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The deep freeze in the Canadian housing markets continues. The latest housing market stats show that housing sales and prices in January were lower than the ones recorded a year earlier.

A retrospective view of the housing markets raises significant concerns. The impact of stringent mortgage regulations appears to be longer lasting than was initially expected.

In January 2018, housing sales declined after stricter mortgage regulations, including a stress test, were enacted. The January 2019 numbers are the first piece of evidence suggesting that housing market slowdown is deeper rooted than a direct and immediate reaction to policy interventions.

The sustained slowdown in housing markets presents at least two alternatives to the government. The first alternative is to maintain the status quo and do nothing. The second alternative is to rethink the policy interventions made in the recent past and see if there is any new evidence that warrants a change in policy.

The decline in housing sales in January 2018 was expected. A whole host of new regulations designed to tighten  mortgage lending became effective on the first day of January last year. Sales in December 2017 were higher than usual as households rushed to close deals to avoid being subject to stricter mortgage regulations a month later.

When January 2018 sales were 14.5 per cent lower than the month before, there was no surprise, and the decline was attributed to the new stress test. Similarly, year-over-year sales were down 2.4 per cent from January 2017.

The January 2019 sales figures are more disturbing. Compared to the year before, sales last month were down by four per cent. In fact, the Canadian Real Estate Association (CREA) revealed that sales in January 2019 have been the weakest since 2015.

In addition to sales, housing prices have also softened. The average house price across Canada was $455,000, 5.5 per cent lower than the same time last year.

The January 2019 statistics offer the first opportunity to compare the annual change in housing market dynamics after the stress test came into effect. The decline in last month above and beyond what was observed a year ago is indicative of the fact that the markets are not merely reacting to new regulations, but the markets have embraced a more systematic response that is characterized by fewer transactions and lower prices.

The weakness in housing markets also affects mortgage lending, a business The Big Five banks continue to dominate in Canada. The continued slowdown in housing sales may have influenced banks’ mortgage portfolios — the first signs of such an effect could soon be visible when the banks release their updated earnings report in the coming days.

The past few weeks have witnessed diverse voices both questioning and supporting the efficacy of the more stringent mortgage regulations. Some believe that stress tests are working fine. Phil Soper, CEO of Royal Lepage, thinks that the stress tests are needed “for the longer term health of the economy.”

Others believe that the stress tests have adversely impacted homebuyers who are either unable to buy at all or are forced to consume less adequate shelter space than they would have afforded in the absence of stress tests.

After reviewing the sustained decline in housing sales, Dave Wilkes, President and CEO of the Building Industry and Land Development Association (BILD), believes that the stress test “has overshot its target.”

BILD has advanced two proposals for the feds to contemplate. First, to consider lowering the stress test threshold that requires borrowers to qualify at 200 basis points above the contracted rate. As the interest rates have been revised upwards since the stress test was implemented, there is merit in reviewing the threshold.

Housing trade groups are also advocating to reintroduce the 30-year amortization for CMHC insured mortgages, which was available until July 2012.

First-time homebuyers are likely to benefit more from these changes. The ability to stretch the amortization period to 30 years lowers the monthly payment and allows many to participate in homebuying who would otherwise be forced to rent at a time when rental vacancy rates are at historic lows in large urban housing markets.

Critics of the 30-year mortgage point out its two obvious shortcomings. First, borrowers end up paying considerably more in interest. Second, longer amortization periods contribute to house price inflation.

Good public policy should be responsive and rooted in evidence. Recent housing market data indicates that the impact of tighter mortgage regulations has been longer lasting than what most housing experts expected. A course correction might be a prudent way forward.

Murtaza Haider is an associate professor at Ryerson University. Stephen Moranis is a real estate industry veteran. They can be reached at


Condos were the only bright spot in Calgary’s 2018 real estate market, declining less in price than all other property types and, in some neighbourhoods, even experiencing an increase.

Condos for sale in Calgary softened 2.4 per cent to $251,500 in 2018 from the year before, compared to the market as a whole which slipped 3.4 per cent to $418,500, and to detached houses which fell 3.5 per cent to  $481,400.

In some neighbourhoods, like the North East and South East, apartment units even increased slightly, while detached housing prices fell in all neighbourhoods.

Prospective buyers are likely favouring condos because of new mortgage regulations put in place January 1, 2018. The federal bank regulator, OSFI, instituted a stress test and borrowers must now qualify at a mortgage rate 2 percentage points above their contract rate (which, at press time, could be as low as 3.27%: the current best mortgage rate in Alberta) or at the Bank of Canada rate, whichever higher, (now at 5.34 per cent). This likely reduced affordability for buyers and pushed them into less expensive forms of housing.

Calgary is also facing an unstable job market due to low energy prices, which potentially further reduced both affordability and demand. Mortgage rates in Alberta also increased over the course of 2018.

Another factor for the city’s rough housing market last year is simply a glut of inventory — Calgary real estate listings are overshooting demand.

The Calgary Real Estate Board reports that there’s about 5.2 months of inventory, meaning it would take that amount of time to completely sell off everything on the MLS. In comparison, Toronto has around 2.5 months.

Even so, buying conditions varied across the city and were hyperlocal.

The North West, for example, saw low competition for condos, with a sales-to-new listings ratio of 20.8 per cent, but extreme competition for detached houses, with a sales-to-new listings ratio of 120 per cent.

In the East, condos were in sellers’ territory, with only four units listed for sale and three of them selling. Similarly, 10 detached homes were listed for sale but an incredible 19 sold.

The City Centre was balanced for both condos and detached houses, with neither sellers or buyers getting the upper hand.

Want more details? Check out the infographic below. is a real estate company that combines online search tools and a full-service brokerage to empower Canadians to buy or sell their homes faster, easier and more successfully. Home buyers can browse homes across Canada on the website or the free iOS app.

Photo by Kyler Nixon on Unsplash

Mortgage rates were very nearly unchanged today, although the average lender was just slightly higher.  Investors reacted to news over the weekend that the US/China tariff deadline would be extended.  While that doesn’t have anything to do with mortgage rates, it set market forces in motion that created the modest, indirect effect.

The looming tariff deadline had been a source of uncertainty for markets.  All other things being equal, uncertainty tends to promote some safe-haven buying in bonds and some weakness in stocks.  When investors are buying more bonds, it helps push rates lower (or keep them from going higher).  Of course, this uncertainty trade must be balanced against a variety of other considerations for investors.  Moreover, the news in question wasn’t a solution to the trade negotiations–just a delay.  As such, it didn’t have huge repercussions for markets.

…(read more)

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Collateral ChargeThe beginning of the year is typically tough financially for most of us. Holiday bill payments, RRSP contributions, property tax bills, etc. And, if you’re self-employed, you probably have to make some sort of business tax or corporate tax payment. If December is the Holiday Season, then January and February feel like a hangover!

Banks and credit card companies love this time of year because this is when we’re most likely to carry a balance, forcing us to pay those crazy interest rates that range from 9% to 24%.

But, wait! Before you get too depressed, there may be a better option. There’s a less expensive way to manage your debt.


Canadians seem to think debt consolidation is a dirty word. Studies show that we’re paying down our mortgage balances faster (I like that trend), except we’re carrying other higher-interest debt such as car loans, unsecured lines of credit and credit card balances.

The big problem here is that these non-mortgage debts carry extremely high interest rates ranging from 6% to 24%. (Sorry Banksters, I’m leaking your secret!) So, when did it become okay to carry a smaller mortgage but still carry all that other debt? Don’t forget that mortgage rates today range from 2.9% to 3.85%. Which rate would you rather pay?


Professor Moshe Milevsky from Toronto’s Schulich School of Business published a study about debt diversification. The results show some clear differences between Canadians and Americans. We have better hockey players, better ski mountains and better beer… sorry, that’s not it LOL. His results showed that we don’t like to touch our mortgages… we’d rather use other credit facilities with higher rates. And this type of thinking has to change.

“Don’t put your eggs in one basket”.  Well, that may work for your assets, but it doesn’t work for your liabilities. I’m not sure why so many of us think this way. Maybe it’s because our parents told us to pay off our mortgage first. Good advice, but they didn’t say to borrow other money at higher interest rates at the same time. Or maybe it’s because we’re being hammered by the media with reports about ‘record personal debt levels’ and somehow we believe that if we don’t touch our mortgage, we aren’t part of that group.


Stop and think about your current situation. Do you have some equity in your home? Do you owe more than $20,000 in other debts? If so, then you could start saving money immediately. With house prices at all-time highs and mortgage rates still on the low side, it’s a great time to review your options. Speak with an experienced mortgage broker today.

Your best interest is my only interest. I reply to all questions and I welcome your comments. Like this article? Share with a friend.

Steve Garganis: 416-224-0114;

Buying a car should start with a budget. Yeah, I know, a budget sounds boring, but it serves as your guiding light to know how much you can afford when buying a car. It will also determine whether to buy new or used and how you’ll pay for it. It’s the starting point to help make a difficult decision easier.

If you’re financing your purchase, the rule of thumb, according to money and car experts alike, is the 20/4/10 ratio.  Here’s how it works:

The downpayment on your car should be at least 20% of the purchase price

If you put any less down, you could be paying more than what the car is worth by the end of the year, it is also known as negative equity. According to Edmunds, a car depreciates in value by 9% as soon as you drive it off the lot. By the end of the year, that same car has lost about 19% of its value.

Think about it, if you buy a $20,000 car with 0% down by the end of the first year your car is worth $16,000. Assuming 4% interest on a 5-year loan you’re paying about $370 per month your remaining amount owing is $15,560.

However, If you put 20% down, your car payments are $295 per month and your remaining amount owing is $12,460. You owe less, you’re paying less per month, and you’re nearly halfway to paying off the car completely.

A lower monthly payment makes affording gas, maintenance, and auto insurance a little easier on the pocketbook.

Limit your car loans to 4 years or less

The longer your term, the more interest you’ll pay. It’s also important to know that your lender may require more expensive car insurance than your budget allows when borrowing money to protect their investment.

For instance, the minimum required third-party liability coverage for Ontario car insurance quotes is $200,000. In Quebec, the minimum is $50,000.

A financial lender will often require you to carry more than the minimum, or $1-2 million, in third-party liability coverage which translates to a more expensive monthly premium. You can shop around for the best car insurance quotes to reduce your rate but the extra added endorsements like collision, comprehensive, and extra third-party liability will cost more than a no-frills policy.

Financial experts tend to agree on a car loan being 48 months, or if you can afford it, go to 36 months. If 48 months is too hard, you can stretch to 60 months but never further. If you can’t make the payments work within these timeframes, you should probably be looking at a less expensive car.

Monthly payments should be less than 10-15% of your take-home pay (after taxes)

I used the neuvoo income tax calculator to figure out that a $50,000 salary means you take home $38,869. If we calculate 15% of that take-home pay, we end up at $5,830.35 or car payments of $485.86 per month.

If you want the best car you can afford at that salary, you could buy a $30,000 car, put a $6000 down-payment, get a 5-year loan at 4% interest and end up at monthly payments for 5 years at $442.  

But, you still need to compare car insurance plus evaluate the gas mileage and maintenance costs of your new vehicle. If you’re setting aside $100 per month in maintenance, $200 for gas, $200 of insurance, and $50 in parking fees – you’re spending almost $1000 per month to drive a vehicle.  

That $100 transit pass might not look so bad anymore.

If we’re staying with above example, at about $1000 per month on your car, you’re left with $26,869, or roughly $2,200 a month, for rent, groceries, clothes, dining out, tax free savings accounts, GICs, etc. for 5 years.

How much car can you afford: car affordabiity calculator




For estimates only. Actual term, rate, and payment amount are
based on credit approval, cost and year of vehicle.
96 months at
0.99% cost of borrowing

Powered by


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var a = Math.round(loan_amount * (i + (i / (Math.pow(1 + i, n) – 1)))); //periodic payment amount
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The bottom line on how much car you can afford

Edmunds depreciation study, experts advising on short term loans, and limitations on what you can afford based on your salary are all major factors in determining the car you buy. If you’re looking for a little more freedom, you could finance a used car and worry less about depreciation.

Buying a car is a major life decision and doing all your research can help you make the smartest, most informed choice when you’re ready.