Canadian household debt

Happy rainy Monday Montrealers. Today, an article in the Montreal Gazette caught my eye entailed "Household debt worries ease as mortgage borrowing slows in May: RBC." The RBC states that Canadian homeowners have been slowing down on the amount of mortgage debt that is assumed. Yes debt-load and market values are critical indices in Canada and I have no doubt that we're taking on less debt but I don't think it's because we are smarter consumers.

Are we managing our household debts better?
Picture: Huffington Post & Alamy Photo 

Perhaps Canadian homeowners are "hitting a wall" when it comes to assuming more debt and mortgages. This is an income issue. I am sure that if wages went up then Canadians would most likely assume more debt as well.

.

Conference Board of Canada says no to housing crash

Lately, I've focused a lot of energy the past few blog entries about real estate market prices. This month the Conference Board of Canada released a report entitled, "Housing Briefing: Bubble Fears Overblown." The Conference Board (CBOC) is an Ottawa based think thank that is comprised by the heads of the largest public and private organizations in Canada. The CBOC provides analytical services to the public and private sectors. In the report, the CBOC states that Canadian real estate market is not over-built and overvalued (apart from Toronto being overbuilt). They argue that the market the past tree years is in line with the 20 year average. 

I do agree that I don't foresee a crash either but I still do think that the average Canadian is financially stretched. Yes, I agree with the CBOC report that defaults still remain relatively low but in Canada the homeowner or real estate investors has a few options at their disposal in refinancing and transferring properties that may skew default stats. If people are stretched now then perhaps we haven't fully seen the pricing adjustment? Just a thought...

The CBOC states that Montreal is "Flirting with buyer's market conditions with sales and average prices having dropped somewhat last year." We shall see how 2014 continues to evolve especially post-Quebec election. Stay tuned folks. 

A tale of property values and Quebec politics

A question I get asked about is whether or not what's transpiring in Quebec politics is affecting the value of your home and investment properties? I think it might be too early to answer that question given the upcoming election. Stay tuned folks...

As most of you are aware, in an attempt to cool market values in Canada the Federal Government has implemented a few mortgage changes. These changes have been happening the past couple years. I agree with some changes such as amortization and limiting lines of credit however it's too soon to comment about the impact of Quebec politics. Having said that, the Federal changes are working.

I believe that what the Quebec Government has been focused on unfortunately distracts the public attention away from the real economic issues facing the Province. Market values in the Greater Montreal area have slowed or adjusted in many cities. I think this was expected as I've seen bank evaluations drop over the past three years. The banks are definitely playing it safe especially with condo values. I agree with this conservative approach. The future is still uncertain. I'm not suggesting we will have a market crash after the Quebec Provincial election however I do think market values will continue to slow. We do need job creation and economic growth in Quebec above anything else.

Looking to sell your existing home and upgrade?

Hey everyone, hope you are all eager for an early spring. I don't mind winter but this year I'm looking forward to a nice spring and with spring in the air many of you may be thinking about selling and perhaps upgrading to a larger home. Selling and buying is not too tricky but here are a couple quick tips to keep in mind:

1. Calculate how much money you will have net should you sell (at a responsible price), minus real estate broker fees (plus taxes), minus mortgage balance and bank penalty (assuming your mortgage is not portable or not worth porting).

2. Will the net proceeds all go towards the new down payment? Can I use some of that money to lower or pay off some debt?

3. Get pre-approved for the new purchase. You can get pre-approved without actually selling or listing. This not only helps set a budget for the new purchase, it also ensures that your credit, income, and incomes taxes are in order. It's not a bad idea to do all this before before listing your home.

4. Can I make a conditional offer on a new home pending the sale of mine? Yes you can however this type of offer is not the strongest because anyone else can walk-in and make an offer without that condition. In such cases, the vendor would give you 72 hours to sell your home otherwise you lose your offer. If your new purchase is really your dream home then sometimes it makes sense to first refinance your present home so you have the down payment. Thereafter you sell and port the new mortgage to the new home later.

5. What if the notary date for the sale of my home is scheduled after my new purchase? Not a problem. In such cases bridge loans are available through the banks.