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For loss-making landlords, things are about to get a lot worse: about 30 per cent of apartment rent due April 1 went uncollected, according to estimates by CIBC Economics. That’s in line with similar estimates of U.S. rental collections.
Then there are those who invested in properties for the short-term rental market that’s all but dried up because of travel restrictions. Nearly a third of Canada’s Airbnb hosts — who jointly had 170,000 active listings in late 2019 — need the income to avoid foreclosure or eviction, Airbnb said in a letter to the Canadian government last month.
Confronting a swiftly collapsing pool of renters, more than 200 Canadian listings have exploded across Vrbo and Airbnb in recent weeks pitching themselves as isolation or quarantine havens, many offering COVID-19 discounts, according to data from Toronto-based Harmari, which analyzes online classifieds. Former Airbnb rental units have also cropped up in sales listings.
Economists and lenders have long pointed to two pillars that have underpinned housing: a robust labour market and the biggest increase in international immigration in more than a century. Neither is holding up.
Nearly 6 million Canadians have applied for income support. Lenders had deferred nearly 600,000 mortgages, about 12 per cent of the mortgages they hold, as of April 9. Meanwhile, immigration targets, based upon an earlier growing labour shortage, will almost certainly be scaled back.
In steps that dwarf those taken during the global financial crisis, the federal housing agency and the Bank of Canada are ready to purchase billions of dollars worth of mortgages and mortgage-backed securities to backstop the market, while lawmakers passed a historic wage bill to stem job losses.
“It’s great we have a government that says they have the fiscal firepower to do this but anyone with any math skills can calculate that my daughter’s grandchildren aren’t even going to be able to pay this off,” says Reza Sabour, a Vancouver mortgage broker. “What’s the plan after?”
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