Housing Regulator: T.O. 'High Risk' + 'Flipping' Draws BOC Attention

In Toronto: Regulators finally sound the housing alarm, but is it too late as bidding wars continue to heat up? 
Elsewhere: Bank of Canada acknowledges the 'flippers', why the U.S. housing market has never been weirder, and New Zealand takes action on speculators. 


Toronto’s Hot Housing Market Raised to ‘High Risk’ by Regulator (Bloomberg)

“What we’re trying to do here is identify the kind of vulnerabilities that could be the precursors to market corrections or house-price corrections,” Bob Dugan, chief economist at the CMHC said in a conference call with reporters. “Those are the kind of conditions that could lead to downward pressure on house prices, or a downward correction on house prices.”

Semi-detached Toronto home gets 20 offers and sells for $575,000 above asking (CTV)

A Toronto semi-detached home that drew 20 offers and sold for $575,000 above asking is a sign of the eye-popping prices that sellers are getting for homes in an overheated market. But all those "sold over asking" signs that dot Toronto streets could be a sign of a market due for a price correction, according to the federal government’s housing agency.

Tory welcomes Ontario budget funds for city services, but says Toronto needs money for housing too (CBC)

"The City does have an urgent need for support from the Provincial government for supportive housing to ensure that we take full advantage of committed federal funding for supportive housing so we can provide safe, indoor spaces for vulnerable residents with the proper health-care supports," Tory said in a news release on Wednesday.

Constructed on what were once the city’s fringes, the one-and-a-half story homes are ubiquitous in Toronto, where their pragmatic, charmingly simple design upended the way houses were constructed and people lived. Their very modesty places them at constant risk of demolition by developers keen to build larger, flashier and more profitable homes on their plots. But while many Victory Houses have already disappeared, a growing movement toward more affordable, sustainable and contemporary living may provide some defense.

A realtor thrives, a linen-supplier struggles. Welcome to COVID-19’s unequal recovery (Toronto Star - Paywall)

For nearly 15 years before becoming a real estate agent, Papaioannou ran a few retail stores in the GTA. He sympathizes with the shop owners and workers facing closures now. “I can’t imagine what it would be like for me if I still ran those stores,” Papaioannou said.


Bank of Canada sees 'a lot more flipping' in housing market (Reuters)

In some cities, “we have data on investment purpose, versus living-in purpose … we have data on how long before it went back on the market. Those things … they indicate a lot more investment activity, a lot more flipping,” said Gravelle. He added that much of the data on investor activity was specific to cities like Toronto. “That data is limited and it’s not across Canada, that’s the issue,” he said.

Home prices vulnerable to correction in multiple Canadian cities as values skyrocket, CMHC warns (The Globe - Paywall)

In Barrie, Ont., the price of a typical detached house jumped by nearly $100,000 over three months to $721,000 in February, according to data from the Canadian Real Estate Association (CREA). House prices in Kitchener-Waterloo have gone up by at least $100,000 over three months. Milton prices are almost $200,000 more than they were in November.

Canadian Housing Boom Raises Concern, With Homes Selling Far Above Ask Prices (Wall Street Journal)

In addition, starting in the third quarter of last year for the first time since data were collected in the 1960s, Canadian investment in real estate outstripped business investment in nonresidential structures, machinery and equipment as a share of GDP. While money is going into real estate, economists point out that houses don’t produce the goods and services to meet domestic and foreign demand, and expand an economy’s long-term potential.


'It's crazy. There is no inventory.' Housing industry veteran marvels at real estate boom (CNN)

It's the polar opposite of what the company faced during the subprime bust that began around 2007, when the housing market was gripped with a massive oversupply problem that took almost a decade to correct. Construction of new homes collapsed in the aftermath of that crisis and never recovered. The supply of new homes remains very low today.

Talk Politics? Some Brokers Are Only Too Happy to Do So (NY Times - Paywall)

“I’ve had so many people ask me ‘Why do you do this? You may be cutting off half your clientele.’ Some don’t agree with me, but others say they love that I put it out there. In my opinion, it hasn’t hurt,” said Ms. Kowalik, noting that her agency’s 2020 business was up by 40 percent over 2019.

‘This Is Unprecedented’: Why America’s Housing Market Has Never Been Weirder (The Atlantic)

In almost any other year, a weak economy would cripple housing. But the flash-freeze recession of 2020 corresponded with a real-estate boom, led by high-end purchases in suburbs and small towns. Even stranger, in America’s big metros, home prices and rents are going in opposite directions. Home values increased in all of the 100 largest metros in the U.S., according to Zillow data. But in some of the richest cities—San Jose; Seattle; New York; Boston; Austin; San Francisco; Washington, D.C.; Los Angeles; and Chicago—rent prices fell, many by double-digit percentages. In many cases, the gap was absurdly large. In San Jose last year, home prices rose by 14 percent (the sixth-largest increase in the country) but the area’s rents fell 7 percent (the sixth-largest decline).


New Zealand targets speculators in new assault on house prices (Bloomberg)

A NZ$3.8 billion (US$2.7 billion) fund will be established to unlock more land for housing development and the government will make first home grants available to more people, Prime Minister Jacinda Ardern said Tuesday in Wellington. The government will also extend the period in which profits on the sale of investment property are taxed to 10 years from five, and phase out the ability of investors to claim mortgage interest as a tax-deductible expense.

Australia floods raise alarm on Sydney's great housing gamble (Nikkei)

As Australia counts the multibillion dollar cost of the once-in-a-century rains that have flooded large parts of its east coast communities this week, experts are warning that even greater calamities lie ahead if Sydney's expansion onto a crucial flood plain is left unchecked.

Top Photo Credit: iStock/Getty/FarzadFrames

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