ALICE YU

Statistics released by the Canadian Real Estate Association (CREA) show national home sales edged a little higher in October 2022. HIGHLIGHTS National home sales were up 1.3% on a month-over-month basis in October. Actual (not seasonally adjusted) monthly activity came in 36% below October 2021. The number of newly listed properties edged up 2.2% month-over-month. The MLS Home Price Index (HPI) declined by 1.2% month-over-month and was down 0.8% year-over-year. The actual (not seasonally adjusted) national average sale price posted a 9.9% year-over-year decline in October. https://stats.crea.ca/en-CA/

From National Bank of Canada In September, the seasonally adjusted composite index fell by 2.0%, matching the previous months record decline and representing a fifth consecutive monthly contraction. Since its peak in May, the composite index (not seasonally adjusted) has already declined by 7.0%, whereas during the 2008 financial crisis, prices fell by only 6.2% over the same period and by 9.2% in total over eight months. In a context where monetary policy will continue to be tightened in the coming months, house prices should continue their contraction and exceed that experienced during the financial crisis of 2008. Indeed, we anticipate a record cumulative decline of about 15% nationally by the end of 2023, assuming a policy rate that tops out around 4.0% and a Bank of Canada that throws some weight behind lowering rates in the second half of 2023. Although corrections are observed in the vast majority of markets covered by the index, the CMAs that have experienced the most significant price growth over the past two years are also those that have experienced the most significant declines to date. As a result, the price correction is expected to be more significant in Ontario, British Columbia and the Maritimes, while it is expected to be less significant in the Prairies, which are favoured by a buoyant economic environment. HIGHLIGHTS: The Teranet-National Bank Composite National House Price Index decreased by 2.0% in September compared to the previous month and after seasonal adjustments. After adjusting for seasonal effects, 8 of the 11 markets in the composite index were down during the month: Victoria (-5.9%), Vancouver (-3.5%), Hamilton (-2.1%), Montreal (-1.9%), Toronto (-1.8%), Winnipeg (-1.7%), Ottawa-Gatineau (-1.0%), and Quebec City (-0.1%). Conversely, the Calgary (+1.2%), Halifax (+1.1%) and Edmonton (+0.2%) markets were still up. From September 2021 to September 2022, the composite index increased by 6.0%. This growth was driven by Halifax (16.4%), Calgary (14 .7%) and Montreal (10.5%). Growth was lower than average in Winnipeg (5.9%). Hamilton (5.6%), Edmonton (5.6%), Ottawa-Gatineau (5.0%), Victoria (4.7%), Toronto (4.5%) and Vancouver (3.9%). https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/economic-news-teranet.pdf

From National Bank of Canada On a seasonally adjusted basis, home sales fell 3.9% from August to September, bringing the level of sales 18.9% below its 10-year average. This was the seventh consecutive decline for this indicator, with sales down a cumulative 36.2% between February and September. Declines were observed in every province and in 60% of all local markets. We expect the current moderation in sales to continue going forward as the Bank of Canada continues to increase its overnight rate in restrictive territory. The rapid rise in interest rates by the central bank is certainly limiting the purchasing capacity of households while also having a psychological effect on some buyers who are waiting to see how high rates will stabilize before taking action. Rising interest rates and the slowdown in the market did not provoke an influx of sellers for the moment. On the contrary, new listings declined 0.8% between August and September, a third monthly drawback in a row. Overall, the number of months of inventory rose from 3.5 to 3.7 months in September, the highest level since May 2020. Based on the active-listings-to-sales ratio, market conditions loosened in the country and are still indicating a balanced market. Six provinces out of 10 are now in balanced territory: B.C., Alberto, Saskatchewan, Manitoba, Ontario and P.E.. The others continued to indicate market conditions favourable to sellers mainly due to lack of supply. On a year-over-year basis, home sales were down 32.2% compared to the second-strongest month of September in history last year. Sales were down in every province on a year-over-year basis, with the largest decline observed in B.C. (-45.2%) and the smallest in Saskatchewan (-7.3%). For the first three quarters of 2022, cumulative sales were down 21.9% compared to the same period in 2021. https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/economic-news-resale-market.pdf

The Bank of Canada today increased its target for the overnight rate to 3%, with the Bank Rate at 4% and the deposit rate at 3%. The Bank is also continuing its policy of quantitative tightening. Inflation around the world remains high and broadly based. This reflects the strength of the global recovery from the pandemic, a series of global supply disruptions, and elevated commodity prices, particularly for energy, which have been pushed up by Russias attack on Ukraine. The strength of the US dollar is adding to inflationary pressures in many countries. Tighter monetary policies aimed at controlling inflation are weighing on economic activity around the world. As economies slow and supply disruptions ease, global inflation is expected to come down. In the United States, labour markets remain very tight even as restrictive financial conditions are slowing economic activity. The Bank projects no growth in the US economy through most of next year. In the euro area, the economy is forecast to contract in the quarters ahead, largely due to acute energy shortages. Chinas economy appears to have picked up after the recent round of pandemic lockdowns, although ongoing challenges related to its property market will continue to weigh on growth. Overall, the Bank projects that global growth will slow from 3% in 2022 to about 1% in 2023, and then pick back up to roughly 2% in 2024. This is a slower pace of growth than was projected in the Banks July Monetary Policy Report (MPR). In Canada, the economy continues to operate in excess demand and labour markets remain tight. The demand for goods and services is still running ahead of the economys ability to supply them, putting upward pressure on domestic inflation. Businesses continue to report widespread labour shortages and, with the full reopening of the economy, strong demand has led to a sharp rise in the price of services. https://www.bankofcanada.ca/2022/10/fad-press-release-2022-10-26/

Highlights After a boom recorded last year, housing starts in the countrys six largest census metropolitan areas (CMAs) fell 5% in the first half of 2022. The decrease observed for apartments (-9%) is the main cause of this drop. On an annualized basis, however, housing starts in the first half of 2022 remained high compared to the level of construction over the past five years. Additionally, there was a lot of contrast between the six urban centres studied. Indeed, in the first half of the year, housing starts were up in Edmonton, Calgary and Toronto, while declines were observed in Vancouver, Ottawa and Montral. The effects of rising interest rates and construction costs could have an even greater impact on housing starts in the coming months. New data on physical construction time for housing reveal important differences across centres and dwelling types, which has an impact on the affordability of the end product. Cities that build a lot of large, tall apartment structures will risk having housing construction sectors that are less responsive to a rapid need for new housing units. This is consistent with what is observed in Vancouver and Toronto. Low-rise apartment structures, such as those built in abundance in Montral, take much less time to build than taller apartment structures with a similar number of units. https://assets.cmhc-schl.gc.ca/sites/cmhc/professional/housing-markets-data-and-research/market-reports/housing-supply-report/housing-supply-report-2022-11-en.pdf?rev=74c50e35-d0a7-4131-b6a5-5829967ed5d1

Highlights Inflationary pressures have been stronger and more persistent than expected since we published our Housing Market Outlook in April 2022. This has led to significantly sharper than predicted interest rate hikes in Canada and other economies. Interest rates are expected to rise further given the need to reduce inflation. The Canadian economy will enter a modest recession by the end of 2022 and start recovering in the second half of 2023. The national house price is expected to decline by close to 15% by Q2 2023 from its historical peak in Q1 2022 as housing demand slows with rising interest rates and deteriorating economic and income conditions. Despite this house price decline, ownership affordability will not improve as the benefit from lower prices will be offset by rising interest rates. Rental affordability pressures will increase with rental demand as fewer renter households can access ownership. https://www.cmhc-schl.gc.ca/en/blog/2022/road-ahead-economy-housing-fall-2022-update

The homeownership rate falls The proportion of Canadian households who own their homeor the homeownership rate (66.5% in 2021)is on the decline in Canada after peaking in 2011 (69.0%). The growth in renter households (+21.5%) is more than double the growth in owner households (+8.4%). Adults under the age of 75 were less likely to own their home in 2021 than adults in that age range a decade earlierespecially young millennials aged 25 to 29 years (36.5% in 2021 vs. 44.1% in 2011). A large share of newer builds are rentals Recently built dwellings are increasingly likely to be occupied by renters40.4% of the housing built in the five years ending in 2021 was tenant-occupied, the highest tenant rate next to that of dwellings built in the 1960s post-war apartment boom, at 44.5%. Over one-third of recently built dwellings, those constructed from 2011 to 2021, were occupied and primarily maintained by millennial (36.6%) renters or owners in 2021, the largest share of any generation. Millennials also represented the largest share of condominium occupants (30.2%) compared with the other generations. The share of condominiums continues to rise The rising trend of condominium construction continuesthe share of occupied dwellings that are condominiums edged up from 13.3% in 2016 to 15.0% in 2021. Most condominiums (90.0%) are located in Canadas large cities, known as census metropolitan areas (CMAs). In Canadas CMAs, condominiums made up 39.9% of the occupied stock in the primary downtowns in 2021, and half of these downtown condos were being rented out by investors. Home values continue to surge through 2021 Expected home values rose in large and small municipalities (census subdivisions [CSDs]) in Ontario and British Columbia from 2016 to 2021. Among CSDs, 77.8% in Ontario and 46.1% in British Columbia saw the average expected value of homes rise by over 50%. Differences in the impact of temporary COVID-19 benefits on household incomesfor renters and for homeownerswere a key contributor to the different degrees of improvement in housing affordability seen for each group, from 2016 to 2021. Canadians find their housing more affordable in 2021 because of higher incomes The rate of unaffordable housing, or the proportion of households that spent 30% or more of their income on shelter costs, fell from 24.1% in 2016 to 20.9% in 2021. The rate of unaffordable housing in Canada for renters fell from 40.0% in 2016 to 33.2% in 2021, with most of the decline occurring among renters earning below the median household income of all renters (68.4% in 2016, compared with 56.0% in 2021). https://www150.statcan.gc.ca/n1/daily-quotidien/220921/dq220921b-eng.htm

Mortgage Documents This is a list of the most commonly requested mortgage documents. Click each one to see an explanation. If you have any questions please reach out. General Two (2) pieces of identification Every Borrower Lenders require two pieces of ID for every applicant on the mortgage. Primary Identification Drivers license (front and back), passport, certificate of Canadian citizenship, Canadian Armed Forces ID, NEXUS Card/FAST Express Card, or a document or card issued by either the provincial or federal government containing a photo and signature. Secondary Identification You must have at least one form of ID from the primary section. Acceptable secondary forms of ID include: Birth Certificate issued in Canada, Certificate of Indian Status issued by the Government of Canada, Old Age Security Card issued by the Government of Canada, Signed Bank Card, Signed Credit Card, Social Insurance Number (SIN) Card Credit Authorization (Signed) Every borrower This is a document youll digitally sign to give me permission to check your credit report via Equifax and/or TransUnion. List of Assets Every borrower A simple, informal list of your assets to help strengthen your application. This can be provided in bullet point form or a spreadsheet, whichever is more convenient. The lender might ask for more details or a bank statement if its needed. Divorce or Separation Agreement Marital status is divorced/separated An agreement between yourself and your former spouse/partner. If you dont have it on file your lawyer should be able to provide this. Income Notice of Assessment (NOA) Every Borrower An NOA is mailed to you by the CRA (Canada Revenue Agency) each year after you file your taxes. This document indicates how much money you made for that year, how much you had to pay in taxes, and your current outstanding income taxes owed or the amount of your tax refund. Where to get it If you cant find your paper copy, I can help you get your statement directly from the CRA. Pay Stub(s) Borrower has employment income If youre an employee, the pay stub confirms ongoing employment and verifies your rate of pay. The pay stub should be your most recent (within the last 30 days). Make sure the document includes year to date figures, current deductions, and year to date deductions. Letter of Employment Borrower has employment income The letter of employment (LOE) should be dated within 30 days and include your managers contact information. It needs to include the following details 1) Start date 2) Your position in the company 3) How youre paid (hourly, salary, commission, etc) 4) Whether youre off probation 5) If your hours are guaranteed 6) And if youre full time, part time, contract or flex T4 Statement of Remuneration Paid Borrower has employment income The tax slips prepared by your employer. It includes what you have been paid before deductions. If you dont have a copy, your employer will have a copy on file. T4A Slip Borrower income is commission only or has pension / other income You receive a T4a for other income which includes commission, pension, retiring allowance. This is prepared by your employer or administrator. T1 Income Tax Return (full) Borrower has self-employed income This is the form to complete your annual tax return. You likely have this on file. If you have an accountant they might be able to provide a copy. Purchases MLS Listing (Realtor View) Borrower has found a property Your Realtor has a special view of the MLS with more detail than is found on the public-facing website. The lender needs the special Realtor version of the MLS. Offer to Purchase (Signed) Borrower has found a property The contract between you and the sellers of the property. Your Realtor can provide this. If its a new build the developer can provide it. Purchase Waiver Borrower has found a property When you remove all conditions youll sign a purchase waiver. Your Realtor can provide this. 90 Day Bank Statement If cash assets used as down payment (savings, chequing, rrsp, investment) Bank statements can be serve a number of purposes: 1) Verify down payments and cash for closing costs 2) Prove your income by showing paychecks being deposited into your bank 3) Show other supporting deposits or expenses (e.g., for self employed individuals) 4) Confirm gifted down payments have been received Its important your bank statements show your name, account number, full (unaltered) transaction history. If your down payment is in multiple accounts or has been transferred between accounts, a 90 day history is required for ALL accounts. You can find these statements by logging into your online banking portal and download a monthly statement PDF. Gift Letter If down payment is a gift from a family member, This lender confirms an immediate family member is assisting you with a down payment. Ill provide you with a template to complete The letter must include the following 1) Your name (as the gift recipient) 2) Givers name, relationship to you and contact information 3) The total amount 4) validate the gift does not need to be repaid and is not from a third party interest in the property. Gifts cant come from just anybody Acceptable : Parents, Siblings. Children Maybe (with exception): Grandparents, Aunts or Uncles, Not accepted: Friends, Enemies, Cousins, Spouses, Other things to be aware of The gifted down payment needs to be in Canada. Gifts from outside of the country require more time, especially if we need to hire a translator. Certain countries are restricted and therefore impossible to use a down payment. For example, Iran or Russia. Confirmation of Gifted Funds Deposit If down payment is a gift from a family member, Proof the money has been deposited into your account. See the 90 day bank statement requirement. Properties Owned Mortgage Statement(s) If keeping a property with a mortgage If you have any outstanding mortgages you need to provide a mortgage statement from your lender. It needs to show the lender name, your name, mortgage number, interest, payment, balance, maturity date. If you dont have a copy, you can obtain one via 1) your banks online portal or 2) by calling your mortgage holders customer service line. Property Tax Statement(s) If keeping a property currently owned Each year at tax time the city will send you a property tax statement showing your property tax bill and amount owing/paid. The lender needs a copy for every property you own. Sale Agreement If selling a property currently owned This is the contract to sell your current property. Your listing agent/Realtor should have a copy. Sale Waiver If selling a property currently owned This is an addendum to the sale agreement confirming that the buyers have removed subjects and the sale is binding. Rental Tenancy Agreement If receiving rental income from a property / suite If you currently rent a property you own, we need a copy of the agreement between you and the tenant. Condo Board Letter If keeping a property with strata fees A letter that proves the monthly condo fees for your condo or townhouse. Your condo board or strata manager can provide this.

From National Bank of Canada On a seasonally adjusted basis, home sales fell 1.0% from July to August, bringing the level of sales 14.4% below its 10-year average. This was the sixth consecutive decline for this indicator, with sales down a cumulative 32.5% between February and August. Declines were observed in every province at the exception of Ontario, due notably to a rebound in sales in the GTA. We expect the current moderation in sales to continue going forward as the Bank of Canada continues to increase its overnight rate in restrictive territory. The rapid rise in interest rates by the central bank is certainly limiting the purchasing capacity of households while also having a psychological effect on some buyers who are waiting to see how high rates will stabilize before taking action. Rising interest rates and the slowdown in the market did not provoke an influx of sellers for the moment. On the contrary, new listings declined 5.4% between July and August. Overall, the number of months of inventory rose from 3.4 to 3.5 months in August, the highest level since May 2020. Based on the active-listings-to-sales ratio, market conditions loosened in the country and are now indicating a balanced market. Six provinces out of 10 are now in balanced territory: B.C., Saskatchewan, Alberta, Manitoba, Ontario and P.E.. The others continued to indicate market conditions favourable to sellers mainly due to lack of supply. On a year-over-year basis, home sales were down 24.7% compared to the second-strongest month of August in history last year. Sales were down in every province on a year-over-year basis, with the largest decline observed in B.C. (-40.0%) and the smallest in Saskatchewan (-2.2%). For the first eight months of 2022, cumulative sales were down 20.7% compared to the same period in 2021. https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/economic-news-resale-market.pdf

From National Bank of Canada In addition to recording a fourth consecutive monthly decline on a seasonally adjusted basis, the Teranet-National Bank Composite House Price Index experienced its largest contraction ever in a single month (-2.1%) due to rapidly rising interest rates and a slowing resale market. This historic drop broke the previous record of -1.3% recorded in July 2010. Augusts data were also unique in that the declines extended to almost all the 31 cities covered by the index, except for the three CMAs located in Alberta (Calgary, Edmonton and Lethbridge), which is unprecedented. The reason for these isolated increases is obviously the high price of energy and many commodities that drive the economy in this province. Since its peak in May 2022, the composite index has already fallen 4.1%, led by significant declines in Hamilton (-10.5%). Halifax (-8.7%) and Toronto (-8.3%). Significant price declines were also observed in several cities not included in the composite index, including Abbotsford-Mission and many cities in the Golden Horseshoe (Brantford, Oshawa, Barrie, Kitchener, Guelph, and Peterborough). It should be noted, however, that the significant declines in these cities follow dramatic price increases since the start of the pandemic. As the Bank of Canada continues to raise its policy rate into restrictive territory, we expect the composite index to decline from its peak reached earlier this year by 10%-15% by the end of 2023. This assumes a policy rate that tops out below 4.0% and a Bank of Canada that begins to lower interest rates in the second half of 2023. https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/economic-news-teranet.pdf

The Canadian Real Estate Association (CREA) has updated its forecast for home sales activity via the Multiple Listing Service (MLS) Systems of Canadian real estate boards and associations in 2022 and 2023. With interest rates on the rise, home sales have continued to cool. In some parts of the country, home prices have fallen from their peaks reached earlier this year, are flat in some regions, and are still climbing in others. The issue of not enough homes for sale has not gone away. Some 532,545 properties are forecast to trade hands via Canadian MLS Systems in 2022, a decline of 20% from the 2021 annual record. The downward revision from CREAs June forecast was mostly the result of a downward revision to sales activity in Ontario, along with smaller revisions in B.C., Alberta and Quebec. The national average home price is forecast to rise by 4.7% on an annual basis to $720,255 in 2022. That said, much of that increase reflects how high prices were to start the year. Annual price gains are forecast to be largest in Quebec and the Maritimes. National home sales are forecast to edge back a further 2.3% to 520,156 units in 2023. The national average home price is forecast to slide mostly sideways (+0.2%) from 2022 to 2023 at around 722,000. https://www.crea.ca/housing-market-stats/canadian-housing-market-stats/quarterly-forecasts/