Economists warn about the possible bubble at the Canadian housing market
Last month Canadian real estate prices kept growing, although the number of existing homes sold in April were a bit lower than a year ago.
The average sales price in Canada was up by 7.6% from 2013 and reached $409,708.
It should be noted that average numbers may be distorted because of changes in the types or locations of homes sold. For example, if we exclude Vancouver and Toronto markets, the average price in the rest of Canada will show 4.8% growth. The MLS Home Price Index, providing a more apples-to-apples comparison, went up by 5%, which is slightly lower than 5.19% reported in March.
Typical first time home buyers’ mistakes when withdrawing funds from RRSP
As you know, when purchasing a house, one may withdraw money tax-free from RRSP. In the same time, it’s extremely important to remember that you have to inform the bank about the reason of your withdrawal. Otherwise, you’ll deal with unnecessary taxes.
Here is an example of how NOT to act when trying to benefit from your RRSP funds.
Kate (name changed) was a first-time home buyer. She withdrew her retirement savings to buy a condo. And now she has to pay $5,000 to the Canada Revenue Agency for that.
Today Kate understands mistakes she made amid strong market competition, tight deadlines and luck of a proper advice.
“In 2011 in order to buy a one-bedroom condo I had to clean out all my savings, including even RRSPs,” - she says. As the Toronto condo was located close to a subway station, there were many potential buyers, so the bidding war started.