Time for your weekly cheat sheet on this week’s top stories.
Canadian Real Estate
Buying a typical home across Canada is now out of reach for many, especially if it’s where the jobs are. A typical non-condo apartment in Toronto, requires a household income of $178,499 per year. That’s more than double the median income. In Vancouver, a “typical” non-condo unit requires a household income of $230,488 to carry a mortgage. The middle class is basically priced out of anything but a small, one-bedroom condo. Even then, they’d have to spend years saving a downpayment.
Tens of thousands of renters are in arrears, and Toronto represents almost a third of them. There were 125,200 people behind in rent as of October 2020, representing 6.11% of private rental stock. Toronto represents 50.36% of Ontario’s rental arrears, and 29.81% of Canada’s total. The arrears stat, as high as it is, is only a part of the total in arrears, since it only includes rentals with 4 or more units.
Canadians now need to save for the longest time in history for the minimum downpayment on a home. National Bank of Canada estimates the median household needs 60 months of savings for a downpayment. This blows past the 1989 previous peak, and it’s much worse in major cities. Greater Toronto requires up to 289 months to save for a “typical” non-condo. In Vancouver, the median household needs 409 months to save for a non-condo. That’s 24 and 34 years, respectively, to just save the minimum downpayment in two of Canada’s largest job markets.
The bottom fifth of households can no longer afford housing of any kind, in Canada’s big cities. In Toronto and Vancouver, this income bracket can only afford 0.2% of purpose-built apartment rentals. Montreal is a little better with 15.3% of rentals affordable to this income bracket. That said, it’s still insufficient for the level of housing required. No market has ever been able to maintain such a disconnect for very long. Young people tend to leave and move to cities they can afford. Hollowing out a whole class of people tends to not exactly be sustainable.
Canadians are becoming increasingly more dissatisfied with life, according to a StatCan study. The average Canadian rated life satisfactions as a 6.71 out of 10, down 1.38 points from 2018. Breaking it down, 40% of people rate life at or above 8, and 40% rated live a 6 or lower. Comparing the data to 2018, they found a polarization of people. More people are now ranking higher or lower in life satisfaction. The middle class is disappearing, and so is a middle level satisfaction with life.
Canada’s central bank holdings show they’ve scaled back Canada Mortgage Bond (CMB) buying. Disclosure data shows they held $9.66 billion in CMBs on Dec 30, 2020, down 0.65% from a month before. The annual increase is still 1,803 % from a year before, but this is the first decline we’ve seen. The slowing can potentially lead to higher mortgage rates in the not so distant future. Which is a good thing, considering home sales are moving at a record pace, and don’t need stimulus.
Vancouver Real Estate
Greater Vancouver real estate prices are rising, but the gains are mostly for detached homes. Detached homes reached a typical price of $1,576,800 in January, up 10.8% from a year ago. A typical condo apartment reached a price of $680,800, up 2.2% over the same period. Both are down from three years ago, with prices still down 0.5% and 1.4% from 3 years ago, respectively. Detached homes are driving the trend, and it’s largely driven by fast rising suburban prices.
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