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Lower rates cut might disrupt Canadian financial system – Macklem

Negative rates down the line are possible, says BoC’s Macklem

Ephraim Vecina
Mortgage Broker News

Bank of Canada Governor Tiff Macklem said in a video conference last week that further rate cuts remain an option in providing economic stimulus.

At present, the central bank’s policy rate is at a historic low of 0.25%.

“We are not actively discussing negative interest rates at this point but it’s in our toolkit, and never say never,” Macklem said.

The timing of the statement made perfect sense, according to Derek Holt, head of capital markets economics at Bank of Nova Scotia.

“He’s putting the concept back on the table if downside risks intensify,” Holt told Bloomberg via email.

This represented a softening in the governor’s stance. Upon taking the central bank’s helm earlier this year, Macklem said that sub-zero rates will significantly disrupt the Canadian financial system.

The possibility of negative rates was floated a few years back, when the bank was reviewing its options.

However, the policy steps taken so far to help the economy weather the pandemic have made the financial system more susceptible to future volatility, Macklem said.

“Without the fiscal and monetary policy actions, the economic devastation of the pandemic could have been much, much worse,” Macklem said. “[But] as much as a bold policy response was needed, it will inevitably make the economy and financial system more vulnerable to economic shocks down the road.”

Macklem said that the bank is keeping a close eye on the national credit environment, despite most Canadians having resumed regular payment schedules as banks’ mortgage deferral programs ended.

A potentially major failure point will be sufficiently large credit losses that will force banks to impose stricter controls on borrowing, Reuters reported.

“If this happens, our banking system would go from being a tailwind that supports recovery to being a headwind,” Macklem said.


Copyright © 2020 Key Media

Covid-19 challenge the real estate market will this be an indication of slow real estate market?

Will a pause in open houses slow Ontario’s raging real estate market?

Clayton Jarvis
Mortgage Broker News

 On Friday, the Ontario Real Estate Association called on the province’s realtors to put a temporary halt to open houses. The recommendation came just hours before the province announced that it had recorded 939 new COVID-19 infections, smashing the previous record of 797 set on Thursday.

“As we see the cases around Ontario continue to rise and that second wave starting to take hold, we wanted to make sure that Ontario real estate is doing its part to help keep people and their communities safe,” OREA president Sean Morrison told Mortgage Broker News by phone.

A pause in open houses is unlikely to impact business for the province’s realtors or mortgage brokers, many of whom were given a crash course in using technology to enhance business during the pandemic’s first few destabilizing months. From Zoom calls to e-signatures to 3D tours, real estate pro’s have already grown adept at using the kinds of tools that make open houses somewhat unnecessary, especially in Ontario’s most active real estate markets. These days, that’s practically all of them.

“I think, because realtors are so adaptive, we’ve already been shifting toward those digital tools. Under COVID-19, everybody had to make that shift a lot quicker,” Morrison says.

InTouch Mortgage Solutions broker Anthony Venuto doesn’t foresee a drop in business resulting from a lack of open houses, but he does hope realtors will see the next few days or weeks as an opportunity to provide better visual representations of homes online.

“If the industry adapts a higher standard of listings – not camera phone pictures of your listings – a client can look through those photos and narrow down from five or ten properties to just these two, or just this one,” he says. “Am I going to risk my life to go see a house if the photos aren’t really good? I’m going to pass.”

Venuto is quick to point out that open houses are not the only way for buyers to view a property. Private viewings are still permitted. But he says some sellers are only allowing viewings once an offer has been made. In that light, putting an end to open houses may actually speed up some buyers’ decisions.

“If you want to see a home, you can certainly book it with your local realtor and go through the home one-by-one,” Morrison says. “The concern here was the groupings of people running through open houses.”

Morrison says 3D renderings and virtual reality provide strong alternatives to open houses.

“You can still hold an open house virtually, which is something realtors have been doing throughout the pandemic and were starting to use even before the pandemic,” he says.

Community Trust’s Grant Armstrong is not expecting Ontario’s rising number of coronavirus infections to hinder the day-to-day operations of the province’s broker community, a large portion of which was operating remotely before COVID-19.

“Brokers and lenders have proven their resilience over the years to adapt to changes that are needed to support the industry,” Armstrong says. “This pandemic challenged the industry, and the industry stepped up to meet that challenge.”


Copyright © 2020 Key Media

PM Trudeau unveiled several changes to the existing program CEBA, CEWS and CERB Replacement

COVID-19: Government Announces New Rent Program, Improved CEBA and CEWS, CERB Replacement

CREA Faculty

Following months of lobbying by the Canadian Real Estate Association (CREA) in collaboration with other business groups, today the government announced the Canada Emergency Rent Subsidy (CERS), as well as enhancements to the Canada Emergency Business Account (CEBA) and the Canada Emergency Wage Subsidy (CEWS).

Prime Minister Justin Trudeau unveiled several new initiatives and changes to existing programs. CREA welcomes these announcements and is pleased to see our efforts to keep these programs a part of the conversation have resulted in direct improvements that provide much needed help for our members.

The CERS is a new rent subsidy program replacing the Canada Emergency Commercial Rent Assistance (CECRA), providing rent subsidies directly to businesses, rather than landlords. It will support businesses, charities, and non-profits that have suffered a revenue drop, by subsidizing a percentage of their expenses, on a sliding scale, up to a maximum of 65% of eligible expenses until December 19, 2020. Organizations would be able to make claims retroactively for the period that began September 27 and ends October 24, 2020. A top-up subsidy of 25% for organizations temporarily shut down by a mandatory public health order issued by a qualifying public health authority will also be available in addition to the 65% subsidy.

In other support for businesses, the CEWS has been extended until June 2021, as promised in the Speech from the Throne, and will remain at the current subsidy rate of up to a maximum of 65% of eligible wages until December 19, 2020. For more information, visit the CEWS website.

It was also announced CEBA has been expanded. Eligible businesses will be able to access an interest-free loan of up to $20,000, in addition to the original CEBA loan of $40,000. Half of this additional financing would be forgivable if repaid by December 31, 2022. Additionally, the application deadline for CEBA is being extended to December 31, 2020. For more information, visit the CEBA website.

Since CECRA, CEBA and CEWS were announced, CREA has worked with government officials to underline the programs’ shortcomings, as well as propose solutions that make them accessible to Canadian businesses needing it most.

CREA continues to push for further improvements, such as CEBA eligibility for businesses operating with a personal bank account. On that issue, government officials have assured stakeholders a solution is in the works, and CREA remains committed to working toward an amendment that makes CEBA eligible to every business in need.

The federal government survived a confidence vote last week as Bill C-4 was passed unanimously in the House of Commons and received royal assent. This COVID-19 response bill will provide further financial support to Canadians who are struggling due to the effects of the pandemic and comes into effect as previous support programs expire.

The initial bill tabled by the Liberal government was subject to criticism from opposition parties. Following negotiations to secure support from the NDP, the government opted to table a new bill incorporating the agreed upon changes.

Bill C-4 establishes the Canada Recovery Benefit (CRB), the Canada Recovery Sickness Benefit (CRSB) and the Canada Recovery Caregiving Benefit (CRCB) to support Canada’s economic recovery in response to COVID-19.

The CRB provides income support to employed and self-employed individuals who are directly affected by COVID-19 and are not entitled to Employment Insurance (EI) benefits. If you are eligible for the CRB, you can receive $1,000 ($900 after taxes withheld) for a two-week period, and you may apply up to a total of 13 eligibility periods (26 weeks) between September 27, 2020, and September 25, 2021.

You may earn employment or self-employment income while you receive the CRB; however, to make sure the benefit reaches those who need it most, there’s a difference in how much you can keep if you earn more than $38,000 in the calendar year. This amount excludes CRB payments. You will have to reimburse $0.50 of the CRB for every dollar of net income you earned above $38,000 on your income tax return. For more information, visit the CRB website.

The CRSB provides $500 per week for up to a maximum of two weeks, for workers who are unable to work due to the effects of COVID-19, while the CRCB provides $500 per week for up to 26 weeks per household for workers who are forced to take care of a family member for reasons related to COVID-19.

The government also announced they will provide an additional $600 million to support workers and businesses through the Regional Relief and Recovery Fund (RRRF). The RRRF was created to mitigate financial pressure experienced by businesses and organizations to allow them to continue their operations, including paying their employees, and support projects by businesses, organizations and communities to prepare now for a successful recovery. For more information, visit the RRRF website.

The measures covered in this email are part of the Government of Canada’s COVID-19 Economic Response Plan. The government is constantly assessing the evolving situation and is likely to introduce additional measures as it deems necessary. We are monitoring the implementation of existing measures and continue to advocate on behalf of REALTORS® as new initiatives are developed.

This article is for information purposes only and is not a substitute for professional advice. If you need professional advice you should consult a lawyer, accountant or other qualified professional.



Comprehensive online seller tool for real estate industry

Canadian tech company uses machine learning to assess your home?s market value

Michelle McNally

 An Edmonton-based tech company is rolling out a suite of online tools to help home buyers and sellers navigate the market as the pandemic continues to alter the country’s housing landscape.

HonestDoor is a free online service that combines realty intelligence and data science to produce in-depth information about residential and commercial properties, such as price assessments and neighbourhood analytics — information that’s typically difficult and time-consuming to collect. Last month, the platform launched in British Columbia, its third province since the company was founded in 2019.

“The company started because we thought there was a need for transparency in real estate and that was our main mission at the time,” said Dan Belostotsky, founder and CEO of HonestDoor. “We still have that mission today, and we’re trying now to do it across the country.”


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In addition to its live database with detailed information on three million Canadian properties, HonestDoor gives users a data-backed price assessment of their property using a machine learning system, known as the HonestDoor Price. The company recently integrated its own listing service, which allows homeowners, developers and real estate agents alike to list their properties on HonestDoor.

“I think HonestDoor has been a nice supplement to have when [homeowners] are going to buy or sell their property, to find out, ‘Hey, what’s my home worth?’ or ‘Hey, what are the details of this property?’ or any other red flags that they can find about a particular property, or just give them peace of mind,” said Belostotsky.

“For that reason, I think we’ve seen our traffic grow considerably because maybe more people are at home or people are actually really interested in moving,” he added.

Unlike MLS-based websites, which tend to share the same information across multiple sites, HonestDoor listings are unique to the platform. They also don’t require the lister to be an agent. Traditionally, listing your property for sale could be a drawn-out process with multiple meetings involved. Belostotsky explained that adding a listing on HonestDoor can be done quickly from your living room couch.


Image: HonestDoor

“In the smaller markets, it’s kind of like a risk-free way to determine the attractiveness of your home without necessarily getting an agent,” added Nicole Dong, a senior manager at HonestDoor. “You can get an agent at any point, but by listing your home on HonestDoor you’re sort of sussing out the demand for it.”

“We’re in a strange time for real estate, so I think that being able to offer that platform is a nice way to gain interest from people who are hoping to sell,” she said.

By the end of the year, HonestDoor plans to capture data for another two million properties on the platform for a total of five million properties site-wide. The company is looking to expand its operation to the Maritimes, Quebec and Ontario.

“I think the key for us is we want to be front and centre when someone is interested in buying or selling a home, or even earlier than [that],” said Belostotsky. “It would be a year or five years before they decide to move, so they’re always checking sold prices, they’re always checking on what’s happening in their neighbourhood.”


© 2020 BuzzBuzzHome Corp.

Vancouver’s housing market soaring high in September sales

Vancouver’s housing market breaks sales record in September

Sean MacKay

With 3,643 homes changing hands last month, the Vancouver housing market broke the all-time record for sales in September.
The total for September meant sales rose a remarkable 56.2 percent over the previous year and were 44.8 percent above the 10-year average for the month. Last month’s tally also firmly beat out August’s total by nearly 20 percent.
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The Real Estate Board of Greater Vancouver (REBGV), which released the data on Friday, said that low interest rates and changing housing needs during the pandemic are the primary drivers of the increase in activity.
Notably absent from REBGV’s commentary on what’s driving the high flying market’s performance was mention of pent-up demand held over from the spring shutdown.
Kevin Skipworth, a partner at Dexter Realty in Vancouver, said pent-up demand appears to have run its course through the summer and market momentum is now being carried by other factors.
“It is safe to say we are well beyond COVID-19 pent up demand; this is a housing market that is carrying itself and there are many factors to consider in looking at what the future holds for it,” he wrote in an email.
New listings also rose significantly in September both when compared to the previous year and to listings brought to market in August, but the pace of sales has been so dizzying that prices continued to rise despite the substantial new supply available.
“While the pace of new MLS® listings entering the market is increasing, the heightened demand from home buyers is keeping overall supply levels down,” said REBGV Chair Colette Gerber. “This is creating upward pressure on home prices, which have been edging up since the spring.”
REBGV’s benchmark home price for all property types rose 5.8 percent over the previous year to $1,041,300. The benchmark price for detached homes was $1,507,500, up 7.8 percent over last September. Meantime, the benchmark price for condos was $683,500, up 4.5 percent from last year.
In keeping with recent trends observed in Vancouver and other major Canadian markets, condo sales volume was higher than detached homes, but the former recorded “only” a 36.9 percent year-over-year increase in sales, while the latter saw a 76.8 percent rise.
“Working at home and the desire for space has led to some owners wanting to make a move outside the downtown core, but the number of [condo] transactions have increased since the spring,” said Skipworth.
“Buyers are still active and taking advantage of an increase in choice. Market cycles do happen, and a shift to detached homes is one of them, especially in light of price declines in recent years in the detached market,” he added.

© 2020 BuzzBuzzHome Corp.

Whats the forecast says about Canadian home market price

Op-Ed: Why all the fear mongering by the CMHC over Canadian home prices?

Christopher Alexander
Mortgage Broker News

The strength of the Canadian real estate market has proven itself time and again during the pandemic. While we’re not out of the woods yet, we are expecting continued growth for the duration of 2020, with an active market for the foreseeable future and balanced conditions at the national level into 2021. This is great news for Canadians.
So why all the fear mongering by the CMHC?
The Canada Mortgage and Housing Corporation’s Chief Economist Bob Dugan told reporters at a press conference recently that the agency stands by its previous forecast in May that warned of a decline in Canadian house prices between nine and 18%.
“I’m not convinced that we have a sustainable basis for housing demand in the economic disturbance that’s going on related to COVID-19,” Dugan said. “That’s why I say I stand by the forecasts.”
We expressed our concerns over CMHC’s predictions in the spring, and Dugan’s latest statement continues to raise eyebrows – ours, and other industry insiders as well, as the Canadian housing market stays on its upward course.
While I can appreciate some of the reasoning that went into CMHC’s prediction, especially in the spring when so much was still unknown, the market data doesn’t support such a steep price decline, especially with the two largest real estate markets of Toronto and Vancouver continuing their upward momentum. The Prairies are facing different circumstances and challenges due to the resources sector, but Ontario and BC are expected to offset slower activity in Saskatchewan and Alberta.
Home prices so far resistant to recession
Nobody could have predicted the success of the Canadian real estate market in the wake of COVID-19. The height of the pandemic, March and April 2020, saw dramatic declines in activity, but transactions quickly resumed across the country as real estate professionals and consumers alike adapted to social distancing measures and embraced technology to continue transacting, despite disruptions to the economy and every facet of daily life.
Last month, RE/MAX Canada revised our forecast for growth in the national average house price in 2020, increasing it to 4.6 percent from our original expectation of 3.6 percent at the end of last year.
In terms of declining prices, “the impact was on rent as opposed to home ownership,” said Benjamin Tal, Chief Economist at CIBC World Markets. His optimism in the Canadian housing market was due to continued low interest rates and strong pent-up demand. “Eighty per cent of jobs lost were in the service sector. Many of them were low-income and many of them were renters. So, the impact was on rent as opposed to home ownership,” he noted.

Economists believe in Canada’s housing market
RBC Economics recently reported that a large-scale decline was unlikely. “The pandemic completely disrupted normal seasonal patterns by shifting activity from the spring to summer,” wrote RBC chief economist Robert Hogue. “With pent-up demand now largely exhausted, we see activity cooling later this fall. This should let some of the steam out of prices though not to the point of causing outright declines on a large scale.”
TD’s Beata Caranci also commented on Canada’s “swoosh” economic recovery and the housing market. The level of unemployment, she says, suggests the housing market should not be as active as it is. However, when you look at income levels, it all makes sense. Incomes today aren’t behaving like we’re in a recession, and incomes are being supported at the same or at higher levels than in previous recessions. The complete disconnect between the employment rate and income levels is adding fuel to the housing market.
So, if the real estate industry disagrees and economists disagree, just where is the CMHC getting its insight to support such a steep decrease in home values?
Recently the Ontario Real Estate Association surveyed Ontarians, finding that a strong majority think housing is an important (60%) or somewhat important (32%) contributor to the provincial economic recovery. They are now pushing governments to help stimulate the market with incentives like a land transfer tax holiday to help get more homes on the market and address some of the supply issues the province in currently facing.
I do think we may see a “hangover” from the busy market we’re experiencing right now, but as we head into 2021, I think a prediction of more balanced conditions across Canadian housing markets is warranted. But an 18 percent decline in prices is highly unlikely.
Christopher Alexander is executive vice president and regional director of RE/MAX INTEGRA’s Ontario-Atlantic Region.

Copyright © 2020 Key Media