Stop Power of Sale scenarios with Tembo Financial

In this article, we’ll explore the possibility of stopping power of sale default situations through a private mortgage loan with Tembo Financial. We’ll also discuss “stigma equity,” a Tembo Financial term, and what it is. In addition, we’ll outline why Tembo can help offer the option of not yielding to a big bank and settling for the first possible offer (what big banks generally prefer). Additionally, we’ll explore how we can collaborate with our clients to weather challenges, optimize market terms, and unlock hidden value.

Understanding Stop Power of Sale/Default

One of the standout features of a Tembo private mortgages is the ability to exercise stop power of sale/default provisions. Unlike traditional lending institutions, Tembo Financial specializes in providing the flexibility to work closely with our clients and borrowers facing financial hardships. When a borrower encounters difficulties in meeting their mortgage obligations, Tembo can offer alternatives such as paying out the bank, offer more flexible terms, extending the loan tenure, and ultimately provide a better market outcome. This approach helps our clients retain their property and avoid a big bank or big lender simply exercising power and sale and locking in the first possible transaction. There is zero flexibility in this option, and it severely limits the debtholder. Tembo’s solution lets the homeowner control their sale and maximize the sale price.

Unveiling “Stigma Equity”

“Stigma equity” is a Tembo Financial term gaining prominence in the private real estate lending landscape. It refers to the difference between the listing price for a home that is listed under power of sale price (often lower due to negative perceptions and the thought that the buyer can get a deal) and its true market value. Tembo specializes in working with our clients to harness stigma equity to their advantage. By collaborating with clients and offering tailored solutions, Tembo Financial can help revive, increase, or enhance the property’s value, bridging the gap between distressed value and its actual potential. We’ve helped countless clients use financing to payout the banks, reno their properties to increase value and allow the homeowner to control their sale despite being in financial hardship.

Rethinking Power of Sale for Banks

In conventional banking scenarios, the power of sale process can lead to rushed sales and lower prices to recover dues quickly. Tembo Financial, however, can navigate this differently. Instead of rushing into a sale, we can opt for more a deliberate and strategic approach aimed at maximizing value and allowing the homeowner to sell on their terms and not the banks!. We’ll get the banks off your back, and work with you to find the best option. Paying off the bank to extend their position and gain the necessary time to position the property more favourably in the market is our approach. This approach can result in a higher selling price.

Managing Power of Sale and Default

The ability to handle power of sale and default situations effectively is a hallmark of private mortgage lending. Tembo Financial has a personalized approach which allows us to engage in open dialogue with our clients. This enables us to craft solutions that align with the client’s circumstances.

Securing Better Market Terms

We often have a unique advantage when it comes to negotiating market terms. With a focus on individual property evaluations and a willingness to consider unconventional properties, we can provide tailored financing solutions that cater to a broader range of properties than traditional lenders.

Going Beyond the First Offer

Unlike traditional bank lenders, Tembo Financial has the luxury of time on our side. This means we can help clients avoid the trap of settling for the first offer that comes along during a power of sale situation. A big bank just wants to conclude the power of sale as soon as possible. They look at these transactions as numbers on a ledger. We are in the business of maximizing value for our client by allowing them to control the sale of their home.  By taking a strategic approach and assessing the property’s true potential, we can payout the bank and provide a short term loan so the client can sell quickly and alleviate the stress of a power of sale proceeding. This patient approach, coupled with the ability to offer creative financing solutions, sets us apart in the real estate landscape.

Tembo Financial and our private power of sale lending solutions can provide an alternative avenue for us to collaborate with our clients in a way that goes beyond the constraints of the big banks. The ability to exercise stop power of sale/default, diminish stigma equity, strategically manage power of sale all while helping the homeowner secure a favourable home across Ontario!.

The real estate market continues to evolve, and Tembo understands how to harness these advantages to help our clients during difficult times

The BOC beat inflation, but at what cost?

It took the Bank of Canada a year and 10 rate hikes to do it, but they’ve succeeded in breaking the back of inflation. With Statscan reporting that June’s inflation number hit 2.8%, we’ve returned to the central bank’s inflationary target range of 2-3%. Make no mistake, this is a serious achievement. Officials will sigh a breath of relief. Many developed economies around the world continue to see rising inflation, and others have noted only modest declines.

Canadian real estate now has two challenges, one, how will the economy handle the biggest rate tightening cycle in memory, and two; will officials manage to keep inflation under control? Statscan’s June snapshot of the economy reveals generally positive indicators, but there are several shifting real estate trends we’re noting.

Employment and wages:

Canada’s employment saw a positive increase of 60,000 jobs, marking a 0.3% growth. The rise in employment was mainly driven by gains in full-time work, accounting for 110,000 jobs, indicating a 0.7% increase.

However, the unemployment rate also experienced a slight uptick, reaching 5.4%, with an increase of 0.2 percentage points. This rise in the unemployment rate was due to more people actively seeking employment opportunities. This is a good sign, but the economy will need to continue generating new jobs to accommodate this increased interest.

The employment gains in June were primarily focused on young men aged 15 to 24, with an increase of 31,000 jobs, and men aged 25 to 54, also seeing a gain of 31,000 jobs. On the other hand, employment levels for women across all age groups remained relatively stable during the same period.

Certain provinces experienced notable changes in employment during June. Ontario saw a significant increase of 56,000 jobs, while Nova Scotia and Newfoundland and Labrador also reported employment gains of 3,600 and 2,300 jobs, respectively. However, Prince Edward Island experienced a decline of 2,400 jobs. The remaining provinces showed minimal variation in employment figures. Ontario continues to lead the nation in job creation. This is why GTA real estate is ironclad, as we remain the dominant job creating engine in the country.

In terms of industries, some sectors witnessed significant growth. Wholesale and retail trade saw an increase of 33,000 jobs, followed by manufacturing with 27,000 jobs, health care and social assistance with 21,000 jobs, and transportation and warehousing with 10,000 jobs. Conversely, construction experienced a decline of 14,000 jobs, along with educational services losing 14,000 jobs and agriculture reporting a decrease of 6,000 jobs.

Regarding wages, the average hourly wage rose by 4.2% year-over-year, reaching $33.12 in June. This increase followed a slightly higher growth of 5.1% in May (not seasonally adjusted). Total hours worked remained relatively stable in June, with a year-over-year increase of 2.0%.

Looking more closely at gender-based wage trends, women experienced a 4.7% year-over-year growth in average hourly wages, reaching $30.95, while men saw a 3.6% increase, bringing their average hourly wage to $35.21. Wage growth is increasing, but it has a long way to go

Overall, the June 2023 employment report presents a mixed picture for Canada’s job market. While employment figures grew in certain sectors and age groups, the slight increase in the unemployment rate and the slower year-over-year growth in average hourly wages call for continued monitoring and thoughtful economic strategies. That strong job growth continues to be recorded despite such a rapid increase in rates is a testament to the underlying strength and resilience of our national economy.

How fares housing?

In the wake of consecutive interest rate hikes, Canada’s housing market, which had been experiencing a rapid rebound, is showing some signs of moderation. The flurry of activity seen during the spring, following the temporary pause in rate hikes by the Bank of Canada, is now “tapering off,” according to economists closely monitoring the market. This is to be expected, as rate hikes have an immediate and powerful impact on the economy.

The latest data from the Canadian Real Estate Association reveals that national home resales rose by a modest 1.5% month-over-month in June. This is a significant drop from the impressive 16.3% surge witnessed between April and May. While the new listings in March hit a 20-year low, they managed to rise by 5.9% on a monthly basis in June. However, it’s important to note that conditions in most major markets still favor sellers, leading to continued price increases. Similar to May, the MLS Home Price Index surged by 2.0% on a monthly basis in June.

Robert Hogue, the Assistant Chief Economist at RBC, suggests that the slower pace of resales growth in June indicates a shift in Canada’s market recovery. He believes that the strength of the spring rebound was not sustainable, particularly with the Bank of Canada tightening the screws with additional rate hikes, thereby making it more challenging for potential buyers.

Hogue further predicts a flatter trajectory for the remainder of 2023, as buyers grapple with increasingly challenging affordability conditions and an potential recession.

This outlook of quieter sales in the latter half of the year is shared by Marc Ercolao, an Economist at TD, and Marc Desormeaux, the Principal Economist at Desjardins. The rising mortgage costs are identified as the primary culprit for the anticipated slowdown. However, when it comes to price predictions, Ercolao’s perspective differs from Hogue’s. While Hogue believes that prices will embark on a more moderate appreciation path, Ercolao expects that the scarcity of new listings, coupled with national seller’s market conditions, will keep prices on an upward trajectory in the near term.

On the other hand, Desormeaux underscores the importance of closely monitoring new listings. Despite remaining low, the uptick observed in June could indicate either investors trying to time the market as prices rise or a response from mortgage holders facing “sharply higher” debt servicing costs. In the absence of significant progress on the supply front, Farah Omran, a Senior Economist at Scotiabank, opines that similar circumstances would have arisen, regardless of rate hikes. The tight market conditions would have still resulted in inflated home prices and elevated mortgage payments, ultimately reducing affordability for first-time buyers.

As we move forward, it’s evident that Canada’s housing market is undergoing a transition. The pace of the rebound is moderating, and some economic factors, including interest rates and mortgage costs, are shaping market dynamics. Industry experts are closely observing these developments, and their predictions indicate a more moderated market trajectory in the coming months.

Burnt out by BOC rate hikes? Consider a debt consolidation loan from Tembo

A recent report from Equifax reveals an alarming trend of increasing missed payments on nonmortgage bills among Canadians. As high interest rates and the rising cost of living continue to burden consumers, financial stability is becoming a significant concern. In light of these challenges, Canadians need effective solutions to manage their debts and improve their credit scores. Tembo Financial, a private lending company, offers a lifeline in the form of debt consolidation loans. By consolidating multiple debt payments into one, reducing high interest charges, and facilitating credit score improvement, Tembo Financial provides our clients with a way to regain control over their financial situation.

According to Equifax’s consumer credit report, the number of consumers missing payments on nonmortgage products, such as credit cards and vehicle loans, has surged. In the first quarter of this year alone, there was a 19% increase, with 175,000 more individuals struggling to meet their financial obligations compared to the same period in 2022. Shockingly, even mortgage holders are experiencing difficulties, with a 15.7% rise in missed payments on nonmortgage debt compared to last year. The impact is evident across income levels, with younger individuals and lower-income households particularly affected.

As Canadians grapple with the increasing cost of living and higher interest rates, paying off debts becomes a daunting challenge. Doug Hoyes, co-founder of personal insolvency firm Hoyes, Michalos & Associates Inc., highlights the concerning ripple effect caused by consumers prioritizing mortgage payments over other bills and credit cards. Falling behind on credit card payments not only leads to more interest charges but also places individuals at risk of defaulting on their loans. This, in turn, triggers foreclosure actions by banks, potentially causing a decline in real estate prices and a broader economic recession.

The Bank of Canada’s annual review expresses growing concerns about Canadians’ ability to handle their debt and the associated risks. As interest rates rise, mortgage payments are projected to increase substantially, affecting both variable-rate and fixed-rate mortgages. By 2026, those with variable-rate mortgages could face a staggering 40% spike in payments, while those with fixed-rate mortgages could see a rise of 20 to 25% compared to 2022 levels. These mounting financial pressures have led experts to question the average Canadian’s financial well-being, especially considering the depletion of savings and the growing disparity between income and expenses.

Equifax’s report highlights another alarming statistic—credit card debt continues to rise. Despite the usual post-holiday slowdown in consumer spending during the first quarter, credit card balances have continued to increase. On average, consumers are spending 21.5% more each month on their credit cards compared to pre-pandemic levels. The combination of a higher cost of living and an influx of new credit customers has driven credit card balances up by 14.5% year-over-year. This trend signals a growing urgency for Canadians to find effective solutions to manage and reduce their debts.

Tembo Financial’s Debt Consolidation Solution:

In these challenging times, Canadians need a viable strategy to regain financial stability and improve their credit scores. Tembo Financial’s debt consolidation loans offer a lifeline for individuals burdened by multiple debts and high interest charges. By consolidating various debts into a single loan, borrowers can simplify their payment structure, reduce interest rates, and alleviate the strain of multiple payments. This approach not only saves money but also contributes to enhancing credit scores over time, allowing individuals to rebuild their financial foundation.

As the debt crisis in Canada continues to escalate, the importance of proactive financial management cannot be overstated. Tembo Financial’s debt consolidation loans provide a practical solution for Canadians seeking relief from high interest rates and mounting debt burdens. By consolidating debts, individuals can streamline their finances, reduce interest charges, and ultimately improve their credit scores. In an uncertain financial landscape, taking control of your debts with Tembo Financial is a proactive step towards a brighter financial future. At the end of the day, the best outcome of a Tembo loan is the peace of mind knowing that your high interest debt is cleared and centralized into one product with Tembo which means one pool to pay off and one set of payments.

BOC rate hikes are slowing the housing rebound

Toronto’s real estate market experienced a notable shift in demand-supply dynamics last month, attributed to the Bank of Canada’s decision to resume its rate hiking cycle. Tembo would like to highlight a recent real estate research report from RBC that indicates that home sales in Toronto declined by 6.9 percent in June, following a surge of 32 percent in April and May, when interest rates were held steady. As the central bank raises rates and moves towards a more balanced market, the rapid appreciation of home prices may start to slow down. This financial blog post delves into the details of the report, shedding light on the recent trends and potential implications for buyers and sellers in the Toronto housing market.

The Rebalancing Act:

According to the RBC report, the resumption of rate hikes by the Bank of Canada has triggered a sharp rebalancing of demand-supply conditions in Toronto’s real estate market. Economists Robert Hogue and Rachel Battaglia highlight that while home prices continue to appreciate, the pace of appreciation is expected to decelerate in the coming months. In June, the area’s MLS composite benchmark price rose by 2.5 percent month-over-month to reach $1.16 million. However, the report suggests that the surge in Toronto home values, which led to an 8.9 percent increase in benchmark prices since February, is unlikely to be sustained.

Increasing Supply and Moderating Prices:

RBC acknowledges that the number of homes available for sale increased in major markets, including Toronto. Although this growing supply hasn’t significantly eased upward price pressure thus far, a continuation of fewer buyers and more sellers could lead to a moderation in price growth. The report emphasizes that the initial rapid rebound in markets like Toronto and Vancouver was unexpected, and the future trajectory is likely to be more measured. These market dynamics indicate a potential shift towards a buyers’ market, where housing supply exceeds demand.

Impact of Higher Interest Rates:

With higher interest rates, affordability remains a significant challenge for prospective buyers. RBC emphasizes that the current market conditions, despite a modest decline in average and median prices, continue to pose extreme challenges for buyers in terms of affordability. While the Toronto Regional Real Estate Board’s seasonally adjusted metrics show steady prices on a month-over-month basis, RBC suggests that further rate hikes could potentially exert downward pressure on prices.

Market Sentiment and Uncertainty:

The decline of 6.9 percent in seasonally adjusted sales, alongside uncertainty surrounding inflation and interest rates, indicates a cooling market that extends beyond the usual summer slowdown. John Pasalis, President and Broker of Record at Realosophy, suggests that the market may be moving towards a buyers’ market, but the specific metrics defining it remain subjective. However, the upcoming fall season remains uncertain, as the impact of interest rate decisions continues to influence market sentiment.

Outlook for the Market:

While TRREB President Paul Baron affirms the strong demand for ownership housing, he acknowledges that uncertainty surrounding inflation and interest rates, coupled with a persistent lack of inventory, contributed to hampered home sales in June. Some real estate experts, like Cam Forbes, a broker with RE/MAX Realtron Realty Inc., believe that the Bank of Canada may be approaching the limit for interest rate increases. Forbes predicts a balanced market for the rest of the year and anticipates a slowdown in inflation, which could eventually lead to lower interest rates, benefiting the real estate market.

Can the economy absorb more rate hikes?

The Bank of Canada (BoC) is poised to raise interest rates for the second consecutive quarter-point hike, following a month of robust economic data that showcased resilient growth, a tight labor market, and persistent underlying inflation. Analysts have noted these factors as driving forces behind the decision. In June, the central bank increased the overnight rate to a 22-year high of 4.75%, breaking a five-month pause and stating that monetary policy was not sufficiently restrictive. The BoC emphasized that future rate adjustments would hinge on economic indicators.

While some recent data indicated a slight slowdown, such as a cooling inflation rate of 3.4%, a modest jobs report for May, and an unexpected trade deficit in the same month, market expectations still lean towards another rate hike. Despite facing nine interest rate hikes totaling 450 basis points since March of the previous year, the Canadian economy has displayed resilience in growth, and the housing market has shown signs of improvement. After a period of stagnation in April, the economy regained momentum in May, with a projected monthly growth of 0.4%. Additionally, data published on Friday revealed that Canada added a greater number of jobs in June than anticipated.

Jay Zhao-Murray, an FX analyst at Monex Canada, noted that although the data released after the June meeting suggested a slight cooling of the economy, the underlying details have been consistently stronger. As a result, it is expected that the BoC will raise the policy rate by 25 basis points to reach 5%. Out of the 24 economists surveyed by Reuters, 20 anticipate a quarter-point increase in rates, followed by an extended period of stability until at least 2024. While headline inflation figures are now less than half of last year’s peak of 8.1%, the three-month annualized rates of the BoC’s core measures have only marginally decreased.

While the primary objective of the BoC is to bring inflation to its 2% target, it also aims to strike a delicate balance by setting borrowing costs high enough to contain inflation without causing a severe economic downturn. Some participants in the money markets are even speculating on the possibility of another rate hike before the end of the year. Andrew Grantham, a senior economist at CIBC Capital Markets, stated that interest rates are already at, or even above, levels that would typically be seen in a normal hiking cycle. He suggests that any subsequent adjustments should focus on fine-tuning policy and responding to the most recent economic data.

The Toronto real estate market experienced a notable rebalancing in June, influenced by the Bank of Canada’s rate hikes. As sales declined and the supply of homes increased, the rapid pace of price appreciation is expected to moderate in the coming months. Affordability remains a significant challenge for buyers amidst higher interest rates. While the market shows signs of shifting towards a buyers’ market, uncertainty surrounding inflation, interest rates, and the upcoming fall season leaves the future trajectory uncertain. Overall, these developments underline the need for prospective buyers and sellers to stay informed and make well-informed decisions in this evolving real estate landscape.

Taking out a second private mortgage in a rebounding housing market

   We always talk about how resilient the GTA and southern Ontario real estate market is. We’ve watched year after year as the market absorbs shocks, adapts, and continues to thrive. Over the long term, price growth remains healthy, demand remains strong, and supply delivers, but never enough to cool price growth momentum. In April, Toronto’s housing market saw its third consecutive monthly price increase, indicating a rebound amidst limited housing supply. The average home price in the Greater Toronto Area rose by four percent from the previous month to $1.153 million, as reported by the Toronto Regional Real Estate Board. However, prices remain below the average of $1.25 million recorded in April 2022. Despite this, the number of homes sold increased by around nine percent month-over-month to 7,531, although it is still slightly down by over five percent compared to the previous year. The recent surge in interest rates has deterred some potential buyers, but the current market data for spring indicates a resurgence of interest, given the low supply and fewer listings available.

            We’re now looking at what could be the early stages of a period of housing price growth recovery in Toronto and southern Ontario from the shock of COVID-19. As the housing market in Toronto and Ontario shows signs of rebounding and picks up momentum, homeowners may find themselves considering alternative financing options. One such option that should be considered is a private second mortgage with Tembo Financial, which offers several advantages for borrowers seeking additional funds. In this article, we’ll explore three key benefits of opting for a private second mortgage in a rebounding housing market.

  1. Access to Quick and Flexible Financing:

In a rapidly evolving housing market, timing is crucial. Tembo Financial offers our clients streamlined approval processes and faster access to funds compared to traditional lending institutions. We have taken calls, booked appointments, processed paperwork, and funded clients with cash in the bank all within 24 hours. Speed is our passion and rapid approvals with robust customer service and tailor-made financial services from real estate experts forms the bedrock of what we deliver. This means that our clients can quickly capitalize on emerging opportunities or address immediate financial needs. Furthermore, Tembo has far more flexible lending criteria, making it easier for clients to qualify for a second mortgage, especially if they have less-than-perfect credit, a large personal debt load, gaps in employment history, or limited income documentation.

  1. Increased Borrowing Power:

With a private second mortgage with Tembo Financial, clients can tap into their property’s equity, unlocking additional borrowing power. This can be particularly advantageous in a rebounding housing market with increasing property values. Sales are picking up, prices are rising again, and demand remains ironclad. By leveraging your home’s equity, prospective clients can secure a substantial loan amount to fund various endeavors, such as home renovations, debt consolidation, or investment opportunities. Consider using your Tembo private second mortgage to remodel a kitchen, finish a basement and transform it into a rental property, or to set aside a down payment for a preconstruction property. The increased borrowing power offered by a private second mortgage with Tembo empowers our clients to seize opportunities and leverage their property’s increasing value for financial growth. The opportunities are endless, and of course, we are here to assist you in maximizing the potential of what you can do with your funds. We help clients every day.

  1. Diversification of Financing Sources:

A private second mortgage with Tembo provides clients with an alternative financing source outside the traditional banking system. This diversification of funding can be beneficial, especially in a rebounding housing market where traditional lenders may impose stricter lending criteria or offer limited loan options. Banks are growing increasingly conservative in their lending practices, are setting aside capital for anticipated defaults, and are facing limits to their ability to expand operations, particularly in the U.S. Higher rates means higher debt servicing costs, which the big banks are increasingly weary of. The approvals process of getting official approval for a mortgage can take a long time. By securing a private second mortgage, borrowers can mitigate reliance on a single lender and expand their financing options. A private second mortgage also allows our clients to avoid tapping into their savings, our other financial accounts to do what they need. This is a big advantage that countless clients have benefitted from. Instead of drawing on savings or an RRSP to finance a down payment for a property, or to help their children buy a home, they can tap into a private second mortgage with Tembo. This not only increases the chances of obtaining the required funds but also allows borrowers to tailor their loan terms to better suit their unique financial situation and goals.

  1. Debt consolidation:

            Debt loads can act as an anchor on financial goals and credit scores, leaving borrowers with few options, stress, and the failure to qualify for a mortgage at a big five bank. But taking out a private second mortgage with Tembo can offer an efficient solution for debt consolidation. By combining multiple debts into a single loan, borrowers can simplify their financial obligations and potentially reduce their monthly payments. Wiping out high interest debts can also help boost a credit score. Debt consolidation through a private second mortgage not only provides convenience but also allows homeowners to take advantage of the equity in their property to secure a larger loan amount and potentially save on interest costs over time. This strategic approach to managing debt can help borrowers regain control over their finances and work towards becoming debt-free sooner.

In a Toronto and southern Ontario housing market that shows signs of accelerating price growth, a private second mortgage with Tembo can be an attractive financing solution for clients. The advantages of quick and flexible financing, increased borrowing power, diversification of funding sources, and debt consolidation to boost your credit score make private second mortgages an appealing option for those seeking additional funds. Please do not hesitate to contact Tembo Financial at 1-844-238-6717 to consult with our experts on how a second private mortgage can help you achieve your financial goals and resolve your money problems!

Toronto’s Real Estate Resilience: The Rebound Continues

Toronto’s real estate market is showing remarkable resilience and bouncing back with vigor, according to recent data released by the Canadian Real Estate Association (CREA). The statistics reveal a significant increase in national home sales in May 2023, signaling positive growth in the Toronto market and other major Canadian cities.

The Greater Toronto Area (GTA), along with Montreal, Greater Vancouver, Calgary, Edmonton, and Ottawa, experienced an uptick in sales activity. Approximately 70% of local markets across the country reported an increase in home sales during this period. Between April and May 2023, there was a notable 5.1% month-over-month surge in home sales, building upon the already robust double-digit surge observed in April.

While the year-over-year sales increase of 1.4% may appear modest, it marks a significant milestone for the Canadian housing market. This is the first national year-over-year sales growth in nearly two years, since June 2021.

According to Shaun Cathcart, CREA’s senior economist, the rebound in housing activity this year was expected due to strong underlying demand. The timing of the rebound was the only uncertainty, which was answered in the spring of 2023. He further explained that the puzzle piece that was less obvious was the reluctance of existing homeowners to make a move, as they were reluctant to give up their ultra-low fixed rates secured during the COVID-19 pandemic. This reluctance has led to a potential tightening of housing supply, which may impact prices.

While the number of newly listed homes increased by 6.8% in May compared to the previous month, it’s important to note that new supply remains historically low. The sales-to-new listings ratio, which measures the number of homes sold against the number of new listings, was 67.9% in May, slightly lower than April but still above the long-term average.

Inventory levels also saw a decrease, with 3.1 months of inventory available nationally at the end of May 2023, down from 3.3 months in April. This tightening of supply is significant, considering inventory has declined by over a month since its peak in January. The long-term average for inventory is around five months.

The positive trend is further supported by a notable 2.1% month-over-month increase in the Aggregate Composite MLS® Home Price Index (HPI) in May 2023. This increase in prices was observed across various local markets, indicating a broad-based recovery. Although the Aggregate Composite MLS® HPI still remains 8.6% below year-ago levels, the decline has significantly lessened compared to earlier months.

The commercial real estate sector in Toronto is also displaying resilience, particularly in industrial and retail spaces. Demand for warehouses and distribution centers has surged amid low real estate inventory. The retail sector has shown remarkable strength as people gravitate back to brick-and-mortar stores, especially along major arterial roads. Industrial real estate, with vacancy rates under one percent, is currently the strongest sector in Toronto.

Parents helping their kids join the Toronto real estate club:

Amidst soaring housing costs and inflation, owning a home in Toronto has become a distant dream for many young individuals. However, despite the barriers, demand in the real estate market is once again on the rise, and homes are selling. So how are people managing to buy them? It turns out that there is one source of capital that continues to flow abundantly—the bank of mom and dad.

A study conducted by the Ontario Real Estate Association in 2022 revealed that four in 10 Ontarians have provided financial assistance to their children when purchasing a home. Of those parents, 72 percent gifted money to help with a down payment, 61 percent loaned money for the same purpose, and 38 percent assisted with mortgage payments. On average, parents who offered financial support for a down payment gave approximately $73,605.50, while those who provided loans contributed around $40,878.90. With home prices in Ontario having risen by 450 percent from 1996 to 2021, it’s not surprising that many parents in the province have significant home equity they can tap into, and some are choosing to pass down that intergenerational wealth.

The bank of mom and dad has become a crucial source of capital for many young individuals trying to navigate Toronto’s challenging real estate market. Parents who have built substantial home equity are leveraging their assets to provide their children with opportunities for homeownership and financial stability. By passing down intergenerational wealth, they are enabling their children to create their own paths to success and secure futures. While this is a sign of how expensive real estate has become, it is also a strong show of inter-generational confidence in the long-term state of GTA real estate.

The BOC will go all out to crush inflation

Former Bank of Canada governor David Dodge warns that the central bank has a limited timeframe of a year to 18 months to control inflation. Failure to do so could result in a return to the turbulent era of the mid-1970s and 1980s, marked by unpredictable pricing and social upheaval. Dodge suggests that modest interest rate increases of around six percent can help align demand and supply, restoring stability and public expectations of price predictability. Acting swiftly is crucial, as a lack of progress within the specified timeframe would result in a significant loss of social capital. The report emphasizes the urgency of addressing inflation to avoid economic uncertainty and diminished trust in institutions. Dodge’s comments underscore the need to implement effective measures and restore stability within the coming months to prevent a return to past economic challenges.

Overall, Toronto’s real estate market is demonstrating a promising and continued rebound in 2023. With the demand for industrial and retail spaces booming, commercial real estate in the city remains a hot commodity for investors. The recovery in the housing market, along with the resilience of the commercial sectors, contributes to a positive outlook for Toronto’s real estate landscape.

The Bank of Canada’s Risky Moves: Are We Heading Towards a Recession?

The recent rate hike by the Bank of Canada on June 7 has raised concerns about the potential negative impact on the economy. Contrary to market expectations, the central bank’s decision to tighten monetary policy has led to speculation that it may have gone too far. With the possibility of further rate increases looming, the economy risks falling into a recession. Let’s delve into the details and assess the potential consequences.

Recent economic data has compelled the central bank to reassess its stance, as evidence suggests that inflation is proving to be more persistent than initially anticipated. The accumulation of evidence across various indicators and sectors has tipped the balance for the central bank, prompting a re-evaluation of interest rates. This article explores the factors contributing to this shift and the implications for monetary policy.

According to Deputy Governor Beaudry, a series of economic data releases since April has provided a clearer picture of the inflationary landscape. The accumulating evidence suggests that inflation is becoming more resilient and difficult to tame, making it challenging to achieve the central bank’s target of two percent. This realization has influenced the central bank’s decision-making process and calls for a reassessment of its monetary policy.

Contrary to forecasters’ expectations of an impending slowdown, the Canadian economy has continued to outperform projections. Stronger-than-expected growth, a tight labor market, and a rebound in consumer spending have all caught the central bank off guard. The rapid rise in consumer spending and renewed activity in the housing market have contributed to the unexpected economic strength. These factors have raised concerns that the current interest rates might not be sufficient to address the growing economic momentum.

Despite some progress in addressing inflationary pressures, recent data shows a slight reversal. The annual inflation rate ticked up to 4.4 percent in April, indicating lingering inflationary pressures. This, coupled with excess demand in the economy, has increased the central bank’s concern about the need for further monetary tightening. The persistence of inflation and the dynamics of excess demand have heightened the risk of not being able to bring inflation down without additional policy measures.

Another factor influencing the central bank’s decision-making is the remarkably resilient labor market. With an unemployment rate of five percent, the labor market has defied expectations of a significant downturn. The strong labor market performance further complicates the central bank’s assessment of the appropriate monetary policy stance.

The central bank is facing a complex set of challenges as economic data points to unexpected strength in the Canadian economy and persistent inflationary pressures. The accumulation of evidence has shifted the balance for the central bank, leading to a reassessment of interest rates. The need for further monetary tightening is becoming increasingly apparent as inflation proves stickier than anticipated. As the central bank navigates these challenges, careful consideration of economic indicators, labor market conditions, and inflation dynamics will be crucial in determining the appropriate course of action.

Surprising the Market:
Similar to its actions in 2022, the Bank of Canada’s unexpected rate hike has caught both the market and economists off guard. This move indicates a return to Governor Tiff Macklem’s previous approach. The press statement accompanying the decision maintained a hawkish tone, leaving the door open for another rate increase in July. As a result, the futures market has already priced in a 70% chance of another 25 basis point hike. Interestingly, this has influenced the pricing of the United States Federal Reserve as well, with increased odds of rate hikes.

Bond Yields Soar:
The impact of the rate hike is evident in the bond market, as the yield on the two-year Government of Canada bond experienced a significant surge. The yield curve of U.S. Treasury bonds also rose in response. These developments indicate growing market uncertainties and potential challenges ahead.

Mixed Signals on the Economy:
The Bank of Canada’s press statement emphasized that the economy remains resilient, even in the face of higher borrowing costs. The central bank highlighted the strength of interest-sensitive spending, particularly the rebound in the housing market. However, concerns about stubbornly high inflation were omnipresent in the statement. Looking ahead, the risk of consumer price inflation remaining persistently above the two percent target was also acknowledged.

Implications for Monetary Policy:
The central bank’s statement implied that the current monetary policy might not be sufficient to restore balance between supply and demand and bring inflation back sustainably to the target. This suggests that the Bank of Canada might have additional rate hikes planned. The statement’s use of phrases like “excess demand” and “more persistent than anticipated” further solidify this notion. The bar has been raised, making it challenging to predict when the Bank of Canada will halt its rate increases.

Recession Fears Loom:
The recent rate hike has taken the policy rate to its highest level since 2001, surpassing the peak seen in 2007. These periods were precursors to recessions, leading to concerns that the central bank’s actions may inadvertently trigger a recession. Moreover, the rapid tightening of monetary policy over the past 16 months is the most aggressive since 1981. By focusing on lagging and contemporaneous indicators, the Bank of Canada may fail to consider the delayed impacts of its past policies, which are yet to fully unfold.

Productivity Woes:
Aside from monetary policy concerns, Canada faces underlying economic challenges. Productivity data reveals a decline in real business output per hour worked. This contraction, combined with a long-term trend of declining per capita GDP, highlights a secular decline in the Canadian economy. The persistently low productivity levels raise questions about the effectiveness of hiring practices and the overall sustainability of economic growth.

The Bank of Canada’s recent rate hike, combined with ongoing concerns about productivity and economic fundamentals, has heightened the risk of a recession. The central bank’s focus on lagging indicators and its failure to fully acknowledge the delayed impacts of past policies pose potential risks to the Canadian economy. As the summer unfolds, we may witness the repercussions of these decisions. It’s crucial for policymakers to balance short-term considerations with the long-term health and stability of the economy, particularly in terms of productivity and sustainable growth.

Higher rates are biting into the big banks

The second-quarter results from Canada’s prominent banks reflect the impact of increased inflation and the central bank’s efforts to curb it, leading to a challenging environment for the financial sector. Four of the Big Five banks fell short of expectations, as they grappled with rising costs, increased provisions for bad loans, and a decline in revenue due to sluggish loan growth. However, CIBC emerged as an exception, outperforming analysts’ predictions. Amidst a slowdown in Canadian mortgage loan growth, attention has shifted to the banks’ U.S. operations following recent high-profile bank failures. Executives from several banks have acknowledged the more difficult economic conditions, and TD Bank Group has warned of tougher times ahead, revising its medium-term earnings growth target. This article explores the latest developments in Canada’s banking sector and their implications.

Disappointing Earnings and Struggles with Rising Costs:

The majority of Canada’s major banks reported earnings that fell short of expectations in the second quarter. This outcome was primarily driven by a surge in provisions for bad loans and the challenge of containing escalating costs. TD Bank Group, for instance, experienced a decrease in profits, with second-quarter earnings reaching $3.35 billion, down from $3.81 billion in the same period last year. To address potential credit losses, TD increased its provisions to $599 million, a significant rise compared to $27 million in the previous year. Similarly, RBC reported a profit of $3.65 billion for the quarter, down from $4.25 billion in the same period last year, largely due to provisions for credit losses amounting to $600 million, compared to a recovery of $342 million in the previous year.

Uncertain Economic Environment and Macroeconomic Deterioration:

Bank executives highlighted the challenging economic conditions, particularly in the U.S., as a significant factor impacting their financial performance. TD Bank Group, in particular, faced obstacles due to the collapse of its proposed $13.4-billion takeover of First Horizon Bank. Additionally, TD acknowledged the deterioration in the macroeconomic environment, leading to a revision of its medium-term earnings growth target. The bank’s CEO, Bharat Masrani, emphasized the unpredictable operating environment as TD adapted to these circumstances.

CIBC Outperforms Expectations:

While most banks faced setbacks, CIBC bucked the trend by reporting better-than-expected results. The bank’s CEO, Victor Dodig, acknowledged operating in a more fluid economic environment. CIBC’s second-quarter profit amounted to $1.69 billion, surpassing last year’s $1.52 billion. Notably, CIBC took early action by increasing provisions for credit losses to $438 million, up from $303 million in the previous year.

Impact of Slowing Loan Growth:

The Canadian mortgage loan growth has significantly slowed, leading to flat results for several banks compared to the previous quarter. This trend has shifted the focus towards the performance of the banks’ U.S. operations, given recent high-profile bank failures. The challenging economic conditions have prompted bank executives to express caution regarding future earnings growth, further highlighting the impact of declining loan growth.


Canada’s economic stability is being threatened by its status as the country with the highest level of household debt among the G7 nations. The Canada Mortgage and Housing Corporation (CMHC) recently warned that rising home prices have led to an inevitable increase in household debt, making the economy susceptible to a global economic crisis. According to Aled ab Iorwerth, Deputy Chief Economist at CMHC, Canada’s household debt has been steadily rising due to soaring home prices, creating a concerning situation. Currently, mortgages account for about three-quarters of the total household debt in Canada. During the 2008 recession, household debt comprised 80 percent of the Canadian economy, and by 2010, it had climbed to 95 percent. More alarmingly, the size of household debt has already surpassed that of the overall economy in 2021. In contrast, the United States experienced a decline in household debt from 100 percent of GDP in 2008 to approximately 75 percent in 2021. While the U.S. witnessed a reduction in household debt, Canada has seen an ongoing increase, highlighting the urgent need to address affordability issues within the housing market. This trend is concerning because high levels of household debt can inflict severe damage during economic downturns, leading to widespread job losses and making it difficult for mortgage holders to meet their obligations. Similar to the situation in the United States in 2007 and 2008, heavily indebted households can quickly exacerbate economic deterioration.

CMHC’s ab Iorwerth has already observed “early warning signs” indicating that a growing number of consumers are encountering financial difficulties. While Canada benefits from a robust institutional framework and prudent financial regulations that currently shield most borrowers from elevated mortgage rates, the nation’s high household debt remains a vulnerability in the event of a severe global economic downturn. To reduce the risk associated with high household debt, the CMHC suggests improving housing affordability in Canada. This can be achieved through measures such as increasing housing supply, renovating existing rental properties, and constructing modern and attractive rental units. By providing viable alternatives to homeownership, Canadians can be dissuaded from taking on excessive debt.

Canada’s major banks have faced hurdles in the second quarter due to heightened inflation, efforts to curb it by the central bank, rising costs, and slower loan growth. While most banks reported earnings below expectations, CIBC emerged as an outlier, delivering better-than-anticipated results. The uncertain economic environment, particularly in the U.S., has added to the difficulties faced by the banks, prompting caution about future earnings growth. As the financial sector navigates these challenges, it will be crucial for banks to adapt and strategically manage provisions for a rainy day.

Why did inflation go up in April?

We’ve all seen the news that April’s inflation figure rose to 4.4% from March’s 4.3%. The increase marked the first in almost a year, as inflation had been either falling or stagnant since June of 2022. The increase was tiny, but it bucked a positive trend – so what happened? Frist off, grocery and food prices continue to pose problems for Canadian consumers. Prices for food went up 9.1% in the year up to April, a slowdown from the rate up to March, but still uncomfortably high. Gas prices rose 6.3% in April, the biggest increase since October of 2022. The CBC noted that there were a number of geopolitical and macroeconomic reasons for the rise in gas prices, but also acknowledged that the increase to the carbon tax was a reason. April 1 marked an increase to the carbon tax to $65 a tonne. The carbon tax increase added three cents a litre to the cost of gas. In total, the carbon tax costs consumers 14 cents a litre when they fill up. Average gas prices hit $1.60 nationally, up from $1.50 in March. The all-time high to the gas price was reached in June of 2022, when it reached $2.07. Gas prices are lowest in Edmonton, at around $1.40, and highest in Vancouver, where they hover just under $1.90.

The continued pace of price increases and the ongoing robustness of the labour market has analysts pointing to a good chance that rates will go up again at the BOC’s next decision point. The bottom line is that basic everyday costs are continuing to go up too quickly, despite all the progress that’s been made in lowering the headline inflation rate. Bank of Canada Governor Tiff Macklem, in a press conference following the release of the central bank’s annual financial system review, acknowledged that April’s inflation report exceeded expectations.

However, Macklem asserted that despite an increase in energy prices and persistent food inflation, the latest inflation report indicated signs of progress. He highlighted that the bank’s preferred core inflation measures continued to decline on a year-over-year basis in April, and there were indications of easing in the services sector.

The Bank of Canada has maintained its key rate in two consecutive decisions after an aggressive hiking cycle that saw the benchmark rate climb by 4.25 percentage points over the course of a year. Policymakers have emphasized that the pause is contingent upon inflation returning to the central bank’s target of two percent, leaving the possibility of additional rate hikes open “if necessary.” When asked about the impact of the recent inflationary uptick on the bank’s monetary policy plans, Macklem refrained from providing a direct response and stated that the governing council would consider the inflation data along with other economic inputs and make a decision at their next announcement on June 7.

Macklem expressed overall encouragement about the progress made in addressing inflation concerns and stated that the central bank anticipates a continued easing of price pressures.

“We are seeing the positive effects of higher interest rates, as inflation is gradually receding,” Macklem stated on Thursday. Although he declined to comment on the timing or likelihood of further rate hikes, he reiterated that it is premature to discuss reducing interest rates.

Market expectations for another rate hike rise following inflation surprise

While money markets anticipate that the central bank will maintain the current rate on June 7, the odds of a hike next month have increased to around one in three after Tuesday’s inflation surprise.

Derek Holt, the head of Scotiabank Capital Economics, is among those on Bay Street who anticipate another interest rate increase, and he believes that sooner rather than later would be a better approach. In a note to clients on Wednesday, Holt argued that if the Bank of Canada needs to raise its benchmark rate, which determines borrowing costs for lenders and borrowers, it should do so early.

Holt emphasized that if business and consumer expectations for inflation remain elevated for an extended period, it will be more challenging to regain control over price pressures and achieve the Bank of Canada’s two percent target. He wrote, “If the BoC doesn’t adopt the ‘crush it, killer mentality,’ then it may never succeed in getting inflation down to (two percent).”

Holt also noted that the central bank has been willing to surprise the markets with rate hikes, as market expectations regarding the magnitude of rate increases were incorrect in three out of the eight previous decisions.

In a note earlier this week, Jay Zhao-Murray, an analyst at Monex Canada, pointed out that in addition to the rise in headline inflation figures in April, the central bank’s preferred indicators of “core inflation” also accelerated on a three-month basis, although they cooled on an annual basis.

Taking these factors into account, along with indications that the housing market correction has reached its bottom and sales activity is picking up again this spring, Zhao-Murray suggested that the Bank of Canada might implement an “insurance hike” in June. However, other economists believe that the central bank will likely maintain its position on the sidelines next month. The hope is that the productive capacities of the economy will continue to drive increases in production which will eventually lead to a fall in prices. The continued robustness of the economy and the labour market will keep demand high.

GTA house sales and prices are rising again

The Toronto housing market continues to show ironclad  resilience despite COVID-19, post-pandemic challenges, and interest rate hikes. A flurry of historically unprecedented wrenches were thrown at the housing market, and yet it has stabilized and begun to recover remarkably well. If anyone ever had doubts about the long-term prospects of GTA real estate, or feared its ability to absorb higher interest rates: the proof is in the pudding. GTA real estate continues its bull run as a gold-plated investment asset. A recent CBC News article highlighted these positive trends, pointing out that despite the pandemic, the housing market has continued to see healthy demand. Sales in March were up 9% from March 2022 levels, and prices have increased 4%. As has been repeated ad nauseum, the article noted that supply constraints continue to hamstring prospective new buyers. Market dynamics are skewing toward sellers as they hold off on listing their homes in wait for lower rates and another price boom. All of this suggests that property holders will be well served and that the market will remain strong for the foreseeable future.

James Laird, the CEO of, summed it all up well: “I think it’s fair to assume that the decreases in home prices might be behind us.” To recap some recent history, according to the Toronto Regional Real Estate Board (TRREB), home sales in the Greater Toronto Area (GTA) were robust throughout the pandemic. 2020 saw a record-breaking 95,151 transactions, surpassing the previous record set in 2016. While the initial lockdown measures in March and April caused a temporary decline in sales, the market quickly rebounded and continued to grow throughout the year. This was attributed to a variety of factors, such as then low interest rates, high demand, and limited housing supply. Higher rates were a body-blow to the market, but the latest data suggests that they weren’t high enough to induce a prolonged stagnation or decline in prices. The trend is very novel, but its momentum will likely continue if rates aren’t repeatedly increased in the coming months.

The history shows that GTA real estate can be slowed down by a crisis, but that it recovers quickly. These market conditions appear to persist as long as strong demand continues to meet limited supply, despite what the interest rate is. Toronto’s population continues to grow rapidly, and its economy continues to serve as an engine of job creation. The intense competition for homes continues, driving up prices and increasingly pivoted the advantage back to sellers. Multiple bids and over-asking sales proliferated across the market over the last several years, particularly for detached homes and in desirable neighbourhoods.

A recent report by the Canadian Centre for Economic Analysis (CANCEA) found that the GTA will need an additional 700,000 housing units by 2041 to accommodate its growing population. Tembo has repeatedly noted this report, and it speaks to the supply challenges that policymakers are dealing with. Transit Oriented Cities, a provincial plan to encourage condo and high rise construction at key public transit nodes, is one response to meeting our supply needs. Densification is going to be a key tool in responding to the challenges we face. Record provincial investment in public transit is another pillar that is supporting densification. Construction along Queen St. of the Ontario Line, the first new subway project built in the downtown core in many decades, has begun. The report also noted that without significant policy changes, the GTA will fall short of meeting this demand, resulting in a suffocating housing shortage.

This housing supply issue has the potential to create challenges for the real estate market. If there aren’t enough homes to meet the demand, it could lead to further price increases and a slowdown in sales. It’s also possible that people will begin to look outside of Toronto for more affordable housing options, which could lead to a decline in demand for properties within the city limits. However, despite these challenges, the Toronto housing market has proven to be incredibly resilient. In addition to weathering the pandemic, the market has also proven to be robust in the face of interest rate hikes. The Bank of Canada increased interest rates five times between 2017 and 2018, yet the housing market continued to grow. This is a testament to the strong demand for properties in Toronto and the city’s stable economy.

The Toronto housing market has also proven to be an excellent investment for those looking to build wealth through real estate. The average price of a home in the GTA increased by 13.5% in 2020, reaching a new record high of $929,699. This increase in value shows that even in the face of economic uncertainty, real estate remains a safe and profitable investment. The Toronto housing market has shown remarkable resilience in the face of economic uncertainty. Despite the challenges posed by the pandemic and interest rate hikes, the market has continued to thrive. While the issue of housing supply is once again at the forefront, the market remains strong and shows no signs of slowing down.