What’s trending in real estate this week: Risks, struggles, and surprises
Here’s what you missed in real estate news from Toronto, Canada, the U.S., and around the world ending Dec. 1, 2017.
‘No quick fixes’: Housing market still rife with risk, despite Bank of Canada optimism (Financial Post)
The Bank of Canada is breathing a sigh of relief that Canada’s housing boom and the hints of a bust in Toronto are stabilizing, but the optimism is premature, analysts said on Wednesday.
Central bank Governor Stephen Poloz said Tuesday a stronger economy and good policymaking are bringing about “a gradual easing” of vulnerabilities in housing and household debt, and the trend should continue.
Home near Toronto’s Upper Canada College sells in 48 hours (The Globe and Mail)
“It’s one of those neighbourhoods where you don’t find too many new homes like this, and it’s a fairly large lot for the area,” agent André Kutyan said.
“You might see a couple a year at most; I sold the home next door about 2 1/2 years ago for about $4.205-million.”
People paying a mortgage in Canada’s major cities aren’t the only ones feeling the heat from hot housing markets: many renters are struggling as well.
Data released yesterday by the Canada Mortgage and Housing Corporation shows the national average cost of rent is up and the national vacancy rate has plummeted.
Canadian real estate now presents one of the biggest risks to the financial system, but it may not as bad as it sounds. The Bank of Canada (BoC) released its quarterly assessment of financial risks to the banking system, and near the top was household mortgages.
BoC analysts expect half of mortgage rates will “reset” over the next year, mitigating much of the risk. Highly indebted households still present a significant risk however.
Builder rebate to encourage Ontario market rental construction (The Toronto Star)
It will be up to municipalities to determine which new rental developments qualify for $125 million over five years in development charge rebates from the province.
Some of that money will help encourage the builders to construct market-priced rentals, in addition to affordable housing, said Housing Minister Peter Milczyn on Wednesday.
Mortgage Applications in U.S. Dip in Late November (World Property Journal)
According to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending November 24, 2017, U.S. mortgage applications decreased 3.1 percent from one week earlier. This week’s results include an adjustment for the Thanksgiving holiday.
The Market Composite Index, a measure of mortgage loan application volume, decreased 3.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 34 percent compared with the previous week.
Pushing New Yorkers Beyond the End of the Line (The New York Times)
In single potent strokes, the piston of mass transit drives the simultaneous creation of tremendous wealth and grinding hardship in New York. The distance between those two can be measured by the length of a morning’s commute.
Priced out of a Queens neighborhood that was closer to work, Jaime Leon, 31, now travels just under two hours each way between Staten Island and his security guard job in Manhattan. He earns slightly more than $14 an hour.
How the ‘generational disruption’ of millennials is shifting real estate in Central Florida (Orlando Business Journal)
The “generational disruption” unfolding today is of historic significance. The second wave millennials coming of age coincides with a transformation in the norms of life, work and society at every level.
The demographics of the millennial generation reveal they are the largest consumer group in U.S. history. There are currently some 75.4 million millennials (born between 1980-1997). That means a significant number of today’s real estate decisions, as well as those connected to the workplace, are made by people younger than 40 years of age.
New homes created by converting commercial buildings into apartments could help to solve the housing crisis in the UK if developers opted to make more of change of use planning permissions, it is claimed.
A report from lender the Nationwide Building Society that currently the number of homes being created each year is now only 3% lower than the levels recorded in 2007 but in the change of use sector there is growth.
Hong Kong’s red-hot housing market shows no signs of cooling anytime soon.
Prices in the city have climbed 11 per cent this year, defying skeptics waiting for the bubble to burst and government attempts to rein in the world’s most expensive housing market through a raft of taxes and mortgage curbs.
China’s efforts to cool the property market may lead to the first decline in home sales since 2014 next year, highlighting the risks as officials try to battle bubbles without tanking the economy.
As a government campaign tackling excessive leverage and financial risks chokes off some sources of buyer funding, such as consumer loans, developers could also find that credit is tighter next year. As dozens of cities maintain their curbs on property sales, new mortgages have dipped and funds for building have slowed. JPMorgan Chase & Co. sees a 6 percent decline in home sales in 2018.