Home sales jumped in April as interest rates stabilized and population boomed
Summary
On a seasonally adjusted basis, home sales increased 11.3% from March to April, a third consecutive monthly increase and the first double-digit gain since the summer of 2020. Unlike the previous month, the increase in sales was spread across all provinces, with New Brunswick (-2.5%) and Newfoundland (-17.0%) being the exceptions.
On the supply side, new listings increased by 1.6% during the month, a first increase in three months.
Overall, supply decreased in Canada as testified by the number of months of inventory (active-listings to sales) decreasing from 3.8 to 3.3 in April. This remains up from the trough of 1.7 reached in the pandemic but remains low on a historical basis.
The active-listings to sales ratio is still tighter than its historical overage in the majority of Canadian provinces, with only Manitoba indicating a ratio above average. Housing starts in Canada increased in April (+47.8K to 261.6K, seasonally adjusted and annualized), more than consensus expectations calling for a 220.0K print. This increase more than offset Marchs 27.7K decline and was the sharpest since November 2021. In urban areas, rises in housing starts were seen in Ontario (+35.8K to 110.7K), British Columbia (+9.9K to 58.1K), the Maritimes (+4.0K to 9.8K) and Quebec (+2.3K to 29.4K). Meanwhile, a decline was registered in the Prairies (-2.8K to 33.2K) on losses in Manitoba (-3.5K to 4.0K) and Saskatchewan {-0.3K to 2.4K) while starts in Alberta posted an increase (+1.1K to 26.8K).
The Teranet-National Bank Composite National House Price Index remained relatively stable in April with a slight decrease of 0.1% compared with the previous month and after adjusting for seasonal effects. After seasonal adjustment, 5 of the 11 markets in the composite index were down during the month: Edmonton (-2.5%). Ottawa-Gatineau (-2.1%), Vancouver (-0.9%), Hamilton (-0.5%) and Montreal (-0.2%). Conversely, prices increased during the month in Quebec City (+1.2%), Toronto (+0.7%), Winnipeg (+0.5%), Calgary (+0.3%) and Victoria (+0.1%), while they remained stable in Halifax.
https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-resale-market.pdf
THE RUN DOWN ON DOWN PAYMENT
Making a down payment is one of the biggest decisions youll face when purchasing a home. Naturally, you may have a few questions about how the process works, such as: Whats the minimum amount you can put down? How will it affect your mortgage? And where can you get the money? Fortunately, we have all the answers to your down payment questions.
What is a down payment?
Simply put, a down payment is the amount of money you put towards the purchase of your home. This amount is then deducted from the total price of the home, with the remainder to be covered over the course of your mortgage.
Whats the minimum amount that you can put down?
In Ontario, the minimum down payment you can make on a house under $500,000 is 5%. For houses more than $500,000 but less than $1,000,000, the 5% minimum down payment applies to the first $500,000, while 10% is applied to the remainder. For example, if your home costs $700,000, your down payment for the first $500,000 would be 5% ($25,000), and 10% for the remaining $200,000 ($20,000) For houses over $1,000,000, the minimum down payment is 20%.
What is mortgage loan insurance?
Mortgage loan insurance (or default insurance) is designed to protect the lender in the event that youre unable to meet your mortgage payments. It is mandatory for those with a down payment lower than 20% to obtain mortgage insurance, though you may be required to do so under certain programs even if you have a 20% down payment. How does your down payment affect your mortgage? The higher your down payment, the lower your monthly mortgage payments. Likewise, higher down payments mean lower mortgage loan insurance rates, with premiums ranging from 0.6% to 4.5% the amount of your mortgage. With less than 20% down, you can only amortize your mortgage over 25 years. With more than 20% down you may qualify to up to 30 year amortization.
Can you borrow the money for your down payment?
Provided that you meet the lenders minimum requirements, in many cases you will be allowed to borrow some of the money for your down payment. There are a number of ways to go about doing this. The first is to take out a line of credit, a type of loan that allows you to borrow money up to a certain limit. Another, less common, option is to use a personal loan. However, doing so may affect your qualifying ratios.
Can I use funds from family as my down payment?
You can also use gifted funds from immediate family members for a down payment. These funds must be gifted without a re-payment plan.
If youre looking to buy a new home or property and want to learn more about the process, including your down payment options, contact Personal Choice Mortgage Services and schedule a free consultation with a knowledgeable and experienced mortgage broker who can answer all your questions and help steer you in the right direction.
EMAIL: info@pcmortgages.com
PHONE: 905-318-1414
TOLL FREE: 1-877-318-4141
By: Graeme Carey
CMHC Housing Market Outlook - Spring 2023
From CMHC
Key highlights from the 2023 release
We expect house prices and supply in Canada to decrease between 2022 2023. Price declines are expected to end sometime in 2023 before increasing for the remainder of the forecast period.
Our analysis forecasts a significant drop in housing starts in 2023 and we can see some recovery starting in 2023 to 2024 and onward.
Rental affordability is also set to decline due to demand outstripping supply, especially in Vancouver and Toronto.
Prairie provinces expect more positive housing market conditions due to interprovincial migration and affordable homeownership.
Ontario, British Columbia and Qubec will see significant drops in housing starts compared to other regions.
The Atlantic regions economy remains stable and moderate relative to other regions.
https://assets.cmhc-schl.gc.ca/sites/cmhc/professional/housing-markets-data-and-research/market-reports/housing-market-outlook/2023/housing-market-outlook-spring-2023-en.pdf?rev=5c29bc91-2310-435f-b2c9-b801866d0ede