Household Debt in Canada: The Startling Numbers You Need to Know

02/7/23 7:01 PM

As living expenses rise, Canadians face a growing burden of debt that can be overwhelming. Household debt has become an increasingly serious issue for many people across the country. Owing to the high cost of higher education, many individuals have taken out significant student loans which, combined with their mortgage payments, add up to hefty household debt.

Facing a hefty sum of debt can take time and money to properly resolve, leaving you unable to save for certain things such as your dream home, car or retirement. Are you curious about the household debt statistics in Canada? Keep reading on to find out more!

2022 Updates:

In April 2022, the Canadian household debt skyrocketed to an unbelievable US$2.116 trillion (according to CEIC Data).
Recent statistical evidence reveals that in March 2022, the Canadian household debt percentage rose to an incredible 105.1% of Canada’s Nominal GDP (CEIC Data).
In 2022, Canadian household debt hit an all-time high of 180.02% of the gross income – a worrying statistic reported by Trade Economics.

Canadians are Facing an Uphill Battle with Growing Household Debts

The term “household debt” refers to the total amount of money owed by all members of a household.
The typical Canadian household has an astonishing amount of debt – a staggering $41,500 – excluding mortgages.
As of April 2022, Canadian households owed a total of $2.116 trillion in debt.
In 2019, half of all Canadians earned an income less than the middle-ground median salary of $37,899.
In 2021, mortgage borrowing saw an impressive 41% growth.
In 2021, the debt-to-income ratio skyrocketed to 173.08%, a staggering 85% increase from the average rate of 88.77% in 1990.
Canadians between the ages of 46-55 bear the greatest debt burden, with an average household debt (excluding mortgage) totaling a staggering $72,482.
An overwhelming majority of Canadian households, nearly 60%, are currently in debt.
Canadians typically have a credit score between 600 and 650, with scores higher than this range considered to be excellent.
Startlingly, only 34% of Canadians are living debt-free and own their homes.
In the 1960s and 1970s, household debt in Canada stayed below $200 billion; however, it has increased rapidly since then and currently stands at over $1 trillion.
Struggling with unmanageable debt from loans and credit cards? Don’t worry. Talk to an expert today about consolidating your debts, and learn how you can save on expenses. Together we will create a plan that works for you!

What is household debt?

Before we focus on the household statistics for Canadians, it is important to understand what is meant by debt and how it differs from personal debt. It is often defined as the combined liabilities that require payments of interest or principal of all members in a household.

In other words, household debt is the combined amount owed by all members of a household.

Types of debt

There are different types of debt that contribute to household debt, which include:

Secured debt, which is any type of debt that is backed by collateral. This collateral will be forfeited to the lender if the debt is not paid. The amount you are able to borrow is determined by the value of the asset used as a collateral. An example of secure debt would be a car loan where the lender will repossess the car if the loan isn’t paid.
Unsecured debt is not backed by collateral and includes debt from credit cards and unsecured loans. How much you can borrow is based on your credit score. The better your score, the more you can borrow.
Mortgage debt is a subset of secured debt where the property is the collateral. Most people will pay back their mortgage over several decades.
Student loans can be government issued or private loans. They are a type of unsecured loans as there is no collateral used.

The average household debt in Canada

Without factoring in mortgage debt, the typical indebted individual owes a staggering $20,739; thus making two-person households liable for nearly $41,500 collectively. Nevertheless, when mortgages are added to this assessment of average per person debt in Canada – that number skyrockets up to an unparalleled amount of almost seventy five thousand dollars!

Canadian households had amassed a staggering $2,116 billion in debt by April of 2022- although this number is lower than the amount which was reported for 2020: $2,330 billion. Mortgages accounted for the most considerable portion of household debt at an impressive total of $1,550 billion with non-mortgage loans and consumer credit making up the difference of roughly $802 billion. (Source)

The average earnings and net worth of Canadian households

In 2019, the median annual income in Canada was $37,899 according to Statistics Canada – not the average yearly salary of $49,000. This is an important distinction; 50% of Canadians earned less than this amount.

Outliers can deceive an individual’s understanding of the average income, which is why median statistics are often more useful when studying data on salaries.

According to Statistics Canada, the net worth of Canadians increased by a striking 3.5% annually between 2012 and 2016. Fast-forwarding to 2019, their median net worth amounted to an impressive $329,000!

Boasting a millionaire population of near one million, the median net worth gives us an accurate reflection of Canada’s wealth distribution. Toronto and Vancouver have the highest median net worth while Montreal has the lowest – Calgary, Edmonton, and Ottawa fall somewhere in between.

What is the primary factor that has caused households to become more and more indebted?

This year, Canadian households are bearing a heavy burden of debt- largely due to the rapid surge in mortgages. It’s no wonder that new mortgage borrowing skyrocketed by an astounding 41%, pushing household debt levels higher than ever before.

Despite this, non-mortgage debt decreased as government issued funds helped many Canadians to pay off their credit card bills. Plus, the lockdowns caused households to spend less money altogether.

Who is most likely to be encumbered with the greatest debt?

Data reveals that Canadians in the 46-55 age bracket owe the greatest amounts of money. Without mortgages, their consumer debt averages around $36,241 while total household debt stands at an estimated figure of $72,482.

Young Canadians, aged 18-25 were in debt to the tune of $8,847 on average at the start of 2020. As those ages increased so did their obligation: 26-35 year olds had an outstanding balance of $18,398; 36-45 owed around $28,863; 56-65 inked a hefty sum totaling up to a staggering amount – approximately 30K! Surprisingly enough though seniors over 65 held a modest estimated total liability at just under 17 grand ($16,491).

What percentage of Canadian households are financially independent and free from debt?

According to Statistics Canada, only 3 in 10 Canadians are debt-free – a figure rising to almost 6 out of 10 for households headed by those aged 65 or over. The growth in seniors’ indebtedness is largely attributed to an increase of mortgage borrowing and credit card use throughout the past few decades.

Mortgage statistics

Lending for mortgages has skyrocketed in 2021, with a surge of 41% compared to the year before. But what other mortgage-related figures exist across Canada? In 2020 alone, Canadians had borrowed an astounding $1.7 trillion on their mortgages – marking the most substantial climb since 2010 when this debt increased by an impressive $118 billion within one single year! Low interest rates and rising property values were instrumental contributors that propelled such spending growth in this sector. This potential hazard is reminiscent of the 2008/2009 financial crisis, when soaring mortgage rates pushed many people into purchasing properties beyond their means. This could be a perilous situation if history repeats itself.

Astonishingly, only 34% of Canadian households own their homes outright. Not surprisingly, these homeowners are more likely to be debt-free and possess fewer liabilities than those with mortgages. This data reveals the breadth of home ownership across Canada; it is clear that for most Canadians mortgaged houses are a reality rather than an exception!

What is the standard credit rating among Canadians?

Equifax Canada has determined that the average Canadian credit score lies between 600 and 650. Credit scores are calculated based on multiple factors such as payment history, debt levels, and length of credit. Canadians who possess a score of 650 or more show financial stability making them likely candidates for loans from lenders. An excellent credit score is one above 760 points according to Equifax’s research findings.

Uncovering Canada’s history of household debt – from its beginnings to today.

Every year in Canada, the total household debt has increased since 1961 when records began. In the 1960s and 1970s, even though there was growth each year, it was slow and consistent. The total debt remained below $263 billion. However, by the end of the 1980s decade, the debt had risen to over $500 billion and surpassed 1 trillion in early 2000.

Over the years, family debt has gone through an array of transformations.

Over the past several years, household debt in Canada has undergone dramatic shifts- particularly when examining the ratio of total debt to household income. In the 1980s, this figure was 66%, yet now it stands at 173.08%. Clearly, Canadian households owe much more money than they did thirty years ago – and a major factor is that most people cannot purchase their home without taking out mortgages. Undoubtedly, these numbers are concerning but also serve as an important reminder of how essential financial literacy and responsibility can be!

Despite Canadians earning more than they ever did before, the debt to income ratio still stands at $1.73 for each dollar earned – a clear indication that what’s left in their pockets is less than what they owe. This unfortunate statistic can be traced back to 1961 when the total amount of Canadian household debt was merely 16 billion dollars; now it’s over 2 trillion!

Nevertheless, there is an optimistic side to this story. The proportion of debt from credit cards has been on a downward trajectory in Canada and recently reached a six-year low. This decrease is closely correlated with the restricted spending due to COVID-19 restrictions. Furthermore, the overall debt to income ratio was higher prior to the pandemic – it was estimated at 180% during Q4 2019! In short: Canadians have made strides towards reducing their reliance on borrowing money which can only lead us down a path of financial wellbeing going forward.

What factors have contributed to the sharp rise of household debt in Canada since the mid-1900s?

As the economy flourished after WWII, Canadians took on more debt with a newfound attitude towards it; instead of viewing debt as something to stay away from, people began embracing taking out loans and using credit. This shift in perspective marked an increase in debts throughout Canada.

Following WWII, Canadians’ access to loans and the use of credit grew in popularity. Though spending on credit became more accepted, it wasn’t until the 1990s that household debt skyrocketed throughout Canada.

Since its foundation in 1971, the credit score system has been improved to make it simpler for those earning a median wage to obtain loans.

Are you concerned about the impact of debt on your financial future? If so, there are several concrete steps that you can take to manage and reduce this burden.

Struggling to stay on top of debt payments? You’re not alone and there are resources available to help. Start by utilizing a debt calculator – an effective tool that will estimate your repayment timeline as well as the amount of interest you’ll end up paying. Knowing this information is essential for establishing a successful plan towards becoming financially free.

Utilizing a debt calculator can give you an indication of whether or not you are capable of taking care of the debt yourself by allocating extra cash each month to increase payment speed. If your budget only allows for minimum payments, or even worse if it is unable to cover them in full, consulting with a financial professional may be beneficial as they can assist in minimizing expenses through methods such as consolidating loans and decreasing outgoings.

Conclusion

Despite the vast amount of household debt in Canada, it is not necessarily an indication that a financial crisis will arise. While there are common elements to past recessions including historically low interest rates and booming real estate market conditions, banks have been more mindful of lending large amounts to unstable households with poor credit ratings.

As people spent less during the lockdowns following the pandemic, the ratio of debt to income in Canada slightly improved. However, it is still too soon to tell what has happened since the return to a more normal life.

Assignment Sales Toronto in the Pre-Construction Market [February 2023]

02/4/23 11:48 AM

Looking for a great deal on a Toronto condo? Check out our list of assignments for sale! With units starting at just $$$$$, you’re sure to find something that fits your budget.

Negotiate significant savings in comparison with resale and other pre-construction units.

Move into your new home in just weeks or months

Get the full warranty on a brand-new, never-been-lived-in unit

An Assignment Sale in the Pre-Construction Market

In other words, an assignment sale is thesale – or “assignment” of a contract to buy a pre-construction condominium suite. An assignment sale usually happens before the condo has been registered, so no one can own the unit itself. The only thing that can be sold is the contract.

When you buy a pre-construction condominium unit, you receive an assignment clause/right to sell in the form of a contract. You can decide to sell your assignment even before the condominium is constructed.

The Assignee is not purchasing the property from the Assignor. Instead, the Assignee is obtaining the right to buy the property from a third party, such as a builder.
The Assignor is authorizing the transfer of its interest and rights in the Original Agreement with the Builder (or original seller) to another party.
The Assignor is assigning its interest in the original deposit to the Assignee.
The Assignee agrees to take on all the duties of the original contract from the Assignor.

The many benefits of contract sales exist for both the buyer and seller before a building is even constructed and registered.

This article will explore assignment sales, from why they are used to the process of making this type of transaction and how it can be transferred.

By learning more about assignment sales, you can decide if this type of sale is right for you. Here at GTA-Homes, we pride ourselves on giving our clients the tools they need to make informed decisions about investing in pre-construction homes.

This way, you will be able to determine if an assignment sale is right for you. We at GTA-Homes strive to provide our clients with the knowledge of the pre-construction market, so that they can make a more informed choice when it comes to investing in their future.

Is It Worth It to Purchase an Assignment?

You may be able to find some of the best deals on condos in the GTA by looking for assignment sales. These types of sales typically have fewer buyers because many real estate agents aren’t familiar with them and don’t bother to advertise these listings.

Assignment sales are often foregone by potential buyers because they are not fully understood. Lack of Knowledge about the process can cause people to overpay for their suite due to bidding wars amongst other things. By opting into an assignment sale, you have the opportunity to avoid all that extra competition and pay much less than what you would for a resale unit.

The condo market benefits both the buyer and the seller in multiple ways. The seller can list their unit earlier, and the buyer can save time and money.

An assignment agreement also has the perk of receiving a unit that is brand-new and automatically registered under the seven-year Tarion Warranty Program. Also, you’ll be able to move in much sooner than if you were waiting for the building completion which could take 3 to 4 years!

10 Common Home-Selling Mistakes (And How to Avoid Them)

01/30/23 1:04 PM

Making the wrong decisions in selling your house could hinder buyers from buying and keep you awake in the late at night. However, it doesn’t have to be that way.

Selling your home isn’t easy however, avoiding the home seller’s mistakes is possible if you are aware of what you can expect. You’ve done a fantastic job of saving up for your first home and making mortgage payments and now you’re getting ready to sell your first house.

In order to make sure your home sale hassle-free and place you in the best place to purchase your next home (the ultimate aim) Here are some basic, yet crucial strategies to help you to follow.

Are you looking to avoid the most common errors of home sellers so you’re with a win? Great! These suggestions are extremely doable and can have a huge impact on your life.

TIP 1: Don’t get caught up In Your Feelings Prior to Selling Your Home

If you are selling your home Take a note of Elsa from “Frozen” as well as “let your house sell.”

It’s easy to be caught up in your thoughts about moving away from the home that has provided you with many memories of happiness over the last few years, but you have to consider your home from the perspective of a prospective buyer who has their own personal life, goals and personal preferences. Your home means something completely different to the buyer than it does to you.

Don’t hinder your sale by holding onto the features of your home which could cause it to be less saleable. This is among the most costly mistakes when selling a home.

A mural that celebrates your love for all things “Game of Thrones” could put off a potential buyer. I’m just saying.

It’s crucial to walk through your home with an open mind and look for any decor designs, styles, features, and art work – anything that reveals your individual style. Then put it together in a way that appeals to all potential buyers feasible. An experienced real estate agent can be capable of setting the stage for success in this market.

Let’s get to the real stuff.

Take away photos of your family. It may seem absurd but the truth is that family photos can make it difficult for home buyers to imagine their lives in the house.

Take any advice (and critiques) by your realtor on the way your house appears to potential buyers and ways you can improve it.

Do not retaliate on the most hurtful things. Remember that your agent’s goal is to earn money by helping you earn money and they’re trained to accomplish this.

Don’t take it personal. It’s an important business transaction.

It’s not easy to leave your house and remove yourself from it however, at the end all, the house is an actual house. We know that it’s more than a home; it’s also filled with memories as well. But, you’ll take those with when you leave.

Tip 2. Think twice about for Sale by the Owner (FSBO)

There’s a chance you’ll be able to get FSBO however, very only a few home owners are equipped with the real estate expertise and understanding of the financial aspects of selling homes and trends to market their properties.

You might be an exception and could show some real estate skills however, is it worth the risk?

Many people who list their personal houses and serve as their own agents are doing it in order to avoid paying commissions to agents However, be cautious. Homes advertised by real estate brokers typically sell faster and for more value than comparable homes that are sold by the owner.

Selling a house through FSBO is a full-time, second job. If you decide to go this route it is essential to keep a few things in your mind.

Plan time to do some thorough study. If you’re not familiar with the market, you’ll have to do some task to do to market your home for sale at a fair price, not too high , but not too low.

Selling your house can be a challenge for the most part. There are numerous aspects to pull off a successful display and you’ll want to do perfect the first go.

It’s picking up some really sketchy sounds

In other words is it possible to advertise your house as a pro? Real estate professionals who are good are a great source of information. Are you able to demonstrate the knowledge and time to add networking and marketing to your list of things to do? If so you should consider a time management self-help manual in the near future.

Listing your house on the market with unprofessional images can turn away a lot of potential prospective buyers. Even if you’re not able to afford the money to pay a professional estate photographer, your property might end up generating more LOLs than excitement when potential buyers go online to look it up.

MONEY HACK

If you choose to go with the FSBO option, ask a trusted person to see if the listing you are selling is appealing. You might be far from your house to evaluate things from a distance.

TIP 3: Grab the Bag but don’t Be a snob when pricing your Home

It’s possible that this isn’t the best idea However, the more honest you are in estimating the value of your house for sale when you decide to sell, the greater amount of cash you’ll receive sooner.

The reason is that houses with high prices are more likely to remain up for a lengthy period of time.

It’s not just that it delays the process of selling your house until you’re forced to lower the price down however, it may also create your home a bad reputation as prospective buyers notice that it’s on the market longer than similar homes.

It is possible that they will be wondering if the home needs repairs or if the house is haunted which could lead to them haunting your house.

Pricing it correctly: appraisals and comps

Similar houses (aka Comps) are the most effective way to arrive at an amount that people would actually be willing to pay for your home. Comps are essentially houses that are similar like yours , and have recently been sold.

If you don’t see any similar homes that sold in the past 3 to 6 months, think about making an appraisal. An appraisal is when a professional arrives and examines every single aspect of your home in order to determine what it’s worth.

Determine the price to be offered by using one of the above techniques. If you employ an agent from a real estate agency to manage it, follow their suggestions on pricing your house – regardless of whether you agree or not.

Do not ask for a price which is based on the amount you’d like to make or what you believe your house is worth. If a reasonable price would hinder you from earning a profit you might want to consider staying there until you’ve paid back the mortgage or, if you’re able to you could let it go.

Be fair and honest when negotiating. Giving and taking is aspect of negotiation. Let’s say that your seller is concerned about closing expenses. Maybe you can assist them in covering the cost in the knowledge that you will not be as flexible when it comes to adjusting the price.

TIP 4: Never Cover Up Anything in the event of selling a home with Problems

When you’re selling your house You’ll need to record all the things you can see that are not right with your home in the seller’s disclosure.

Without Cap Say the truth (and absolutely nothing else) about the condition of your home

Do not be shy.

Honesty now reduces the chance of delays in sales (or perhaps lawsuits) later on.

If you’re using an agent in real estate (or you’re friends with an inspector for your home who can perform this service for you at no cost) take a brief tour with them. They’ll probably be able identify other problems you weren’t aware of.

Whatever the issue regardless of whether it’s a huge, terrifying one for buyers of homes include it in the disclosure. Your agent will be able to help you make adjustments to the price you offer so that the issue is less of a barrier to buyers.

Apart from being morally untrustworthy Not telling potential buyers about previous water leaks, fires, foundation repairs, and other damages could affect the value of your home.

If a home inspection requested by a potential buyer exposes the issues up the buyer may opt to back out of the purchase that they are entitled to do during the due diligence period.

Tips 5: Maintain Your House at a Glance until It’s Ready for its Closeup

Improve the appearance of your home than ever. One of the most common home selling mistakes is failing to prepare for open houses. It’s easy to make a poor first impression.

A home that’s properly designed will be more comfortable. Let’s face it the effect is just different.

When you see a mucky lawn and spider webs in the entranceway, and a damaged front doorknob, how would you consider? Home buyers are no different.

Put your best foot forward. You’re aware of the house that is for sale on the street could be.

Do all the minor repairs you might have put off. Cabinet drawers that are sticky, leaky faucets, damaged drainage … Get rid of all of it or be prepared for trouble when you make an offer.

If you’re in need of assistance to handle everything, go ahead. However, if you’d like to take your financial security seriously make sure you consult your realtor to confirm that it’s worth paying for before hiring someone else to handle it.

After you have fixed the issue Keep them running and tidy.

Vacuum, sweep and sweep often. Do not forget about the windows, too. It’s not an easy task to wash, but don’t forget about the tracks that windows are on and clean up all that gunk out. We don’t know the cause but it’s got to go!

TIP 6: Never Guess What to Fix when Selling the house

A carefully planned, cost-effective renovations will cover the cost by improving the selling worth of your home for example, replacing old appliances with brand new stainless steel ones.

Don’t start with a project simply because you think everything new is great.

Certain renovations won’t raise your selling price enough for you to pay the cost even if they would appear great in a magazine.

If your renovation isn’t impressive, when compared against the other house or other houses within the area it is likely that you won’t get the value you put into it.

Also, be sure to beware of renovations that do not follow current trends or are unusual and unorthodox. Be consistent but not enough to draw the largest number of potential buyers to your home.

MONEY FACT

Buyers pay attention to bathrooms and kitchens. Sellers who are smart should begin there when they are considering making upgrades.

Tip 7: Beware Not to be Excited by the Cost to Sell Your House

Making preparations to sell your home and paying closing costs could cut into the expected profits.

It’s exciting to research what your home might be value when you’re ready sell it. If the real estate agent you use offers it for sale at a price that is even more than that the experience can be thrilling.

However, you’ll have to cover closing expenses (including that of your buyer in the event that they’ve agreed to this). If you’re not selling your home by yourself, the commissions paid to agents will eat up the money you earn by selling your house.

The cost of these costs alone could result in thousands – even tens of thousands of dollars.

Before you put your house on the market ensure that you’re ready for the reality of the money you’ll earn through the selling of your home after these expenses have been factored into. This will help inform the decisions you make regarding selling your home moving forward.

Consider it as follows: If you make less than the amount you have to pay on your mortgage, it might not be worth selling your house now, even if you don’t need to. If you’re making a an income that’s healthy what does it impact the look for your next house?

Congratulations! You’re a champion home seller right now.

Did the tips you read help? We’d like to believe that it did! The key is not to be a victim to anything. Consider frequent mistakes that you may make far ahead of time, and inquire with your real estate agent (or Google) how to most effectively avoid them.

The Bank of Canada has once again raised its key interest rate, but plans to keep it at the same level for now.

01/25/23 4:35 PM

On Wednesday, the Bank of Canada declared a triumphant quarter-percent increase in its key interest rate and stated that this would be their final move to combat inflationary levels unseen since long ago. This is the eighth hike consecutively since March as they attempt to rein in rapidly inflating prices with these measures.

The bank’s key interest rate is currently at 4.5%, the highest it has been in almost 14 years!

This morning, the Bank of Canada will reveal its interest rate decision amidst widespread speculation that it is likely to choose a quarter-point raise. A news statement from the central bank declared that with the Canadian economy still surpassing capacity, its governing council has decided to increase interest rates yet again. The Bank of Canada’s headquarters located in Ottawa on Tuesday July 12th, 2022 was pictured by THE CANADIAN PRESS/Sean Kilpatrick.

But if economic conditions remain as expected, the central bank has indicated that it will maintain its key interest rate at the current level.

Wednesday’s rate hike follows a period of decreasing inflation. In the summer, Canada’s annual inflation hit an apex of 8.1%, yet has since dwindled to 6.3% in December – indicative of slower economic growth over recent months and clearly presenting Wednesday’s rate increase as essential for market stability moving forward into 2021.

The Bank of Canada’s latest Monetary Policy Report, which they published Wednesday, contains the most up-to-date economic and inflation projections. As per the report, inflation is predicted to slow more than initially thought; it will descend to three percent by mid-2023 and ultimately reach its two percent target in 2024.

The recent decrease in inflation may be credited to falling oil prices as well as the mitigation of worldwide supply chain interruptions. Simultaneously, labor is still relatively scarce and both businesses and individuals maintain a heightened anticipation for rising inflation, the central bank remarked.

According to Statistics Canada’s recent labour force survey, Canada is at the brink of a historical low in unemployment with its December rate standing at five per cent. Previously, the Bank of Canada had warned about potential inflation due to strong wage growth; however now it claims these risks are on a decline as wages have leveled off.

Despite the Bank of Canada’s optimism at keeping interest rates unchanged, they made it clear that they will not hesitate to raise them if needed in order to return inflation back up to the two percent target. With high interests rates continuing their drag on our economy, this could lead to a softening of the labor market in ensuing months. “Governing council is prepared,” The central bank said, “to increase the policy rate should circumstances necessitate.”

Rising interest rates have already had a negative impact on the economy, particularly in relation to housing. However, in upcoming months we can anticipate more extensive ramifications as businesses and consumers reduce their spending due to higher borrowing costs.

As the process advances, it’s estimated that economic growth will stagnate throughout the first half of 2022 before rebounding at year-end. The Bank of Canada is forecasting a 3.6 percent boost in 2022 and an unimpressive one percent gain for 2023 — further demonstrating how this progress has been stalled by the pandemic.

The central bank has noticed that global growth is surpassing expectations, as people continue to spend money. The focus of the central bank remains on domestic prices and demand, however international dynamics have potential for inflationary effects. A case in point could be China’s lifting of COVID-19 restrictions; if this happens it may lead to a surge in world economic activity, plus rising commodity costs.

The ongoing war in Ukraine has created an environment of uncertainty and risk, according to the central bank. Additionally, domestically services price inflation could be stronger than anticipated if labour costs and heightened expectations become more established than initially projected. The Bank cited by saying “Services price inflation in Canada could be stickier than projected if elevated inflation expectations or increased labour costs prove more persistent than expected.”

Although inflationary pressures are a major worry for the Bank of Canada, an extreme global downturn could cause economic instability just as quickly.

Despite this, the risk of a serious global recession has fallen in recent months. This report from The Canadian Press was initially published on January 25th, 2023.

New vacant home tax takes effect in Toronto: What homeowners need to know

01/23/23 7:13 PM

As a Toronto homeowner, you must be aware that the Vacant Home Tax (VHT) is now in effect and all residential property owners are required to report on their occupancy status annually – even if they live there. It’s essential to get this done by February 2nd so make sure it’s marked on your calendar!

The Vacant Homes Tax (VHT) seeks to motivate property owners to make their properties available for purchase or rent, thus encouraging the growth of housing in Toronto. But what do we consider a “vacant” property? The City of Toronto states that if it was unutilized as a primary residence by any owner(s) or permitted tenants during the previous year and remained empty for six months total within that time frame, then such land is considered vacant. Moreover, when an owner fails to declare occupancy status related to such premises, they can be deemed ‘vacant’.

The Vacant Home Tax is a fee of one percent based on the Current Value Assessment (CVA) of your property. For instance, if the CVA is assessed at $1,000,000 then you will owe an amount of $10,000 ($1% x $1M). It’s crucial to remember that this tax amounts are calculated for last years occupancy status- so if it was vacant in 2022 by 2023 you’ll have to pay up.

Are you wondering how to declare the status of your property? It’s quite straightforward. All that is required for this process are two numbers – a 21-digit assessment roll number and customer number, both found on your property tax bill or account statement. Declaring occupancy status must be done through the City’s secure online declaration portal.

All residential property owners in Toronto must now be mindful of the Vacant Home Tax. Don’t forget to declare your occupancy status annually; you can do this via the City’s secure online declaration portal, with a deadline of February 2nd! Remember to take note on your calendar-the tax is calculated at one percent of the Current Value Assessment for each property.

How Can I Avoid Paying Vacancy Tax?

Property owners can escape the vacancy tax if they allow themselves or a tenant to occupy the property for at least six months of every year.

Are you able to submit a Notice of Complaint?

If you’re unhappy with your Vacancy Tax Notice or Supplementary Assessment, take action and submit a Notice of Complaint within 10 business days of April for the Vacancy Tax Notice or 90 days after receiving the Supplementary Notice. Don’t let this opportunity to dispute your assessment pass by; make sure to act quickly!

Is Toronto Imposing a Tax on Unoccupied Properties?

The Toronto City Council is requiring 1% to be charged on all vacant or underused residences in the city. Homeowners must adhere to the Ontario housing tax regulations when declaring any empty homes they own within Toronto.

Have you been wondering what the difference is between an Empty Home Tax and a Speculation Tax? Let’s take a closer look at how these two taxes differ from one another.

Empty home taxes are levied by either the federal or provincial government and speculation tax is imposed at a municipal level. Both of these taxes have been designed to ensure that vacant properties remain occupied for an appropriate period throughout each year.

Housing Market Gains Momentum with Modest Rise in December Sales in Canada

01/17/23 10:38 PM

Canada’s home sales exhibited an uncommon boost from November to December, hinting at a prosperous close to the year.

CREA has recently revealed its national statistics for December 2022, and while they don’t come as a surprise, there are still significant insights to glean from them.

Chart A from the national association unveils a subtle pattern: in times of economic uncertainty, Canada’s real estate market inevitably slows down. This is evident in 2009 and 2020, when there was an abrupt decrease in volume just as we are seeing today – however, after this slowdown both years saw rapid recovery to surpassing the 10-year average. Therefore, it can be expected that once again these trends will follow suit.

For those who can brave the turbulence of the market, this form of rebound tends to benefit them. According to CREA’s predictions, a resurgence in volume is due around 2024.

Sales volume

Although it appears disconcerting, sales volume was down by an impressive 40% last month compared to the remarkable December 2021. Keeping that in mind, this decline is not as worrisome as one might initially think.

December saw a notable 1.3% surge in monthly volume, contrasting the usual downtrend of December and January after an abrupt drop last year. This signifies that the output remains stable despite expected seasonal fluctuations.

After a period of stagnation, the market is finally showing signs of life again; indicating strength and optimism. This departure from usual trends suggest buyers who had been priced out in recent months may be re-entering the marketplace.

From recent market trends, it appears that buyers are eagerly waiting for the right time to purchase. This has caused a shift in the market where urgency is no longer present; instead, what’s on everyone’s minds now is affordability. The current state of affairs suggests an opportunity-filled environment with a slower yet steadier and healthier approach towards buying.

Chart B

When determining affordability, economists typically examine a few components to reach their conclusion:

House prices

Interest rates

Income

In their Q3 Housing Affordability Monitor, National Bank reported that the level of affordability had not been seen since 1981 and 1989. Unfortunately, after these peaks in housing affordability both times, there was a significant drop as prices adjusted and interest rates returned to normal levels.

To maintain a healthy and sustainable market, the Bank of Canada has focused on job vacancies to curb inflation – this likely won’t have an effect on income. Therefore, prices or interest rates must be reduced for affordability to remain constant.

December witnessed the most drastic year-over-year decrease in house prices since 2009, with national home costs dropping 12 percent. Examining regional benchmark rates further reveals a noticeable shift towards city centers as workplaces and travel resume. Consequently, core markets appear to be more resistant than their surrounding suburbs.

The cities that witnessed skyrocketing prices during the pandemic are now experiencing similarly eye-popping decreases.

Uncover the essential data about December’s housing market from CREA’s report. Click here to explore further!

Why the increase in Toronto home sales in October is a good sign for the housing market

11/23/22 6:26 PM

Although October’s home sales saw a slight month-over-month increase from September, it’s still 36% lower than last year, leading many real estate industry observers to say that the housing market isn’t roaring back as initially hoped. These analysts’ outlooks come as the Canadian Real Estate Association revealed Tuesday that total sales for October were 35,380—just 1.3% higher than September.

Even though sales increased from the month before in 60% of all local markets, Robert Kavcic- a senior economist with BMO Capital Markets noted that last months activity was still below pre-COVID standards. Greater Vancouver alone had an increase of six percent.

It was even the quietest October for unit volumes since 2010, Kavcic said.

Rishi Sondhi of TD Economics had a similar opinion.

Sondhi told investors that sales have decreased by over 40% since February and are currently at levels not seen since 2012. He also said that these numbers appear to be below what is typical given other factors such as income and housing supply.

They attributed the slowdown mainly to interest and mortgage rates, which have increased in recent months to fight an inflation rate not seen for decades.

Low consumer purchasing power, in combination with few new listings, has kept many buyers from entering the market and instead waiting for prices to drop even lower.

Because prices have lowered since the beginning of the year, sellers are now more hesitant to list their properties unless they have to move.

CREA found that the number of seasonally-adjusted and newly-listed homes totalled 68,605 in October—a 2.2 per cent month-over-month increase.

New listings dropped 1.3% in November from the previous month, which Kavcic attributes to lower buyer affordability caused by high demand early in the year.

“There aren’t many listings to choose from outside of some areas, and sellers can still say ‘no thanks’ and pull their listings.”

The average national home price was $644,643 in October—a decrease from last year by 9.9%. Seasonally adjusted, the figure reaches $643,743 which is 0.6% lower than September’s number.

Cailey Heaps, president of the Heaps Estrin Real Estate Team in Toronto stated that after a 10% drop from their pandemic peak, prices in the GTA have begun to level off. “The market has stabilized since June,” said Heaps.

“It is possible we will see a small alteration of percentage in the next year or so, but I don’t think there will be the same severe decrease in Toronto’s central core. Although, we might see it in the areas surrounding the city.”

According to her theory, buyers are making multiple offers on listings last month and recognizing that despite lower prices, higher borrowing costs still exist.

According to her, the buyers in today’s market are mostly those who are upgrading and can take advantage of lower pricing, or those who aren’t as impacted by interest rates.

Kavcic and Sondhi both noted that the downward price pressure will continue into next year because mortgage rates are pushing above five per cent–and more interest rate hikes could be on the horizon.

According to Sondhi, home prices are expected to fall by about half of the gains made during the pandemic. However, they cautioned that supply levels represent a key risk to TD’s predictions.

“Rising interest rates are making it difficult for homeowners to make their monthly payments. Some of them may be forced to sell their homes, even though the number of new listings each month is still relatively low,” Sondhi wrote.

“If a large number of these homeowners list their homes, prices could drop more than we expect.”

(Source)

New Housing Legislation Ontario: What It Is and How It Will Impact Home Buyers and Sellers

10/28/22 3:10 PM

On Tuesday, the Ontario government announced it would be changing housing-related legislation in order to meet its pledge of building 1.5 million homes in 10 years. If this bill were to pass, here’s what would change:

Municipal zoning laws

You will be allowed to have up to three units on one residential lot without needing any additional bylaw amendments or municipal permissions. Municipalities will not have the authority to set minimum unit sizes or require more than one parking space per unit.
duplexes, and triplexes will now be allowed on single residential lots.
Going forward, site plan reviews will only assess health and safety concerns, not landscaping or exterior architectural design. Therefore, these latter matters will no longer be under site plan control.
Zoning changes to allow more near transit

Development charges

Development charges are fees collected from developers that help pay for the cost of municipal services or impacted infrastructure such as roads and transit.

Development charges for additional units built on single residential lots will be waived
Development charges will be waived for affordable housing, non-profit housing and inclusionary zoning units, as well as select attainable housing units. These homes would also be exempt from parkland dedication levies and community benefit charges
Development charges will be reduced up to 25 per cent for family-sized rental units
Any development charges in new bylaws as of June 2022 would be phased-in over five years to make the increases more manageable

Conservation authorities

Conservation Authority fees for development permits and proposals will be temporarily frozen
The regulations of 36 conservation authorities in Ontario will be streamlined into one
When approving permits factors such as pollution and conservation of land will no longer be considered. Instead the only requirements would be the consideration of unstable soil or bedrocks. Permits will also be issued for development in areas “prone to flooding and erosion along rivers and lakes and within wetlands.”

Housing targets

The province identified 29 large municipalities housing targets based on population size and growth. The Greater Toronto Area, as well as Ottawa, will be responsible for more than half a million of the province’s 1.5 million goal.

Each city will be required to develop a “pledge” outlining how they will meet the targets.

Municipal fees and funding

No additional funding has been announced thus far to help with housing targets
Proposal that would require municipalities to spend or allocate at least 60 per cent of their development charge and parkland reserve balances each year ot building infrastructure and parks
Increase maximum penalties to $50,000 for “bad actors” who terminate contracts or cancel projects such as pre-construction homes
Increase the non-resident speculation tax from 20 per cent to 25 per cent

Inclusionary zoning

Make inclusionary zoning rules “more consistent” where they are applied, including a maximum 25-year affordability period, a five per cent cap on the number of affordable units and a standardized approach to determining an “affordable price or rent”

Community involvement in development

Limit third-party appeals at the Ontario Land Tribunal for official plan amendments, zoning bylaw amendments, as well as “minor variances and consents.” This includes appeals made by individuals or community groups not directly involved in the development case
Speeding up decisions at the Ontario Land tribunal by prioritizing cases that will create the most housing, among other things
Municipalities will no longer be required to hold public meetings for drafts of a new development
Reduce parkland requirements for higher density residential developments

Market Watch – Slow Summer season sees fewer Home sales in Ontario

10/3/22 2:05 PM

Since August is typically a slower month in the resale market because of summer vacations, and given that buyers are unsure about their purchasing power due to potential interest rate hikes, existing homeowners who will soon need to renew their mortgage may face even higher costs.

While Sales and Listing Activity Fell, Ontario Sees More Quiet Summer Season.

Toronto,01 September 2022 – The Toronto Regional Real Estate Board (TRREB) MLS® System reported 5,627 home sales in August 2022. This number is a 34.2% decrease from the previous year but shows improvement compared to the last few months; there was even a month-over-month increase from July.

The housing market was mainly influenced by supply and demand. Inventory rose for the third consecutive month, representing a larger portion of new listings than in the previous three months. If this pattern persists, it might indicate an interest in selling prices in the months ahead. The MLS® Home Price Index (HPI) increased by 8.9% on an annual basis, while the average selling price for all types of homes combined grew by 0%.

Compared to July, the average selling price in August was slightly higher, while the HPI Composite was lower. This suggests that a greater share of more expensive home types were sold in August.

The recent increase in mortgage borrowing costs has dampened the desire of many homebuyers to purchase. However, existing homeowners near their mortgage renewal period are also facing higher fees. There is space for the federal government to help more people buy homes by eliminating the stress test when borrowers switch lenders, which would allow for greater competition in the housing market.

Furthermore, allowing for longer amortization periods on mortgage renewals would benefit current homeowners in an inflationary environment, according to TRREB President Kevin Crigger.

The Office of the Superintendent of Financial Institutions (OSFI) should give their opinion on whether or not the current stress test is still useful. Should home buyers be tested at a rate two percent higher than the already high rates, or would it make more sense to have a test that adapts based on interest rates?

TRREB CEO John DiMichele said that OSFI should also remove the stress test for people who currently have mortgages and want to shop around for a better rate at renewal. This is especially an issue when they’re not asking for any extra funds, he said.

Aside from borrowing costs, there are other factors that have an impact on housing affordability in the Greater Golden Horseshoe. Longer-term, the capacity to produce more is the challenge. However, we are making progress in this area. The province’s strong mayor idea, as well as Mayor John Tory’s recent commitment to increase home ownership and rental housing choices, are good examples of this. TRREB is hopeful to hear more ideas from the candidates running for office in the upcoming municipal elections, said TRREB Chief Market Analyst Jason Mercer.

Brampton’s Housing Market in 2022

August Resale Sales Are Slowing Down Because of Buyer Uncertainty

Members of the Ottawa Real Estate Board sold 1,137 homes through the Board’s Multiple Listing Service® System in August, compared to 1,565 houses a year ago, a decrease of 27%. In August, 850 residential properties were sold, down 27% from last year and 287 condominium properties were sold this month. The five-year mean for total unit sales in August is 1,603.

“In the resale market in Ottawa, August is usually a less active month as a result of summer vacations. Given impending further interest rate increases, Buyers are worried about their purchasing power.

“The lightning speed at which homes were selling at the start of 2022 is a thing of the past, evidenced by Days on Market (DOMs) inching closer to that 30-day mark. We have also observed a return to standard financing and inspection conditions and fewer multiple offer scenarios,” she adds.

The average sale price for a condo-class residence in August was $421,966, up 4% from 2021.

The median sale price for a residential-class property was $707,712, up 5% from last year.

The average sale prices for residential properties and condominiums are currently $795,978 and $457,771 respectively. These values illustrate a 10% and 9 percent increase from last year.*

In August, 2,093 properties were listed which has increased inventory to nearly 3 months for residential class properties and 2.2 months for condominiums.

“Prices in some areas are still rising, albeit at lower single-digit percentages. This is bringing back the moderate price growth stability that is characteristic of the Ottawa resale market,” says Toronto real estate agent Steve Torontow. “What happened to prices in 2020 and 2021 was unusual. We are moving towards a balanced market state, where Buyers have choices and Sellers need to ensure they are pricing their properties accurately.”

“A licensed REALTOR®’s market knowledge and insight are crucial to both buyers and sellers, especially in today’s changing housing market. Sellers will want to consult their REALTOR® on the best time and price to put their property on the market while also optimizing its days on market. Buyers may use the extra time to collaborate with their Realtor® on diligence, as well as finding a dream house that meets their needs within their financial constraints.”

In addition to helping find rentals, REALTORS® also screen potential tenants. OREB Members have assisted clients with renting 4,172 properties since the beginning of this year–a 29% increase over last year’s numbers.

In the second quarter of this year, there were fewer home buyers and sellers in the British Columbia housing market than there were in July.

Metro Vancouver’s housing market is experiencing a more subdued summer season, with reduced sale and listing activity.

In August 2022, the Real Estate Board of Greater Vancouver (REBGV) stated that residential property sales in the region totaled 1,870 in August, a 40.7% decrease from the 3,152 sales noted in August 2021 and a 0.9% decrease from the 1,887 properties sold in July 2022.

“With inflationary pressure and interest rates on the rise, home buyer and seller activity fell below our long-term seasonal norms this summer. Over the previous four months, prices have declined as a result of this change in market conditions. ”

In August 2022, there were 3,328 detached, attached, and apartment properties newly listed on the Multiple Listing Service® (MLS®) in Metro Vancouver. This is a 17.5% decrease compared to the 4,032 homes put up for sale in August 2021 and a 16% drop compared to July 2022 when 3,960 houses were marketed.

The MLS® system in the region of Metro Vancouver currently has 9,662 properties for sale, a 7.3% increase compared to August 2021 (9,005) and a 6.1% decrease compared to July 2022 (10,288).

“Homebuyers and sellers are spending more time thinking about the impact this changing environment will have on their housing requirements,” said Lis. “Preparation is critical in today’s climate. Assess what current home prices, financing alternatives, and other criteria mean for you with your Realtor.”

The sales-to-active listings ratio for all property types was 19.4% in August 2022. The ratio is 12.2% for detached homes, 25.3 percent for townhomes, and 24.8 percent for apartments, according to analysts . When the percentage drops below 12 over a lengthy period of time, home prices tend to be depressed; when it exceeds 20 percent over several months, home values generally rise.

The MLS Home Price Index composite benchmark price for all residential properties in Metro Vancouver is $1,180,500. This represents a 7.4% increase over August 2021 and a 2.2% decrease from July 2022.

In August 2022, the sales of detached homes reached 517; this number is 45.3% lower than the 945 detached sales recorded in August 2021. Additionally, the benchmark price for a detached home is $1,954,100; note that this figure represents a 7.9% increase from August 2021 but also a 2.3% decrease when compared to July 2022’s numbers.

In August 2022, sales of apartment residences fell to 998, a 38.8% reduction from the 1,631 sales in August 2021. The average price for an apartment home is $740,100. This indicates an 8.7% increase over August 2021 and a 0.9% reduction compared to July 2022.

In August 2022, 355 attached home sales were recorded, a 38.4% decrease from the 576 transactions in August 2021. The typical price of an attached property is $1,069,100. This represents a 12.7% increase from August 2021 and a 2.5% decline compared to July 2022 .

With fewer new listings in August, Alberta’s supply levels ease.

The City of Calgary’s month-over-month sales activity was comparable to last year’s strong levels, and significantly exceed long-term trends for the month. While sales have remained relatively robust, there has been a movement towards cheaper alternatives as the year-over-year reduction in detached sales was just about matched by increases for multi-family product types.

CREB® Chief Economist Ann-Marie Lurie stated that although higher lending rates have decreased activity in the detached market, homebuyers are still choosing more affordable options. This is keeping sales activity steady compared to other large cities where sales have drastically pulled back.” New listings continue to trend down while supply remains unchanged.

Despite year-over-year increases in new listings, the gap between new listings and sales narrowed this month compared to the previous three months. This resulted in total inventory decreasing and preventing any substantial shift in supplies. August’s months of supply remained at roughly two months, not as tight as earlier in the year but still below normal levels seen this time of year.

For the third month consecutively, benchmark prices have slowly decreased to $531,800. While this reduction indicates changing market conditions, it is crucial to remember that any progress made earlier has not vanished–prices are still over 11% better than they were last year.

The number of new home listings to purchasers in the Toronto region was down by 13 per cent year-over-year. This indicates that sellers are being more selective about who they sell to and is a sign of market conditions improving. The good news is that sales have continued to grow, albeit at a slower pace than they were earlier in the year. While the recent drops haven’t offset the strong increases reported throughout 2018, things are changing in this sector of the market. At the same time, we’ve witnessed supply increase in higher-priced homes, which is aiding healthier balance.

The higher demand from buyers has caused prices to trend downward in recent months, though with a benchmark price of $633,000, levels are still over 13% higher than last year.

Semi-Detached – There was a large decline in new listings relative to a slight decrease in sales for semi-detached properties this month. This caused the sales-to-new-listings ratio to rise above 80% for the first time since April, while total inventory decreased compared with levels seen during the previous several months and last year. Price ranges, in particular lower price ranges, continue to exhibit varied market conditions, much like the detached sector.

Although prices this month went down compared to May, they are still over 10% higher than they were last year. The benchmark price is now $569,300. (Source)

Despite sales trends indicating a decline from previous years, the row-home market is still healthy and year-to-date totals are around 50% greater than last year. At the same time, this month saw a significant drop in new listings, resulting in decreased inventory levels. This prevented any big changes to the months of supply, which remained under two months for the fourth consecutive month.

The housing market is continuing to be fairly stable, despite the fact that market conditions are still tough. Overall, the benchmark price for row houses in August was 14% higher than those recorded last year.

The appeal of the condominium market has increased with the national economy, and Apartment Condominium – Sales activity improved in August, contributing to year-to-date sales of 4,576 units, which is a 65% increase over last year. Some of this growth was aided by an increase in supply within this sector. The recent rise in volume relative to new listings has narrowed the gap in supply.

Despite the fact that circumstances have changed in recent months, rental prices continue to be relatively stable when compared to July, but they are more than 10% higher than last year’s rates. Despite the present increases in costs, apartment condominium sales remain well below peak values reached in 2014.