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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