Archive for July, 2019
Millions of Canadians put off seeking help for their debts because they feel ashamed.
A new survey from insolvency experts MNP reveals that 46% of respondents said they would be too embarrassed to ask for help and a third said they would hold back due to the stigma of bankruptcy.
But not getting help when debts become too much to cope with, means Canadians risk serious financial trouble.
“Unmanageable consumer debt or financial hardship is extremely lonely and isolating because the guilt prevents people from talking about it. Unfortunately, our survey shows those who are most in need of help are the least inclined to ask for it,” says Grant Bazian, president of MNP.
That is highlighted by the survey results with 61% of Canadians who rate their personal debt situation as bad and more than half 54% who are financially insolvent saying they would be embarrassed to ask for help if their financial situation was serious enough to consider bankruptcy.
“The number of people filing has increased, but this doesn’t reflect the magnitude of the consumer debt challenges in the country because so many people delay getting help until they are in an absolutely dire situation. By the time they speak with a professional, many may be forgoing basic necessities to avoid filing a Consumer Proposal or Bankruptcy,” says Bazian.
The report shows that 30% of those struggling with debts do not know what to do or who to turn to when things get desperate; rising to 47% among those most in need including those who are insolvent at the end of the month.
But there is also a trust issue with 52% of all respondents and 58% of 18-34 year olds, saying that they find trusting professional companies to help get them out of debt.
“The trust issue may stem partially from a lack of financial literacy and awareness about debt relief options in Canada,” says Bazian. “Many people – particularly young people – don’t know there is a regulated system in place to help severely indebted individuals regain financial stability. Licensed Insolvency Trustees are the only professionals authorized to offer relief options such as Consumer Proposals and Bankruptcies,” says Bazian, adding that Canadians should be wary of any companies that aggressively market quick-fix debt forgiveness.”
30 Jul 2019
Trends in Canadian seniors’ health and finances point to the cohort’s singular impact in future housing supply, according to veteran industry observers Murtaza Haider and Stephen Moranis.
In their recent contribution to the Financial Post, the pair argued that Canada’s senior home owners will be a major market force in the years to come, largely due to the sheer size of their decades-old housing wealth.
“Seniors today are healthier and wealthier than their older counterparts. Many seniors are asset rich and wonder whether they should continue to own or switch to renting,” the duo wrote.
“Better health has also led to longevity, which means seniors will have more time to live independently. During this period, they may also have to continue to support their children,” they added. “Changes in the economy, cultural shifts, and spikes in housing markets have all contributed to millennials staying with their parents longer than similar-aged cohorts in the past.”
What these factors may likely bring about is severe shortage in available housing.
“Seniors with financially dependent children will thus have a constrained choice set as they might have to choose living arrangements that are optimal not just for them but also for their adult dependent offspring.”
“The choice between renting and owning is not trivial for young seniors who are now approaching retirement age. They are likely to spend a decade or two before they may feel the need for assisted living. The choices they make now are likely to impact them for decades.”
The analysts cited data from Statistics Canada indicating that more than 80% of those between the ages of 55 and 74 owned their homes. Meanwhile, approximately 75% of those age 75 and over lived in owned dwellings.
Canada’s seniors will particularly influence the market by just staying put. StatsCan numbers showed that almost 80% of those over the age of 55 lived in the same property for more than five years, and that 62% lived in the same home for more than 10 years.
“Young and old seniors [are] more likely to age in place,” Haider and Moranis explained. “Only one in five respondents in the survey indicated that they would consider downsizing or purchasing a retirement home.”
by Ephraim Vecina
29 Jul 2019
Appetite for environmentally-friendly homes is expected to surge in the years ahead, but incorporating green technologies still requires outside-of-the-box thinking.
“The next generation of buyers will flock to it,” said Tom Storey of The Storey Team with Royal LePage Signature. “The average buyer in Canada is 32 years old and the next generation is coming soon and it’s more focused on the environment than previous generations. For them, environmentally-sustainable developments will be attractive.”
But the problem is that eco-friendly developments have yet to proliferate the real estate market and, because of their cutting-edge technologies, existing ones are more expensive than standard builds.
However, Subterra Renewables is a thermal energy company that pays developers to install its technology in their buildings in lieu of conventional equipment, like natural gas boilers. In doing so, developers reduce both their greenhouse gas output and capital costs, and save residents money.
“The incentive is for developers to spend as little as possible when they’re building these things,” said Lane Theriault, president of Subterra Renewables. “We look for a way to make it a net benefit for the developer. The way to do that is, rather than putting in conventional equipment, they forego the expense of putting that in because we’re the ones who pay for our system. And because our system is so efficient, we can sell energy back to the residents at a price that’s comparable to what they would have paid if they’d used a conventional system, so everybody wins.”
Incorporating green technologies could also buy developers some grace with city planners, which could positively impact their bottom lines.
“They don’t have to spend money putting in boilers and cooling towers, so right away that expense comes off the project budget,” he said. “If the building code gets tighter, this is a way to meet the code, which is often measured in an energy efficiency number of greenhouse gas per square foot, and you spend our money to do it instead.
“The last one is around zoning and density: If you eliminate the mechanical penthouse for the conventional equipment, the city oftentimes looks very favourably on the use of renewables in the building and they’ll let you re-purpose that space for an additional sellable area. In Toronto, some of these places are getting up to $1,500 per square foot, so if you can recover that 2,500 square feet of mechanical penthouse space, that’s a few million bucks.”
While Subterra pays developers to use its technology, it makes its money back on 30-year amortization payments from residents.
“We sell energy back to residents with a fixed payment, so they perfectly hedge their energy costs and know all their payments going into the future,” said Theriault. “The total cost is about equal to what they would have paid in a conventional situation.”
by Neil Sharma 15 Jul 2019
The Ontario Real Estate Association wants federal political parties to make homeownership cornerstones of their election campaigns, and according to its CEO, homeownership shouldn’t be prohibitive.
“We need to fix the one-size-fits-all, harsh mortgage restrictions holding people back who would otherwise qualify for owning a home,” said Tim Hudak, himself the former leader of the Progressive Conservative Party of Ontario. “Sadly, the rate of homeownership in Canada is in decline for the first time in history, and the two main causes, both with government, is artificially limiting housing supply, which limits choice and puts affordability out of reach for families.
“Federally-imposed mortgage restrictions have meant families who could afford homes are being disqualified because of the mortgage stress test. Fewer than 100 days out from the federal election campaign, this is a great opportunity for all four parties to offer a comprehensive housing plan to restore Canadians’ dream of homeownership. But, unfortunately, so far they seem to be missing the boat. “
OREA has three recommendations for federal parties: Reinstate 30-year amortizations as an option; make B-20 more flexible rather than a one-size-fits-all policy; and eliminate the stress test on mortgage switches for financially responsible borrowers.
However, on the issue of how to make housing affordable, Hudak says the preponderant reason pertains to supply.
“The most important thing is for the government to increase housing supply. The provincial government has already made progress,” Hudak said of the More Homes, More Choice Act, which encourages re-zoning that favours intensification.
“It allows greater density around major transportation hubs, like subways and GO stations and building above them. My centre point is even if there are more homes on the market, these unfair, harsh mortgage restrictions will disqualify far too many people from even putting an offer in.”
by Neil Sharma 22 Jul 2019
A worrying share of Canadian homeowners may be risking serious financial consequences by not knowing enough about their home insurance. Almost a quarter of respondents to a recent survey said they had not read their home insurance policy and 3 in 10 said the matter was like their daily commute – tedious but necessary.
Nearly 10% of respondents to the poll by belairdirect said they did not know if their home is covered for animal damage, from rodents for example.
Four-in-ten Canadians with home insurance believe their policies automatically protect all of their valuables, while only 36% believe they are covered for a sewer back-up.
Almost 1 in 5 Canadians believes they can grow pot at home without any impact on their home insurance.
Many also believe the cannabis they grow is covered by their home insurance policy but belairdirect says that the rules vary by province. The insurer has a limit on recreational cannabis products under home insurance policies in Ontario, Alberta, and British Columbia while no coverage is provided for plants growing outdoors.
Overall, 52% of respondents said they find their home insurance policy hard to understand.
by Steve Randall
July 16, 2019
We have attached this survey directly from belairdirect
How many Canadians lose sleep when they think of insurance? We asked people around the country what their perception of home and auto insurance was. Discover the results here:
The duty of a condominium corporation to accommodate disabled residents is highlighted by a decision from the Ontario Human Rights Tribunal released earlier this year.
Mr. P. moved into a condominium in Toronto, in September, 2016. He still lives there.
He uses a scooter and has difficulty entering the building’s front doors. His disability affects his hands and he must pull one of the doors open then wedge his scooter between the doors.
Mr. P. asked the condominium to install automatic door openers at the front of the building to allow him to enter more easily and without risk.
A year after Mr. P. moved in, an engineering report commissioned by the condominium concluded that it was not possible to install automatic openers compliant with the Ontario Building Code.
Instead, the corporation proposed installing automatic door openers at the back door, but Mr. P. was not satisfied and commenced an application to the Ontario Human Rights Tribunal in October, 2017. In December, 2017 — some 15 months after he moved in — automatic door openers were installed at the rear entrance.
Mr. P. rejected the rear door as inappropriate and stated in his human rights application that he had been discriminated against because of his disability. He felt the rear-door automatic door openers were not a reasonable accommodation, saying it was embarrassing and an injury to his dignity, since other residents were entitled to use the front door.
In its decision this past April, the tribunal found that Mr. P.’s condominium had a “duty to take positive action to ensure that members of disadvantaged groups benefit equally from services offered to the general public.”
After concluding that the installation of automatic openers at the front door was not feasible, the tribunal decided that their installation at the rear entrance was a reasonable solution.
However, the tribunal also determined that the building owners failed to deal with Mr. P.’s request with “due diligence and dispatch” since it took about 15 months from the time that he moved in to make an entrance to the building accessible. As a result, the building’s owners were ordered to pay $10,000 in general damages as compensation for injury to dignity, feelings and self-respect.
Denise Lash, a condominium law expert at Lash Condo Law in Toronto, cautioned in a recent blog on her website that the case underlines the necessity to accommodate disabled residents.
“Not only must the corporation assess the request and all accommodation options open to it, it must do so promptly and within a reasonable time period …” Lash wrote.
by Bob Aaron
Bob Aaron is a Toronto real estate lawyer and frequent speaker to groups of home buyers and real estate agents.
He can be reached by email at firstname.lastname@example.org, phone 416-364-9366 or fax 416-364-3818.
Stimulating residential construction and sales activity might fuel a vicious cycle that could eventually derail the national housing market, according to the head of the Canada Mortgage and Housing Corporation.
The problem, as Evan Siddall described it in a recent contribution to The Globe and Mail, leads to the same element feeding into consistently elevated housing prices: unchecked speculation and investment activity.
“Economic growth and immigration strongly influence demand for housing. When they exist together with slow housing supply, the problem compounds even further. Opportunistic investors – both domestic and foreign – seize an investment opportunity and prices climb higher still,” the CMHC president and CEO wrote.
“Making home-buying easier, by easing mortgage eligibility requirements for example, can increase demand; but unless supply keeps up, prices rise even higher,” Siddall added. “Counter intuitively, if we focus housing programs only on helping people buy homes, we make it harder for people to afford places to live. If more people can afford to spend more to buy houses, prices increase. And higher-priced housing leads to higher rents.”
This is particularly problematic, as housing currently represents a disproportionate share of the Canadian economy, at 7.5%. The ratio is far above that seen in other global economies like the United States (4.9%), the United Kingdom (4.1%), and Australia (5.9%).
“Simply put, building more single-family homes is not the foundation upon which our economic prosperity will be built,” Siddall explained. “If we aren’t careful, housing will eventually eat our economic future from within.”
“Canadians spend 50% on real estate transaction costs (broker fees, land-transfer taxes and legal costs) than we do on research and development. In comparison, our American friends spend 25% more on research and development than they do on real estate transactions.”
by Ephraim Vecina
There was an increase in Canada’s jobless rate in June as more people looked for work.
The economy shed 2,200 jobs according to data from Statistics Canada, disappointing the economists who had predicted a gain of 10,000.
But despite the pause, the overall state of the Canadian labour market continued strongly in the second quarter of 2019 with employment up 132,000, mostly full-time jobs.
Year-over-year employment in June was up 421,000 or 2.3%.
Employment in June increased in Alberta and Saskatchewan, while it decreased in Manitoba and Newfoundland and Labrador. Employment was little changed in the remaining provinces. In Alberta, employment rose by 10,000 in June, as an increase in full-time work more than offset a decline in part-time work.
There were more jobs in healthcare, education, transportation, and information; but fewer in retail, manufacturing, and natural resources.
There was also a decline in the number of self-employed workers as the number of employees increased.
Employment among people aged 55 and over grew by 22,000 in June, driven by increases among men (+16,000) while there was a decrease of 18,000 among men in the core working ages of 25 to 54, with little change among women. There was little change for youth employment (15-24 years).
by Steve Randall
08 Jul 2019