by Clayton Jarvis

There were few fireworks on July 31, when Prime Minister Justin Trudeau announced that out-of-work Canadians who have been receiving the Canada Emergency Response Benefit due to COVID-19-related job disruption would be transitioned to the country’s employment insurance program this fall.

CERB is set to expire on September 26, but anyone who began receiving payments once the program got underway in March could see their benefits run out as early as August 29.The $2,000 per month payout has been instrumental in keeping Canadians housed and fed, but it has also come under considerable fire for potentially disincentivizing the return to work among low-wage earners who saw their overall pay increase under the program.

That criticism is unlikely to hold up once the EI system kicks in, a minor win for Trudeau’s Liberals, but that impending $2,000 hole where CERB used to be has many unemployed Canadians wondering if they’ll have enough in their bank accounts to get through the month.

Will it be enough?

In comments made during a virtual press conference last Thursday, David Macdonald, senior economist at the Canadian Centre for Policy Alternatives, said Canadians should prepare to receive far smaller payments from EI.

CERB was never tied to the amount of money recipients were earning prior to COVID-19, but employment insurance is. Unless changes are made to the percentage of lost income provided by EI, recipients will receive 55 percent of their average insurable earnings. Those max out at $573 a week.

According to the Workers Action Centre, an advocacy group for low-wage workers, many of the people in line for these refreshed EI payments would receive between $600 and $1,000 a month, a far cry from today’s CERB levels.

Macdonald said the government should consider raising EI’s wage replacement rate to a level closer to the 75 percent included in the federal wage subsidy program. It’s a move Michael Gregory, managing director and deputy chief economist at BMO, is anticipating.

“Millions of Canadians don’t even qualify for EI as it exists right now, so that’s why they’re talking about modifying it,” Gregory says, adding that the transition will have to be gradual, with some sort of provisional system in place to ensure the gap between when CERB ends and enhanced EI begins doesn’t leave those still out of work with no income to speak of.

“We don’t want to go cold turkey,” he says.“The program has to change to catch the people – and we’re talking about millions of Canadians – that won’t qualify once CERB ends.”

One twist Gregory hopes to see is that, as gig workers and the self-employed are brought into the EI fold, these new recipients will be asked to contribute to the program by paying EI premiums. Although the government hasn’t signalled whether they’ll be charging EI premiums to this cohort of workers, Gregory’s thinking is that anyone benefiting from the program should be also contributing to its long-term financial health.

Such a demand on the part of the government would help lower, at least to some extent, the cost of the new program. With CERB projected to cost $80 billion, and the federal government expecting a deficit of $343 billion for 2020, reducing the cost of the Liberals’ COVID-19 support measures will be a growing concern, particularly when it comes time to face the long-term consequences of keeping a nation’s economy on life support for the better part of a year.

Gregory, who has seen worse debt crises, isn’t panicking. The country’s debt load was actually higher during the economic tumult of the 1990s, which he describes as “a very lean time for the Canadian economy,”one that also required a years-long rebound.

Still, this year’s towering deficit will need to be addressed at some point once the Canadian economy is on firmer footing. Gregory envisions a combination of decreased government spending and some form of higher taxes making up the government’s attempt to regain the mountain of fiscal ground lost in 2020.

“Fortunately, interest rates are going to remain very low, so that’s going to help the government finance that debt,” he says, adding that the return of economic growth and the end of other costly aid programs like CEWS and CECRA will all do their part to ease Canada’s debt burden.

“We’ll get back to more steady growth, and the unemployment rate will come down, maybe not all the way to where it was before,” he says. “Are people going to be hard up? Some probably will, but people will presumably be getting their jobs back, too. That’s going to help lower the overall cost for the government at the same time.”

The real estate market has an ever-rising temperature despite doomsday predictions

By: John Last, Katie Toth

When Vanessa Thorson bought her duplex in Whitehorse’s Takhini neighbourhood in 2015, it cost her just $285,000. Three years later, she moved to Alberta and sold it for $305,000.

But when she returned just 18 months later, in the fall of 2019, she says she was shocked.

“They’re now worth $430,000?” she said. “That’s substantially more. How?”

The answer is a housing market with an ever-rising temperature — despite doomsday predictions that the coronavirus would put a chill on the market.

Realtors in Whitehorse and Yellowknife, where most real estate transactions in the North take place, said they are seeing more activity this summer — and at higher prices — despite the pandemic still underway.

“We were a bit surprised that the market didn’t stall,” said Marc Perreault, a Whitehorse realtor and president of the Yukon Real Estate Association. “We expected a real significant slowdown, and we didn’t see that.”

In Yellowknife, “we really can’t keep anything under five hundred thousand dollars on the shelf,” said Adrian Bell, a realtor with Century 21.

Isolation may have piqued interest in new housing

In April, Bell predicted it would take the end of pandemic-related travel restrictions to see the housing market recover in the city. But it turned out the rebound took almost no time at all.

Bell suspects the pandemic has forced people to spend more time in their houses or apartments than ever before — and some are realizing they want a home that’s a little more sweet.

“Quite often they’re self-isolating in homes that may be too small for them, and they’re not super keen on the prospect of doing that through the winter,” he said. “They’re not going on summer vacations and they’re also probably saving some money by not traveling. They’re building up bigger down payments .. So they’re buying homes.”

According to numbers posted by Bell, 47 homes that were listed with realtors in Yellowknife sold in July, compared to just 24 homes that sold the same month last year.

In Whitehorse, Perreault says for every house he lists, he has “five or ten … serious, interested buyers” — including interest from outside the territory.

“We’re seeing lots of interest from outside,” he said. “We’re hearing lots of people inquiring about properties and lifestyles in the Yukon.”

But Perreault and Bell both said the market is only super active below a certain price point. Houses listed for more than half a million dollars in Yellowknife are spending longer on average waiting for a buyer, and are continuing to sell below their appraised value — a symptom of a weakened economy.

High-price sellers willing to wait

Perreault said in Whitehorse, it may simply be that many sellers are willing to wait a few months and hold out for a better price.

For buyers like Thorson, that can be frustrating, as affordable houses are snapped up in seconds and the listings are clogged with unattainable properties.

“Usually, if your house isn’t selling, you drop the price,” she said. “You don’t leave it on the market for eight or nine months at the same price. But that isn’t happening, the sellers are just hanging on.”

Neither city’s experience is totally unique. Statistics Canada recorded average property price increases of 4.4 per cent across the country. The Ottawa region alone saw prices jump by more 13 per cent compared to last year.

In Whitehorse, at least, developers appear to be capitalizing on high demand. According to the Canadian Mortgage and Housing Corporation, 143 new houses have been completed in Whitehorse since January, and another 305 are on the way.

Meanwhile in Yellowknife, the CMHC recorded 18 new houses built so far this year, and 26 now under construction.

Source

by Kasi Johnston

When the COVID-19 pandemic first hit back in March, Canada’s big banks announced that clients affected by the coronavirus crisis would have the option to defer their mortgage payments for up to six months. Lenders across the country soon followed suit, offering their own mortgage payment deferral programs.

Depending on which plan the borrower entered into, that support has either already ended, or is quickly approaching in September, resulting in many Canadians on the hook for their mortgage payments once again. Despite loosening restrictions across the country and the economy showing signs of recovery, there are still many Canadians left financially strapped.

“For the Canadians fortunate enough to be back at work and collecting full, non-government-backed income, the deferrals would have done what they were designed to do by assisting these Canadians through a difficult time,” said Agostino Tuzi, national partnership director, mortgage brokers at HomeEquity Bank. “The more widespread reality is that as these deferral programs come to an end, these Canadians will have a stark reality to deal with.”

The impact of the COVID-19 crisis and these programs coming to an end is leaving many looking for ways to access cash, whether that means selling their home, refinancing or in some cases dipping into retirement funds. For many people over 55, they could feel pressure to relocate into a family member’s home or downsize to a smaller home in a more remote location.

While downsizing was common in the past, leaving the comfort of their home is the last thing Canadians want to do, especially considering the health risks involved in moving during a health crisis. A more attractive option to consider could be a reverse mortgage.

Tuzi predicts the demand for the ‘ultimate long-term deferral plan’ to pick up significantly in the coming months, as support from the government and financial institutions begins to dwindle, especially for those who already see themselves having problems making the deferred mortgage payments. In fact, that increase in demand is already starting to form. HomeEquity Bank gets between 5,000 and 7,000 inquires every month, according to Tuzi.

“The CHIP Reverse Mortgage is a long-term financial solution that will defer their mortgage payments for life. The stress and anxiety of having to deal with a monthly mortgage payment will no longer be part of their lives. Whether they get back to work in the short or long term or decide to retire, these 55+ Canadians will no longer have to worry about making a mortgage payment again.”

Tuzi adds that brokers play an important role here, as Canadians who feel trapped or desperate are vulnerable to making quick decisions that can hurt them in the long run. He suggests having holistic financial and cash flow conversations, while helping them to identify their present and future needs.

“People are empowered to make good decisions when they have access to accurate information and all possible options,” he said.

It seems small town real estate is doing well, and two of the attractions are more space and less COVID-19.

By: Terri Trembath

Jennifer Handley is a real estate agent in Nanton, a town about an hour drive south of Calgary.

She is also the town’s mayor.

According to her, the Nanton housing market is hot right now.

“We haven’t been able to catch our breath that’s for sure, for about three of four weeks,” Handley said.

Handley said when COVID-19 hit Alberta back in March, sales were halted, not unlike any other real estate market.

But since the middle of May, she has sold about 15 houses — a pretty big number when you consider the size of the rural market in a global pandemic.

And a big chunk of the buyers are coming to the town, which has a population of 2,300, from Calgary. They’re telling Hanley they want out of the big city.

“They felt, especially if they were living in a condo apartment and they wanted to sell their place there, come here and not be as close to people — and we’ve heard that story time and time again,” Handley said.

While Calgary is still considered the hot spot for COVID-19 cases in Alberta, Handley said there have been no cases reported in Nanton. There were just 14 cases in the entire municipal district where the town is located, as of Sunday.

“I think there is that appeal that we are a little bit isolated from what’s going on in the city,” Handley said.

Anne-Marie Lurie is with the Alberta Real Estate Association, which tracks data in rural areas.

Lurie said she’s not surprised by Handley’s experience.

“The trend has been the same in areas like Airdrie as well, where their numbers improved much more in June than what we saw in the city.”

According to the Calgary Real Estate Board, Airdrie’s sales rose above last year’s levels this June, following declines from the previous three months. Inventories were also below last year’s levels as well.

Other small municipalities in the Calgary region also saw sales improve slightly (Cochrane) or remain stable (Okotoks), despite the economic conditions.

Lurie said something to keep an eye on is a shift in consumer demand preferences .

“If people aren’t having to come into the office as much what does that mean?” she said.

“Do we see people considering living in different, more further out places? So I’m really curious to see if there are any fundamental shifts that will come with you know, essentially COVID-19.”

For now, small town realtors like Handley are happy to ride the rural real estate wave for as long as it sticks around.

Source

By Natalia Vega

Home sales in Chatham-Kent are heating up as the industry starts to recover from the COVID-19 pandemic.

The Chatham-Kent Association of Realtors reports that 127 homes were sold in June, which is only one fewer sale than the same time last year.

On a year-to-date basis, 554 homes were sold in the first six months of 2020, a drop of 12.3 per cent during the same time period in 2019.

A drop in the number of home sales within the municipality started showing up in mid-March after the provincial government issued a state of emergency. Although fewer homes changed hands, the average price of homes sold continued on an upward trend.

Last month, the average price of a home sold was up 29.1 per cent to $315,296, compared to June 2019. The year-to-date average price was $287,489, which is a 16.6 per cent increase from the first six months of 2019.

“The local housing market showed signs of recovery in June, bringing us closer to pre-COVID norms,” said Michael Gibbons, president of the CK Association of Realtors. “Though sales are rebounding and prices have risen, we are still dogged by low inventory levels, especially in the low to mid-range price points.”

There were 184 active residential listings by the end of June, which is a drop of 34.3 per cent compared to the same time last year.

However, new listings in June were up 8.4 per cent on a year-over-year basis as 181 units went on the market.

Source