Time for your cheat sheet on the most important real estate stories of the week.
Canadian Real Estate
After climbing for four years, the median income of Canadian households is on the slide. The latest numbers from Statistics Canada show that the median gross income fell to $56,000, a 0.35% decrease from the year before. In case you’re wondering why this is a bad thing, it means that more people are earning under the median. Although one in five Canadians now bring home over $100k, so there’s that.
The Canadian debt train just keeps on rolling. Canadians now owe more than $2.025 trillion in debt, a 5.5% increase from last year. That’s a $104.7 billion increase in just 12 months, $20 billion in the first four months of 2017. The annualized rate of change in April was 6.8%, so to put it bluntly it’s accelerating.
Speaking of debt getting out of hand, the Canadian senate invited Moody’s, the IMF, and the CMHC to explain what they’re seeing. Most reiterated things you probably know, but the IMF made an interesting suggestion. They recommended that the Canadian government cap household debt as a ratio. What does this mean? Right now households are at the 170% debt to disposable income ratio. Placing a lower cap on it, and restricting how much you can borrow will prevent the levels from getting this high. Household debt in Canada is getting so bad, the government is being advised they should control it for us. Yikes!
Canadian chartered banks saw a decline in insured mortgages, and an increase in uninsured mortgages. Generally speaking, this can be a good thing since uninsured mortgages means the owner of the mortgages have substantial equity. Substantial equity means owners remove risk from the banks, and are less likely to see their mortgage fall underwater in a correction. The majority are still insured, but the ratio does appear to be improving by the day.
Toronto Real Estate
Toronto home prices are sky high, but how does it compare to previous bubbles? In order to eliminate the skew caused from devaluing currency, we benchmarked it against the world’s oldest functioning money – gold. Using gold prices we can see that prices are still frothy, but much less so than the two previous bubbles caused by easy credit conditions. Despite buyers not showing the same exuberance as previous Toronto bubbles, there’s much more talk and skepticism. It doesn’t mean real estate is a deal at this level, but it does mean you’re not paying the same advance premium that previous peak markets have.
Vancouver Real Estate
Thinking of checking out that rental you saw on Craigslist? You better act fast. Vancouver based data scientist scraped, and analyzed thousands of rental listings to determine how long they’re on the market, and how prices are trending. What he found was 80% of listings are gone after just 10 days. Oh yeah, and rentals are most certainly getting more expensive, especially downtown.
The Real Estate Board of Greater Vancouver (REBGV) has been busy learning about Vancouver real estate buyers. There’s a ton of interesting points, but here’s the ones we found most interesting: 14% of people had no intention of moving into the property they bought last year. First time buyers were the the largest single segment, representing 32.2% of buyers. There were 8 times a many domestic investors buying property than foreign investors.
The World Economic Forum (WEF) published a white paper on the global shortfall of retirement funds. According to WEF, by 2050 retirement funds are going to be US$427.8 trillion short of the funds needed to support retirement. This gap is the widest in the United States, where it’s expected to grow to US$137 trillion. However Canada is pretty far off too, with the gap widening $13 trillion by the same time.