Flip or Flop: Canadian Real Estate Renovation Loans Down Over 40% From Peak

Canadian real estate owners, including flippers, are taking a break from renovations. Bank of Canada (BoC) numbers show chartered banks are holding onto less outstanding residential renovation debt in Q4 2018. The annual growth of renovation debt has been on the decline for almost two years now.

Canadians Have Over $2.97 Billion In Renovation Debt

The amount of outstanding credit for renovations held by chartered banks is falling. Renovation debt fell to $2.97 billion in Q4 2018, down 1.81% from the quarter before. This represents a 2.14% decline compared to the same month last year. The annual slide is nothing compared to where it was near peak.

Canadian Real Estate Renovation Debt

The outstanding balance of loans for residential real estate renovations, at Canadian chartered banks.

Source: Bank of Canada, Better Dwelling.

Compared to the most recent and all-time peaks, there’s a lot less borrowed cash going to renovations. The recent peak of $3.61 billion was hit in Q2 2016, and the most recent quarter is down 17.79% from there. The balance is also down 42.25% from the all-time high peak of $5.14 billion hit in Q3 2009.

Canadian Renovation Debt Has Been Negative For Almost 2 Years

The balance of renovation loans has been falling for almost 2 years now. The most recent quarter is the 7th quarter the annual rate of growth has been negative. The trend was last negative for this long in 2013 to 2014. On a slightly less negative note, Q4 2018’s 2.14% annual decline is smaller than the month before.

Canadian Real Estate Renovation Debt Change

The annual percent change in outstanding loans for residential real estate renovations, at Canadian chartered banks.

Source: Bank of Canada, Better Dwelling.

Banks are seeing a decline in renovation loan balances. This is potentially another indicator demonstrating peak real estate growth has passed. In many markets, the end of a renovation boom is also a sign of the end of the business cycle. In Canada, the declines typically line up with recessions and oil patch trouble.

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  • Obi 5 years ago

    This is chartered banks, where professional flippers would borrow from. What I really want is the private loan and HELOC data being used for flippers. That’s where the true amateurs are doing things, and has gotta be hella entertaining.

  • Jason Chau 5 years ago

    Watching flippers lose money is my new favorite past time. Good accounts to follow



    Any I’m missing out on?

    • JJ 5 years ago


    • Joseph 5 years ago

      I like to see this as well…any one tracking the 416 region for flipping? Seem like most of those posts are for the 905 region. From what I see, 416 flippers are still in the black other than Willowdale area…

    • Tom peters 5 years ago

      Real nice human being you are.

      • George 5 years ago

        Predatory behavior is only cool when communities are being marginalized, right? Did you chime in when people were being renovicted by rentiers, or were you too busy cheering the rise in home equity?

  • Tom Wolfe 5 years ago

    Was it in Q3 2010 that Sub Zero Introduced the first $20,000 residential refrigerator? That might explain the following spike. But its a stand-alone so the bank doesn’t own it.

    Those Meile’s though – they brought fully integrated components that add up to $20K. When they break is when you’ll lending for renovations increase again ’cause you need to replace the kitchen at the same time.

    Fun times!

    • MV 5 years ago

      Found a fellow Vancouverite I believe. 😂

      • Tom Wolfe 5 years ago

        We are everywhere. I’m from Oakville, the Vancouver of the East.

    • SUMSKILLZ 5 years ago

      I agree, built in appliances, when they fail, is like your auto mechanic saying you need a new engine. Horrifically costly. As a God fearing person, I could not tempt God to toy with me with built ins.

  • Ethan Wu 5 years ago

    In Canada, the declines typically line up with recessions and oil patch trouble.

    Good observation. Canada manages to print a GDP gains when the anecdotes don’t exactly match up, especially when Alberta’s economy is in trouble. Highly skeptical of the GDP numbers we’re using.

  • ken 5 years ago

    Canadians were duped into amassing ridiculous amounts of debt to renovate their home, thinking they would make them worth more. Recall those reno shows which literally tallied the total on screen, something like this:

    House Value- 500k
    Kitchen Reno Cost- 50k
    New Market Value- 600K

    Yeah, Canadians bought that load of BS, and now are stuck holding the 100K HELOC bag for a reno which is worthless in a declining market. In essence, Canadians bought the “Economic Recovery!” through debt and mal-investment.

    Time to pay the piper.

    • SUMSKILLZ 5 years ago

      I saw this proved wrong at the top of the market. Two identical homes, one builder basic finishes, one with $100 000 interior & exterior upgrades (the builder is a cycling buddy). Both sold for the same price at the time. Maybe 30 days apart. The flashy magazine worthy spread sold way under asking for the same price as its ugly twin. No huge gap as expected by the seller. I asked the realtor what happened…she said the house was over improved for the street. I guess my street sucks…

  • Harry Farnsworth 5 years ago

    we sold my parents house in Willowdale at the top of the cycle in the spring of 2017. My sisters insisted we needed to stage the house or we would lose money – 2000 sq ft, on 150×50 lot…nothing but builders bidding. But my sisters had watched the shows and had been flipping real estate for years themselves – thinking it was there wonderful renovating skills driving up the prices. House sold to a builder for 2.1 mill..never looked at the place.

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