Housing affordability in Canada worsened by 4.9 points in Q1'22, marking a fifth consecutive quarterly deterioration. The first quarter of 2022 was also the worst quarterly deterioration in over 27 years. Over the last 12 months, the worsening in affordability was the nastiest in 40 years. For the first time since 1994, it would take more than 50% of income for a representative household to service the mortgage on a representative home in Canada's main urban centers. The blame can be retraced in equal fashion to surging home prices and an increase in the mortgage interest rate in Q1. For the latter, our 5-year benchmark mortgage rate used by our affordability metrics rose 46 bps in the last quarter of the year which was the largest one quarter change since 2013Q3. The annual increase in interest rates was the steepest in over two decades. Most homebuyers have avoided these steep increases in recent months by opting for variable rate mortgages, but the financing conditions for those are now less attractive. Subsequently, we have started to notice their impact on weakening resale market data. Already in May, 60% of consumers answered that now is a bad time to make a major outlay (such as a home, Conference Board data). the highest level on record outside of a recession. Headwinds will continue to blow against Canada's real estate market in the months ahead with the Bank of Canada pursuing its monetary policy normalization process through higher policy rates and quantitative tightening.

HIGHLIGHTS:

• Canadian housing affordability deteriorated for a fifth consecutive quarter in Q1'22. The mortgage payment on a representative home as a percentage of income (MPPI) rose 4.9 points after a 2.2-point increase in Q4'21. Seasonally adjusted home prices increased 5.1% in Q1'22 from Q4'21; the benchmark mortgage rate (5-year term) rose 46bps, while median household income rose 0.8%.
• Affordability deteriorated in all the ten markets covered in Q1. On a sliding scale of markets from worst deterioration to least: Victoria, Toronto, Vancouver, Hamilton, Ottawa, Gatineau, Montreal, Winnipeg, Calgary, Quebec, Edmonton. This was the fifth consecutive quarter with a worsening in all markets. Countrywide, affordability deteriorated 2.7 pp in the condo portion vs. a 6.3 pp deterioration in the non-condo segment.

Source: nbc.ca

(NC) Feeling housebound and restless from the pandemic? A road trip may be just what you need. It’s the perfect opportunity to explore places closer to home that you may not have considered otherwise.

Plus, the feeling you’ll get on the open road, listening to your favourite music and enjoying the sights, will surely give you a lift. Before heading out, here are some tips to make your trip as smooth as possible:

Plan your route
First, decide where you want to go and any attractions you’d like to see along the way. Plan your route accordingly, taking into consideration gas or recharging stations, rest stops and dining options. Get tickets or make reservations ahead of time for any attractions, restaurants or hotels you’d like to visit to ensure availability. Before setting off, check the weather forecasts, as well as road closures or any restrictions along your planned route.

Car maintenance
Before embarking on a road trip, ensure your car is in top shape. You’ll want to check that your tires are in good condition, there are no unusual noises while braking, fluid levels are normal, the wipers are working and that everything is in good order.

This is also a good time to familiarize yourself with the driver assistance features of your car. From blind-spot warnings to cameras, sensors and adaptive cruise control, these features are a great aid. But it’s important to know how they will warn you or intervene, and also when they might not work properly, like in bad weather or with poor visibility. Transport Canada recommends reviewing these features in the owner’s manual or on the manufacturer’s website.

Communicate
Let family and friends know the route you’re taking, as well as your destination and the timeline for your trip. Stay in contact throughout the road trip, sending quick updates as you stop at different landmarks or attractions.

Vehicle Safety Kit
Consider keeping a vehicle safety kit in your vehicle that may include first aid items, food, tools, flares, reflective safety items, and provisions that can keep you warm. Kits can be purchased at retailers.

www.newscanada.com

(NC) A vacation should be a time of rest and relaxation away from the hectic pace of work and daily life. But it can also become a time with a lot of expenses that may prevent you from enjoying the moment.

To make sure you don't ruin your vacation with worries about unexpected spending, prepare a budget for the activities you would like. This way you can set limits on your spending, identify ways to reduce costs, ensure you spend within your means, feel in control and, most importantly, reduce your stress.

The same principles apply to a vacation budget as to your regular spending. Make a list of your planned expenses and divide them into needs and wants. Consider required expenses such as accommodation, food, gas, and travel insurance. Wants might include things like guided tours, boat rides and eating at the best restaurants. When considering the fun stuff, think about what’s important to you and what you can live without. Also, include a cushion for the unexpected. All this will allow you to better estimate how much money you’ll need and plan ahead to put that amount aside.

The Financial Consumer Agency of Canada has a free, easy-to-use online budget planner that can help you prepare. And when you’re on your vacation, watch for new electronic alerts from your bank to help warn you about overspending. By June 30th, 2022, Canadian banks must send alerts to customers when they have $100 left in their chequing account or come within $100 of their credit card limit. You can contact your bank to customize this minimum amount, so you’ll receive a text, email or app notification if you go past it.

Overall, your vacation should be a time of relaxation and adventure, and thinking about your spending in the planning phase can help it stay that way.

Find more information at canada.ca/money.

www.newscanada.com

Statistics released by the Canadian Real Estate Association (CREA) show national home sales were up in February 2022 as buyers jumped on the first batch of spring listings.

Home sales recorded over Canadian MLS® Systems climbed 4.6% between January and February 2022. The monthly increase in activity was likely the result of a rebound in new listings in February following big a decline in January. As such, stronger activity may persist as late-February new listings continue to sell in March.

Sales were up in about 60% of local markets in February, led by some big jumps in Calgary and Edmonton, as well as a gain ahead of the national increase in the GTA.

The actual (not seasonally adjusted) number of transactions in February 2022 came in 8.2% below the monthly record set in 2021. That said, as was the case in January and throughout the second half of 2021, it was still the second-highest level on record for that month.

• On a seasonally adjusted basis, home sales decreased 12.6% from March to April, a second monthly decline in a row. Despite this pullback, the resale market remained very active on a historical basis, standing above the historically high level of 45K now for 22 consecutive months.
• This seems to be the beginning of a downward trend as 80% of covered markets experienced a decline during the month.
• The recent drop in the resale market is in part due to the increase in fixed mortgage interest rates which are consequently leading to more restrictive stress tests. The effect on variable rates should begin to be felt in the coming months and accentuate the slowdown.
• New listings decreased by 2.2% during the month. However, the reduction in sales compensated for the decrease in new properties for sale, so that the number of months of inventory rose from 1.9 to 2.2 months in April.
• Based on the active-listings-to-sales ratio, market conditions loosened during the month but the housing market continued to be tight in 8 of the 10 provinces, with only Saskatchewan and B.C. (the latter switched this month) indicating a balanced market.
• Housing starts in Canada increased by 18.9K in April to 267.3K (seasonally adjusted and annualized), the strongest print since November 2021 (at 305.9K) and above consensus expectations calling for a 245.7K print. All told, housing starts continue to stay well above the historical average.
• The Teranet-National Bank Composite National House Price Index increased 2.0% in March compared to February after seasonal adjustment, the second-highest monthly increase on record. Ten of the 11 markets in the composite index were up during the month: Halifax (5.4%), Hamilton (3.3%), Toronto (2.7%), Ottawa-Gatineau (2.4%), Victoria (1.9%), Vancouver (1.5%), Winnipeg (2.4%), Montreal (1.1%), Edmonton (0.6%) and Calgary (0.5%). Only Quebec City was down (-0.6%).

Source: https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/economic-news-resale-market.pdf

(NC) Moving to a new place involves lots of changes, and it can take time to get used to your new surroundings, including new people, shops, parks and more. But living somewhere new is also an opportunity to explore and build community with your neighbours and in local spaces. Here are some tips to discover your area:

1. Check out local events.
While indoor events may be on pause or restricted on and off during the pandemic, communities are still trying to keep outdoor and online events running and accessible. So, join a local online crafting event or virtual trivia games night. Head to an open-air farmers’ market or even go to your local outdoor skating rink to get a feel for your neighbourhood. Your public library’s website is a good place to find upcoming events.

2. Spend more time outside.
If you’re trying to meet people, it can be hard finding the right way to start a conversation. But if you take a long walk through your neighbourhood or take your pup to a nearby dog park, casual chats are more likely to happen naturally. You might compliment someone’s outdoor entry arrangement or speak about the weather to a passerby.

3. Take a stroll along main street.
A great way to get to know your new community is by connecting with small businesses serving the area. Pick up some flowers or plants from your local florist, grab some takeout from the neighbourhood pub and buy some books from your local bookshop. Chat with the folks who work there to get recommendations and build connections.

4. Get active in public spaces.
Whether it’s a community garden, your local library or a neighbourhood park, find something that interests you and get involved. You can volunteer for a park cleanup, join a virtual book club or begin to plan out your own veggie patch in a community garden while learning about your area.

5. Get to know your community through census data.
The 2021 Canadian census data are being released all throughout this year, and it’s a great way to find out more about your city, town, or neighbourhood. Use them to discover what languages are commonly spoken in your area, how many families have kids of similar ages as your own and more. By being more informed about your area, you can help drive informed decisions by leveraging your community leaders to consider whether a new school or retirement home is a valuable addition to your neighbourhood.

Find more information at statcan.gc.ca/census.

www.newscanada.com

(NC) You might think you know your town like the back of your hand. But if you go for a walk or a drive in your neighbourhood, you might be stunned by a new shop or a landmark that you didn’t notice before. Whether you’re planning a staycation or just need a new family activity, there’s no better time to learn more about where you live.

Here are some fun ways to explore your home town on a new level:

Create a photo scavenger hunt

Perfect for a family get together. Write out a list of things to photograph around town and then hit the streets and get snapping. Items can be as specific as local landmarks and as general as squirrels or colours. The first to find everything on the list wins a prize. Try printing the best photos or creating your own social media hashtag to share your discoveries and have an easy way to look back on the day.

Visit local shops

Another great way to play a tourist in your own backyard is to discover new finds while supporting local businesses. Try every local restaurant in your town or in a specific neighbourhood over a period of several months. Or, decide to only buy from local stores during a specific time frame. Cross off local shops from ‘best of’ lists to make your own definitive list and share with family and friends. When you support local, it’s a great way to discover character, hidden gems and the people of your home town.

Explore local history

From haunted alleyways to sacred monuments, every town has its own unique story to tell. You can reach out to your local library or search online to gain some historical insights. To get the most out of what you learn, discuss it with family, friends or online. Free resources like census data can also give a unique portrait of your community’s population, and how it has evolved over time. Check out the latest data visualization tools for this information, including easy to understand maps, graphs and trends for your area. What do your family and friends think about it? If your town began full of young families but is now primarily retirees, what drove the change? You might be surprised by what you uncover.

Find more information and start your search at statcan.gc.ca/census.

www.newscanada.com

The Bank of Canada increased its target for the overnight rate to ½ %, with the Bank Rate at ¾ % and the deposit rate at ½ %. The Bank is continuing its reinvestment phase, keeping its overall holdings of Government of Canada bondson its balance sheet roughly constant until such time as it becomes appropriate to allow the size of its balance sheet to decline.

The unprovoked invasion of Ukraine by Russia is a major new source of uncertainty. Prices for oil and other commodities have risen sharply. This will add to inflation around the world, and negative impacts on confidence and new supply disruptions could weigh on global growth. Financial market volatility has increased. The situation remains fluid and we are following events closely.

Global economic data has come in broadly in line with projections in the Bank’s January Monetary Policy Report (MPR). Economies are emerging from the impact of the Omicron variant of COVID-19 more quickly than expected, although the virus continues to circulate and the possibility of new variants remains a concern. Demand is robust, particularly in the United States. Global supply bottlenecks remain challenging, although there are indications that some constraints have eased.

Economic growth in Canada was very strong in the fourth quarter of last year at 6.7%. This is stronger than the Bank’s projection and confirms its view that economic slack has been absorbed. Both exports and imports have picked up, consistent with solid global demand. In January, the recovery in Canada’s labour market suffered a setback due to the Omicron variant, with temporary layoffs in service sectors and elevated employee absenteeism. However, the rebound from Omicron now appears to be well in train: household spending is proving resilient and should strengthen further with the lifting of public health restrictions. Housing market activity is more elevated, adding further pressure to house prices. Overall, first-quarter growth is now looking more solid than previously projected.

We expect the growth in prices, sales levels, and housing starts to moderate from recent highs, but remain elevated in 2022. Robust GDP growth, higher employment and net migration will support demand. 

In 2023 and 2024, the growth in prices will moderate with sales and starts activity remaining above long-run averages. Homeownership affordability will decline, with the growth in prices expected to outpace income growth. Rental affordability is also set to decline from increasing rental demand and low stocks of rental housing. 

The growth in prices will likely continue to be led by markets with already low listings, including Vancouver, Toronto, and Montreal. 

Supply constraints on construction will continue to impact major centres and especially Vancouver and Toronto, highlighting the central role of housing supply in determining affordability.

Source: CMHC