Real estate association predicts falling home prices and more Canadian real estate news for October 14

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Here are The Globe and Mail’s top housing and real estate stories this week, with the lowest mortgage rates available in Canada today, commentary from our mortgage expert and one home worth a look.

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Home sales dropped in September and prices will continue to fall in 2023, predicts real estate association

The Canadian Real Estate Association reported home resales fell 1.9 per cent in September over August — primarily in Vancouver and Toronto — and now expects a 10 per cent drop in sales from last year, writes Rachelle Younglai. The home price index was $753,900 in September, the first decrease since March when buyers rushed to make their purchases amid a lull in interest rate hikes. The market has since slowed with Bank of Canada’s summer interest rate hikes, as well as its message that rates will stay elevated until inflation slows.

Regulator warns higher interest rates and weaker commercial real estate are increasing risks at banks

Citing increasing issues in commercial real estate as office vacancies rise and high rates cool the construction market, the Office of the Superintendent of Financial Institutions said that the rising cost of borrowing is putting greater pressure on the ability of consumers and companies to pay down their debt, writes Stefanie Marotta. While all commercial property types are vulnerable to higher interest rates, the office, construction and development segments pose the greatest risks, the regulator said.

As a result, banks have adjusted their lending practices and are increasingly using “participation” agreements and other co-lending agreements that spread the risk across multiple lenders. However, these agreements could present some additional risks to lenders.

This week’s lowest available mortgage rates

If you don’t have a line of credit and need to tap home equity for more funds, some methods are much better than others. Especially if you are sitting on a miracle rate you wouldn’t want to lose, writes Robert McLister in his weekly column. You could break it up and refinance, add a new portion, or even get a second one. The goal is to ask the right questions to extract the best equity for your situation.

Halifax business owner still knee-deep in insurance red tape after summer flood

Nova Scotia continues to count the costs after torrential rains and flash floods inundated the province on July 22, which claimed lives and caused huge damages. When commercial businesses were affected, owners say dealing with insurance has been a constant struggle, writes Michael Lewis. Experts say Canadian insurers have continued to offer commercial policies in most high-risk areas even in the face of catastrophic losses linked to climate change that cost billions last year. But with insured losses for flooding surging, some providers have started to deny flood coverage to residences and businesses on recognized flood plains.

Glut of office space leaves older downtown buildings facing far higher vacancy rates

The slump in office demand amid the growth of remote work has widened the divide between older, no-frills buildings and the new gleaming towers with gyms, cafés and the latest HVAC technology, writes Rachelle Younglai. These “A-class” buildings used to keep very low vacancy rates, but the switch has hurt the B and C class buildings the most, as their tenants upgrade to better deals in better towers. The high vacancies and slow return to the office have sparked talk of turning underused skyscrapers into apartment buildings.

Home of the week: A Toronto heritage home with park, boardwalk and beach as the rec room

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71 Lee Ave., Toronto

Long-time residents of the Beaches will recognize 71 Lee for its unusual side lot that for decades was almost completely given over to formal gardens, as the current owners have lived and maintained the home for four generations. The house still has its original stained-glass windows, solid oak doors, even the original brass doorknobs and switch plates, and features five bedrooms, but only one bathroom. Some of the wood floors are covered in carpeting, but the wood trim, brick fireplaces and built-in leaded glass cabinetry are still prominent fixtures.