If houses are investments, then they’re subject to the harsh math of investing losses.
However much an asset falls in price, it has to rise by a larger percentage just to get back to the starting point.
The national average resale home price peaked at $816,720 in February and has since fallen a bit more than 21 per cent to $644,463 in October. To get back to the peak, we need the average price to rise by almost 27 per cent. Figure on it taking between four and five years to do that, if prices bounce back enough to revive the toxic idea that houses are investments.
Treating houses as investments means the death of affordability. The longer prices decline or flatline, the more opportunity there will be for home ownership to remain a viable middle-class goal.
Still, the investment mentality is a big reason why our housing market overheated. Attention must be paid.
What houses have going for them as investments is a decades-long history of price appreciation that beat inflation, and a capital gains tax exemption on the sale of a principal residence. That tax break is a key support for the idea of housing as a financial asset.
There are steep costs if you own a home, including maintenance, improvements and mortgage interest. But never mind that. Houses have clearly been seen as a can’t-miss investment in the past two years. The only way to explain the questionable buying decisions made in 2021 is that people saw houses and condos soaring in value and wanted a piece of the action.
House prices are falling in many cities, which adds some gritty authenticity to the idea of houses as an investment. Stocks are investments and everyone knows they go up and down in value.
Let’s look at how a recovery in house prices might play out. The annualized average price gain from 1980 to 2021 for resale homes was 5.8 per cent, which is an impressive three percentage points above the average inflation rate for that period.
If houses appreciate at an average annual rate of 5.8 per cent for the next 4.5 years or so, the average resale price would exceed the February peak. With a growth rate in prices of 2.9 per cent, it would take about 8.5 years to recover.
You’re in better shape if you bought in 2020 or early 2021, when mortgage rates were cheap and pandemic lockdowns drove people to find homes with more living space. If you bought at the average national resale price in January, 2021, you’re ahead by 3.7 per cent ahead, based on the average resale price for October. A purchase at the average price in October, 2020, leaves you up about 6 per cent.
There’s plenty of investment goodness left in a home bought at the average of $525,000 in October, 2019 – current prices are cumulatively almost 23 per cent higher than that, or 7.1 per cent on a compound average annual basis.
Investment success in housing comes at the expense of affordability for people trying to buy into the market. Expect to see more of this, not less.
Further increases in mortgage rates could hold back a price recovery, but there’s growing evidence that we are close to the end for the current cycle of rate hikes. A recession is possible, but the consensus so far is that it will be a) mild, and b) unlikely to cause rampant unemployment, which is deadly for housing. We still have a very tight job market in some sectors.
A clear advantage for housing is that nearly 1.45 million immigrants are expected to come to Canada in the next three years, a big number for a country with a population of not much more than 38 million. Expect housing supply to increase in the years ahead, and expect it to be soaked up to some extent by newcomers to Canada.
The historical 5.8 per cent growth rate in Canadian house prices was powered by a decades-long trend of falling interest rates. We could see falling rates by late next year. TD Economics sees the Bank of Canada’s overnight rate falling in the fourth quarter of 2023, while the Government of Canada bond yields that influence fixed mortgage rates are expected to fall through the year.
A quick rebound in house prices would end the dream of home ownership for young adults in some big cities. Prices haven’t fallen enough yet to discredit the seemingly unshakable idea of houses as an investment.
TORONTO – Canada’s main stock index was up more than 250 points in late-morning trading, led by strength in the base metal and technology sectors, while U.S. stock markets also charged higher.
The S&P/TSX composite index was up 254.62 points at 23,847.22.
In New York, the Dow Jones industrial average was up 432.77 points at 41,935.87. The S&P 500 index was up 96.38 points at 5,714.64, while the Nasdaq composite was up 486.12 points at 18,059.42.
The Canadian dollar traded for 73.68 cents US compared with 73.58 cents US on Thursday.
The November crude oil contract was up 89 cents at US$70.77 per barrel and the October natural gas contract was down a penny at US2.27 per mmBTU.
The December gold contract was up US$9.40 at US$2,608.00 an ounce and the December copper contract was up four cents at US$4.33 a pound.
This report by The Canadian Press was first published Sept. 19, 2024.
Losing a loved one is never easy, and the legal steps that follow can add even more stress to an already difficult time.
For years, families in Vancouver (and Canada in general) have struggled with a complex probate process—filled with paperwork and legal challenges.
Thankfully, recent changes to Canada’s probate laws aim to make this process simpler and easier to navigate.
Let’s unearth how these updates can simplify the process for you and your family.
What is probate?
Probate might sound complicated, but it’s simply the legal process of settling someone’s estate after death.
Here’s how it works.
Validating the will. The court checks if the will is legal and valid.
Appointing an executor. If named in the will, the executor manages the estate. If not, the court appoints someone.
Settling debts and taxes. The executor (and you) pays debts and taxes before anything can be given.
Distributing the estate. Once everything is settled, the executor distributes the remaining assets according to the will or legal rules.
Probate ensures everything is done by the book, giving you peace of mind during a difficult time.
Recent Changes in Canadian Probate Laws
Several updates to probate law in the country are making the process smoother for you and your family.
Here’s a closer look at the fundamental changes that are making a real difference.
1) Virtual witnessing of wills
Now permanent in many provinces, including British Columbia, wills can be signed and witnessed remotely through video calls.
Such a change makes estate planning more accessible, especially for those in remote areas or with limited mobility.
2) Simplified process for small estates
Smaller estates, like those under 25,000 CAD in BC, now have a faster, simplified probate process.
Fewer forms and legal steps mean less hassle for families handling modest estates.
3) Substantial compliance for wills
Courts can now approve wills with minor errors if they reflect the person’s true intentions.
This update prevents unnecessary legal challenges and ensures the deceased’s wishes are respected.
These changes help make probate less stressful and more efficient for you and other families across Canada.
The Probate Process and You: The Role of a Probate Lawyer
(Image: Freepik.com)
Working with a probate lawyer in Vancouver can significantly simplify the probate process, especially given the city’s complex legal landscape.
Here’s how they can help.
Navigating the legal process
Probate lawyers ensure all legal steps are followed, preventing costly mistakes and ensuring the estate is managed properly.
Handling paperwork and deadlines
They manage all the paperwork and court deadlines, taking the burden off of you during this difficult time.
Resolving disputes
If conflicts arise, probate lawyers resolve them, avoiding legal battles.
Providing you peace of mind
With a probate lawyer’s expertise, you can trust that the estate is being handled efficiently and according to the law.
With a skilled probate lawyer, you can ensure the entire process is smooth and stress-free.
Why These Changes Matter
The updates to probate law make a big difference for Canadian families. Here’s why.
Less stress for you. Simplified processes mean you can focus on grieving, not paperwork.
Faster estate settlements. Estates are settled more quickly, so beneficiaries don’t face long delays.
Fewer disputes. Courts can now honor will with minor errors, reducing family conflicts.
Accessible for everyone. Virtual witnessing and easier rules for small estates make probate more accessible for everyone, no matter where you live.
With these changes, probate becomes smoother and more manageable for you and your family.
How to Prepare for the Probate Process
Even with the recent changes, being prepared makes probate smoother. Here are a few steps to help you prepare.
Create a will. Ensure a valid will is in place to avoid complications.
Choose an executor. Pick someone responsible for managing the estate and discuss their role with them.
Organize documents. Keep key financial and legal documents in one place for easy access.
Talk to your family. Have open conversations with your family to prevent future misunderstandings.
Get legal advice. Consult with a probate lawyer to ensure everything is legally sound and up-to-date.
These simple steps make the probate process easier for everyone involved.
Wrapping Up: Making Probate Easier in Vancouver
Recent updates in probate law are simplifying the process for families, from virtual witnessing to easier estate rules. These reforms are designed to ease the burden, helping you focus on what matters—grieving and respecting your dead loved ones’ final wishes.
Despite these changes, it’s best to consult a probate lawyer to ensure you can manage everything properly. Remember, they’re here to help you during this difficult time.
TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
