First National Financial LP

Residential Market Commentary - Strong market despite consumer concerns

  • First National Financial LP

The reports and realities continue to appear at odds.  Home sales and prices remain strong, while surveys suggest debt and other money worries remain top of mind for many Canadians.

October saw a resurgence of COVID-19 cases across the country and a corresponding return to tighter health-related restrictions and closures.  Still, home resales jumped to another record-setting, monthly high with a nearly one-third increase (32.1%) over a year ago.  Although there was a slight (-0.7%) slip from September.

The national average price for a home topped $607,000, up 15.2% over last October.  With Toronto and Vancouver calculated out, the national average price rose to $480,000, a 19.5% increase year over year. 

At the same time, the annual Debt Survey by one of Canada’s big insurance companies / banks suggests one-third of Canadians (35%) were financially unprepared for the pandemic.  That appears to have led to a substantial amount of anxiety about homeownership. 

The survey indicates more than a third of respondents (36%) have “significant” worries about saving for a home.  It suggests many feel they have been – or are about to be – priced out of the market.  It says, on average, Canadians have been allocating nearly half of their income to essentials like food and housing since the pandemic started.  Fifty-eight percent of homeowners and 54% of renters worry about making their payments.

There is a sharp disparity that shows up in the survey as well.  More Canadians report being debt free – 27% compared to 21% last fall.  Over the same period, the average savings rate has climbed to 16% of after tax income, up from 14%.  But nearly a quarter of respondents report saving zero after tax income since the pandemic started.  And, those who are in debt appear to be having a harder time.  Nearly a quarter say everyday living has caused their debt.

According to the survey nearly half of indebted Canadians say their debt is having a negative effect on their mental health.  More than a third say their debt keeps them awake at night.