Each week I hear from people who bought Canadian homes over the past few years–whether as primary residences, secondary homes or rentals–and now they realize that they will need to sell. Most are facing capital losses in doing so, but the cost of continued ownership is simply unsustainable. Some recognize that location changes they made during the pandemic are not a long-term fit and they need to move. A significant percentage of current owners with low-rate loans are unable to qualify for refinancing as fixed terms come up for renewal. Others may be eligible but find it too tight to function.
The supply of incentivized sellers is rising as the pool of able buyers shrinks. More will stumble as the Canadian job market weakens. Canada’s unemployment rate hit 5.5% in July (from a 53-year low of 4.9% in June 2022) and is forecast to move higher into 2024.
Even when the Bank of Canada gradually starts cutting its base rate in 2024, credit strains will persist. It’s wholly predictable and very sad to see. We can hope that some lasting lessons will be learned from the misery. Admitting mistakes is the first step toward recovery. Stories like this one are increasing all around us, see, Barrie area woman watches mortgage payment go from $2,850 to $6,200, forced to sell:
While those with a fixed-rate mortgage will face significant increases when it comes time to renew, those with a variable-rate mortgage are feeling the pinch every day. This includes Cora Cook, a Barrie-area esthetician who has been forced to put her family’s dream home up for sale after their mortgage payments ballooned from $2,850 to $6,200 since moving into their Springwater home in January 2022.
“To have to leave the home that we spent so much blood, sweat, and tears into building — everything was custom-built for our family here — and to now give that up, it definitely feels hard. But now, looking at rentals, we’re looking at rentals for $4,000 a month,” she told Simcoe.com.
Cook says, even with her business and a husband working two construction jobs, they’ve been forced to sell their furniture and hold garage sales on a regular basis to settle their monthly mortgage bill.
“It’s not like we’re struggling for work or anything. We make good money. We have good jobs, but it’s just, we want to be able to live our lives and not be putting every dollar toward a mortgage,” she said.
To add insult to injury, Cook says while her home esthetician business was shut down during the COVID pandemic and she initially qualified for CERB, she was later told she had to pay it all back.
…While Cook and her family haven’t turned to the food bank yet, she says she can understand reports of families making $100,000 or more making use of the social service. Sharon Palmer, executive director of the Barrie Food Bank, says the Bank of Canada’s rate hike will increase demand on an already overburdened service.
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