontario and a 15 per cent non-resident speculation tax in the Greater Golden Horseshoe area.
The Toronto Real Estate Board reported this week that August sales in the region were down almost 35 per cent from a year ago while prices are off more than 20 per cent from the peak reached before the tax. All those foreign buyers, if they weren’t scared away by tax, might also be retreating because the Canadian dollar has risen about 14 per cent against the greenback since a May low — a key factor since many foreigners hold their money in United States currency.
“What I worry about is there is a series of policies and programs being implemented by governments at different levels and they are not necessarily co-ordinated,” said Brad Henderson, chief executive of Sotheby’s International Realty Canada. “Any of them can have an effect on the market but all of them together can have a very significant and unintended consequence.”
About a quarter of those with mortgages have rates tied to prime, so they are being immediately impacted by any increase in the overnight lending rate which prime tends to track. Most financial institutions had raised their prime rate by 3.2 per cent Thursday after it had been as low as 2.7 per cent two months ago.
Discounting is still a major factor, as lenders compete for an ever-shrinking market because of falling sales and prices and McLister says the best variable rate from brokers, who buy down their rate by eating into their commission is still 2.14 per cent if the loan is backed by Ottawa. The best variable rate deal from banks is 2.55 per cent, he said.
Consumers are also soon going to be hit by increasing rates on long-term mortgages which are priced based on government of Canada bond yields. The best five-year fixed rate from a broker for an insured mortgage is now 2.48 per cent and a typical discretionary five-year bank rate is up to 3.04 per cent.
“There is a delay in lenders (passing on increases) for five-year money. Lenders are seeing a slowing market and are trying to load the pipeline in advance,” said McLister.For now, it appears consumers have jumped into the market to beat the latest rate increases, said Bill Whyte, senior vice-president with Ontario credit union Meridian. “It take a couple of days for things to move through on mortgages so that drives a little bit of input. We were quite busy,” said Whyte, who does believe market can withstand the rate increases and the tougher lending rules.
Benjamin Tal, deputy chief economist, has lobbied against the latest OSFI changes to the uninsured market because he thinks it’s just too much for the real estate sector to absorb. “They are getting a lot of feedback from the industry. I wouldn’t be surprised given the increase in rates and the slowing in Toronto, that we might see them not change but postponing the change,” said the economist.
gmarr@postmedia.com
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