REAL ESTATE MARKET – CANADA – NOVEMBER 2016

BY: PAUL YOUNG, CPA, CGADATE: DECEMBER 17, 2016

This presentation will discuss real estate trends for Canada.

AGENDA

• Graph 1 - Housing Starts

• Graph 2 - Housing Prices / Average by Province

• Graph 3 – Wage Growth, CPI and Change in Average Housing Price

• Income Analysis / Mortgage value

• Job Market Analysis

• Summary

GRAPH 1 - HOUSING STARTS

Source – BMO. Scotiabank, CMHC, Stats Canada

GRAPH 2 - AVERAGE HOME PRICE BY PROVINCE

GRAPH 3 – WAGE GROWTH, INFLATION AND HOUSING PRICE CHANGES

Source – CBC, CTV, Stats Canada and Canadian Real Estate association

INCOME AND HOUSING MORTGAGES

• Average weekly earnings of non-farm payroll employees were $957 in September, virtually unchanged from the previous month (-0.1%) and up 0.4% from 12 months earlier.

Average house Price $481,991 (October 2016)

Average Income $50K (September 2016)

• A key mortgage rate is on the way up again at Toronto-Dominion Bank. 

• The bank said its five-year closed mortgage special rate will increase by 10 basis points to 2.94 per cent, effective Thursday, matching a hike last month by RBC. Source – CBC.com

After tax income per month would be $2,500

Two income: 100K or 5,000/month (after tax incomeRatio: 38% of your after tax income would cover the mortgage

Source – CBC, CTV, CMHC, Stats Canada and mortgage calculator

JOB MARKET / NOVEMBER 2016• Family income for house today is $100K+

“The country added a net total of 11,000 jobs in the month, but all of the gain was in part-time work. Full-time employment fell by 8,700 positions, while part-time jobs grew by 19,400.In fact, over the past year, Canada has lost 30,500 full-time jobs, while gaining 213,700 part-time jobs. That likely helps to explain why wages in Canada are falling, when adjusted for inflation.”Source -http://www.huffingtonpost.ca/2016/12/02/unemployment-canada-november-2016_n_13369418.html

SUMMARY

• New Taxation comes effective January 1, 2017 – (Carbon Taxation)

• Economy will continue to grow slowly (2% or less in terms of GDP Growth)

• New mortgage rules (stress test) will impact new entrants to the real estate market (millennials)

• Job churning is the new norm for job seekers

• Technology will drive business (Analytics, Cybersecurity, eCommerce, robotics, drones, etc.)