Loans Canada Launches Free Credit Score Portal And Is Recognized As One Of Canada’s Top Growing Companies
Loans Canada is pleased to announce it placed No. 131 on the 2022 Report on Business ranking of Canada’s Top Growing Companies.
There is currently a vicious crisis concerning affordable housing in Canada. While experts say we shouldn’t spend more than 30% of our income on housing, there are millions of struggling Canadians spending more than 30% of their income on housing costs. What makes this issue even worse is that its effect doesn’t end at housing. For those who live off minimum wage, it becomes almost impossible to maintain their budgets as so much of their income is going toward rent. This can lead to high levels of consumer debt, poor credit, and even homelessness. How and why has the housing market become, and continues to be, so unaffordable?
The word affordable has changed drastically over the years. Today, an “affordable” house in the Greater Toronto area costs on average around $1,025,200 according to the CREA National Price Map. As mentioned above, according to the Canadian Mortgage and Housing Corporation (CMHC), housing is considered “affordable” if it costs less than 30% of your income.
Unfortunately, for some people, this isn’t enough to keep their current home, let alone buy a new one. Looking closely at Statistics Canada’s numbers, it appears that this housing crisis is more severe in small, suburban areas and cities. According to The Globe and Mail, in British Columbia, 31% of renters in West Vancouver spend more than half their income on housing, compared with 25% in the City of Vancouver itself. The cost of homes and rental apartments in residential areas is skyrocketing, causing people to leave their homes in search of
According to a 2021 report by Oxford Economics, five Canadian cities are ranked among the ten least affordable cities in North America.
When cities like Hamilton Ontario, a suburb of Toronto, is more unaffordable to live in than major U.S. cities like Los Angeles, New York City, and Miami, it’s not hard to understand why young Canadian and Canadians with average to low incomes are putting their dreams of homeownership on the back burner.
|City||Home Price (2020)||Household Income (2020)||% of Income For Mortgage (2020)|
|Richmond Hill, BC||907,867||107,024||36.3%|
Information taken from Mortgage Affordability Study conducted by Point2. Please check out their report for more information.
Advocates state that the steeply rising cost of rent is a result of the lack of low-cost rentals supplied in the main cities. The majority of rentals in the cities are overpriced and privately owned by money-hungry investors. This has forced low-income workers out of the cities and away from their jobs, to look for more affordable housing in rural areas.
With the influx of people moving from the cities to more rural areas, housing prices also increase in these places. This then creates another issue as the people who leave the cities trying to escape the high cost of living are faced with prices just as expensive. The high prices in these communities then spread and affect the residents living in nearby, underprivileged regions, who now must also deal with price increases.
Check out if you should rent or buy a home.
Another reason behind the affordable housing problem in Canada is the recent real estate boom. An intense growth in major cities, followed by the increase in demand for real estate, has a direct link to prices. As demand increases, so does the price. Additionally, people from other countries looking to either move to Canada or invest in property have caused this problem to worsen. Foreign investment in the real estate market has caused an increase in prices and the expected increase in immigration over the next few years will, without a doubt, escalate the demand for rental units.
It’s no secret that Canada is home to dozens of picturesque locations that make for great vacation destinations for both Canadians and tourists from all over the world. And while this is great for the Canadian tourist industry, for those families who have lived in these places for years, the financial burden is only getting worse. With popularity comes an increase in the cost of living.
Is there ever a right time to buy a house?
The COVID-19 pandemic has impacted the economy in more ways than one. One of the most unprecedented effects it had is on the current red hot housing market. While initially housing prices and sales decreased during the first half of the pandemic, total sales outdid total listings during the rest of 2020.
According to the Housing Market Outlook report by the CMHC, the historic low mortgage rates and higher savings had created an opportunity for many Canadians to fund a home. The limited supply and a spike in demand lead to an inflation in housing prices. A CBC article, also notes that the rise Canadian housing prices will keep trending depending on the:
According to RE/MAX; a reputable real estate company in Canada, it is unlikely that the housing market will crash in 2021. It explains that in 2017 when the Government of Canada implemented the foreign buyer tax and the mortgage stress test to cool the market, many Canadians put their house buying dreams on hold. Now 2020 comes along, interest rates drop and savings increase causing Canadians to jump into the housing market.
Given this, the influx of real estate listings required to cause a housing market crash, is unlikely. In fact, RE/MAX believes that even if a flood of listings were to appear, there would be enough demand to balance the supply.
According to the Housing Market Outlook report by the CMHC, the economy is expected to return to normal towards the end of 2023. That is, if the majority of Canadians are vaccinated by the end of 2021. Other economic variables such as immigration, higher consumer and business confidence levels, and the decline of disposable income as government support comes to an end and people return to work will all contribute to the economic condition returning to normal. This includes home prices as well as the home sales returning to pre-pandemic levels.
As the price of houses continues to increase at startling rates, people are losing their homes and slowly losing their jobs. With a broken economy and ageing housing stocks, communities are in need of reasonable, inexpensive housing.
Rating of 4/5 based on 50 votes.
Don’t pay until March with this offer from our partner, Fairstone.* Ends January 31st.
New Offer! Get up to $2,000 cashback + a $50 bonus on signing up. Conditions apply.
Earn an average 5%¹ cash back at thousands of partners and at least 0.5%² cashback guaranteed.
All consultations and conversations with Loans Canada and its partners are confidential and risk-free. Speak with a trusted specialist today and see how we can help you achieve your financial goals faster. Loans Canada and its partners will never ask you for an upfront fee, deposit or insurance payments on a loan. Loans Canada is not a mortgage broker and does not arrange mortgage loans or any other type of financial service.
When you apply for a Loans Canada service, our website simply refers your request to qualified third party providers who can assist you with your search. Loans Canada may receive compensation from the offers shown on its website.
Only provide your information to trusted sources and be aware of online phishing scams and the risks associated with them, including identity theft and financial loss. Nothing on this website constitutes professional and/or financial advice.