We got a little distracted there with the mortgage rules and the distinct possibility that you will have to pay capital gains tax on your suite, but before the numbers become ancient history let’s take a look at September.
While the VREB is trying to convince regulators there’s nothing to see here with their headline, September was another extremely active month. September inventory was the lowest ever recorded (since 1996), while sales were second highest on record.
Months of inventory was the lowest ever for September. Remember, anything below about 4 is a sellers market.
Prices are still taking a breather into the fall, but as we’ve discussed, this can and has happened before in hot markets. Year over year we are at about +15% for detached homes.
Of course this is all kind of looking in the rear view mirror with the mortgage changes that have hit the market since then. Looking forward into the next couple weeks, we should see that reflected in the sales rate (currently we are still reporting on sales from before the rules were introduced.
|Wk 1||Wk 2||Wk 3||Wk 4|
|Sales to New Listings||81%||
|Months of Inventory||
On the mortgage rules front, the banks and insurers are quite predictably foaming at the mouth at the new rules. A little discussed change that the feds are looking at right now is how to shift some of the risk of insured mortgages from the taxpayer to the banks by making lenders and insurers pay a deductible if an insured mortgage goes under. A little skin in the game to encourage prudent lending. Naturally the banks are against it and have spun up their lobbyists to say that our mortgages are already so incredibly safe and default rates are so low that it would be pointless.
We don’t understand what a deductible is intended to achieve as a policy outcome. If it’s supposed to be something to improve the quality of underwriting, well the quality of underwriting is already very strong.
-Darren Hannah, Canadian Bankers Association
Of course, one might ask if there are no defaults, why are the banks so desperate not to be on the hook for them?