First quarter highlights

  • CMHC provided more than $1.5 billion for housing programs on behalf of the Government of Canada.
  • Budget 2017 proposed new federal investments of over $11.2 billion over 11 years, as well as preservation of social housing funding and new low-cost loans to support affordable housing under a National Housing Strategy. CMHC is well positioned to lead the development of a National Housing Strategy, a once-in-a-lifetime opportunity to ensure Canadians have the housing they need and that they can afford.
  • Mortgage loan insurance facilitates access to housing finance for qualified Canadian homebuyers, supporting the stability of our financial system and economic growth. CMHC provided mortgage loan insurance for more than 48,000 units across the country. At March 31, 2017, CMHC’s total insurance-in-force was $502 billion, well below CMHC’s legislated insurance-in-force limit of $600 billion.
  • CMHC’s securitization programs facilitate access to funds for residential mortgage lending. New securities guaranteed totalled $34.2 billion, consisting of $23.4 billion for National Housing Act Mortgage-Backed Securities and $10.8 billion for Canada Mortgage Bonds. As at March 31, 2017, CMHC’s guarantees-in-force were $457 billion.
  • CMHC’s mortgage loan insurance and securitization guarantee programs operate on a commercial basis without the need for funding from the Government. During the quarter, CMHC generated $370 million in net income from these activities.
  • On the continued strength of our performance, CMHC will pay a dividend of $145 million to our shareholder, the Government of Canada. Historically, CMHC has retained all of its net income as capital.

Mortgage loan insurance portfolio highlights

The quality of CMHC’s mortgage loan insurance portfolio has been improving in recent years. As at March 31, 2017, the average equity CMHC-insured homeowners hold in their property is 35.2% and the overall arrears rate stood at 0.32%.

Additional portfolio highlights for the three months ended March 31, 2017:

  • Average loan amount of $260,826
  • Average credit score of 751
  • Average gross debt service (GDS) ratio of 26.9% and average total debt service (TDS) ratio of 36.6%

Dividend framework

Going forward, CMHC will consider a quarterly dividend to the Government in the event its actual capital exceeds its capital target. CMHC will continue to hold capital for its commercial activities commensurate with its risk profile and in accordance with OSFI’s updated regulatory capital requirements for mortgage insurers. Historically, CMHC has retained all of its net income as capital. CMHC has not paid any dividends since its creation in 1946.

The implementation of a dividend framework aligns with recent direction from the Government to Canadian federal financial Crown corporations. The framework will ensure that CMHC effectively manages its capital in relation to risk and pays dividends to the Government when capital is in excess of levels required to deliver its objectives. As CMHC’s earnings are already consolidated into the Government’s accounts, the dividend will not impact the Government’s projected deficit.

CMHC also expects to declare a special dividend during the year to align its actual capital with its capital holding targets.

Provided By: CMHC


The BCREA Commercial Leading Indicator (CLI) increased for the fifth consecutive quarter, rising 0.5 index points from the fourth quarter of 2016 to the first quarter of 2017. The index now sits at 128.0, a 4 per cent increase from a year ago and a 0.4 per cent gain on a quarterly basis. “The rising CLI mirrors the overall robust trend in the provincial economy,” says BCREA Economist Brendon Ogmundson. “The commercial real estate sector stands to benefit from BC’s strong economic growth through increased demand for commercial space and the attraction of invesment dollars.”

The underlying CLI trend, which smooths often noisy economic data, continues to push higher due to ongoing strength in economic activity, particularly from the retail and wholesale trade sectors. That uptrend signals further growth in investment, leasing and other commercial real estate activity over the next two to four quarters.

Provided By: BCREA



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The Bank of Canada is maintaining its target for the overnight rate at 1/2 per cent. The Bank Rate is correspondingly 3/4 per cent and the deposit rate is 1/4 per cent.

Inflation is broadly in line with the Bank’s projection in its April Monetary Policy Report (MPR). Food prices continue to decline, mainly because of intense retail competition, pushing inflation temporarily lower. The Bank’s three measures of core inflation remain below two per cent and wage growth is still subdued, consistent with ongoing excess capacity in the economy.

The global economy continues to gain traction and recent developments reinforce the Bank’s view that growth will gradually strengthen and broaden over the projection horizon. As anticipated, growth in the United States during the first quarter was weak, reflecting mostly temporary factors. Recent data point to a rebound in the second quarter. The uncertainties outlined in the April MPR continue to cloud the global and Canadian outlooks.

The Canadian economy’s adjustment to lower oil prices is largely complete and recent economic data have been encouraging, including indicators of business investment. Consumer spending and the housing sector continue to be robust on the back of an improving labour market, and these are becoming more broadly based across regions.


Macroprudential and other policy measures, while contributing to more sustainable debt profiles, have yet to have a substantial cooling effect on housing markets. Meanwhile, export growth remains subdued, as anticipated in the April MPR, in the face of ongoing competitiveness challenges. The Bank’s monitoring of the economic data suggests that very strong growth in the first quarter will be followed by some moderation in the second quarter.

Privided By: Bank Of Canada


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A repeat of Toronto's 1989 crash could have devastating effects on the entire economy


It's the question lingering behind every headline. It's whispered among homeowners, would-be buyers and sellers, economists and policy-makers. What actually happens if Canadian real estate prices crash?

On the one hand, a crash might be good for some Canadians already priced out of the market. And even a dramatic 40 per cent drop in prices would set homeowners in markets like Toronto or Vancouver back, what, two or three years?

But there are broader concerns for the market and the economy itself that could prove devastating.

Home prices are notoriously off the charts. Everyone from the governor of the Bank of Canada to the chatty guy in your local cafe has said, repeatedly, that this increase in prices is not sustainable. But what that means, precisely, is vague.

The latest numbers from the Canadian Real Estate Association show the average home price in Canada climbed by 10 per cent to $559,317 in April. Notably, the number of sales in Toronto's red-hot market fell by almost seven per cent but prices continued to rise. 

No one is saying the end is nigh. Most are still banking on that ambiguous "soft landing" policy-makers have talked about for years. But, for the sake of argument and for a better understanding of the risks, let's talk about what a real crash would look like.



First of all, what is a real crash? Think Toronto in 1989. Prices fell off a cliff. The average cost of a home in Toronto hit a whopping $273,698, a 30-year high. Then the bottom fell out.

By 1996, that average had fallen to $198,150. (Yes, you read that right, you could buy a home in Toronto for a mere fraction of the $920,000 it costs today.)

Like then, some owners would be largely unaffected by a crash today. Someone who isn't going to move and has a lot of equity in the house would be set back, but given the enormous increase in house prices (33 per cent in 2016), they would have something of a cushion.

But housing isn't just about prices. And that's never more evident than during a downturn.

"I think the most important thing is the impact on the composition of economic growth," says Karl Schamotta, director at Cambridge Global Payments. He says for 17 years, Canadian real estate, retail finance and construction sectors have significantly outpaced the rest of the economy. That cycle has fed on itself.

"Rising loan volumes and attractive spreads have bolstered the finance sector. Driven by more lending, home prices have risen, allowing households to borrow more money and spend more in the retail sector," says Schamotta.

Were that cycle to stop or suddenly slow, the impact would stretch far beyond Toronto's overheated housing circus.

Hurting the entire economy

Joblessness would spike, and it would be made worse by people's reluctance to move for work because they are tied to monster mortgages for homes worth less than they paid, Schamotta says.

That would be bad for productivity, but it would also make Canada's entire economy less able to react to global changes. And the loonie would likely fall, too, hurting imports while boosting exports.

And even those homeowners who have equity in their homes and don't plan on leaving wouldn't be immune.



Benjamin Tal, deputy chief economist at CIBC World Markets, says the important question isn't how far prices would fall, but why they fell in the first place. If prices fell because Toronto's well established supply issue was sorted out, that could actually prove positive for the economy.

But if they fell as a result of a quick rise in interest rates, as happened in the United States in 2006, the impact could be severe. 

"The higher interest rate environment would lead to a significant increase in debt financing as opposed to other spending," says Tal. That would require people to spend more covering their mortgage and leave them with less to spend elsewhere in the economy.

"Then you get into a consumer-led recession. And this would lead to increased unemployment and people defaulting and continued decline in prices. That's the worst scenario."

A cascading correction?

The wealth effect is an economic theory that for every increase in wealth there's a disproportionate increase in spending. In housing terms, that means that for every one per cent increase in prices, we usually see spending go up about five per cent. Tal says the reverse is also true, that for every one per cent fall in prices, people spend disproportionately less.

Based on this theory, it's not hard to see why a double-digit correction in prices could cascade through other parts of the economy, "and that can feed on itself," says Tal.

On the upside, just about everyone agrees that nightmare scenario is still unlikely. Prices are slowing in Toronto and Vancouver. And Tal says one big difference between today's situation and the U.S. housing crash is that everyone in this country is trying to slow down the market.

"It's banks, even developers, clearly policy-makers. You don't have the situation where banks are seeing green and trying to maximize profits. In fact they are really trying to slow it down. Regulators are trying to slow it down and more is coming."


Peter Armstrong

On the Money on CBC News Network


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According to statistics[1] released today by The Canadian Real Estate Association (CREA), national home sales declined in April 2017.


  • National home sales fell 1.7% from March to April.
  • Actual (not seasonally adjusted) activity in April was down 7.5% from a year earlier.
  • The number of newly listed homes jumped 10% from March to April.
  • The MLS® Home Price Index (HPI) was up 19.8% year-over-year (y-o-y) in April 2017.
  • The national average sale price rose 10.4% y-o-y in April.

Home sales over Canadian MLS® Systems fell by 1.7% in April 2017 from the all-time record set in March. (Chart A)

Chart A

Chart A

April sales were down from the previous month in close to two-thirds of all local markets, led by the Greater Toronto Area (GTA) and offset by gains in Greater Vancouver and the Fraser Valley.

Actual (not seasonally adjusted) activity was down 7.5% year-over-year, with declines in close to 70% of all local markets. Sales were down most in the Lower Mainland of British Columbia, where activity continues to run well below last year's record-levels. The GTA also factored in the decline, with faded activity compared to record levels set in April last year.

"Sales in Vancouver are down from record levels in the first half of last year but the gap has started to close," CREA President Andrew Peck. "Meanwhile, sales are up in Calgary and Edmonton from last year's lows and trending higher in Ottawa and Montreal. All real estate is local, and REALTORS® remain your best source for information about sales and listings where you live or might like to."

"Homebuyers and sellers both reacted to the recent Ontario government policy announcement aimed at cooling housing markets in and around Toronto," said Gregory Klump, CREA's Chief Economist. "The number of new listings in April spiked to record levels in the GTA, Oakville-Milton, Hamilton-Burlington and Kitchener-Waterloo, where there had been a severe supply shortage. And with only ten days to go between the announcement and the end of the month, sales in each of these markets were down from the previous month. It suggests these housing markets have started to cool. Policy makers will no doubt continue to keep a close eye on the combined effect of federal and provincial measures aimed at cooling housing markets of particular concern, while avoiding further regulatory changes that risk producing collateral damage in communities where the housing market is well balanced or already favours buyers."

The number of newly listed homes jumped 10% in April 2017, led overwhelmingly by a 36% increase in the GTA. Housing markets in the Greater Golden Horseshoe also saw similar percentage increases.

The jump in new listings and drop in sales eased the national sales-to-new listings ratio to 60.1% in April compared to 67.3% in March.

A sales-to-new listings ratio between 40 and 60 is generally consistent with balanced housing market conditions, with readings below and above this range indicating buyers' and sellers' markets respectively.

The ratio was above 60% in just over half of all local housing markets in April, mostly in British Columbia and southwestern Ontario. The GTA downshifted into the middle of the balanced range in April, while Greater Vancouver and the Fraser Valley have returned to sellers' market territory.

The number of months of inventory is another important measure of the balance between housing supply and demand. It represents how long it would take to completely liquidate current inventories at the current rate of sales activity.

There were 4.2 months of inventory on a national basis at the end of April 2017, up slightly from 4.1 months in March when it fell to its lowest reading in almost a decade.

Although new listings surged in the Greater Golden Horseshoe, inventories remain tight at near or below one month across the region. Ontario's recent changes to housing policy were announced late in the month, so their full effect on the balance between supply & demand has yet to be determined.

The Aggregate Composite MLS® HPI rose by 19.8% y-o-y in April 2017. Price gains accelerated for all benchmark housing categories tracked by the index. (Chart B)

Chart B

Chart B

Two-storey single family homes posted the strongest year-over-year price gains (+21.8%), followed closely by townhouse/row units (+19.9%), apartment units (18.8%) and one-storey single family homes (17.2%).


While benchmark home prices were up from year-ago levels in 11 of 13 housing markets tracked by the MLS® HPI, price trends continued to vary widely by location.

After having dipped in the second half of last year, home prices in the Lower Mainland of British Columbia have been recovering, are up from levels one year ago, and are now at new heights or trending toward them (Greater Vancouver: +11.4% y-o-y; Fraser Valley: +18% y-o-y).

Meanwhile, benchmark home price gains remained in the 20% range in Victoria and elsewhere on Vancouver Island. Price gains were in the 30% range in Greater Toronto and Oakville-Milton, and ranged in the mid-20% in Guelph.

By comparison, home prices eased in Calgary (-0.9% y-o-y) and Saskatoon (-2.6% y-o-y) and are now about 5.5% below their peaks reached in 2015.

Home prices were up modestly from year-ago levels in Regina (+0.4% overall, led by a 2% increase in apartment prices), Ottawa (+4% overall, led by a 4.9% increase in two-storey single family home prices), Greater Montreal (+3.7% overall, led by a 5.5% increase in prices for townhouse/row units) and Greater Moncton (+4.8% overall, led by a 12.7% increase in prices for townhouse/row units). (Table 1).

The MLS® Home Price Index (MLS® HPI) provides the best way of gauging price trends because average price trends are prone to being strongly distorted by changes in the mix of sales activity from one month to the next.

The actual (not seasonally adjusted) national average price for homes sold in April 2017 was $559,317, up 10.4% from where it stood one year earlier.

The national average price continues to be pulled upward by sales activity in Greater Vancouver and Greater Toronto, which are two of Canada's most active and expensive housing markets. Excluding these two markets from calculations trims more than $150,000 from the average price.

Provided by: CREA - Canadian Real Estate Association


The British Columbia Real Estate Association (BCREA) reports that a total of 9,865 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in April, down 23.9 per cent from the same period last year. Total sales dollar volume was $7.19 billion, down 25.4 per cent from April 2016. The average MLS® residential price in the province was $728,955, a 2 per cent decrease from the same period last year.

“BC home sales are on an upward trend this spring, led by a sharp increase in consumer demand in the Lower Mainland,” said Cameron Muir, BCREA Chief Economist. The seasonally adjusted annual rate (SAAR) of home sales was over 106,000 units in April, significantly above the five-year SAAR for April of 89,000 units.

The supply of homes for sale declined 17 per cent from April 2016. On a seasonally adjusted basis, active residential listings have declined 50 per cent since 2012 and are now at their lowest level in over 20 years. The imbalance between supply and demand is continuing to drive home prices higher in most regions, further eroding affordability.

Year-to-date, BC residential sales dollar volume was down 31.8 per cent to $21.3 billion, when compared with the same period in 2016. Residential unit sales declined 25.0 per cent to 30,757 units, while the average MLS® residential price was down 9.2 per cent to $692,220.



Home prices in Canada rose for the 15th straight month in a row in April, according to the Teranet-National Bank house price index, which once again hit its highest levels ever.

But virtually all the strength seen over the past year came from just three cities — Toronto, Hamilton and Victoria.

The index, which tracks repeat sales of single-family homes over time, found Toronto led the way, with the price index rising 2.6 per cent in April. The city has seen prices jump 7.3 per cent since the start of the year, and 26.3 per cent in the past 12 months.

Nearby Hamilton, which is experiencing spillover from Toronto’s housing boom, saw its price index rise 2 per cent in April and 23 per cent over the past year.

Vancouver, which as recently as a year ago was showing the fastest price growth in the country, is now showing signs of slowing. The price index fell 0.1 per cent in April, and compared to a year ago, prices are up 9.7 per cent, slower than the national average of 13.4 per cent.

Many market experts say Vancouver’s foreign buyer tax has pushed buyers to other cities, including to Victoria, where the price index rose 1.5 per cent in April, and 19 per cent over the past year.

“Based on the cooldown in home sales that began early last year, we expect the Vancouver growth rate to fall much lower over the next few months,” wrote David Madani, senior Canada economist at Capital Economics.

But Madani expects Toronto to experience a similar cooling. He noted that the city saw a sudden, 30-per-cent spike in new home listings in April.

That’s “further evidence that the surge in house price inflation is close to a peak and will drop back sharply before the end of this year,” he wrote in a client note.

Not everyone agrees. National Bank senior economist Marc Pinsonnault said he doesn't see much of a slowdown in prices ahead, even with the new housing rules Ontario announced last month.

The provincial government last month announced a slate of 16 measures to address a growing affordability crisis. Among them are a 15-per-cent tax on foreign home buyers, expanded rent controls and the ability for municipalities to charge a tax on vacant homes.

"The effect of that tax on homes sales and home price growth will be assessed over the next few months," Pinsonnault wrote in a client note.

"But even if this measure curbs speculation, it should not bring home price growth to a halt due to strong fundamentals such as job creation, immigrants from other countries and lately a net flow of migrants from other provinces. Low interest rates also contribute to the housing boom."

Provided By: Daniel Tencer with The Huffington Post


Increases in home prices in the City of Vancouver have had a spillover effect in surrounding British Columbia municipalities. Centres within commuting distance of Vancouver City experienced the strongest spillover effect, however, price increases could also be seen in municipalities outside commuting range.


This analysis is part of Canada Mortgage and Housing Corporation’s (CMHC) latest Housing Market Insight (HMI) report on the link between Vancouver home prices and other major centres in British Columbia.

Report highlights

  • Home price changes in the City of Vancouver have a measurable effect (and in the same direction) on the home prices of other municipalities.
  • Stronger spillover effects are seen in municipalities closest to Vancouver, such as Richmond and the North Shore. As the distance from Vancouver increases, the spillover effects generally become weaker.
  • House prices in municipalities that are outside of the commuting range are still affected by price changes in Vancouver. Migration out of Vancouver provides another potential channel for spillover effects.

The exact causes of spillover effects are complex and change over time. There are other factors that may have cancelled out past spillover effects or amplified them, depending on the particular example. These results are based on changes in the City of Vancouver home prices in isolation of other factors that would lead house prices to fluctuate jointly in several B.C. centres.


To access future market analysis reports from CMHC, subscribe to Housing Observer Online.

As Canada’s authority on housing, CMHC contributes to the stability of the housing market and financial system, provides support for Canadians in housing need, and offers objective housing research and information to Canadian governments, consumers and the housing industry.


“Price changes in the City of Vancouver are linked to prices in other municipalities, both on the way up and on the way down. The spillover effects take years to fully work through other markets and have varying degrees of strength.”

— Braden Batch, Senior Market Analyst, Market Analysis Centre, Canada Mortgage and Housing Corporation

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