Banks seize properties as mortgage defaults grow
(Source: Toronto Star / YourHome.ca)
Power-of-sale statistics are not officially tracked by any agency. But according to figures compiled for the Star by real estate broker Mike Donia and by Jim Common, a realtor who has a monthly power-of-sale newsletter, there were 472 such listings in the Toronto area on the Multiple Listing Service in March, up 44 per cent from March of last year, the first year-over-year increase Common has seen in recent memory.
In the ruthless world of real estate cycles, one person’s misfortune is another person’s opportunity. As the economy sours, power-of-sale properties – typically homes that have been repossessed by a lender because the owner defaulted on their mortgage – are making a comeback.
The number of distress sales, while growing, still represents only a tiny fraction of the thousands of listings on the Multiple Listing Service. But they do act as an early warning stress test of potential problem spots in the Greater Toronto Area.
According to the research for the Star, the vast bulk of sales are in the Brampton and Bramalea area, followed by Oshawa, both areas that have been severely hit by manufacturing and auto plant layoffs.
So far the existing home market has held up relatively well, with sales off by only 7 per cent in April compared to a year earlier, in a better-than-expected spring market. But economists are worried about the long-term implications of job loss. The equation is simple. No matter how low interest rates go, without a job, no home is affordable.
Canadian employment rose by 35,900 jobs, said new figures released yesterday, the first positive figure since last October. But the unemployment rate remained unchanged at 8 per cent, up from 6.1 per cent a year ago, as the number of Canadians receiving employment insurance reached its highest level in nearly five years.
Read Tony Wong’s full article “Big spike in number of homes lost in GTA” in the Toronto Star (May 9, 2009).