by Kimberly Greene

Yesterday, the federal and provincial governments announced the Canada-Ontario Housing Benefit, a joint venture that will provide direct support to Ontarians in housing need.

More details have emerged on the program, namely who will be served as well as how the funds will be distributed.

“It is the first direct support for rental housing in generations,” said the Honourable Ahmed Hussen, Minister of Families, Children and Social Development.

The benefit goes directly to recipients and is “portable”, meaning that it can be used to help with the beneficiary’s current housing or new housing that better suits their needs. This flexibility and choice means that they can move quickly to help people that need it most, said Steve Clark, Ontario’s Minister of Municipal Affairs and Housing. It’s not just for low-income housing; household can use the benefit to supplement market rate rental housing as well. The benefit of that would be two-fold: helping people who are marginalized and at risk; and loosening the housing system from the bottom up.

The funding will be available the next fiscal year, which begins on April 1, 2020. Due to its size, Toronto will see a significant portion of the funds.

Clark said that the program will rely on Ontario’s 47 service managers and Indigenous program administrators who are on the ground in local communities. The rate will be based on a combination between the average market rent in the community as well as personal income level. In order to hit targets, Clark said, the budgetary amount discussed could be an average of $2,500 per person, but that doesn’t take into account that some people will only need a rent supplement for a short period of time, while others will need it longer, and that amount will differ depending on province and community.

“We’re also encouraging our service managers to look outside the box, to work with non-for profits, to work with people in the private sector to try to leverage the existing community housing asset and try to renew and repair and ultimately grow, using the federal provincial agreement, more housing opportunities in communities,” Clark said.

Hussen said that the benefit it meant to target people who have been identified through existing Ontario programs as being in “great housing need.”

Earlier this year, Clark released Ontario’s Community Housing Renewal Strategy, which aims to remove overly restrictive rules and income formulas that make it difficult to keep tenants in their homes. Clark also mentioned Ford’s More Homes More Choice Act, which he says has “renewed our focus on providing more supply. We’re looking at the entire system . . . we want to make sure that we use every tool and every partner that’s available to us.”

Toronto Mayor John Tory pointed out that this is only one initiative meant to help ease housing affordability in other ways and echoed Clark’s sentiment that it can be done relatively quickly compared to other forthcoming initiatives.

If nothing else, all levels of government gave themselves a pat on the back for working together—apparently it’s not a given these days.

“Through cross-government investment and cooperation, we have the power to solve housing affordability challenges for all Canadians,” Hussen said.

“We know that we can only be successful as governments if we find a way to work together to actually lever the resources we have on top of each other to have a bigger and bigger impact,” said Finance Minister Bill Morneau, who added that the benefit will also help the broader economy.

Source

by Kimberly Greene

Minister of Finance Bill Morneau was urged to reconsider the borrower stress test in a Ministerial Mandate letter from Prime Minister Justin Trudeau.

The prime minister reiterated Morneau’s commitment to four key principles for the implementation of the government’s fiscal plan: reducing the government’s debt; preserving Canada’s AAA credit rating; investing in people and things that give people a better quality of life; and preserving “fiscal firepower” in the event of an economic downturn.

Among the list of top priorities were to “review and consider recommendations from financial agencies related to making the borrower stress test more dynamic.”

Whether or not anything comes of the recommendation remains to be seen, but some brokers are encouraged by the fact that the conversation is continuing.

“I think it’s definitely a step in the right direction and the fact that they’re even considering looking at it—especially after re-election—is a good sign,” said Michelle Campbell, principal mortgage broker at Mortgage District, based in Mississauga.

The stress test has somewhat begrudgingly been hailed as a success in terms of cooling overheated housing markets and making it more necessary for consumers to turn to mortgage brokers for guidance. There has been no shortage of criticism, however, due to the fact that it negates the purchasing power of first-time buyers as well as making it harder for those renewing mortgages to switch lenders and take advantage of better deals.”

“From my perspective, I don’t think that there shouldn’t be a stress test, but it should be reasonable.” Campbell sits on the chapter committee for MPC, which has asserted that a reasonable bar for a stress test would be .75 above the contract rate.

“The fact that they’re realizing that it it’s effecting first-time homebuyers the most, I think it’s a positive thing,” Campbell said.

The prime minister also indicated for Morneau to work with the Minister of Families, Children and Social Development who is the Minister responsible for the Canada Mortgage and Housing Corporation (CMHC) to further limit housing speculation by “developing a framework and introducing a 1% annual vacancy and speculation tax on applicable residential properties owned by non-resident non-Canadians. This would involve working with provinces, territories, municipalities and law enforcement to track housing ownership and speculation.”

Other priorities include a complete implementation of the new financial consumer protection framework and the introduction of legislation to “cut taxes for the middle class and those working hard to join it.” This tax cut would increase the basic personal income tax exemption by around $2,000 to $15,000.

Mandate letters are meant to outline the strategic priorities of each department and to enhance the transparency and accountability of government. Commitments are described in the mandate letters sent from the Prime Minister to each cabinet minister and represent action on top priorities identified by the government. Progress of the government commitments are then tracked by the Government of Canada.

By: Ian Bickis The Canadian Press

TORONTO — When Chris Pollard wanted to list his Toronto condo, he decided to try a private sale in his neighbourhood first.

And thanks to a Supreme Court decision last year against the Toronto Real Estate Board, he and his wife were able to look up how much similar units had sold for in the area to better price the home themselves.

Private listings and other alternative sales models are still outliers in Canada’s real estate market, despite an opening up of data on sale prices and listing history.

Still, last year’s ruling has ushered more information for consumers into the market and spurred innovation opportunities, said Anthony Durocher, deputy commissioner for the Competition Promotion Branch of the bureau.

“For the average consumer, they’re able to benefit from greater choice of online tools to enable them to make an informed decision,” he said of the change, which came after seven years of “hard-fought” litigation.

“That’s really a great outcome for competition and innovation.”

The additions to the online real estate landscape have taken a variety of forms, including international companies like Redfin that promise low commissions.

Meanwhile, Canadian players like Zoocasa and HouseSigma are expanding their data-driven models, regional startups like Fisherly are emerging as other boards change rules and realtors are setting up their own data sites.

Stephen Glaysher, who’s worked as a downtown Toronto realtor for 18 years, set up a site called MLS Sold Data as a resource for current and potential clients to boost transparency and trust.

He said he’s long been an advocate of more disclosure on sale prices, in part to keep his own industry in check.

“I see a lot of unethical business practices with real estate agents,” said Glaysher.

He said it’s been too easy in the past for realtors to fudge numbers when determining bid and sale prices, where they could manipulate comparables up or down by as much as $200,000 to make sure they win a bidding war.

“You can doctor it to make it look how you want it to look.”

He said clients can double-check data themselves now that sale prices can be made available online, though he worries some people could make wrong decisions by not analyzing the data properly.

TREB, which fought the release of data largely over privacy concerns, said the ruling has started to dilute the MLS system, because some consumers aren’t providing information or not even listing on the system over privacy concerns.

John DiMichele, president of TREB, said in a statement that he’s concerned how people both in and outside of the industry are using the data. He said the board, which has restrictions including no scraping, mining, or monetizing of the data, is looking to protect its intellectual property and defend personal information.

“We are currently in the process of auditing and protecting confidential information in TREB’s database, which is what our members and consumers expect and what the law demands.”

Aware of privacy concerns, real estate site Zoocasa has taken down some price history information on request, generally a couple a month, said CEO Lauren Haw.

Overall though, the data has allowed the company to provide more information and will play into a range of better tools and valuation features it plans to unveil in the coming months to help people better predict price changes.

“This does allow us to better innovate, in terms of the data interpretation that we’re providing,” she said.

And despite privacy concerns, the Supreme Court ruling has prompted real estate boards in other major cities including Vancouver, Calgary and Ottawa to open up their data online, while Quebec’s amalgamated board is considering the issue.

The competition bureau said it has been generally pleased with how other boards have reacted, and that “most” have implemented new rules, but did not provide specific numbers.

But even as the openness of information increases and new companies enter the market, the overall market does not look to have changed all that much, said Queen’s University real estate professor John Andrew.

“Most people aren’t accessing the data that is available, so I don’t see really that it’s had a very profound impact on the market,” he said.

“I kind of made the prediction that this might be kind of the next step of several in the general trend towards the liberalization of data, and that really hasn’t happened, to my surprise.”

He had expected more Canadians would follow the growth in the U.S. of flat-rate listings and other ways to reduce commissions, where the cost savings are “simply staggering,” but the vast majority are sticking with the standard model.

“I think it’s just about the consumers’ confidence level. They’re dealing with their home, and by far their largest investment.”

Pollard, who had listed his condo privately, decided after a quick test of the option to go with a realtor. He said one of the big trade-offs in paying a commission was the greater potential for multiple bidders.

“There’s definitely benefits of having a realtor, and I’m seeing that right now actually, the fact they know how to price it, they have the network. It’s a marketing campaign.”

Source

by Ephraim Vecina

The cost of Canadian housing – which also covers water and utilities – shot up by more than 208.68% in the decades since 1980, according to Statistics Canada.

The latest edition of the agency’s consumer price index also found that rent had a 144.2% increase during this period, while owner costs (inclusive of carrying costs) went up by 205.6%.

Tuition had the most dramatic growth at 932.16%, Better Dwelling reported.

Data released by CREA earlier this month showed that Canadian home prices went up by 5.8% annually in October, up to around $525,000. However, this was mostly because of the impact of the nation’s two largest markets.

“The national average price is heavily skewed by sales in the GVA and GTA, two of Canada’s most active and expensive housing markets,” CREA explained. “Excluding these two markets from calculations cuts almost $125,000 from the national average price, trimming it to around $400,000 and reducing the year-over-year gain to 4.7%.”

A significant driver of price increases was the influence of the Greater Golden Horseshoe, in particular.

“In markets further east, price growth has been trending higher for the last three or four years,” CREA added. “Comparing home prices to year-ago levels yields considerable variations across the country, with mostly declines in western Canada and mostly price gains in eastern Canada.”

by David Larock

Source

According to the Chinese Zodiac, 2019 is the Year of the Pig, but history may better remember it as the Year of the Falling Interest Rate.

Today, approximately one-quarter of the global bond market trades at a negative yield. (When a bond has a negative yield, it means that investors will end up with less than they started with by the end of the term, effectively paying the borrower to store their money.)

Short-term rates have also fallen. Economist David Rosenberg calculates that the world’s central banks have now cut a total of 2,200 basis points off of their policy rates thus far in 2019 – and I don’t have to remind any Canadian with a variable-rate mortgage that thus far, the Bank of Canada (BoC) isn’t included in that group.

The BoC has argued that its job is to maintain price stability by keeping inflation near to its 2% target, and it has done an excellent job of doing that. But the Bank must also anticipate how the road ahead will impact inflation, because its actions (and inaction) create impacts that are both slow to accrue and take time to reverse.

The Loonie provides a good example of a slow-to-develop impact in our current context (as it did back in 2017, when I wrote a similar post to this one).

The BoC now has the highest monetary policy rate in the G7 and that has pushed our dollar steadily higher against a basket of other currencies.

Let’s start with a look at how the Loonie has fluctuated in value against the Greenback in 2019:

The Loonie’s appreciation is not surprising when you consider that the U.S. Federal Reserve has cut its policy rate by 0.75% thus far in 2019.

The Canada/U.S. exchange rate is the most important one for Canadians because we sell about 75% of our exports into U.S. markets, but we compete with other countries for U.S. export demand as well, and the Loonie’s movement against those currencies also impacts our export momentum.

Here is a chart showing our top five exports and a ranking of the five countries who currently sell the most of these goods and materials into U.S. markets:

Let’s now look at how the Loonie has fared against the four highlighted countries in the chart:

The Loonie hasn’t moved too much against the Peso thus far, but Mexico just dropped its policy rate by another 0.25% last week, its third cut in a row, and it also lowered its inflation and growth forecasts for this year and next. So, the red line in the chart above could (and likely will) look more like the others in the near future.

Now here is the most important chart in today’s post. It shows a monthly breakdown of our export sales growth on a year-over-year basis thus far in 2019:

Not surprisingly, the Loonie’s steady rise has corresponded with declining export sales.

To be clear, the lofty Loonie isn’t our exporter’s only headwind, but it is a significant one which the BoC can help alleviate by cutting its policy rate. And given that a rate cut’s stimulative impact takes time to accrue and that our export sales are already in a clear downward trend, there is increased urgency for the BoC to move off the sidelines.The Bottom Line: It is becoming increasingly apparent that a broad swath of central banks around the world are in a race to cut their policy rates in an attempt to devalue their currencies, and in so doing, steal some much-needed economic momentum from other countries by increasing their export sales. It’s time for the BoC to put on its running shoes.