Bank of Canada - Interest Rates

Bank of Canada Governor Stephen Poloz stated he was in no rush to resume monetary tightening, saying while interest rates needed to move up into a neutral range, over time the path back was now “highly uncertain.”

The overnight rate is currently 1.75 percent, well below the bottom end of what the Bank of Canada considers to be a neutral range of 2.50 percent to 3.50 percent, where policy is no longer stimulative.

The last increase was October 24th 2018 when the Bank of Canada raised the overnight rate from 1.5 per cent to 1.75 per cent.


Source: https://www.bankofcanada.ca/2019/03/fad-press-release-2019-03-06 PIC Stephen Poloz

Income and House Prices

Sal Guatieri, senior economist at BMO Capital Markets, says incomes in many regions of the country are likely to rise faster than house prices. That follows many years of property prices outstripping income gains by many multiples. While that means a slow rise in equity gains, the good news is more Canadians will be able to buy into the housing market.

First Time Home Buyer Incentive

The 2019 federal budget announcement included $1.25 billion over three years for “shared equity mortgage” with first-time home buyers. That means Canada Mortgage and Housing Corporation (CMHC) could contribute up to 10 per cent of the purchase price of a home in what will essentially be an interest free loan that does not need to be paid back until years later – possibly when the home sells. There are still more details to come and questions to be answered, but here are a few of the qualifying requirements we know about:

• Applicants must have a household income of less than $120,000 per year.
• Applicants must be able to come up with a five per cent down payment.
• The program caps out at four times the applicant's annual income, which means it can only help homeowners looking to buy properties where the mortgage value plus the CMHC loan don't exceed $480,000.

This Initiative could save first-time home buyers a considerable amount of money. For example, if a first-time buyer wants to get a home that costs $400,000, they have to come up with a $20,000 down payment, then they'd normally have to take out a loan for $380,000 to cover the rest of the purchase price. However, under the new program, CMHC could kick in up to $40,000 toward the purchase price, in exchange for up to a 10 per cent stake in the home. That brings the buyer's mortgage down to $340,000. On a standard mortgage at 3.5 per cent interest, that translates into a monthly mortgage payment that is $200 lower than it would have been for the 25-year life of the loan. That's more than $2,700 a year in potential savings; a significant amount of money for households that are just starting out in their careers and growing their families.

Reference: https://www.cbc.ca/news/business/budget-cmhc-home-buyers-1.5063204

Reference: https://www.timescolonist.com/business/easing-mortgage-stress-test-better-for-first-time-buyers-critics-1.23670358

Second Casino in Greater Victoria

View Royal is home to the region’s only casino, Elements Casino. However, BC Lottery Corp. would like to place a second casino in Greater Victoria. Saanich is vying to be included in the next round of casino talks after Victoria turned it down. Saanich would only consider a casino with amenities such as a hotel or entertainment centre with about 1,200 seats and is interested in revenues that would reduce the tax pressure on residences and businesses.

Source: https://www.timescolonist.com/news/local/saanich-wants-to-be-a-player-in-next-round-of-casino-talks-1.23661699

Property Renovations

There is a lot less cash being borrowed for property renovations compared with recent all-time peaks according to the Bank of Canada.

A recent peak of $3.61 billion was hit in 2nd Quarter of 2016, and the most recent quarter is down 17.79% from there. The balance is also down 42.25% from the all-time high peak of $5.14 billion hit in 3rd Quarter of 2009.

SOURCE: https://betterdwelling.com/flip-or-flop-canadian-real-estate-renovation-loans-down-over-40-from-peak

Building Inspectors

Building inspectors are the unsung heroes and heroines providing vital quality assurance in construction. They also have some memorable adventures while providing this essential service. “Building Inspector Memories” by Tom S. North provides a fun and interesting look at the industry.


Source: https://www.mayerthorpefreelancer.com/entertainment/books/book-review-building-inspectors-memoir-provides-an-insider-look-at-the-b-c-property-industry/wcm/fce71259-2325-4d3d-b6fe-bf2f00d87658 

Who is paying more taxes?

According to a study of Statistics Canada data by CMHC, the share of the province’s homes owned purely by overseas residents was found to increase dramatically among newer properties, rising to a peak of nearly nine per cent built in the frenzied 2016/2017 market.

CMHC also found that the median value of homes owned by non-residents in Metro Vancouver and across B.C. was higher than the median value of homes owned by Canadian residents. The non-resident-owned median assessment value of a single-family house in British Columbia was $236,000, or 36.7 per cent, higher than the median-valued resident-owned detached house in B.C.

Source: https://www.westerninvestor.com/news/opinion/weekly-buzz-foreign-home-ownership-price-drops-1.23664980