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Unlocking Your RRSP: The Home Buyers Plan Explained

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Unlocking Your RRSP: The Home Buyer’s Plan Explained In order to purchase or construct a qualified house for yourself or a relative with a handicap, you may make a withdrawal from your Registered Retirement Savings Plan (RRSP) under the house Buyers’ Plan (HBP). Withdrawals from the HBP must be repaid within 15 years. If you are the owner of more than one RRSP, you may make withdrawals from any or all of them. Up to $35,000 ($70,000 for a couple) of your RRSP assets may be withdrawn tax-free to use towards a down payment on a property. You can’t access the money in a locked-in RRSP or a group RRSP, for example. Participation in the HBP is contingent upon meeting the following requirements: You must be a first-time buyer to qualify. A signed contract to purchase or construct a qualified residence for yourself or a family member who is disabled is required. The money you’re withdrawing from your RRSP must have been in the bank for at least 90 days. When you take money out of your RRSPs for the HBP, and until the time you buy or build a qualified house, you must be a Canadian resident. Within a year of purchasing or constructing the qualifying house, you must move in and use it as your primary residence. You must have the intent that the person with a handicap for whom you purchase or construct a qualified house, or whom you assist in purchasing or constructing a qualifying home, will use the home as his or her permanent residence. If your repayable HBP amount is zero on January 1 of the year of the withdrawal, and you fulfil all the other HBP eligibility rules, you may be eligible to enroll in the HBP again. The greatest thing is that if you pay back the money within 15 years, you won’t have to pay taxes on the withdrawal. The First-time Home Buyer Rule If this is your first time buying a property, you are termed a “first-time buyer.” You are not eligible for first-time homebuyer status if you plan to live in a residence that was acquired by your spouse. The 4-year rule If you did not own a property or reside in a home acquired by your spouse for 4 calendar years previous to 2019, you may qualify for the HBP. You may rejoin the HBP four calendar years after relocating to a flat, for instance, if you and your spouse have divorced and you no longer live together. You may become qualified in 2022 if you relocate in 2018. Before you may sign up for the HBP programme again, any outstanding debt must be settled in full. Qualifying for Homebuyers’ Plan after relationship breakdown, withdrawals after 2019 Withdrawals made after March 2019 are subject to the new policy mentioned below. If you and your husband or partner are no longer living together due to marital or relationship problems, you may be eligible to participate in the Homebuyer’s Plan. Your separation period prior to the withdrawal date is at least ninety days. You and your spouse started living apart in the year of the withdrawal, or during the preceding four calendar years. If the Homebuyers Plan participant already owns a home that was their principal residence at the time of the withdrawal but is not the same as the dwelling they intend to purchase with the Homebuyers funds. If the participant sells or terminates their right to the principal residence to their former spouse no later than the end of the second calendar year following the year of the withdrawal, or if the participant remarries before the end of the second calendar year following the year of the withdrawal, then the Homebuyers Plan participant may use it. No sooner than 30 days prior to the withdrawal, and no later than September 30 of the year following the withdrawal, does the Participant acquire the interest or right of the other spouse in the home that was the matrimonial home; and if the Participant has a new spouse at the time of the withdrawal, the new spouse may not own or occupy a dwelling that is the Participant’s primary residenceI How to Withdraw RRSP Funds Under The Home Buyers Plan Fill out form T1036 to make a tax-free withdrawal from the Home Buyers plan. This is a request to withdraw money from a registered retirement savings plan under the Home Buyers’ Plan (HBP). To notify your bank of your desire to withdraw money, please complete this form. Be cautious to follow the correct procedures, since it is impossible to take the funds from your RRSP and then claim they were part of the Home Buyers Plan. Multiple Home Buyers Plan withdrawals are permitted every calendar year, up to a maximum of $35,000. RRSP Home Buyers Plan Repayment Let’s get to the bad news now. The Home Buyers Plan requires you to make annual payments on the full amount of money you withdraw. These payments must begin in the second year after the closing of the Home Buyers Plan withdrawal. The Home Buyers Plan functions similarly to a loan, although interest-free. All money taken out must be paid back within 15 years, at the rate of one-fifteenth each year. Any payments made to settle an outstanding HBP amount will not reduce your contribution limit. Repaying an HBP loan with RRSP contributions is not eligible for the RRSP tax deduction.The amount reported on Schedule 7 as an HBP payback will be subtracted from any RRSP contribution refunds. You should also check that your RRSP contributions are being applied to the HBP loan, not just your RRSP. Many Canadians don’t do this and end up in arrears on their HBP as a consequence. Related posts 18 July 2023 Unlocking Your RRSP: The Home Buyer’s Plan Explained 10 July 2023 How Your Home Warranty Can Help You in an Emergency How Your Home Warranty Can Help You in an Emergency The last thing you want to face

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How Your Home Warranty Can Help You in an Emergency

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How Your Home Warranty Can Help You in an Emergency The last thing you want to face when moving into a new home or condominium is an emergency, such as a total loss of heat or an extensive plumbing leak. After all, everything in the house is spanking new, including the principal systems and materials, and the house was examined at various phases of construction. Even yet, situations do occur from time to time. Fortunately, your Tarion-managed new home warranty covers situations that can be traced directly to your builder’s labor and supplies. What is an emergency? According to Ontario’s new home warranty, an emergency happens within the warranty term and includes a guaranteed fault that, if not addressed quickly, will cause significant damage to your house, condominium unit, or standard condominium features. An emergency might also endangers your health and safety or renders your house uninhabitable. Examples of typical emergencies that may be covered under warranty include: complete loss of heat between September 15 and May 15 complete loss of electricity a gas leak complete loss of water complete stoppage of sewage disposal; a plumbing leak that necessitates shutting off the entire water supply a major collapse of any part of the home’s exterior or interior structure water penetration through the interior walls or ceiling a pool of standing water inside the home and/or the presence of unacceptable levels of hazardous substances. It should be noted that an emergency scenario over which the builder has no control, such as municipal or utility service breakdowns, is not covered by the builder’s guarantee. What should you do in an emergency? In the event of an emergency, you should contact your builder as soon as possible since you are responsible for handling the warranty procedure for your property. Afterward, your builder has up to 24 hours to handle the emergency problem by making your house safe and avoiding future damage. What if you can’t contact your builder or if they don’t handle the situation within 24 hours? That’s when you may contact Tarion for advice on handling the emergency scenario. Tarion has a dual function in this circumstance. First, they ensure homeowners get the warranty coverage to which they are entitled. Second, when builders fail to satisfy their duties, we hold them responsible. If you are unable to contact your builder or Tarion, you or a contractor you hire may do the required repairs to handle the immediate issue and then file a claim to be compensated for the expenditures. You must preserve records of the emergency and repair work done, save all receipts and take photos before and after the repairs. After dealing with the immediate emergency, your builder has 30 days to thoroughly remedy the fault. If they don’t, you may contact Tarion to address the issue. Nobody wants or anticipates an emergency to ruin their first house-buying experience. But, if they do occur, you can be certain that steps are in place to guarantee that you can quickly return to fully enjoying your new home. Related posts 10 July 2023 How Your Home Warranty Can Help You in an Emergency 02 July 2023 Four 2023 new home buyer facts that may surprise you Four 2023 new house buyer facts that may surprise you Tarion revealed the findings of its initial poll… 02 July 2023 3 “warranty exceptions” for warm weather 3 “warranty exceptions” for warm weather Your routines as a new homeowner will likely shift when the… 27 June 2023 Reuters survey predicts rising Canadian housing prices due to high demand Reuters survey predicts rising Canadian housing prices due to high demand According to a Reuters survey… 21 June 2023 Canadian Real Estate Correction Continues, Sales Rise Temporarily: Oxford Econ. Recent Immigrants Cannot Support High Home Prices in Canada After a temporary lull, the real estate market… 24 May 2023 Recent Immigrants Cannot Support High Home Prices in Canada Recent Immigrants Cannot Support High Home Prices in Canada Canada’s population growth is contributing… 16 May 2023 Toronto’s Best Investment Areas for Families Toronto’s Best Investment Areas for Families Don’t be fooled by The Six’s huge towers, high-rises,…

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Reuters survey predicts rising Canadian housing prices due to high demand

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Reuters survey predicts rising Canadian housing prices due to high demand According to a Reuters survey of real estate experts, Canadian house prices are expected to decline by approximately 9 percent this year before rising again in 2024 and beyond as purchasers wager interest rates have already peaked and demand for housing remains high. After skyrocketing by over 50% from the onset of the COVID epidemic in early 2020, Canadian house prices have declined by roughly 15% since March due to the Bank of Canada’s quick rate hike from near-zero early last year to 4.25% in January. Home prices in Canada have been on the increase again this year, increasing by 17% according to one metric, since the Canadian central bank decided for a conditional freeze on rate hikes in January. In a survey conducted between May 15 and June 5 by Reuters, 11 industry experts anticipated that house values would drop by around 9% in 2023, which is less severe than the 12% drop predicted in a poll conducted three months ago and the 12% loss in April from a year earlier reported by the Canadian Real Estate Association. The median forecast from the most recent survey predicted that property prices will grow by 2% in 2024 and by 4% in 2025. After a year-long recession, Canada’s housing market is on the upswing in the spring of 2023. As RBC’s associate chief economist Robert Hogue said, “Demand-supply conditions suddenly appear tight.” “Sellers are once again in control in most major markets as rising demand and falling supply have driven prices up and supply down. Now that the Bank of Canada has halted its aggressive rate raise campaign, buyers’ confidence is fast returning to both markets. Despite widespread predictions that the Bank of Canada would leave rates unchanged all year, another Reuters poll found that if economic growth remains robust and inflation remains high, the BoC may be forced to raise rates again. There may be no relief for rising costs if immigration rates continue to rise with demand. Experts who were asked a follow-up question predicted a small increase in delinquency rates among highly indebted families in 2018. Despite efforts, “Canada’s housing affordability problem is not easing,” said Douglas Porter, chief economist at BMO Capital Markets. While many may advocate for a supply-side solution, we’ve always held that it’s naive to imagine that a sector operating at full capacity can suddenly quadruple production, resulting in a glut of new units that drives down prices and rents. Related posts 27 June 2023 Reuters survey predicts rising Canadian housing prices due to high demand 21 June 2023 Canadian Real Estate Correction Continues, Sales Rise Temporarily: Oxford Econ. Recent Immigrants Cannot Support High Home Prices in Canada After a temporary lull, the real estate market… 24 May 2023 Recent Immigrants Cannot Support High Home Prices in Canada Recent Immigrants Cannot Support High Home Prices in Canada Canada’s population growth is contributing… 16 May 2023 Toronto’s Best Investment Areas for Families Toronto’s Best Investment Areas for Families Don’t be fooled by The Six’s huge towers, high-rises,… 11 May 2023 Sales and prices in Toronto’s real estate market are soaring Sales and prices in Toronto’s real estate market are soaring After last year’s record meltdown,… 11 May 2023 Rise in Toronto’s Home Building Costs Rise in Toronoto’s Home Building Price Even if inflation in Canada has slowed, the price of constructing… 05 May 2023 Toronto and Vancouver Home Prices Rise Like Mortgage Credit Toronto and Vancouver Home Prices Rise Like Mortgage Credit Home prices increased dramatically last month…

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Recent Immigrants Cannot Support High Home Prices in Canada

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Recent Immigrants Cannot Support High Home Prices in Canada Canada’s population growth is contributing to rising home costs. The more the demand, the higher the property price, right? Don’t jump to conclusions; the story’s premise could not be accurate. The income levels of immigrants were surveyed in 2021, and the results were just revealed by Statistics Canada (Stat Can). Recent immigrants to Canada have lower wages than the average Canadian, making it difficult for them to afford even the most basic housing needs without raising rents. Recent Canadian immigrants had far lower wages than native Canadians Recent immigrants to Canada (those who came between 2016 and 2019) are paid much less than native-born Canadians. The median annual income of these immigrants was $35.6k, which was about 20% (-$7.2k) lower than their non-immigrant counterparts. It’s not simple to obtain affordable housing if a couple earns the median salary. Rent in Most Canadian Cities Is Too Expensive for Newcomers Finding affordable rental homes is challenging for them. At the 30% poverty line for housing costs, they have a maximum monthly budget of $1,780. Put another way, that’s around 17% less than the $2,140/month a dual-income, non-immigrant family may spend before meeting the shelter poverty criterion. In April, the national average for a one-bedroom rental was a little over $2,000 per month. The average monthly rent is much higher in more costly cities like Toronto ($2,370) and Vancouver ($2,600). Canadians could only afford to buy a home in a few urban centres It will also be difficult to purchase a property at this salary. The maximum price they could pay is roughly $400,000 if they used 100% of their available credit and a high-ratio mortgage. It’s around $65k less than a family of four without immigration status could afford. In all of Canada, that amount of money won’t go very far. According to CREA, the national average house price in March was $709,000 nationwide. Winnipeg ($331k), Moncton ($309), Quebec City ($323k), St. John’s ($313k), Regina ($309k), Mauricie, QC ($231k), Fredericton ($273k), or Saint John ($270k) are among the few places that come close to the budget. For a while, a story can keep a trend going, but it becomes difficult to maintain after that. Immigration and population expansion may boost demand, but wages couldn’t keep up in the long run. Taking increasing proportions of family earnings is the only way to continuously boost rents without fast, inflationary rise of income. On the other hand, widespread acceptance of shelter poverty isn’t exactly a selling factor for future immigration. Related posts 24 May 2023 Recent Immigrants Cannot Support High Home Prices in Canada 16 May 2023 Toronto’s Best Investment Areas for Families Toronto’s Best Investment Areas for Families Don’t be fooled by The Six’s huge towers, high-rises,… 11 May 2023 Sales and prices in Toronto’s real estate market are soaring Sales and prices in Toronto’s real estate market are soaring After last year’s record meltdown,… 11 May 2023 Rise in Toronto’s Home Building Costs Rise in Toronoto’s Home Building Price Even if inflation in Canada has slowed, the price of constructing… 05 May 2023 Toronto and Vancouver Home Prices Rise Like Mortgage Credit Toronto and Vancouver Home Prices Rise Like Mortgage Credit Home prices increased dramatically last month… 29 April 2023 To Avoid Defaults, Canadian Banks Extend Amortisations 35 Years To Avoid Defaults, Canadian Banks Extend Amortisations 35 Years What is Canada’s secret for having… 24 April 2023 Canada’s Cheap Mortgage Credit Drives Real Estate Prices… Again Canada’s Cheap Mortgage Credit Drives Real Estate Prices… Again Everyone in Canada is trying to determine…

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Toronto’s Best Investment Areas for Families

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Toronto’s Best Investment Areas for Families Don’t be fooled by The Six’s huge towers, high-rises, and reputation as Canada’s de facto financial hub. Many of the city’s best neighbourhoods, ideal for raising a family, may be found within easy commuting distance of the central business district. Why It’s Important to Investors Investors would do well to consider the needs of prospective tenants when evaluating a property. The astute investor may use this perspective to better cater to the demands of the families moving into their houses.  In addition to some of the best universities and colleges in Canada, Toronto is home to several elementary and secondary schools located around the city. In addition, there are often patches of greenery in these metropolitan settings, which are perfect for dogs and toddlers. They are also in close proximity to places suitable for families.We’ve compiled the Toronto communities we believe best position investors to attract the most Rockwellian of families from among the estimated 140 that may benefit an investment targeting families well. Canadian Real Estate Wealth has compiled a summary of the fundamental features, educational institutions, and demographics of each community that made our cut as being among the finest in Toronto, Ontario, for families. Keep in mind that there is no specific sequence to them. Bedford Park In the late 1890s, Bedford Park was a part of the City of North Toronto.  Compared to the other megacity, Bedford Park is one of the few surviving areas where it is safe to stroll for at least 30 minutes in any direction. This neighbourhood and its environs have a long history of being considered safe and welcoming places to raise a family. Since the end of World War II, this area has had a stellar reputation. One needs only take a drive through the neighbourhood to see that this is the case; the streets are lined with tiny homes, or “wartime,” so named because they predate the 1950s, the era in which the vast majority of Toronto’s dwellings were constructed.Bedford Park is home to some of the city’s best schools, which have been lauded for decades. The floral garden hidden behind John Locke Library is a great place to start exploring the beautiful park system. This route takes you on some of the best paths in the city out to Lake Ontario, a natural wonder. It’s the best vacation ever, but if you go any lower in latitude, you’ll be in the ocean. The Beaches The Beaches, or “The Beach” as the locals call it, is a popular vacation spot on Lake Ontario because of its four beaches of the same name. However, there are several reasons why this Toronto suburb is an excellent option for starting or expanding a family. To the south is Lake Ontario, while to the north is Coxwell Avenue and Victoria Park Avenue along Queen Street East. The Beaches, a neighbourhood in eastern Toronto just south of East York, is conveniently close to the downtown area. In around 20 minutes by automobile, or 45-55 minutes by rail or bus, residents may reach the heart of Toronto. There are several parks and paths in addition to the beaches, with Woodbine Beach being the most kid- and dog-friendly. Queen Street East is a great place to take the kids because of the abundance of cafés and eateries along its length. There is a vibrant, multiethnic community in the area that hosts events like the Winter Stations Outdoor Art Show and a jazz festival in July. The latter is a great way to re-jam a family night together. While the music fills the night air, traffic on Queen Street is restricted to foot traffic only. Danforth Village Danforth Village is home to a large number of families due of its welcoming environment and proximity to excellent educational opportunities, green space, and retail options in Toronto. Students and young urban professionals alike might be seen living in the area. The latter is what sets this neighbourhood apart; not only is Danforth Avenue one of Toronto’s most popular shopping destinations, but it’s also often referred to as Greektown. Investors should know that there is a great selection of excellent restaurants, cafes, and supermarkets within walking distance of the property. Families will find a lot to love at Danforth Village. The easygoing lifestyle and safe, tree-lined avenues make it ideal for families with young children. Danforth Village is not only a great place to shop because of all the great parks, schools, and other amenities it has to offer for families. Eleven public schools, including Chester Elementary, Westwood Middle, and East York Collegiate Institute, are located nearby. Monarch Park is another neighbourhood highlight, and it has a top-notch leisure facilities complete with an ice rink, a kiddie pool, and an Olympic-size swimming pool. Many locals consider this to be the crown jewel of the area’s recreational facilities. If you’re a sports fan, you’ll be happy to know that Danforth Village is home to a public library, a gym, and a variety of playing fields. Bloor West Village Bloor West Village, or BWV as the locals call it, is a fantastic community with excellent housing, safety, shopping, health, and job opportunities. This pleasant area of west Toronto has a beautiful array of architectural styles. There are many friendly shops to peruse along Bloor Street West. The convenience of being near High Park, sometimes known as “Toronto’s Central Park,” makes it the best aspect of the neighbourhood. The 400 acres of this public park are stunning. In the spring, when the cherry blossoms are in bloom, people from all over Toronto go to the tranquil area surrounding Grenadier Pond. The High Park Amphitheatre hosts Shakespeare in the Park, a not-to-be-missed event. It’s a popular spot for family picnics. Not only that, but nobody has ever seen Yogi Bear in Bloor West Village. Conclusion To sum up, it is clear that there is a wide variety of family-friendly housing alternatives in Toronto, or The Six, to

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Sales and prices in Toronto’s real estate market are soaring

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Sales and prices in Toronto’s real estate market are soaring After last year’s record meltdown, Toronto’s housing market came roaring back to life last month as the annual spring selling season produced a jump in both sales and home prices. According to data released Wednesday by the Toronto Regional Real Estate Board, on a seasonally adjusted basis, the number of house sales in Canada’s most populous city increased by 27% in April compared to March. Outside of the recovery from the Covid lockdowns in 2020, it is the largest monthly gain in the previous two decades. In April, the average price of a property in Toronto, which is C$1.11 million ($815,000), was up 2.4% from the previous month. This increase completely reversed prior drops in pricing for the year, with prices being 0.5% higher overall. According to Toronto real estate agent Tom Storey, “this is seasonal activity in the way things typically happen, but the difference this time is that inventory is not just low but extremely low.” There was a lack of listings because “sellers didn’t want to put their property on the market in a market they were told wasn’t very good.” After a historic drop in prices in 2017 due to the Bank of Canada‘s aggressive rate rises, prices have already begun to rise again. With the central bank on hold, buyers have returned, refocusing attention on the severe lack of inventory that made Canada’s real estate market so competitive in 2017. “As demand for ownership housing has picked up relative to supply, we are seeing renewed upward pressure on home prices,” said Jason Mercer, the real estate board’s senior market analyst, in a news statement accompanying the study. He claimed the “persistent lack of listings” is making it harder for people to purchase homes. National Bank of Canada said in a research note on Wednesday that the amount of new listings entering the Toronto market lags considerably behind the growth in sales, at only 2.8%. That resulted in a 12.3% decrease in the inventory of homes for sale, which had been building up over the previous year, and left the city’s active listings to sales ratio, a metric of buyer competition, tighter than the historical norm, as noted. Supply shortages and price increases aren’t exclusive to Toronto’s real estate market. Vancouver, historically one of the most expensive markets in the nation, also witnessed a 2.4% increase in its benchmark price last month. According to Vancouver Real Estate Board Director of Economics and Analytics Andrew Lis, “the issue remains a matter of far too little resale supply available relative to the pool of active buyers in our market,” as stated in a press statement on Tuesday. After a difficult year, “home buyers are returning with confidence as evidenced by rising prices and a rebound in sales this spring” Related posts 11 May 2023 Sales and prices in Toronto’s real estate market are soaring Sales and prices in Toronto’s real estate market are soaring After last year’s record meltdown,… 11 May 2023 Rise in Toronto’s Home Building Costs Rise in Toronoto’s Home Building Price Even if inflation in Canada has slowed, the price of constructing… 05 May 2023 Toronto and Vancouver Home Prices Rise Like Mortgage Credit Toronto and Vancouver Home Prices Rise Like Mortgage Credit Home prices increased dramatically last month… 29 April 2023 To Avoid Defaults, Canadian Banks Extend Amortisations 35 Years To Avoid Defaults, Canadian Banks Extend Amortisations 35 Years What is Canada’s secret for having… 24 April 2023 Canada’s Cheap Mortgage Credit Drives Real Estate Prices… Again Canada’s Cheap Mortgage Credit Drives Real Estate Prices… Again Everyone in Canada is trying to determine… 14 April 2023 Canada maintains 4.5% interest rate, What’s next Canada maintains 4.5% interest rate, What’s next? The Bank of Canada will reveal its decision on… 11 April 2023 TRREB: GTA Competition increases due to tight market conditions  TRREB: GTA Competition increases due to tight market conditions In March 2023, the Greater Toronto Area…

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Toronto and Vancouver Home Prices Rise Like Mortgage Credit

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Toronto and Vancouver Home Prices Rise Like Mortgage Credit Home prices increased dramatically last month in Canada’s two most populous real estate regions. In April, home values in both Toronto and Vancouver increased. There has been a gain in sales and a decrease in inventory in both markets, but this probably hasn’t led to the same level of expansion in both locations. More likely to blame are falling mortgage rates, which introduced leverage proportional to the price rises The Value of a Toronto Home Increased by 2.4% in the Past Month Although they are still down from a year ago, Greater Toronto real estate prices increased last month. In April, the median price of a home, or the composite benchmark, increased by 2.4%, or $27,200, to $1,145,700. This is the third consecutive monthly increase, and it follows a gain of 2.5% the month before. Even though home prices are still down dramatically from last year, they are recovering quickly.  It’s a huge increase, and once you consider Canada’s other major and expensive market, the word “unusual” takes on further significance. The Value of a Home in Vancouver Increased by 2.4% Previous Month After hitting rock bottom in January, property prices in the Greater Vancouver are also rising rapidly. The index rose for the third month in April, increasing by 2.4% ($27,400) to $1,170,700. While prices are still lower than this time last year, at the current rate the difference will be made up in less than three months. Today’s experts from both locations didn’t waste any time blaming a lack of stock for the problem. Similar price increases indicate that supply shortages were a factor in both cities. Lower mortgage rates have provided a similarly powerful source of leverage Probably more The easing of credit standards in Canada may be to blame. Borrowers have moved toward fixed rate mortgages as the Bank of Canada (BoC) has kept rates steady. The average fixed mortgage rate dropped by 0.3 percentage points from March to April, increasing the borrower’s leverage by about 2.6% assuming the borrower maintains the same income. It’s also important to remember that the monthly installments won’t change. The standard property purchased in March using a conventional mortgage is essentially the same in April, despite a significant rise. Home prices ate up any “savings” from the reduced interest rate. Both Toronto and Vancouver saw similar results. Price increases in response to rising demand are capped by what can be afforded in terms of servicing existing debt. When the cap is on, squeezing a tube of toothpaste doesn’t accomplish much. It can spread out and take up more space after the top is removed. For the same reason, despite Canada’s record population growth, home prices have fallen due to a lack of mortgage credit. It wasn’t until mortgage rates started going down that prices started going up in tandem with the economy’s growth. Isn’t that shocking? It shouldn’t be, according to Bank of Canada (BoC) studies. Lower interest rates, according to the former Deputy Governor, did not increase affordability because housing values simply adjusted to absorb the decrease. Either that, or your local think tank is correct, and buyers evaluated economic trends, immigrant patterns, and liquidity before concluding that prices should absorb the payment discount from lower rates. Related posts 05 May 2023 Toronto and Vancouver Home Prices Rise Like Mortgage Credit 29 April 2023 To Avoid Defaults, Canadian Banks Extend Amortisations 35 Years To Avoid Defaults, Canadian Banks Extend Amortisations 35 Years What is Canada’s secret for having… 24 April 2023 Canada’s Cheap Mortgage Credit Drives Real Estate Prices… Again Canada’s Cheap Mortgage Credit Drives Real Estate Prices… Again Everyone in Canada is trying to determine… 14 April 2023 Canada maintains 4.5% interest rate, What’s next Canada maintains 4.5% interest rate, What’s next? The Bank of Canada will reveal its decision on… 11 April 2023 TRREB: GTA Competition increases due to tight market conditions  TRREB: GTA Competition increases due to tight market conditions In March 2023, the Greater Toronto Area… 08 April 2023 Why Canadian Homeowners Aren’t Selling Why Canadian Homeowners Aren’t Selling There hasn’t been the usual rush of vendors at Canada’s… 08 April 2023 Toronto Real Estate Correction Pauses, Prices Upto $27k Toronto Real Estate Correction Pauses, Prices Upto $27k Is the Greater Toronto real estate market overpriced?…

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Canada’s Cheap Mortgage Credit Drives Real Estate Prices… Again

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Canada’s Cheap Mortgage Credit Drives Real Estate Prices… Again Everyone in Canada is trying to determine why real estate prices have suddenly increased. However, the data from the Bank of Canada (BoC) points to a more direct explanation: witchcraft. In reality, it’s the return of easy access to debt and the resulting increase in leverage. The decrease in new mortgage interest rates in February provided leverage comparable to that seen in March’s increase in home prices. Interest rates for Canadian mortgage borrowers are dropping Lenders in Canada are benefiting from a flood of new home loans with reduced interest rates. In February, rates on new loans were 5.53%, down from 5.63 in January. The current rate is 3.14 percentage points more than it was this time last year, and it is higher than January. That’s more than in the previous month but less than in the same period last year. This is a crucial reminder as we continue to analyze the data. There Is Minimal Effect At This Point On Canada’s Mortgage Stress Test At present levels of mortgage debt in Canada, changes in interest rates are felt quite keenly. Canadian banking watchdog  OSFI has a stress test for mortgages called Guideline B-20. Borrowers will be able to pay either 5.25% interest (the maximum allowed by the Guideline) or the contract rate plus 2 percentage points. It performs an excellent job of limiting credit up to the 5.25% line, but thereafter leverage starts swinging wildly. The amount people are able to borrow responds extremely instantly to changes in the interest rate. It’s important to note that not all mortgage lenders are subject to the stress test Non-stress-tested lenders have their own methods of reducing exposure to risk. If the interest rate is over a certain threshold, then the quoted rate is used for the computation. This morning, I opened my go-to mortgage app to find that helpful hint waiting for me. There’s no harm in reminding folks that they have more leverage than they realize, right? So, are you any closer to understanding the stress test now? Imagine you were able to negotiate a 6.00% interest rate on your mortgage (by the way, your mortgage broker is lousy) and an 8.00% stress test rate. Now let’s say your pal decides to borrow a month from now and locks in a mortgage rate of 5.75 percent. They’ve also gotten an additional 0.25 percentage points off their stress test rate.  It didn’t matter much when mortgage points were 2 and the minimal stress test rate was 4.75%. The floor was put in place, reducing the impact on everyone other than those with big pockets. The Effects of Interest Rates and Borrowing in Canada You need to know that leverage is related to housing prices in order to appreciate the significance of this. This is common knowledge, as evidenced by a recent explanation from a former BoC Deputy Governor on how low interest rates encouraged borrowers to spend more money on the same home. Interest savings due to lowering rates were formerly widely accepted. Over the past 30 years, historically, low-interest rates have not benefited purchasers, but given sellers more bargaining power. For thirty years, prices rose to compensate for the shortfall, until someone eventually did the math. To borrow money, or use leverage, is to squander the fruits of your future effort right now. A certain way to drive up housing costs is to provide incentives for individuals to buy what they need and then allow them to borrow more and more of their future earnings to pay for it. This is Canada’s housing catastrophe, and it was made this way on purpose. Recent Home Price Growth in Canada Is Reflected in Falling Mortgage Rates Take another look at the uninsured mortgage rate. Although a 0.12-point decline in February may not seem like much, it would increase a buyer’s purchasing power by about 1.2%. That’s an additional $11,500 in debt for a couple making $200,000 annually. It’s extremely close to the $12,300 gain that the median house saw in March. It is quite likely that the whole growth was due to the use of leverage. For the return of low-cost leverage, the Bank of Canada should just ease off on quantitative tightening. Government bond liquidity has not been tightened, thus falling fixed mortgage rates continue to stimulate demand. Related posts 24 April 2023 Canada’s Cheap Mortgage Credit Drives Real Estate Prices… Again Canada’s Cheap Mortgage Credit Drives Real Estate Prices… Again Everyone in Canada is trying to determine… 14 April 2023 Canada maintains 4.5% interest rate, What’s next Canada maintains 4.5% interest rate, What’s next? The Bank of Canada will reveal its decision on… 11 April 2023 TRREB: GTA Competition increases due to tight market conditions  TRREB: GTA Competition increases due to tight market conditions In March 2023, the Greater Toronto Area… 08 April 2023 Why Canadian Homeowners Aren’t Selling Why Canadian Homeowners Aren’t Selling There hasn’t been the usual rush of vendors at Canada’s… 08 April 2023 Toronto Real Estate Correction Pauses, Prices Upto $27k Toronto Real Estate Correction Pauses, Prices Upto $27k Is the Greater Toronto real estate market overpriced?… 05 April 2023 Canadian real estate prices will “rip” higher: SCOTIABANK Canadian real estate prices will “rip” higher: SCOTIABANK Canadian real estate may be sluggish… 05 April 2023 After just 86 days, Canada quietly reversed sections of its foreign buyer ban After just 86 days, Canada quietly reversed sections of its foreign buyer ban After hours of enforcement,…

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Canada maintains 4.5% interest rate, What’s next

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Canada maintains 4.5% interest rate, What’s next? The Bank of Canada will reveal its decision on the benchmark interest rate it will use going forward. Even if the economy performs better than projected, most economists believe the central bank will maintain its key interest rate at 4.5 percent. The economy started the year strong, even with interest rates at a record high, and unemployment around record lows. The Bank of Canada has stated that it would like to see an additional economic slowing in order to return annual inflation to its objective of 2%. For the second month in a row, February’s inflation rate of 5.2% was lower than expected. Today’s monetary policy report will also include the Fed’s most recent growth and inflation forecasts. The prime interest rate has increased dramatically during the past year, from near zero to its highest level since 2007. The Bank of Canada issued its eighth straight rate increase in January and said that it plans to keep its key interest rate unchanged if economic growth continues in line with its projections. Most economists believe the Bank of Canada will keep its benchmark interest rate unchanged on Wednesday, arguing that further rate hikes would come too soon. The central bank’s goal of dampening economic activity has been aided by the general trend of the economy. “There really were no significant surprises here,” said Douglas Porter, chief economist at BMO. The Federal Reserve in the United States has recently indicated that it intends to continue raising interest rates. Still, the Bank of Canada’s policy is beginning to diverge from that of the Fed. Stephen Gordon, an economics professor at Laval University, argued that the United States’ monetary policy does have consequences in Canada. The Canadian dollar may weaken and import costs may rise if investors decide to move their money to the United States in response to higher interest rates there. “It’s not an automatic thing of,” Gordon said, “the (Bank of Canada) has to follow the Fed.” The Canadian economy stalled in the fourth quarter, and inflation dropped to 5.9% in January, according to recent figures. Although “the labor market remains very tight,” the central bank stated conditions should improve and wage growth should slow. Suppose the 150,000 jobs added in January were a one-time occurrence or a sign of underlying strength in the labor market. In that case, we should learn more from the February labor force survey, which will be released on Friday, according to Porter. The Bank of Canada maintains its forecast that annual inflation in Canada will decline to around 3% by the middle of the year. There will need to be a “surprise” for the Bank of Canada to act again in the form of an interest rate hike, according to Gordon. Inflation in Canada is predicted to remain low this year due to base year effects, barring any unforeseen developments. The influence of price changes from the previous year on the determination of the annual inflation rate is referred to as the base-year effect. Price increases accelerated in the first half of 2022 as fears of a Russian invasion of Ukraine materialized, but analysts anticipate that the annual inflation rate will continue to decline in the coming months. The rate of inflation is currently declining, as Gordon has stated. Further time is required for the economy to react to past interest rate hikes, which can take as long as two years. The Bank of Canada reports that international economic growth is trending roughly as predicted. However, it noted that “upside risks” that could increase inflation include the robustness of China’s economic recovery and the impact of Russia’s war in Ukraine. In the future, Porter predicts that the Bank of Canada will have “limits” in its ability to diverge from the Federal Reserve. Because of their interconnected economies and shared stresses, he continued, both countries would benefit from higher interest rates. “If the U.S. economy is really showing more underlying strength and greater inflation pressures, those will probably get reflected eventually in Canada as well,” he added. The Bank of Canada is scheduled to release its next interest rate decision and quarterly monetary policy report on April 12. 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TRREB: GTA Competition increases due to tight market conditions 

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TRREB: GTA Competition increases due to tight market conditions In March 2023, the Greater Toronto Area (GTA) housing market tightened. Compared to March 2022, sales accounted for a higher percentage of listings, indicating that buyer rivalry is increasing. For the first time since May 2022, the average selling price exceeded the average list price in Toronto. “As the first quarter progressed, Toronto Regional Real Estate Board (TRREB) members increasingly reported that buyer competition was heating up in numerous GTA neighborhoods.” “The most current numbers support this,” TRREB President Paul Baron remarked. “Latest consumer polling also indicates that demand for owning homes will remain strong this year.” As high average rents come more nearly in line with the cost of ownership, expect first-time buyers to lead this rebound.” In March 2023, GTA REALTORS® reported 6,896 sales through TRREB’s MLS® System, a 36.5 per cent decrease from March 2022. Actual and seasonally adjusted sales increased month over month. New postings were likewise falling year over year, albeit at a significantly higher yearly pace. This indicates that market conditions are tighter than they were last year. “Lower inflation and financial market uncertainty have caused medium-term bond rates to trend downward.” This has resulted in decreased fixed-rate borrowing rates this year and will continue to do so. Reduced borrowing rates will assist with affordability, particularly when tighter market circumstances push up selling prices in the second half of 2023,” TRREB Chief Market Analyst Jason Mercer said. The composite benchmark for the MLS® House Price Index was down 16.2 percent year over year, but up month over month on both an actual and seasonally adjusted basis. Similarly, the average selling price fell 14.6% year on year to $1,108,606. On both an actual and seasonally adjusted basis, the average selling price increased month over month. “As population growth accelerates due to immigration, first-time buyer intentions will stay robust.” Since the quantity of available properties for sale is projected to remain limited, a considerable rental supply will be required. Sadly, we do not have this option at the moment. “Over the next several years, we need to see a policy emphasis on bringing more purpose-built rental units online,” TRREB CEO John DiMichele said. Related posts 11 April 2023 TRREB: GTA Competition increases due to tight market conditions  08 April 2023 Why Canadian Homeowners Aren’t Selling Why Canadian Homeowners Aren’t Selling There hasn’t been the usual rush of vendors at Canada’s… 08 April 2023 Toronto Real Estate Correction Pauses, Prices Upto $27k Toronto Real Estate Correction Pauses, Prices Upto $27k Is the Greater Toronto real estate market overpriced?… 05 April 2023 Canadian real estate prices will “rip” higher: SCOTIABANK Canadian real estate prices will “rip” higher: SCOTIABANK Canadian real estate may be sluggish… 05 April 2023 After just 86 days, Canada quietly reversed sections of its foreign buyer ban After just 86 days, Canada quietly reversed sections of its foreign buyer ban After hours of enforcement,… 31 March 2023 Non-Canadians can buy property more easily Non-Canadians can buy property more easily Certain limitations on foreigners buying residential property… 21 March 2023 What You Should Know About the Toronto Vacant Home Tax What You Should Know About the Toronto Vacant Home Tax The Toronto Housing Affordability Task Force has…

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