The Canadian real estate market has witnessed a rise in Vancouver and Toronto, stagnation in Alberta; with the rest of the country somewhere in-between, experiencing little to zero growth in the price of homes. The overall national sales activity for 2016 has thus increased, evident by the 6.1 per cent increase in sales, after an astonishing record of 536,400 homes sold. With respect to price, the average Canadian home is selling for $490,700, representing an annual increase of 10.8 per cent.
The red hot markets in both Vancouver and Toronto are not only increasing at an unsustainable pace, but they have also contributed to a severe shortage of high end property, resulting in the resale price of homes increasing by 30 per cent and 16 per cent respectively. This rise in prices has greatly impacted the average mortgage debt in Canada which has seen an increase from $175,000 to $181,000. The cities accounting for the largest mortgage debt outstanding consist of Vancouver at $259,000; Calgary/Edmonton at $217,000; followed by Toronto at $194,000; and Montreal rounding up the list at $156,000.
Aside from the high performing markets in Vancouver and Toronto, the average price of a home in the rest of Canada has seen a price increase of 9.1 per cent, documented by an average price of $375,532. Canadians all over are thus experiencing greater difficulty in keeping up with the rising prices, evident by the fact that more and more Canadians are unable to afford homes. To give you a better indicator of the impact the rising prices has had on the affordability level of Canadians – the home ownerships costs in Ottawa, Calgary, and Montreal constituted respectively 36.5 per cent, 38.3 per cent, and 42.8 per cent of an average household’s pre-tax income for a single-family detached home.
Due to the widespread increase in prices, sellers have now become reluctant to list their homes for sale because they are unable to afford new homes down the line – local economists have thus called for government intervention, however the government has remained silent, counting on the market to restore prices in the year 2017.
To make matters worst, the occurrence of the Fort McMurray wildfire and the dented oil production have contributed to the weakening of the Canadian dollar, leading to a severe decrease in investments made by Canadians in foreign markets. Although the number of foreign investments has come to a halt, the number is expected to increase as the price of oil recovers, and the value of the Canadian dollar is restored.
In the mean time, however, the weak Canadian dollar has led to an influx of foreign investors, with Vancouver alone accounting for a spending of $12.7 billion from Chinese investors, representing 33 per cent of total sales.
US investors have also been quick to take advantage of the favorable exchange rate, considering homes in Canada have now become 20 to 30 per cent cheaper. Major undervalued regions in Canada such as Alberta has served as favorable grounds for US investors, evident by the fact that US investment has increased from 27 per cent to 48 per cent with respect to commercial investments in the past six months.
The above statistics thus make quite clear that foreign investment in Canada has been on the rise, with the US responsible for majority of the direct investment. From these facts we can conclude that the one-time reluctance of US investors to enter the Canadian market has greatly reduced, resulting in massive investments in most major cities – with Vancouver serving as the hottest market for residential investments and Toronto constituting the hottest market for commercial investments.
This is where JustClose.com can be invaluable to the process of closing your deal on a property in Canada. These three parties, as well as yourself need to work together and keep the lines of communication open.
JustClose.com can provide you with a virtual structure that is clear to all the parties involved in the process. They provide a portal that offers clear communication between parties as well as a virtual pre-closing, virtual closing and administration controls that allow you to monitor every step of the deal. They even offer dispute resolution tools that will help you untangle any snags along the way.
For a foreign buyer, acquiring property in Canada has never been easier with the help offered by JustClose.com. For Tips and Advice please click on JustClose.info.
Note: JustClose.com is going Live at the end of July, but company is taking applications for a membership. Membership is free for the first 6 months. Please ask for a promo code at info@JustClose.com.
By: Amtej Dosanjh