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This Week’s Top Stories: Canadian Real Estate Price Growth Falls, While Debt Costs Soar

Time for your weekly cheat sheet on this week’s most important stories.

Canadian Real Estate

Canadian Real Estate Price Gains Continue To Taper, Annual Growth Falls Below 2%
After an epic run, Canadian real estate prices are starting to taper in growth. The price of a typical home across Canada reached $618,800 in November, up 1.98% from the year before. Over the past 5 years, prices are now up just over 43%. For context, the average bubble city on the UBS Bubble Index experienced 35% growth over the past 5 years.
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RBC: Canadian Real Estate Affordability Is At Crisis Levels, But Falling Prices Will Help
Canadian real estate is at record levels for unaffordability, according to the country’s largest bank. RBC estimates a household earning a median income would need 53.9% of their income to service a mortgage in Q3 2018. That’s the highest level of income needed across the country, since Q2 1990. Toronto and Vancouver were both at “crisis levels,” needing 75.3% and 86.9% of local incomes, respectively. Sounds totally sustainable.
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Canadians Owe Over $294 Billion Secured Against Their Home Equity
Canadians are still using their homes as ATMs. Regulatory filings show the outstanding balance of debt secured against homes reached $294.16 billion in October. The balance represents a 4.5% increase, when compared to the same month last year. The dollar value sets a new all-time high, but the annual pace of growth is beginning to slow down.
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Canadian Reverse Mortgage Debt Just Made One Of The Biggest Jumps Ever
House rich, cash poor seniors are turning to reverse mortgages at a record pace. The balance of reverse mortgage debt reached $3.425 billion in October, up 11.57% from the month before. The huge monthly jump took the 12 month growth rate to 57.46%, a new record high. Since this form of debt doesn’t require payments, this number can get much larger, very quickly.
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