Money123: IKEA just got cheaper — Netflix, not so much

Possible rate peak feeds spring housing market

The Bank of Canada delivered on expectations this week with its fourth consecutive interest rate hold.

While the central bank’s top officials were mum on a timeline for rate cuts, real estate experts are expecting the hints of a possible peak in the interest rate tightening cycle will lure prospective home buyers and sellers off the sidelines.

The housing market is already showing a pulse with an unexpected surge in sales to end 2023, thanks in part to an easing on borrowing costs for fixed-rate mortgages.

Royal LePage CEO Phil Soper said in an interview this week that his agents have an uptick in inquiries in recent weeks, which he believes will set up a “more or less balanced” spring housing market.

“We believe this will provide Canadians with more comfort that home prices in their city have stabilized and the next step will be a return to home price appreciation,” he told Global News.

Soper said there’s a “window” for buyers where home prices will hit their trough after more than a year of correction, but when interest rate cuts do come, home values are likely to rise again in 2024.

But for those thinking of jumping into the housing market based on rate forecasts, other experts are urging caution with plenty of uncertainty still on the horizon.

Read more here for a sense of what you should consider heading into the spring housing market.

IKEA Canada plans price cuts

IKEA Canada is taking note of the rising cost of living straining Canadians’ budgets, and is planning to cut prices on hundreds of its most popular items in response.

Internal reports from the Swedish furniture maker identified household finances and pressure on disposable income as a concern for its Canadian customers.

Some of the products reduced in price include the BILLY Bookcase with glass doors at $199 from $249, and the STRANDMON Armchair at $349 from $399.

IKEA warned that it’s not immune to price pressures facing its suppliers, but said it “looks forward to lowering prices where possible.”

The Bank of Canada earlier this week also flagged the possibility of further disruptions to trade in the Red Sea as a possible inflationary risk.

Read more for what to know about what to expect from IKEA’s price changes.

Netflix to ax cheapest ad-free plan

Netflix is ending one of its most affordable plans in Canada.

The streaming giant confirmed this week that it will phase out the Basic plan, its lowest-cost, ad-free option, for Canadian customers starting in the second quarter of 2024.

The Basic plan, currently priced at $9.99 per month, will disappear and customers will be prompted to move to the similar no-ads Standard plan at $16.49 per month, or select a different plan. The option to add extra member slots to the Standard plan will be available at $7.99 per month.

The company still offers a Standard plan with ads for $5.99 per month or users can pony up the extra cost for a Premium plan, which supports additional device and download permissions as well as Ultra HD capabilities, for $20.99 per month.

Netflix signalled it will try to justify the higher subscription prices — and perhaps reel in more advertisers to the low-cost plan that includes commercials — with a $10-billion deal announced Tuesday that will bring the WWE’s popular wrestling program, Raw, to its service.

Read more about what to expect from Netflix in 2024.

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– THE QUESTION –

“What if you open a first home savings account and then you inherit a house, like from a parent or grandparent? Do you then become ineligible for the FHSA? What happens to any savings if that’s the case? Could you sell the house quickly enough to maintain your FHSA eligibility?”

— A Money123 reader 

“This is a great question. In order to open an FHSA, you must be considered a first-time homebuyer, meaning you did not live in a home that either you or your spouse owned in the current year or the previous four years. In order to take a qualifying tax-free withdrawal from an FHSA, the same current year and previous four-year restrictions apply for you and your spouse.

When you inherit a house, it is owned by the estate of the deceased until the estate is settled and title to the house is transferred into your name. Even once it is transferred into your name, you may own the house, but if you are not living in it, you may still be considered a first-time homebuyer.

In order to take a tax-free qualifying withdrawal from an FHSA, you need to buy or build a house. Inheriting a house does not meet the definition to allow you to take a qualifying withdrawal as a result.

If an FHSA holder became ineligible due to inheriting and moving into a home, they could make a direct transfer from their FHSA to their RRSP or RRIF account on a tax deferred basis. This does not impact unused RRSP room.”

— Jason Heath, managing director, Objective Financial Partners

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