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StatCan: Nearly Half of Canadians Worry About Shelter Costs

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StatCan: Nearly Half of Canadians Worry About Shelter Costs Many Canadians worry that they are only a few dollars away from financial disaster. Canadian Social Survey Quality of Life and Cost of Living for Q3 2022 findings were recently released by Statistics Canada (Stat Can). Nearly a third of households struggle to make ends meet because of the cost of the living problem, with young adults bearing the brunt of the uncertainty. Particularly difficult have been the skyrocketing costs of both buying and renting a home, with nearly half of Canadians concerned about their housing affordability. Canadian inflation is reaching a generational high The rate of inflation in Canada is among the highest it has ever been. The increase in the CPI of 10.9% in 2022 was the highest since 1982. Following a 2021 increase of 6.8%, which was more than three times the targeted pace, we now see this. Transport (+10.6%), food (+8.9%), and housing (+6.9%) all showed the highest price increases, according to Stat Can. It has put a lot of people in Canada in a tight spot, especially young individuals. One of the hardest-hit demographics in Canada is the country’s youth The cost of living increase has affected all households, especially young adults. A recent survey found that 35% of American families struggled financially in the previous 12 months. Individuals between the ages of 45 and 54 accounted for the second largest percentage, after those between the ages of 35 and 44 (46%). Those over the age of 65 had the lowest rate of reporting financial hardship at 25%. Nevertheless, one-quarter of Americans citing financial hardship is a sizable proportion. One-quarter of Canadians would have trouble paying a $500 emergency bill One in four (26% of all households) can no longer afford to pay for a $500 emergency due to the rising cost of living. That skews towards younger households, with the biggest share (35%) among those between the ages of 35 and 44. Those between the ages of 45 and 54 were the next most likely to report being unable to cover a modest unexpected expense (31%), while those 65 and older were the least likely (19%). Almost Half of Canadians Worry About Housing Costs Housing was the primary concern because Canada has one of the world’s most overheated real estate markets. Nearly half of the households (44%). Reported worrying about meeting their housing costs. Those between the ages of 15 and 24 had the highest rate (58%), followed closely by those between the ages of 25 and 34 (56%). Of all age groups, those 65 and up had the lowest percentage of worry about housing expenses (27%), but that’s still 1 in 4 people. Young folks are already feeling the effects of the housing affordability crisis. According to Stat Can, housing expenses affected 44% of adults aged 25 to 34. These families either had to uproot because of a change in circumstances or because of the high cost of maintaining their living arrangements. Less than 15% of households headed by someone 45 or older selected this option. Nearly half of Canada’s population under the age of 45 now faces difficulties meeting their basic housing needs. Because of the crushing financial burden of home ownership, even fewer young persons are likely to consider making the investment. Related posts 18 February 2023 Despite the slowdown, Canadian mortgage debt continues to rise. 15 February 2023 StatCan: Nearly Half of Canadians Worry About Shelter Costs StatCan: Nearly Half of Canadians Worry About Shelter Costs Many Canadians worry that they are only a… 30 January 2023 How can homeowners safeguard against title fraud? How can homeowners safeguard against title fraud? There are new reports of title fraud every week, and… 30 January 2023 Bank of Canada will increase rates, and leave room for more: BMO Bank of Canada will increase rates, and leave room for more: BMO One possible reason why we won’t… 28 January 2023 How To File A Warranty Claim And What You Can Anticipate How To File A Warranty Claim And What You Can Anticipate There has been a recent surge in the population… 28 January 2023 Three Improved Ways to Understand Your Warranty Three Improved Ways to Understand Your Warranty Purchasing a home in the pre-construction phase can be… 28 January 2023 Can I Have A New Home Warranty Even If It’s Not New? Can I Have A New Home Warranty Even If It’s Not New? Did you buy a previously owned house recently?…

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How to determine the mortgage I can afford?

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How to determine the mortgage I can afford? Real estate purchases financed by mortgages typically represent the single largest investment most people ever make in their lifetimes. What you can afford to borrow is based on a number of factors beyond just what a bank is willing to lend you. You should take stock of your values, as well as your financial situation. Most would-be homeowners can afford a mortgage equal to about two to two and a half of their annual gross income. Knowing what the banks and other lenders are ready to offer is one thing, but knowing how much house you can afford is another. While the TDS and GDS ratios are certainly helpful, they are focused on averages rather than specific individuals or households. If you want to know what you can afford each month without feeling like a pauper, it’s best to make a precise budget.  You need to add up all of your monthly expenses, from groceries and cell phones to entertainment and gas. There are a number of other considerations that must be made before settling on a particular piece of real estate. To begin, it’s helpful to have an idea of the lender’s estimate of your financial capability. Second, you need to do some soul-searching to determine the type of house you can acceptably live in. It is also important to know the types of consumption you are willing to forego (or not forego) in exchange for staying in your home. How Do Mortgage Lenders Figure Out How Much to Loan? Every mortgage lender has its own set of affordability guidelines.  The following are the most important considerations when determining whether or not you will be approved for a loan. Moreover, what conditions you will be granted. In the end, a mortgage lender will consider the borrower’s income, debt, assets, and obligations. This will determine whether or not they are able to finance the purchase of a property. Lenders are interested in knowing not just how much money an applicant makes. They also want to know how much pressure will be put on that income in the future. Base eligibility for financing is determined by income, down payment, and monthly expenses. The interest rate for financing is determined by credit history and score.

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What is mortgage affordability?

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What is mortgage affordability? After saving up for a sizable down payment, you should then determine how much of a mortgage you can afford, which is the amount you will pay back to the lender each month along with interest. Your mortgage will equal the purchase price of your property minus the amount you have already put down as a down payment. Lenders calculate a borrower’s maximum mortgage amount based on their gross debt service (GDS) ratio and total debt service (TDS) ratio when evaluating a mortgage application. The mortgage amount you are offered will be based on these figures, which are essentially a test of your income in relation to your debt and anticipated housing expenses. The distribution share (TDS) is the ratio of your gross annual family income to the total cost of owning and maintaining your home. This includes your mortgage, utilities, property taxes, and condo fees, if any. The debt service ratio (DCR) is calculated by adding all of your monthly debt payments (including mortgage, automobile, and revolving credit card payments) and then dividing that number by your monthly gross income. If your gross debt service (GDS) and total debt service (TDS) are less than 39% and 44% of your gross income, respectively, then a home is considered affordable by the Canada Mortgage and Housing Corporation (CMHC), Canada’s national housing agency. If your GDS or TDS is more than 32% or 40%, respectively, the Financial Consumer Agency of Canada will require you to take corrective action. How to calculate mortgage affordability Let’s begin by discussing what it means to have an affordable mortgage. Although it is sometimes used to describe the ratio of a city’s cost of living to the average income of its residents, the term is better understood as the maximum loan amount from which you can expect to be approved by a financial institution, taking into account your income, debt, and living expenses. When determining whether or not you qualify for a mortgage, lenders look at: Your pretax yearly income Credit card, loan, and auto payments all add up to your monthly debt payments. Included in this are mortgage payments, utilities, and half of your condo or HOA fees (if applicable). Because condo fees might include expenses like property maintenance, insurance, and some utilities, which are not used in debt-service calculations for other types of properties, only half of the latter figure is used. A mortgage is considered affordable by the Canadian Mortgage and Housing Corporation if the borrower’s gross debt service (GDS) ratio, which includes housing costs, does not exceed 39%. Total debt service (TDS) ratios, which include mortgage payments and other debt payments, cannot exceed 44% to be considered affordable.

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BoC Index: Canadian Housing Affordability Unsustainable

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BoC Index: Canadian Housing Affordability Unsustainable Even while Canadian real estate has never been cheap, it has rarely been this costly in recent history. For the third quarter of 2022, the Housing Affordability Index (HAI) published by the Bank of Canada (BoC) reached a new record high not seen since 1983. What this means is that it is extremely difficult for the typical American family to purchase a home anywhere in the country. Housing prices have reached an unsustainable high that has never been maintained for long. Mortgage Credit Availability Measure of Canada The Bank of Canada Affordability Index measures how much of one’s income would have to go toward housing costs. The real cost is likely more than what is reflected because only principal and interest payments and utilities are considered. The median annual take-home pay is utilized. The median list price for a home is calculated using data from the past six months. The mortgage interest rate is a composite of the discounted variable rate and the 1-, 3-, and 5-year fixed rates. Water, gas, and electricity are all examples of utilities that can be used as currency. It’s conceptually comparable to the RBC and NBF affordability indices. If the ratio is large, then purchasing and maintaining the home will be difficult financially. The BoC utilizes average income, which is typically higher than the median for households, in contrast to RBC and NBF. In addition, several indices employ the median rather than the average because the average fails to take into consideration quality and size. Many people rely on a benchmark pricing that already accounts for these factors. We do not think the Bank of Canada index accurately reflects the true costs of housing. Nonetheless, it’s helpful for validating trends and resting assured that the problem is being tracked. The fact that they actually care about the information it contains is another story. The Canadian Housing Market Is Becoming Less Affordable. The index shows that the cost of purchasing a home in Canada increased significantly during the past three months. In Q3 2022, according to the HAI, a typical family will need to spend 48.8% of its income on housing costs. Increases of 0.4 points from the previous quarter and 11.1 points from the previous year. Home price decreases capped the month-over-month gain. When it comes to the deterioration of affordability, however, an annual rise of more than 11 percentage points is still an outrageous move. It’s impossible for Canadian home prices to remain at this level for long The housing affordability index has never been this low. Only two quarters in the 1990s surpassed this level of income proportionality. Only eight quarters in the preceding half-century have been less cheap than the current one. Having a bubble that is comparable to two of Canada’s largest is, to put it mildly, undesirable. The indicator has hit an alarming level, as confirmed by a number of financial institutions. NBF issued a dire affordability warning earlier this month, saying it was the worst it has been since the 1980s. According to RBC’s estimates, our current level of affordability is worse than anything seen since the 1980s. There is no positive information to be found among any of these numbers. The upshot is the same: the cost of housing in Canada has risen to unaffordable levels. A number of businesses anticipate near-term deterioration but acknowledge there is always the possibility of things becoming better. This problem, however, has never lasted for very long. Countries where the typical family cannot afford a safe place to live typically offer a subpar value proposition.

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Canada hopes to welcome half a million immigrants by 2025, but can the country keep up?

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CANADA HOPES TO WELCOME HALF A MILLION IMMIGRANTS BY 2025, BUT CAN THE COUNTRY KEEP UP?​ Policymakers say increased immigration is needed to boost Canada’s economy and reduce labour shortages, yet population expansion causes growing pains. Canada increased by 700,000 inhabitants in a year, about the same as Mississauga. Canada adds a big city each year. The population has spread, especially to urban areas but also to suburbs and remote communities. They work, learn, and improve their lives here. Canada’s population increased by 285,000, 0.7 per cent, from July to September, the highest increase since Newfoundland joined Confederation in 1949. Over the past year, Mississauga, Canada’s seventh-largest city, has gained 700,000 residents. The federal Liberal Party accelerated the trend. Since 2016, the country has expanded nearly twice as fast as its G7 peers. Immigration mostly drives that increase. However, a population surge has growing pains. 220,000 homes were built last year. The greatest ratio since 1991 was 3.2 new inhabitants per home. Most places are losing affordability. The population boom is exacerbating the residential supply-demand gap. Canadian governments struggle to provide fundamental services. Overcrowded hospitals cancel surgeries. Newcomers to Canada have trouble finding family doctors. Cash-strapped cities can’t fix their infrastructure quickly enough. People are fleeing cities due to affordability issues. Teachers, nurses, and construction workers manage those cities. Ottawa accelerates in this tense situation. The federal government wants 500,000 permanent residents in 2025 after admitting 405,000 last year. Only part of the migrant wave: Last count, 1.4 million residents have temporary employment or study visas. Canada is adjusting. Due to rising loan rates and declining profitability, developers are cancelling or postponing home projects. If more homes are required, fewer are built. How immigrants are building jobs in Canada despite challenges Immigrants shield us from the worst political and economic risks. When so many social infrastructure pillars are failing, economists wonder why the federal government will increase service demand. They worry that Ottawa is too focused on immigration targets and not enough on assimilating newcomers. The federal government says increasing immigration solves many of these issues. They want foreign physicians, nurses, and homebuilders. Recent immigrants waited years for entry. They arrive over decades of rising inflation and diminishing economic growth. Skilled immigrants should adjust well. Others are finding the Canadian dream expensive and possibly not what they expected. According to the last census, a narrow majority of new immigrants prefer Toronto, Vancouver, and Montreal, but more are moving elsewhere. As migrants flood other cities, prices are rising fast. As per Rentals.ca data, the average rent in Calgary has increased 18% to $1,720 a month. London, Ontario, rose 26%. 21% Halifax. The affordability crisis makes it hard to recruit and retain key workers. Aled ab Iorwerth, deputy chief economist of the Canada Mortgage and Housing Corp., mentioned that large cities face considerable economic risks if housing costs are not controlled. “These cities are becoming pricey, making it harder to attract qualified and even highly-skilled workers.” Huge work awaits. Canada would need to build 3.5 million more houses than planned by 2030 to return affordability to 2003 and 2004 levels, according to CMHC. This year, the federal government pledged billions to double house building over the next decade. Higher borrowing rates kill that plan. Labor is another issue. CMHC reported a shortage of trained labour to build badly needed homes. Shaun Hildebrand, president of real estate firm Urbanation, stated, “Even under more ideal conditions, I don’t think we have the capability to construct at a rate that balances the demand through population increase that we’re witnessing. Related posts. How does a home warranty differ from an insurance policy? Read More Deposit Protection Eases Homebuying Stress Read More Importance of the performance audit Read More How can Home Warranty Guard You Against Unexpected Expenses Read More Canada hopes to welcome half a million immigrants by 2025, but can the country keep up? Read More Canadian Real Estate Prices Fall 30%, Recession Starts: Ox Econ Read More

Canada hopes to welcome half a million immigrants by 2025, but can the country keep up? Read More »