Archive for the ‘General Real Estate’ Category
Age profile of homeowners relatively stable over generations
Financial Post
More Canadians are owning homes later into life, according to a new report by Statistics Canada.
The study based on census information from 1971 to 2006 shows that more people buy homes as they approach the age of 40, but the rate of home ownership continues to climb after that until hitting a plateau as people reach retirement age.
Figures show the peak level of ownership is for people born during the Second World War, at 78%; 73% of those born during the 1910s bought houses.
The early baby boomers, those born in the late 1940s and early 1950s, achieved higher ownership rates before the age of 60 than earlier generations.
The agency said the home ownership rate starts declining when people reach their late 70s.
“The majority of seniors continued to receive services associated with home ownership for more than 10 years after the age of 65,” the study found.
The study found family income played a role in home ownership, with increasing income responsible for some of the increases in ownership rates. The lower-income groups are less likely to own homes now than they were in 1971, the study shows, while those in the higher-income bracket are more likely.
Families with children were the most likely to own a home in 1971, a trend that continued into 2006, the study found, but the degree of difference in home ownership rates between families and childless couples, or single people, has declined in that period as those latter groups increased as a proportion of the population and bought more homes. The study also noted that adult children are more likely to remain in the home now than they were 35 years ago.
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National housing agency deserves a fair shake
Stephen Dupuis – Toronto Star
It’s not my job to defend the Canada Mortgage and Housing Corporation, but when I read articles criticizing CMHC that make quantum statistical leaps while ignoring important facts as well as relevant differences between Canada and the U.S., I feel compelled to write.
Among the many positive roles that CMHC performs as Canada’s national housing agency, it insures mortgages against default by the borrower. Over the years, CMHC has helped millions of first-time homebuyers get over the initial downpayment hump. Virtually every buyer that CMHC has ever insured has eventually progressed into the conventional mortgage market and ultimately reached the goal of being mortgage-free.
Despite the fact that there is no evidence to suggest that Canadians are about to default en masse on their insured mortgages, the critics have been taking random pot shots at CMHC with the most recent attack published in this very paper last Sunday.
The critics tend to look at what has happened in the U.S. housing market, which is rife with foreclosures, as their critical point of departure. They are forgetting or ignoring a couple of very important differences between Canada and the U.S.
Yes, U.S. homeowners got caught by the double whammy of increasing interest rates and decreasing house prices, but they could scarcely afford the homes they had purchased in the first place.
The sad truth is that all parties (lenders, brokers, insurers) in the U.S. system invented ingenious ways to artificially lower the monthly carrying cost of homes while at the same time ignoring the rigours of income verification. That’s a double whammy of a different sort.
When you put both double whammies together, you have a situation where millions of Americans are “under water” in terms of the value of their home relative to their mortgage.
Here in Canada, we did not go down the path of “mortgage innovation,” although we were tempted. Fact is, our own federal government made sure that we would not do so by restricting mortgage financing rules not once, but twice in the last few years. More importantly, our lenders and insurers have continued to insist on full review and verification of every mortgage insurance application against standards set out by CMHC.
The other thing that amazes me about the CMHC critics is the complete lack of evidence of a mortgage default problem in Canada. Mortgages in arrears in Canada are less than one half of one%, according to the Canadian Bankers Association. That’s a miniscule number and outright defaults would be an even smaller subset, which means that CMHC is far from over-exposed.
In my view, the reason there are so few mortgages in arrears in Canada has as much to do with the fact that our lenders and insurers have been cautious, as it does with the fact that our homebuyers tend to think of mortgage burning parties as a good thing, continually striving towards that goal by paying down their mortgages as quickly as possible.
It’s worth noting that 40% of our homeowners nationally don’t even have a mortgage, so we obviously don’t need to worry about them. According to the Canadian Association of Accredited Mortgage Professionals, the average equity of Canadians with mortgages is 53%, so I don’t see much to worry about there either.
I firmly believe that when times get tough, Canadians first priority is to work as hard as possible to protect the heart of the Canadian dream – their homes.
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Parenthood, incomes draw people to the suburbs
New data from Statistics Canada suggests that one in seven people of prime child-rearing age vacated Toronto, Montreal and Vancouver for the suburbs between 2001 and 2006
By Shannon Proudfoot, Canwest News Service
The suburbs around Canada’s largest cities are magnets for young parents in the middle of the income and education scales, while the urban cores draw those on the extremes, according to a new report from Statistics Canada.
People in the prime child-rearing age group of 25 to 44 were most likely to move out of Toronto, Montreal and Vancouver and into the surrounding suburbs between 2001 and 2006, the report says, with one in seven (14 per cent) making that move. In contrast, just five per cent in that age group made the move from the suburbs back to the city in Toronto and Montreal, and four per cent did so in Vancouver.
“I think a lot of what we’re seeing in these patterns are really associated with housing costs and availability of affordable homes. I think that’s a really big factor,” says Clarence Lochhead, executive director of the Vanier Institute of the Family. “That also explains the exception of the high-income folks who have a smaller likelihood of moving because they’re more likely to be able to afford some of the costs associated with housing in the core of cities.”
Families with incomes of $100,000 or more are less likely to move to the suburbs than those in the middle of the income scale, Statistics Canada says, suggesting they place a “higher premium” on being close to downtown amenities and can buy pricier central properties.
On the other hand, the lowest-income families who bring in $20,000 or less per year were least likely of any income group to move out of the city core. The agency speculates they might not be able to buy a vehicle, which is crucial to living in the car-centric suburbs.
Family status is another big influence in where people live, and in all three cities, people who became first-time parents between 2001 and 2006 were among the most likely to leave the central municipality. In Vancouver, 27 per cent of new parents left the city for the suburbs, while just eight per cent of people living alone made the same move.
Aside from housing costs, Lochhead suggests childcare may drive young families to the suburbs, where there are plenty of others like them and they’re more likely to be able to make arrangements for home-based daycare.
The propensity to move to the suburbs increases up to age 34 and then starts to wane in older age groups, the agency says, and when children are older and the family is “complete,” the odds of moving — short or long-distance — decline.
Single-parent families are the one aberration in the trend of families gravitating to the suburbs.
“What lone parents are basically facing is that the prospect of home ownership is a dim one,” Lochhead says. “Few people can actually afford the costs of home ownership and a mortgage on a single income.”
Education also exerts an influence on where people live. People with college or university bachelor’s degrees were more likely to move to the suburbs, Statistics Canada found, speculating they have more stable incomes that allow them to buy a home. However, people holding master’s degrees or doctorates tended to stick to the urban core, which the agency suggests reflects their focus on urban cultural amenities and willingness to pay more or live in “lower quality housing” to be near them.
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