Mixed Real Estate Conditions and a Potential BOC Rate Cut


The Greater Vancouver Real Estate Board released rough real estate stats earlier this week. Reports showed that year-over-year Feb. residential home sales fell over 30%. This represents the worst Feb. sales total since 1985, over 40% below the last decade’s average.

Detached homes lasted roughly 55 days on the market before sale, while townhouses averaged 39 days and apartments and condos at 40. Prices also fell by over 6% year-over-year, while at the same time, inventories are piling up. Total listings rose by over 48% year-over-year to almost 11,600.

In Toronto, prices rose by 1.6% while listings fell 6.2%, sales fell by 2.4%. Canada’s banks are also feeling the heat of an inconsistent real estate market. Credit losses rose by double digits at the big 5. The same credit losses were seen in the Australian banking and real estate markets as well and in other countries dependent on real estate.

Economic stats have dipped into such negative territory so quickly that news is spreading of the possibility that the BOC may cut rates soon. Tembo has consistently made the point that the BOC will stick to an aggressive and consistent rate hike trajectory until economic conditions change. While most experts believe that rates will stay put, the potential for a cut will grow if economic conditions continue to worsen. As we previously reported, the economic recently contracted by a very narrow margin.

On an additional note, the City of Toronto will convene on Thursday, March 7th to pass its 2019 budget. The budget outlines a massive drop in land transfer tax revenues because of stalling real estate conditions. The City has become addicted to the previously perpetually rising land transfer tax which financed large increases in city spending. That era has come to a close.

Tembo Money Tips for a Rainy Day

Here are a few tips on how to save money in case of a bump in the road or a rainy day. It’s always important to consider ways to save money. These easy methods can make a huge difference in your savings and spending habits.


Move bank accounts

If you’re paying a monthly fee for your checking or savings account, you would benefit from researching some of newest banking offers out there. Not only do some banks offer sign-up bonuses simply for opening an account and setting up direct deposit, but some offer attractive interest rates to new customers as well or maybe even no fees.

Pay Yourself

Designate a certain amount of your paycheque as your pay and try to be disciplined in spending within the amount. Absolutely be sure to pay your bills and keep up with your responsibilities but try to allocate a piece of your pay that you are comfortable with so you can develop discipline and begin to save.

Automate your finances

If paying yourself first won’t work, consider talking to your bank about automatic deposits into your saving account. Your bank will automatically transfer a certain percentage of your paycheck into your savings account every time you get paid. You can also use automated services for paying bills.

Prepay your debt

You can save hundreds of dollars if you put more towards your debt, and avoid the high interest rates. Increasing your payment by even the slightest can save you a good amount in interest costs.

An emergency, accident, workplace change, increase in debt costs, or higher interest rates are all potential scenarios to keep in mind and to be prepared for. It’s always wise to better manage your money and to be mindful of the financial unpredictabilities of life.




A Strong Real Estate Market is Here to Stay

In this blog post, Tembo Financial will outline some of the main underlying foundations of the real estate market in the Greater Toronto Area. These foundations are the key pillars of strength, resilience, and health in our housing market.

Low rates: The Bank of Canada has interest rates set at 0.50% and there is no intention from the Bank to raise rates anytime soon. Inflation in Canada is at record lows and has been decreasing so there is little pressure on the Bank to raise rates.

Stable economy: Unemployment in Ontario is at 5.8%, the lowest level in over 16 years. Jobs are plentiful, consumer spending is strong, and there are several sectors which are growing quickly, particularly technology, advanced services, and finance. Governments are spending large amounts of money to support the economy and construction and development is widespread. Real estate in Ontario has always remained strong with unemployment at present levels.

Immigration: A strong economy and society are inviting for immigrants, especially when one considers the present situation in Europe, the United States, and the Middle East. Record numbers of immigrants are entering Canada, and many of those migrants who have already lived in the country for some time are now buying housing and moving out of rentals. Net immigration will hit 350,000 a year for the foreseeable future. These new Canadians will need housing in the short, medium, and long term.

The Greenbelt: The Greenbelt is a massive tract of protected greenspace on the edges of the Greater Toronto Area that is blocked from housing development to preserve farmland and protect the environment. This has restricted supply, driven up the costs of land and thus of housing, and will stimulate other sectors of the real estate industry, particularly high rise condos and rentals.

Better regulations: The number of high risk, high debt mortgages in Canada is much lower than was the case in the United States a decade ago. While the cost of money is low, buyers need good jobs, solid credit, and fairly large deposits to secure mortgages and ultimately close a house purchase. Canada has been internationally recognised as having a strong regulatory system in place with regards to housing and mortgage issuance.

Stellar banks: Canada’s big five banks are widely regarded as some of the best run, most successful, and most profitable in the world. Our banking system operates under much more stringent regulatory system than many of our counterparts. Our banks are healthy and growing and were not bailed out by governments as was the case in the UK and the US. Canadian insurance companies are also financially solid and growing.

In combination, these five pillars have contributed to the most dynamic sellers’ market in the history of southern Ontario. Tembo Financial has great confidence in the long term health of the GTA housing market.