Month: December 2021

Toronto city council has accelerated the timeline for its TransformTO climate action plan in hopes of reducing community-wide greenhouse gas (GHG) emissions to net-zero by 2040 – 10 years earlier than initially proposed.

It’s an ambitious strategy that sounds good on paper, and Toronto is presently one of only three big cities in North America with this 2040 target.

However, the devil is in the details and there will likely be some consequences as a result of the action.

Speeding up the timeline will put undue pressure on the building and development industry at a time when it is dealing with unprecedented challenges such as COVID-19, supply chain unpredictability, material and labour shortages, and productivity challenges caused by the uncertainty.

As an essential industry, Toronto’s builders and trades have worked through the pandemic and, by implementing stringent safety protocols, continued to build essential housing and infrastructure. Pushing the timeline ahead by a decade will only exacerbate an already difficult situation for the construction community. Supply chain disruptions, in particular, are causing headaches for builders. Add in COVID-19 and the shortage of labour and it makes for a volatile mix.

The new strategy establishes a trajectory to reach net-zero by 2040. To be on target, the city would have to achieve a 45-per-cent reduction in GHGs from 1990 levels by 2025 and 65 per cent by 2030.

It’s great that the city is showing leadership in the fight against climate change through implementation of the Toronto Green Standard (TGS) for new private and city-owned developments but moving up the city’s climate strategy implementation ahead of the policies being established by higher-tier governments could result in unintended consequences and confusion.

RESCON sent a letter to council, objecting to speeding up the city’s climate strategy. The original plan counts on renewable energy resources being readily available by 2050. The timetable for the renewables does not align with the target of the new plan. While some of the renewables exist today, they are still in their infancy and might not be developed and available for widespread implementation. This causes a whole series of problems that are out of the control of the building industry.

The plan could therefore increase construction costs and complexity for the industry and further affect the affordability of housing. Costs of housing have been rising dramatically. Many people have given up on the thought of ever owning a home. Speeding up this policy will make a bad situation worse.

The 2050 deadline for the original climate action plan already posed significant challenges for developers. Imposing this advanced timeline could propel our industry down a path that is not practical or sensible and force the industry to prematurely adopt practices that are not yet proven feasible.

City council has acted hastily without consulting members of the building community and gathering all the necessary information to make an informed decision about the impact of the change.

Moreover, data has not been provided to evaluate the projected costs associated with accelerating the timelines. In the end, the new policy could end up doing a lot more harm than good.

City council has directed the director, environment and energy to consult with members of the construction and development industry to identify challenges and solutions to ensure the goal is reached. However, the new target means that approximately 100,000 buildings must be retrofitted in the next eight years, or about 12,500 buildings per year, which is just simply not realistic.

The original plan pushed the limits of what is technically feasible for builders. There needs to be a more fulsome understanding of the technical merits and cost implications of the accelerated requirements.

We are fully supportive of measures to fight climate change, but they must be realistic and not be done in haste. Builders and developers must be given time to make adjustments and test new products.

The fight against climate change should not be a competition as to which jurisdiction can set the most rigorous targets first. It is about affecting meaningful and verifiable change to actually reduce greenhouse gas emissions. In my view, council should have stuck to the original 2050 timeline.

Richard Lyall, president of RESCON, has represented the building industry in Ontario since 1991. Contact him at [email protected].

The Greater Toronto Area is one of the hottest regions in the Canadian housing market and has been for a long time. With so much attention from buyers and investors, the ever-pressing question is how the market will perform in the coming months and years.

Despite difficulties stemming from pandemic conditions in the past two years, price growth has stayed strong in the GTA, continuing its decades-long climb. Can we expect a continued fast pace of growth in house prices, or will things slow down? Will we see a large price correction in the coming years?

In this article, we will explore some of these questions and get a better idea of what the future may hold.

The current state of the GTA housing market

It should be no surprise to anyone paying attention that the housing market in the GTA is growing at a rapid pace. For over a year now, markets in the GTA have continuously reported record-breaking months and record-high house prices. At the same time, housing stock in the GTA has hit dismal lows. Today, the GTA is one of the most expensive of all Canadian housing markets.

Average prices in the GTA

In November of 2021, the average price across the GTA rose to $1,163,323, up from $955,889 at the same time last year. In terms of market activity, the region recorded over 9,000 home sales and only 10,036 new listings.

In this month, the price of single detached homes edged above $1.5 million, a 30% increase year over year. The semi-detached and condo segments saw average prices of $1,206,016 and $715,104 respectively. That means condos now in the GTA cost around the same that an average single-detached home did in 2014.

With sales up since this time last year but listings down, the GTA has remained firmly within seller’s market territory and the Toronto Regional Real Estate Board (TRREB) is calling attention to “an inherent supply issue across all home types in the Greater Toronto Area.”

Though home price appreciation continues in the GTA, price acceleration has begun to slow, indicating a cooling off from rapid price gains of mid-2020.

What might the future hold?

As indicated by the statistics above, there are a few things that are driving the real estate market in the GTA. Firstly, the area has a lot of economic momentum. Not only is it Canada’s most populated region, but it’s also a hot spot for industry, business, and jobs. It sees huge amounts of yearly investment from both domestic and international sources, as well as steady population growth.

This can to some extent explain the high levels of housing demand in the GTA housing market. Simply put, people want to be where the action is. This is coupled with the fact that supply is so low in the city. In the past years, active supply in the market has dwindled, with homes being bought up about as fast as they can be put on the market, contributing to tight market conditions.

Demand can be reduced in a few ways. One major way would be to push buyers away from the housing market, while another would be to actually satisfy demand with a proportionate amount of housing supply. Unfortunately, even with large increases in housing seen in the GTA in the last year, it is unlikely to make enough of a dent to significantly impact housing affordability.

In terms of reducing demand, there is hope that an increase in interest rates could ease demand and slow price acceleration. In addition, upcoming regulations such as limiting foreign purchases and a vacancy tax are intended to help reduce demand as well. However, the actual effectiveness of these changes is contentious and remains to be seen.

With the forecasted end of pandemic conditions in 2022, other factors may keep demand high in the GTA, such as many people returning to work in the city, returning post-secondary students and increased immigration.

With more population growth and increasingly unfavourable detached homes, the condo segment, which has seen relatively slower increases in price, may see sales and values continue strong in the coming years.

Overall, opinions are mixed among economists and real estate professionals on what the future holds for the GTA and for Canada’s housing market. In general, it seems the market will continue strong or steady through 2022, with the potential for a small price correction. Though given the recent increases in home prices, even a significant correction would only see prices return to the still high values of a few years prior.

In its recent Housing Market Outlook report, the Canada Mortgage and Housing Corporation predicted continued price growth through to 2023, though at slower rates than seen recently.

Buying or selling in the GTA today

In terms of buying, many are trying to get in now before an impending increase in interest rates makes large mortgages moderately less affordable. If you are waiting for lower prices before buying, however, you may be out of luck.

For sellers, you can be assured your house will sell easily, and for a good amount of money if you choose to list it. But should you? With property in the GTA being so hard to come by, and its years-long trend in appreciation, values in the market will likely remain strong for at least a few years to come. However, if you want to move your money elsewhere or buy in another city, you will find your money will go much further in other areas with better affordability.

With the weather once again turning cold and another long winter ahead of us, many Canadians are beginning to dream of warmer horizons. When it comes to sunny getaways the most popular choices are the warm states of the U.S. such as Florida, Arizona, Texas, and California. Many Canadians are even opting to purchase property down south both for investment and pleasure. Could this option be right for you?

You may be surprised to learn that many of the ideas that Canadians have about buying cross-border are in fact mere myths, while others are real but can be worked around if you have the right know-how. The bottom line is that these days, buying U.S. properties is within reach of many Canadians if they know what they are doing and have the right help.

To explore more about these common myths and realities, we spoke to Alain Forget, Head of Sales & Business Development at RBC Bank, the U.S. division of the Canadian bank and a U.S. national residential lender specializing in Canadian clients. Forget has years of experience working with fellow Canadians to achieve their goals of U.S. property ownership and a wealth of knowledge on the differences over the border.

1. Is warm weather the only reason to buy in the U.S.?

Not even close! When most people think about heading down to the U.S., they commonly think about the warmer weather. And they aren’t wrong: especially in the winter months, areas in the southern U.S. such as Florida, Arizona, and Texas have much more comfortable weather than in Canada and draw many Canadians for that reason. However, especially as someone looking to invest, you should know this is far from the only reason to consider the States.

For one, the weather is not the only thing that dictates your potential lifestyle. For example, you should look at what sort of amenities and nearby activities you want to have access to from your U.S. home. You should also carefully consider the location and property type because this can affect your lifestyle and price greatly. If you buy solely for the weather alone, you risk making a bad decision or being unhappy with your property.

There are also numerous financial benefits to owning in the U.S. such as more affordable properties, U.S. home equity, cash flow from rentals and more. We will cover these more in-depth later on, and in future articles.

2. Is buying a property in the U.S. the same as in Canada?

In some ways, buying in the U.S. is similar to Canada, and in other ways, it’s not.

For one, the U.S. and Canada are currently experiencing similar market conditions. This means that supply is limited and multiple offers are common. What this means for Canadians is that when you budget for your home in the U.S., you need to be prepared to spend a little more than you think.

“In this competitive market, a property listed at let’s say $400,000 right now, may end up selling for $425,000 at the end of a bidding war,” said Forget. “So what I tell Canadian buyers right now is: set your budget, get a preapproval letter from us. Then, you know exactly how much financing you’re going to get, and how much down payment you will need. Then start looking for properties lower in your price point”

Some things that differ include taxes and insurance. While you will generally pay lower taxes in the U.S. than in Canada, you may also need to consider different insurance to protect your investment. In places like Florida for example, flooding and storm damage are much more common threats than in other areas, and you should always make sure you have the appropriate insurance.

3. Will the exchange rate limit my purchasing power?

Yes and no. Currently, as the Canadian dollar is weaker than the U.S. dollar, you will naturally have to account for some level of a currency exchange when buying a property cross-border. However, there are factors that can make the currency exchange less impactful than you may think.

For one, U.S. homes tend to be more affordable, so your weaker dollar could actually go farther in the U.S. than in Canada even after exchange.

Further, if you choose to finance your home with a U.S. mortgage, you will only need to pay exchange rates on the down payment at first. “What I’ve seen is a lot of Canadians coming down with a budget of say, $500,000. I say, here’s the thing: If you pay cash it will cost you $650,000 Canadian,” said Forget. “If you get financing for a second home with 20% down, you can mitigate the impact of the currency exchange which is currently around 1.30. You can save right off the bat, around $100,000 Canadian at purchase.”

In addition, exchange rates are always changing and U.S. mortgages, as opposed to their Canadian counterparts, are always open. This means that you can repay your mortgage at any time without penalty and it allows you to take advantage when the Canadian dollar is stronger.

According to Forget, “This can help reduce the impact of currency exchange, and also help you to potentially consider a property that is a little bit higher priced than your initial budget.”

4. Isn’t renting cheaper than buying?

Renting is cheaper than buying at first, but over time, you will find greater benefits from investing in a real estate purchase. That being said, Forget says that renting does have some utility for potential buyers.

“I always recommend before buying, that people rent or go to a hotel, or an Airbnb, whatever, to get a feel of the environment,” said Forget. “See how they feel there, and if they like it or not, because of course buying is a big commitment.”

“But if you start renting a property for three or four months, every year in the midst of the busy season, after a few years that could have been a down payment. Furthermore, opting to buy offers you even more benefits than renting. For one, you will never have to worry about missing out on a vacation due to a lack of rental options. Property owners have the luxury of property available whenever they want to use it. In the popular states, there’s a shortage of rental inventory right now. It’s an especially busy season for the next few months and it’s going to be difficult to find a rental right now for someone who did not book in advance, say six or even nine months ago,” said Forget.

Depending on where your property is and how long you stay there every year, you can potentially even generate cash flow through rentals. For people who are able to rent in the busier months, this income can be significant and can help cover some of the costs of ownership.

“Right now in South Florida, for example, if you rent for a few months, this is usually enough to cover all your property expenses for the year, such as homeowner association fees, your insurance, your property taxes and things like that.”

5. Is cross-border buying too complicated?

Maybe after all this, you feel that the dream of owning a U.S .property is just too complicated. Forget says, “That is a myth.”

RBC Bank has 17 years of experience helping Canadians buy homes in the U.S., and has developed a network of trusted associates to help you go from dreaming to the doorstep in the easiest way possible.

“We are a U.S. national residential lender for Canadians, but we have gone above and beyond that role to develop a network of trusted resources for Canadians such as homeowner insurance companies, cross border tax experts, real estate professionals and more that are qualified and trained to work with Canadians. With RBC U.S. HomePlusTM Advantage we have basically made a one-stop-shop for all the different issues you could come across.”

Be it finding the right location and property for your needs, getting financing for your U.S. home, dealing with exchange rates and taxes, or any other questions you may have, RBC Bank can help you along the way with their full-service support. Visit their website for more information on how they can help you with your cross-border real estate needs.

In recent years, the city of Calgary has been doing much to contend with the notion that it is a city purely at the whims of the oil and gas market. Recent efforts towards diversification are making the city an increasingly attractive choice for families and investors. With recent gains in emerging industries like Information Technology, Calgary is preparing itself for a new era of prosperity.

Recently, Amazon announced it would be establishing a cloud computing hub near Calgary that hopes to bring billions of dollars of investment to the region. This follows other large tech companies such as Mphasis and Infosys that have established themselves in the city. In addition, the city hopes to expand in sectors such as agribusiness, creative industries, and financial services.

We spoke to Natasha Phipps, a top local realtor and founder of the Phipps Real Estate Group, about what diversification may mean for Calgary, its residents, and real estate investors.

“The diversification of Calgary is something that has been needed for a very long time,” said Phipps. “The benefit of diversifying is firstly, more stability. From a real estate perspective, the market in Alberta and Calgary has been very cyclical. The hope is that diversification can bring more consistency to the market.“

While attracting new industries to Calgary may be crucial, it does have numerous benefits in place for businesses that may make it an appealing choice. Phipps highlights the abundant space for industrial and office property, something that cities like Vancouver have been struggling to provide. As well, Phipps highlights the “very attractive workforce” in the city that is ready to take on the challenge of a shifting economy.

“We’re a very young and well-educated city, with an entrepreneurial spirit. That combined with Alberta’s tax advantages makes Calgary a great home for many blooming businesses.”

For Canadian’s attracted to Calgary by one of its emerging sectors, there is even better news in the area of affordability. Not only does Calgary have some of the lowest home prices in any major city, but the province also reports some of the highest household incomes in the country. The city offers all the modern amenities that residents would expect of any major city, with much more approachable prices.

“Particularly for people buying their first home, they’ve been priced out of other markets. Even if you’re a retiree, you want your money to go further. So Alberta is a very attractive market for that fact alone. You can get into a single-family house here for the price of a two-bedroom condo in other major cities.”

In November 2021, the benchmark price for a condo in Vancouver cost $752,800, far higher than the price of a detached home in Calgary for the same period at just $542,600. The disparity is not lost on home buyers: according to Stats Canada, over 30,000 people from Ontario and BC alone moved to Alberta last year.

Speaking on Calgary’s appeal to real estate investors, Phipps said that when it comes to the major economic indicators that investors look for, such as GDP and population growth, employment opportunities and infrastructure improvements, Calgary is checking all the boxes.

“And you get a great renter profile here because you’re getting people who have good well-paying jobs and who are looking to get settled in Calgary but are not necessarily in a position to be able to buy. Plus, you can actually obtain positive cash flow here, which is becoming harder and harder to do in the Canadian real estate market.”

According to Phipps, the suburbs of Calgary are the “sweet spot” for cash flow in multiple different property types such as detached houses, duplexes, and multiplexes.

“Another sector that has started to become interesting here again, in my opinion, is pre-sale condos. Pre-sale condos as a strategy work well in an appreciating market, but in the last five to ten years the condo market in Calgary has been almost flat or negative. Now the tide is finally starting to turn.

“So we’re starting to see presale condo construction projects make sense again. In these new developments, you can get that passive appreciation over the next four to five years while it’s being built and then have a really nice investment property at the end of that time as well.”

Looking forward to next year Phipps is optimistic for Calgary, expecting continued market performance and appreciation.

Get in touch with Natasha Phipps on the Phipps Real Estate Group website, or join the conversation on the Calgary Real Estate Investing Facebook page.

Brampton is one of the hottest markets in Ontario and has seen large appreciation in the last year, similar to many of its neighbours in the GTA. The city of Brampton has proven to be one of the most popular suburbs of Toronto and its growth has been rapid for years. But what does the real estate forecast hold for Brampton in the future? Will house prices fall in the next year, or can investors sleep easy? We’ll answer these questions below.

About Brampton

Though Brampton is often lumped in with other nearby cities as simply the GTA, it has plenty of weight on its own. Brampton is the third-largest city in the GTA, after Toronto and Mississauga. It’s also the 9th most populous municipality in all of Canada. The city is home to almost 650,000 people and growing every year.

The average real estate price in the Brampton housing market is now above $1 million

Because of the close proximity of large population centres clustered in the GTA, these cities often have closely connected housing markets. Therefore, it should come as no surprise that Brampton has seen similar price growth in the past year as other cities in the region. If anything, cities like Brampton were hit especially hard with demand as many from the city of Toronto reevaluated their living situations and chose to move where more space could be had outside the more developed urban areas. In January of 2020, the average selling price across all housing segments in Brampton was around $760,000 according to the Brampton real estate board. By the end of that year, the rising prices had reached $970,000, and the price today is above $1 million dollars. This means the average home price has increased by over 40% in the last two years.

How does the Brampton housing market compare to other markets in the GTA?

When compared to average home prices across the GTA, Brampton is essentially in the middle of the pack. According to data obtained from the Toronto Regional Real Estate Board (TRREB), Brampton’s average price is higher than that of areas like Toronto East and West, Ajax, Oshawa, and Mississauga. However, its average price is below areas like Oakville, Vaughan, Central Toronto, and others.

In terms of sales volume, when looking at the figures for November 2021, Brampton has the largest volume of home sales in the GTA outside of the city of Toronto, with over 820 sales happening that month alone, and over 11,000 year to date. New listings in Brampton are very close to the number of monthly sales, meaning supply is very low.

Detached houses are the most popular segment in the city, accounting for over half of all sales. The next largest segments are semi-detached and row housing. Condos are the smallest segment in the city. While Brampton sold far more detached homes than Mississauga, Brampton sold exactly half as many condos as the neighbouring city, and condo prices were lower.

What is the Brampton housing market outlook for 2021?

Reasons to predict a positive outlook

One reason that Brampton real estate market may hold up for a while yet is the fact that the GTA is simply always in high demand. As the busiest region in the country, there is almost no shortage of people looking to buy homes. Currently, there is still a lot of pent-up demand in the market that will take some time to dissipate, if it all.

There are also many people who can not afford homes, so are forced to rent, further increasing the demand from rental investors.

This area of the province is also one of the biggest magnets for population growth, both from within Ontario, other provinces in Canada, and international immigration. The number of new homes being built in the peel region has fallen since 2017, and there simply won’t be enough housing supply built to offset the demand for them.

Reasons for potential price correction

There are other reasons however that housing prices may correct in the coming years. Prices dropping is only one potential outcome of a correction, prices may also just slow in growth or flatline. The Canadian Real Estate Association forecasts that sales will level out but still remain elevated from pre-pandemic conditions.

One big reason right now is the upcoming rise in mortgage rates. Many buyers are already racing to settle a home before rates go up, and as a result, real estate professionals are reporting steady sales despite what is usually a slow season. When rates go up loans become generally less affordable. If enough people are put off by high-interest rates, the growth of the average house price could slow down somewhat as a result.

Another reason the housing market in Brampton could slow is a return to normal economic conditions after the covid-19 pandemic. Though prices were increasing for years before the pandemic in the Canadian real estate market, the conditions it ushered in greatly increased the rate of growth.

With overvaluation and a lack of affordable housing, many are worried that things will eventually topple. The existence of a housing market bubble in Canada is pretty contentious, but it is something that you should at least consider the risks of before investing.

Should I invest in Brampton’s housing market?

Ultimately, if you ask 10 economists their opinions on the housing outlook, you will get 12 answers. As with any investment, you should consider the risks and the market condition before buying any property.

That being said, if you plan on investing either way, there is no need to wait around for a better time. Though prices may level off in the coming years, there is still a good amount of time for appreciation until then.

Should I sell my home in Brampton?

The Brampton market continues to favour sellers currently. This means that you will have a much easier time getting the highest value for your home. However, the days of the covid housing frenzy where homes sold for far above asking price are largely now behind us. With that in mind, and potential price leveling the worst realistic scenario for the future, there is no rush to sell, but it isn’t a bad time either. Though Brampton is far from the most expensive area in the GTA, there are many more areas beyond the GTA where the value of your Brampton home will go much further, should you choose to sell.

Calgary is currently among the most affordable of the major cities in Canada for real estate, which is particularly attractive given the out-of-control prices being seen in other major markets. According to a recent report, homes in Calgary are actually deeply undervalued. However, according to local realtor Jesse Davies, growth potential in the market means there is still a lot to look forward to.

According to the Calgary Real Estate Board’s (CREB) new statistics release for the month of November, the average price of a detached home in the city was $542,600, up over 10% year over year. Semi-detached homes averaged $429,800 and apartments averaged just $251,700 with the lowest year-over-year increase. In addition, despite winter being seen as a traditionally slow season for the city, according to CREB sales have remained strong at “roughly the same levels seen since August” while inventories continue to fall.

Compared to other major cities, Alberta is doing much better in terms of affordability even with continuous price gains. In October, Ottawa reported an average residential price of over $700k, while detached homes in Toronto and Vancouver both sold for well above $1.5 million on average.

Last month, a report from Moody’s Analytics revealed that real estate markets in Canada were up to 90% overvalued above-trend prices. The same expensive cities mentioned above displayed high double-digit amounts of overvaluation while Calgary was actually reported to be undervalued by up to 30%, some of the highest undervaluation in the country. 

This doesn’t mean investors have lost money – home values continue to rise. Instead, this report may point to big growth opportunities for the future.

“Calgary has a very cyclical market that historically has followed the price of oil and gas,” said Jesse Davies, a top local realtor, explaining one reason for the current undervaluation in Calgary. 

However, Davies says, the oil industry is no longer the only player in Calgary. 

“Since the downturn, Calgary has diversified away from being so dependent on one sector and has seen job growth in tech, medical, agriculture and other sectors.”

These new sectors have plenty of room to grow in Calgary and will potentially attract many newcomers to the Calgary market, providing reciprocal benefits for both businesses and the city.

“Because of the conservative government’s policies, Calgary can be an attractive place for new or current businesses to relocate to, with attractive incentives both in lease rates and tax advantages.”

Another reason Calgary may be in a good position is mentioned in Moody’s report. With prices inflating so rapidly in other areas of the country and interest rates set to increase, the report claims that the forecast  “implies a deceleration of national house price growth”. Essentially, rapid price growth is simply not sustainable as the economy shifts back into gear.

 However, in areas like Calgary that didn’t fly so high, Moody’s actually predicts that these areas “will do better despite weaker economic fundamentals precisely because they have retained better affordability”.

This means not only can you find more affordable prices in Calgary now, but your investment may also be more stable in the face of coming changes.

According to Davies, “This sets Calgary up to really flourish in a recovering economy and the future. I see Calgary having a high probability of steady growth both in the short and long term. There are numerous factors at play but attractive values, the re-opening of immigration, diversification, and opportunity are a recipe for steady growth for the city.” 

Davies says his clients are optimistic too, with many eager to get in now while interest rates are still low to make the most of the opportunity.]

“Among my clients, there is a sense of urgency to pull the trigger as their 90-day mortgage rate holds are set to expire. Their monthly payments can end up being substantially higher when rates go up, so they are looking to make the most of the current level of affordability.”

For those looking to buy now, Davies says there is “real opportunity” in multiple real estate segments.

Connect with Jesse Davies at [email protected] or visit his website for more detail and consultation on opportunities available for your particular situation and budget.

There’s a serious labour supply shortage threatening Ontario’s construction industry. Tackling it requires a new approach as it’s estimated we’ll need to hire and train over 100,000 new workers by the end of the decade in this province just to keep pace with anticipated growth and retirements.

It is time to change our traditional recruitment methods and reach out to more underrepresented groups like women and youth from Black, Indigenous, People of Colour (BIPOC) communities. They are an untapped resource for the industry, and it is critical that we promote careers to this demographic.

Presently, women make up only 12 per cent of construction employment in Ontario and, in 2020, Indigenous people accounted for only 2.7 per cent of the construction workforce. We also know from worksite demographics that BIPOC workers do not make up a large part of the construction workforce.

RESCON has made diversity, equity and inclusion of underrepresented groups such as women and BIPOC workers a strategic priority. This past April, we launched a BIPOC youth advisory committee.

After speaking to youth on the committee about the different ways we could increase BIPOC interests in the construction industry, we learned that, first there needs to be more outreach and awareness in high schools from guidance counsellors, and second they need to see more people that look like them in the industry. 

In November, RESCON, with the help of the Anti-Racism Roundtable, launched a #BIPOCinConstruction testimonial campaign to highlight the voices of diverse and racialized workers in construction and to let BIPOC youth know that the construction industry is a viable career option. 

RESCON worked with a team of five inspiring BIPOC youth on the testimonials. Their stories show how they got into the industry and why they like working in construction. You can read more about the campaign at www.rescon.com.

Mulisius Joe, a concrete former with Carpenters Local 27 who grew up in Saint Vincent and the Grenadines, explained that seeing another woman on-site in a lead position gave her a lot of confidence. Her favourite part about being in construction is the sense of accomplishment she feels at the end of the day.

Jenelle Richards, a site administrator at The Daniels Corp. who grew up in Kitchener to Jamaican parents, says the sky is the limit for women considering a career in construction and you can work your way up from anywhere. She likes the job because it allows her to meet and work with people of different backgrounds.

David Kim, a third-year concrete former apprentice with Local 27 who came to Canada from South Korea at age 12, says the potential of working in the industry is limitless and construction can help young people reach their dreams and goals faster.

A big takeaway is that we must reach high school guidance counsellors about the industry as they can influence decisions of young people, so they need to be educated about the construction industry. 

The provincial government is taking steps to make this happen. In the fall economic statement, an additional $90 million was announced for the Skilled Trades Strategy to help break the stigma associated with the trades by improving details about the industry to educators and guidance counsellors. 

A diversity and inclusion governance structure, meanwhile, is also being established within Skilled Trades Ontario. 

These are certainly positive moves. We must send the message that the skilled trades are a viable career option for everyone – and that includes women and BIPOC youth.

Richard Lyall, president of RESCON, has represented the building industry in Ontario since 1991. Contact him at [email protected].

What Canadian mortgage debt can tell us about the economy.

For most Canadians in 2021, debt is a regular part of life. If you own a house, you likely have a large amount of debt in your mortgage as well as many smaller debts such as car payments, student loans, or credit bills. In 2021, total consumer debt in Canada rose above $2 trillion.

You might think of debt as your own personal responsibility, but you may be surprised to know it is also part of something bigger. You represent one component of the larger economy and, therefore, your debt is actually part of a larger measure that is known as the debt to income ratio.

The debt to income ratio is an important indicator not just for your own personal financial condition. It’s also used by analysts to measure the average condition of all Canadian’s financial situations as well as the condition of the Canadian economy as a whole. Especially as we start coming out of the pandemic-induced recession, economists are paying attention to the debt ratio to see how Canadians are handling changing economic conditions.

What debt to income ratios means for individuals

Your mortgage to income ratio is important for you personally because it represents how much of your income goes towards servicing your mortgage debts. When it comes to getting a mortgage, lenders will consider your gross debt service and total debt service ratios, which are a measure that tells them how much of a mortgage you can afford. Lenders need to know you have a certain amount of income to not only afford your housing costs but to continue covering your mortgage if rates or your financial situation changes.

What the debt to income ratio means for the economy

Beyond individual concerns, analysts track the average amount of income to debt ratio for all Canadians in order to know how the country as a whole is doing. The statistic for the debt to income ratio is expressed as a percentage representing the value of household debt compared to household disposable income. According to stats Canada, the average Canadian income to debt ratio for Q2 of 2021 was 173%. This means that the average Canadian household owes $1.73 for every dollar of income made.

This measure includes all debts that Canadians owe, of which mortgage debt only makes up one component. However, mortgage debt is one of the largest debts that most Canadians will take on and makes up a very large portion of the debt ratio. Of the over $2 trillion in consumer debt held by Canadians, over $1.6 trillion is in mortgage debt.

Recently, with the growth of house prices accelerating, the amount of mortgage debt that Canadians are taking on per person is now higher than ever.

Another important figure to keep in mind is the debt service ratio, which is the amount of money it takes to service debts. Though the size of Canadian debt has risen, interest rates, especially mortgage rates, have fallen from decades earlier, which must be kept in mind when talking about debt affordability. The recent growth of housing prices was due in part to historically low mortgage rates, meaning the debt from more expensive homes is easier to service than would otherwise be the case with higher rates. The average debt service ratio for Canadians has remained relatively steady for a long time.

History and trends of the debt to income ratio

For the past few decades, Canadian household debt has been on an upward trend, however, there have been some small dips year to year. Most recently, the effects of the COVID pandemic actually caused the indebtedness of Canadians to drop significantly, reaching 159% in Q2 2020. A figure that low hadn’t been seen in over a decade until that point. The highest recorded Canadian debt ratio of over 182% occurred in Q3 of 2018.

The continuous increase of debt ratio hints towards the growing costs in the Canadian economy, while household income has not been able to keep up. The effects of the pandemic are hard to fully understand, but essentially the way that Canadians held and paid off debt was significantly altered during the start of 2020 as uncertainty loomed.

Why the ratio is rising

As opposed to something like the Consumer Price Index, there is no reason that the Canadian debt ratio needs to continuously grow. If household income and debt remained steady in proportion to one another, the ratio would stay constant despite inflating costs. The increasing trend of debt ratio then indicates a growing rift between Canadian household income and their debt expenses.

It can also indicate a changing attitude towards debt for Canadians. In general, it seems Canadians have become more comfortable with holding more debt and paying it out over longer periods of time.

Finally, it’S worth remembering that as a ratio, both components affect the final value. An increase can mean debts are going up but it could also mean income is going down.

What is the forecast for the debt ratio?

Though there was a dip in the debt ratio as a result of unprecedented conditions in early 2020, the ratio has now started to approach its pre-pandemic levels. It will likely remain lower as recessionary conditions wear off, but the trend of increasing debt is likely to continue into the future.

The reason that we should pay attention to a high debt ratio is that it warns of financial vulnerability for Canadians. This is essentially the same reason your lender wants to ensure you have favourable debt ratios before lending to you. Larger amounts of debt mean that the Canadian economy as a whole is more vulnerable to macroeconomic shocks and could be destabilized much easier.

That being said, it seems that the most recent challenges from the COVID pandemic were not the kind of shock that would cause major harm. While there were temporary hits to things like employment and mortgage arrears, both stats have now nearly returned to pre-pandemic levels.

Though Canadian debt is high, thanks in part to things like the mortgage stress test, Canadians have demonstrated to some extent that they are able to weather the storms of economic strain.

In fact, an increase in Canadian debt can potentially indicate optimism towards the future of the economy. When more Canadians are taking on debts, it indicates that they have confidence in their continued financial prosperity.

Overall, a recent rise in the debt ratio is an indicator of economic recovery for Canada as it emerges from the pandemic. However, on the larger scale, the upward trend of the debt ratio could be cause for concern should it continue to rise, or increase its pace.