In Canada ‘middle class’ currently seems to mean ‘deep in debt’ and rate hikes are a looming threat on the middle class :
For one view of Canada’s rate hike, consider the case of David and Neera. He can’t get a raise, is worried about retirement and they borrowed money a couple years ago to fix the roof. Interest costs will jump now, with vacations and kids’ clothes already out of reach.
Justin Trudeau’s entire economic agenda is aimed at David and Neera — we know, because he invented them. Their story anchored the Liberal government’s debut budget, tying together the impact of all the prime minister’s measures. Now they’re a cautionary tale.
“Canadian families are also taking on more debt to make ends meet,” the 2016 budget said. “For David and Neera, this debt is a constant source of worry.”
Read the full article over that the Financial Post.
Poloz is hinting that rate hikes are coming and thats pushing the Canadian dollar up a bit:
The Canadian dollar climbed to a four-month high of 76.44 cents US after Poloz’s comments, which fed speculation about a rate increase as early as its next scheduled announcement in two weeks. The boost lifted the loonie from an average price of 75.83 cents US on Tuesday.
If the central bank increases its key rate, the big Canadian banks are expected to raise their prime rates, driving up the cost of variable rate mortgages, other loans and lines of credit tied to the benchmark rate.
Poloz credited the two rate cuts introduced by the bank in 2015 for helping the economy counteract the effects of the oil-price slump, which began in late 2014. The reductions also helped increase the speed of the adjustment, Poloz added.
“It does look as though those cuts have done their job,” said Poloz, who was in Portugal on Wednesday to participate in a forum hosted by the European Central Bank.
“But we’re just approaching a new interest rate decision so I don’t want to prejudge. But certainly we need to be at least considering that whole situation now that the capacity, excess capacity, is being used up steadily.”
Read the full article over at the Financial Post.
Here’s a surprise – it turns out if you hand out $13 Million in loans to the general population to buy a product, the price of that product rises.
In this case the product is condos and the $13M comes courtesy of taxpayers and the BC liberal governments ‘BC Home Owner Mortgage and Equity Partnership’ program.
As it turns out though, not everyone things this is the smartest thing in the world. UBC economist Tom Davidoff sounds downright unenthusiastic:
The BC Liberals announced the program back in December, arguing it would help young families crack into the red-hot housing market.
But critics warned that financially stretched buyers would take on risk by essentially starting a second mortgage and that the infusion of cash could drive prices up.
Davidoff said that second case appears to be playing out, with people using the program now accounting for about five to 10 per cent of condo purchases.
“When there’s too many people chasing too few houses, pushing more people to get in on the action just seems like a really dumb idea.”
Condo sales have been driving the Metro Vancouver real estate market in recent months, and the average unit price now sits at about $655,000.
For the month of May, the Real Estate Board of Greater Vancouver found 95 per cent of all condos listed had sold, with prices up more than 17 per cent year over year.
Read the full article over at global news.
Looking to cheat on your real estate transaction taxes? Bad news, the CRA has decided it doesn’t want you to and is coming after real estate tax cheats.
From April 2015 to March 2017, the CRA audits of real estate transactions resulted in more than $329.4 million in assessed income that had not been reported. During this time, the CRA applied over $17 million in penalties, primarily associated with Canada’s two major real estate markets in Toronto and Vancouver.
Canadians work hard for their money and the Government of Canada recognizes that many families count their principal residence as both their home and most valued asset. The CRA will continue to strengthen relationships with key partners such as provinces, territories, and municipalities to further expand, obtain, and exchange information on real estate transactions, thereby enhancing the CRA’s ability to combat tax evasion and avoidance.
17 million in penalties? That’s almost enough to buy a fixer-upper on the north shore!
If you’ve got an idea of how to make housing more affordable in Vancouver, city officials say they’re all ears.
“I think we’re almost at the desperation stage,” said Randy Pecarski, the City of Vancouver’s deputy director of planning. “People are on the verge of leaving the city because they can’t find a place to stay.”
First step: another survey to improve housing affordability over the next ten years.
Read the full article over at the CBC.