Tag Archives: new immigrants

4 Men with 4 Very Different Incomes Open Up About the Lives They Can Afford

Stuart Patience

 The median household income in America is $53,657. Politicians draw $250,000 as the line between the middle and upper classes. And the true starting point of real wealth remains a cool $1,000,000. We asked four more or less typical men, each of whom earns one of these incomes, to tell us about the lives they can afford.

$1,000,000 Per Year – Tim Nguyen, 35

Location: Huntington Beach, California

Occupation: Business owner, CEO/cofounder of BeSmartee, a DIY mortgage marketplace

Family status: Married with a 9-month-old son

Homeowner? Renter? “I’m a homeowner. No mortgage.” (Price of home: $1 million.)

Do you keep a budget? We track every single penny that comes in and out of our bank account. And we give 6 percent of our money away to charity. We have a big heart for animals, children, the el­derly, the underprivileged.

What’s a weekly grocery bill for you? I break it down monthly. We eat main­ly at home. We spend around $1,200 a month.

One thing your family needs but can’t afford: There’s nothing that we need that we can’t afford. Anything reasonable I can afford.

One thing you want but can’t afford: The thing that keeps me up at night is want­ing to retire my parents. There’s a certain dollar figure that would allow me to pay off all their debts. That’s my first goal: to retire my parents so they can be independent and just live their lives.

The last thing you bought that required serious plan­ning: We budget our money all the time, so we’ve already been planning for every­thing—I could tell you exactly where all my money is going over the next five years.

Do you have credit cards? I have one credit card. It’s cash for points, so we charge ev­erything on the card and pay it off at the end of the month.

How much debt are you carrying now? Less than 10 grand.

I’VE BEEN BROKE BEFORE. I’VE REFINANCED MY HOUSE TO PAY MY EMPLOYEES. I’VE BEEN THROUGH ALL THAT—THAT WAS ME WORRIED.

Saving for retirement? Yes. [I’ve put away] north of $5 million.

At what age would you like to retire? I’ll always be working. As far as working on a start-up, I want to be done with that in five or 10 years. But as far as working, investing in real estate, things of that nature, you can do that until you’re 90.

College plans for your kids? We set up a trust with our at­torney where our kids will have money for college. But they’ll only get more than that if they achieve their milestones, such as getting a certain GPA or vol­unteering in the community. We want our kids to be good citizens. They can’t be spoiled brats. We want them to understand what it means to work and to earn your way to the top. We put the rules in place to help reinforce that.

Looking at your current ca­reer prospects, how much money do you think you’ll be earning in ten years’ time? My goal is to have a net worth of $150 to $200 million.

How happy are you on any given day, on a scale of one to ten? I’d say eight or nine. Lately, with the start­-up, I’ve been putting in two to three hours more per day than I’d like, and that’s taking away from family time. So if I could get those two or three hours back, I’d be a happy man.

How often do you worry about money? Maybe once a week. I’ve been broke before. I’ve refinanced my house to pay my employees. I’ve been through all that—that was me worried. Now, because I’m able to forecast and plan my money better, there’s not as much worry.

How much money do you think you’d need to have the life you want? I need about 25 [million]. That includes retiring my parents, an upgraded home, and enough money to make sure my kids have funds available when they want to start their own businesses. There’s a certain amount of mon­ey you need to live the life you want. Beyond that, it’s really a game, and money is the scoreboard.

Do you think your taxes are too high? I’m happy with taxes. I had a really good year when I was 22 or 23—I made about 250 grand—and I came home and complained to my dad about it. I said, “I can’t believe I’m paying all those taxes! Half the money is gone!” And my dad said, “You should feel lucky that you live in a country where you can pay taxes”: He came from a communist-run coun­try. Ever since that day, I never complain about my taxes.


$250,000 Per Year – Yakov Villasmil, 41

Location: Miami

Occupation: Real Estate Agent

Family Status: In a relationship; one son, 10 years old

Monthly rent: $2,000

Do you keep a budget?  Yes, I’m very organized with it. Overall, my fixed expenses are about $7,000 a month. They include rent and about $1,000 a month for transportation, $180 a month to the cleaning lady, $200 for gas for the vehicle, and a handful of little things—$300 a month for Netflix, Pandora, Skype, subscriptions like that.

What’s a weekly grocery bill for you?  I would say about $200 a week.

AT THIS POINT IN MY LIFE, IF I HAD $600,000 YEARLY INCOME, I WOULD HAVE THE LIFE THAT I WANT TO BE LIVING. BUT THEN AGAIN, WHEN I GET THERE, I’LL WANT TO BUY THE JET.

One thing your family needs but can’t afford: Nothing.

One thing you want but can’t afford: I’m a fan of watches, and there’s a Cartier that just came out that’s about $10,000. It’s not that I can’t afford it; it’s just not a priority right now.

The last thing you bought that required serious plan­ning: I spend money trav­eling every year, and that’s something I put some thought into. Last December, I went to Austria, Slovenia, and Italy.

Do you have credit cards? Fifteen.

How much debt are you carrying now? $7,700 on one card, and it should be paid off by the end of the month.

Saving for retirement? I am saving, but not for re­tirement. I’m saving up to buy an apartment building, which will give me another stream of income. My money is all in play right now to make more money. The kind of life that I want to live when I retire is not one I have to manage by having, you know, a million dollars and 3 or 4 percent [interest]. It’s not going to happen.

At what age would you like to retire? I don’t think that I want to retire.

But say you did: At what age would you be able to retire? I want to be financially free by age 50.

College plans for your kid? No, but it’s all part of making sound investments.

Looking at your current career prospects, how much money do you think you’ll be earning per year in 10 years’ time? In 10 years’ time, I want to have $50,000 a month from apartment buildings, and another $50,000 a month from the real estate business. A million-five per year is the goal.

How often do you worry about money? Every single day. Every single minute. I always want more, and every single day I’m thinking, “What’s the next move?”

How much money do you think you’d need to have the life you want? At this point in my life, if I had $600,000 yearly income, I would have the life that I want to be living. But then again, when I get there, I’ll want to buy the jet.

How happy are you, on a scale of one to 10? I’m a good nine every day.

Do you think your taxes are too high? You know what? No, I don’t think they’re too high. I re­member I had a boss about 10 years ago who said, “You guys complain about the tax­es being taken out—if you don’t want them to take that much, just make less.”


$53,000 Per Year – Michael Greene, 48

Location: Brooklyn

Occupation: Concierge for a property-management group

Family status: Married with 3 children (a 21-year-old stepson and 8-year-old twin girls)

Monthly rent: $1,000

Do you keep a budget?

We do. Because of the size of our family, we have to budget at least $150 per month for BJ’s [Wholesale Club]. BJ’s is our friend; we have to buy in bulk.

What’s a weekly grocery bill for you? Probably in the range of $100 to $125.

I’D LOVE TO STAY IN BROOKLYN, BUT RIGHT NOW THE ASKING PRICE IS BETWEEN $500,000 AND $600,000.

One thing your family needs but can’t afford: A ranch-style home, four to five bedrooms, two to three bathrooms. I’d love to stay in Brooklyn, but right now the asking price is between $500,000 and $600,000.

One thing you want but can’t afford: I’ve always liked Volvos. If I could get a big, six-seater Volvo, that would be nice. In my color: navy blue. With a little TV in the back for the kids.

The last thing you bought that required serious planning? We bought bedroom sets for ourselves and our girls four years ago. Our set was between $5,000 and $6,000, with the dressers and everything. Our girls’ little beds—which they’re about to outgrow now—we got a better deal for them: around $2,000 or $2,500. I had to go into my savings a bit to get it, but we got it. We got it done.

Do you have credit cards? Just one. A Chase Visa. I’m definitely on top of my month­ly payments, and I try not to go anywhere past $300 to $400 a month. That would be stretching it. And I have to thank my wife for that. She helps me stay focused.

How much debt are you carrying now? No credit-card debt, but I definitely still have a student loan from the mid-nineties that I’m trying to bang out. I think I still have seven G’s left.

Saving for retirement? Yes, I am. Our company of­fers a 401(k) plan, and our union offers one, so I have two separate running re­tirement plans. Gotta do it. I don’t know how much is in there at the moment.

At what age would you like to retire? I’m 48 now. Realistically, I’d say I wouldn’t want to go past 60. But I think I’m looking at 60 be­fore I’ll be able to retire.

College plans for your kids? We have a college plan in place for the girls. I put away money biweekly—$75 to $100.

How much money do you think you’ll be earning per year in 10 years’ time? I’d love to say I’ll be making dou­ble if not more than double what I’m making now.

How often do you worry about money? Money is not something that I stress over.

How much money do you think you’d need to have the life you want? I’m not a greedy guy. Because of my upbringing, where we learned how to do more with less, and with the times and the econ­omy we live in now, my fami­ly and I could be very comfort­able at $200 to $250K a year. I could be very comfortable with that.

How happy are you, on a scale of one to ten? Eight.

Do you think your taxes are too high? Yes. Yes. Yes. Yes.


The Poverty Line (Or: $7 An Hour Plus Tips) – Demetrius Campbell, 25

Location: Chicago

Occupation: Bar-back at the Signature Lounge in the John Hancock building

Family status: Single with two daughters, 7 and 4

Monthly rent: 30 percent of income through antipoverty nonprofit Heartland Alliance

Do you keep a budget? No, but I have been working on trying to recently. I know I have to pay bills for food, for clothes, gas. It’s a lot of things that go into budget­ing. It’s hard to plan for, be­cause you never really know what you’re going to need to spend money on. And the amount of money I make var­ies, because I work different hours. The biggest two-week check I’ve had so far is $250.

I’M IN A LOT OF DEBT. I HAVE TRAFFIC TICK­ETS, HOSPITAL BILLS, OLD PHONE BILLS. I’M PRETTY SURE THAT MY DEBT FROM THE TICKETS ALONE IS ROUGHLY $3,000.

What’s a weekly grocery bill for you? In a week, about $130 to $140—that’s when I have the money to spend. I’m on food stamps, and I get $400 a month through EBT.

One thing your family needs but can’t afford: I don’t really think about stuff like that. I just try to make do with what I have. I feel like I’m just working to pay for the bills. I don’t even have time to spend with my family—to take them out to certain places.

One thing you want but can’t afford: I’d buy a newer-model car. And every time those commercials come on TV—the Pillow Pets—my kids always ask for those. It’s discouraging, having to tell them all the time that we can’t afford things.

The last thing you bought that required serious plan­ning: I bought a TV—a Black Friday deal. It’s a Vizio 39-inch. I paid like $250. I had to work for it. I saved up.

Do you have credit cards? No.

How much debt are you carrying now? I’m in a lot of debt. I have traffic tick­ets, hospital bills, old phone bills. I’m pretty sure that my debt from the tickets alone is roughly $3,000. By the time you get the money to pay the ticket, the fine has doubled. Then you get another one and can’t pay that one. Like, I’m on a boot [booted vehi­cles] list, and I got the money to get off the list, but my car got towed that morning, so I had to pay half that money to get it out of the impound. It just keeps going like that.”

Saving for retirement? No. Retirement is a long ways from now.

At what age would you like to retire? As young as I can and still have money. Probably late 60s.

College plans for your kids? I’ve thought about it. Once I get all my debts paid off and I’m in a better place, I’ll start putting as much money as I can toward it. I’ll take steps to put myself in better standing.

How much money do you think you’ll be earning per year in 10 years’ time? My goal is to triple what I’m making now.

How often do you worry about money? Always. Living like this is hard to do.

Does money ever keep you up at night? I can say that it has. It’s a lot of things building up—having the money when the bills are due, having a ticket, and not being able to pay it before it doubles.

How much money do you think you’d need to have the life you want? 50 to 60 thousand a year.

How happy are you, on a scale of one to 10? I’d say a seven or eight. But you might get lucky and catch me on 10 now and then.

Do you think your taxes are too high? Yes, I do.

Source: Esquire –INTERVIEWS BY 

Illustrations by Stuart Patience.

This article originally appears in the April 2016 issue. 

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New Canadians’ Mortgage Guide

Starting a new life in Canada? Buying your first home is one of the best ways to put down roots and establish yourself in your new country. According to Genworth Canada’s 2017 First-Time Homeownership Study, a full 19% of first-time homebuyers were born outside of Canada, 10% of whom arrived in the past decade. Wondering how to start your journey to homeownership? Read on for our New Canadians’ Mortgage Guide.

Step 1: Study your options

Responsible homeownership is about buying a home you can afford, so for starters, take a look at our library of articles about affordability. Read up on topics such as how to choose the right home for your budget and learn about financing options for new Canadians.

Genworth Canada’s New to Canada program can help you buy your first home with a down payment of as little as 5%. See how it works in this short video.

Share the knowledge with your family, too. Our New to Canada microsite offers content in Chinese, Punjabi, Korean, Spanish and French.

Step 2: Establish credit history in Canada

Banks and other lenders look at your credit score to determine your level of financial responsibility. Your credit score is determined by your financial behaviour: Do you pay your monthly bills (including cell phone) on time, or have you skipped payments? Do you have credit cards or lines of credit, and if so, how much do you have left to access?

TIPS: Never skip a payment (always pay at least the minimum),  and keep your credit utilization– the amount of your credit limit that you actually use–low. Don’t carry a balance over 30% of your credit limit; the lower the better.

The better your credit score, the more likely you are to be approved for a mortgage – and at a more favourable interest rate.

Because your Canadian credit history starts in Canada (foreign credit history isn’t taken into consideration by lenders), it’s important to establish positive patterns as soon as possible:

  • Open a savings or chequing account at a Canadian bank or credit union, and use it for your payroll deposits, as well as withdrawals and transfers.
  • Apply for a small loan or credit card. Make some purchases each month, and pay off the balance or make regular payments each month, to prove you are responsible with credit.

Step 3: Build your savings

Use a separate high-interest savings account, investment account or set aside funds in a TFSA (tax-free savings account) to build toward your home down payment. You can purchase a home with as little as 5% down, but in high-demand cities like Vancouver, Calgary and Toronto, a competitive real estate market means it can take longer to save for an adequate down payment.

TIP: First-time homebuyers can borrow RRSP funds to help towards a down payment under the federal government’s Home Buyers’ Plan.

Check out our Financing hub for an entire section of articles about saving for a down payment, including this video on how to set financial goals.

Step 4: Research neighbourhoods and communities

While you’re saving and working on building your credit history in Canada, take some time to daydream! Checking out neighbourhoods and communities where you might like to live is a great way to stay motivated. It can also help ensure that you have a smooth transition to your new home.

Think about where you’d most like to live. Would you prefer the excitement of a big city, the quiet family vibe of the suburbs, or the natural splendour of the rural countryside?

Research the amenities you’ll need, whether that’s public transportation, walkable communities, schools, places of religious worship, shops and other priorities.

Consider making weekend excursions to potential communities to explore the local amenities. Since Sunday afternoons are a traditional time for open houses, think about scheduling your visits so you can squeeze in a couple of house or condo tours, too.

Step 5: Start assembling your real estate team

Finally, as you get closer to house-hunting time, start building your real estate team. Ask friends, colleagues and neighbours for recommendations on professional REALTORS®, real estate agents, mortgage specialists, real estate lawyers and home inspectors.

It’s important to hire professionals who are familiar with the real estate market in your preferred neighbourhood or community. Interview a few candidates and research customer reviews online, so you can find the right pros to help you embark on your journey to homeownership in Canada. 

Source: Homeownership.ca

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Canada to admit nearly 1 million immigrants over next 3 years

Immigration Minister Ahmed Hussen said that by 2036 100 per cent of Canada's population growth will be as a result of immigration, it stands at about 75  per cent today.

Economic class will make up about 60% of newcomers

Immigration Minister Ahmed Hussen said that by 2036 100 per cent of Canada’s population growth will be as a result of immigration, it stands at about 75 per cent today. (CBC)

Canada will welcome nearly one million immigrants over the next three years, according to the multi-year strategy tabled by the Liberal government today in what it calls “the most ambitious immigration levels in recent history.”

Canadian immigration levels by year

The number of economic migrants, family reunifications and refugees will climb to 310,000 in 2018, up from 300,000 this year. That number will rise to 330,000 in 2019 then 340,000 in 2020.

The targets for economic migrants, refugees and family members was tabled in the House of Commons Wednesday afternoon.

Hussen said the new targets will bring Canada’s immigration to nearly one per cent of the population by 2020, which will help offset an aging demographic. He called it a historic and responsible plan and “the most ambitious” in recent history.

“Our government believes that newcomers play a vital role in our society,” Hussen said. “Five million Canadians are set to retire by 2035 and we have fewer people working to support seniors and retirees.”

In 1971 there were 6.6 people of working age for each senior, Hussen said, but by 2012 that ratio had gone to 4.2 to 1 and projections show it will be at 2 to 1 by 2036, when almost 100 per cent of population growth will be a result of immigration; it stands at about 75 per cent today.

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Hussen said immigration drives innovation and strengthens the economy, rejecting some claims that newcomers drain Canada’s resources and become a burden on society.

He said the government is also working to reduce backlogs and speed up the processing of applications in order to reunite families and speed up citizenship applications.

Canadian immigration class levels by year

The federal government’s own Advisory Council on Economic Growth had recommended upping levels to reach 450,000 newcomers annually by 2021. Hussen said the government is taking a more gradual approach to ensure successful integration.

“At arriving at these numbers we listened very carefully to all stakeholders who told us they want to see an increase but they also want to make sure that each and every newcomer that we bring to Canada — bringing a newcomer to Canada is half of the job. We have to make sure that people are able to be given the tools that they need to succeed once they get here,” he said.

Focus on integration: Rempel

Conservative immigration critic Michelle Rempel was critical of the plan, suggesting the government needs to do a better job of integrating newcomers.

“It is not enough for this government to table the number of people that they are bringing to this country. Frankly the Liberals need to stop using numbers of refugees, amount of money spent, feel-good tweets and photo ops for metrics of success in Canada’s immigration system.”

Chretien Ceremony 20170925

Luiz Capitulino, 11, of Brazil joins others take the oath as they become official Canadians during a citizenship ceremony at the National Arts Centre in Ottawa on Sept. 25, 2017. The federal government will welcome 310,000 newcomers to Canada in 2018. (Sean Kilpatrick/Canadian Press)

She said the Liberals need to bring Canada’s immigration system “back to order” by closing the loophole in the Safe Third Country Agreement that has seen migrants cross into Canada at unofficial border crossings only to claim refugee status.

She also said the immigration system should focus on helping immigrants integrate through language efficiency and through mental health support plans for people who are victims of trauma.

Dory Jade, the CEO of the Canadian Association of Professional Immigration Consultants, welcomed the news although he suggested the numbers should be higher.

“Canada will greatly prosper and grow once the 350,000 threshold has been crossed,” he said. “Nevertheless, we are witnessing a very positive trend.”

The Canadian Council of Refugees also welcomed the news, but wanted more, saying the share for refugees was only increased slightly from 13 per cent this year to 14 per cent in each of the next three years.

Calls for longer-range forecast

In past, there has been a one-year figure for how many immigrants will be permitted into the country, but provinces and stakeholders have called for longer-range forecasts.

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A statement from Ontario’s Immigration Minister Laura Albanese, before the announcement, said the province supports the introduction of multi-year levels plans “to provide more predictability to the immigration system and inform program planning.”

“Significant variation in year-to-year immigration levels can dramatically impact the requirement for provincial year-to-year resources. A longer term outlook would help in planning for appropriate service levels and use of resources.”

The statement said Ontario supports growth in immigration levels, particularly in economic immigration categories to support the growing economy.

Diversity drives innovation

During the government’s consultation period, the Canadian Immigrant Settlement Sector Alliance presented “Vision 2020,” what it called a “bold” three-year plan to address growing demographic shifts underway in the country, calling for increased numbers in the economic, family and refugee categories.

It recommended a target of 350,000 people in 2018, which climbs to 400,000 in 2019 and 450,000 by 2020.

Chris Friesen, the organization’s director of settlement services, said it’s time for a white paper or royal commission on immigration to develop a comprehensive approach to future immigration.

“Nothing is going to impact this country [more] besides increased automation and technology than immigration will and this impact will grow in response to [the] declining birth rate, aging population and accelerated retirements,” he told CBC News.

Source; CBC.ca – Kathleen Harris, Chris Hall, Peter Zimonjic, CBC News 

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New to Canada? Three tips to start your finances off right

New to Canada? Three tips to start your finances off right

Moving to a new country can be overwhelming but starting your finances off right can make all the difference as you build your new life.

 

As you begin your new life in Canada, here are three tips can get you headed in the right direction.

  1. Connect with resources that can help your family get settled.

There can be so much to do when you arrive in Canada—find a home, a job, schools, a bank—it can be hard to know where to start.

Scotiabank’s Newcomer Handbook gives you quick and easy access to things you need to know as you build a new life here. It’s available for free online and includes advice on:

  • 10 Things You Need to Know About Banking in Canada
  • Top 10 Tips for Settling in More Easily
  • Government Information and Assistance
  • Jobs and Careers
  • Health, Safety and Your Rights
  • Education and Training
  • Entrepreneurship
  • Embassies in Canada

After friends and family, a good place to begin when looking for a job is the Service Canada website as well as online job boards. If you need Canadian work experience, consider volunteering in your community.

The federal government also offers other newcomer support, to help get a language assessment and finding a language class, finding a place to live, signing up kids for school and learning about community services.

Your province is responsible for providing services like health care. All Canadian citizens and permanent residents are eligible for public health insurance, which provides most services free of charge (health care in Canada is paid for through taxes). Information about your province’s health care program is available through the government of Canada website.

  1. Learn how to manage your money.

Building a relationship with a financial advisor at a bank in Canada is an important step in creating your new life. Start by visiting your local branch to open chequing and savings accounts and consider applying for a credit card. Your advisor can help you understand your needs and suggest the products that are right for you and your family. Check out the popular credit cards that the Scotiabank StartRightprogram has to offer. With more rewards than any other bank, you’ll be sure to find a card that meets your needs and rewards you in the process.

A credit card not only lets you charge purchases rather than pay cash, it also helps you establish a credit history in Canada. This will be crucial when you need to get a loan to start a business or buy a home. Banks learn a lot about your financial health by accessing your credit history and use it to decide whether they should lend you money.

More important information about credit history:

  • It’s your responsibility to review your credit report and ensure it doesn’t contain any errors
  • Try to pay your bills on time and in full to avoid a negative rating
  • Make sure you understand the terms and conditions
  • Never go over your credit limit
  • Make sure to contact local credit agencies if you need help managing debt
  1. Plan for your future.

Before long, you’ll find that you and your family have settled into your new life in Canada and will start thinking about buying a home or car, putting money aside for your children’s education and investing for your retirement. Having a financial plan is an important element to help you take control of your finances.

One of the first things you can do is evaluate your day-to-day cash flow and think about spending only on things you really need or value. Cutting a few dollars here and there from your daily expenses, even if it’s just $5 a day, can add up to big savings year over year. Where can you start? Cut out your daily luxury coffee, bottles of water, or lunch out once a week. If you saved and invested that daily $5, in 20 years you would have more than $50,000!1

A “Mapping Tomorrow” session with a Scotiabank advisor will go a long way in helping you achieve your unique goals in Canada. Want to learn more? Our expert advisors can offer practical advice and smart solutions to help you have the life you want in Canada.

Source: by Scotiabank  Learn more about Scotiabank’s StartRight Program.

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Commentary: Supply not the main factor in Toronto’s housing woes

Commentary: Supply not the main factor in Toronto’s housing woes

While various quarters have cited supply scarcity as a central driver in Toronto’s long-running housing affordability issues, latest census data actually belies that notion, according to a Bloomberg analyst duo.

In their latest piece, markets observers Erik Hertzberg and Theophilos Argitis argued that “the most important question remains the extent to which speculation is driving demand.”

“Ideally, fundamentals such as demographics and employment are at play, and the price gains reflect natural household growth getting ahead of supply. If that’s true, the market should eventually stabilize once new supply kicks in,” Hertzberg and Argitis wrote. “A situation where speculators are bidding up prices would be much more problematic.”

“Canada’s 2016 census, which the statistics agency is releasing piecemeal this year, is providing some insight into the debate. The results: supply may not be the big problem many people thought it was.”

The data revealed that between 2011 and 2016, the total number of Toronto households increased by 146,200 (up to 2.14 million). To compare, the number of newly completed homes stood at 175,825 projects.

“In other words, supply of new houses exceeded real household demand by almost 30,000 over those five years,” the duo stated. “That throws cold water on the argument — voiced particularly by the industry — that the city’s affordability crisis won’t be resolved unless the government introduces measures to help increase supply.”

More importantly, Toronto is rapidly running out of buildable space, “evident in census data that show its population density has surpassed 1,000 people per square kilometre for the first time ever, another factor that should continue supporting prices for detached homes.”

Source: Mortgage Broker News – by Ephraim Vecina15 Aug 2017

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Solving the enigma of Canada’s housing bubble

A real estate sold sign hangs in front of a west-end Toronto property Friday, Nov. 4, 2016. THE CANADIAN PRESS/Graeme Roy (Graeme Roy/THE CANADIAN PRESS)

If Yogi Berra were alive today, he’d probably describe the Toronto housing market like this: Things are so good, they’re bad. And if they get any better, that’ll be worse.

In February, the Teranet-National Bank house price index showed prices in Greater Toronto rising 23 per cent over the previous year – or about 21 per cent faster than the rate of inflation. Homes in neighbouring Hamilton were up 19.7 per cent. Even in Metro Vancouver, long the hottest market but which recent policy changes have somewhat cooled, prices are up 14.3 per cent. Most of the rest of the country, however, looks relatively calm.

But not Toronto. It’s become such a sellers’ market that – another Berraism – nobody wants to sell.

In response to surging demand, the number of properties offered for sale has dropped. Potential sellers are holding off putting houses and condos on the market, because they assume the longer they wait, the higher prices will go.

“In the first two months of 2017,” writes Simon Fraser University public-policy professor Josh Gordon in a recent report on Toronto housing, “new listings dropped despite rapidly rising prices, likely because even more sellers now expect prices to climb higher. That has sent the sales-to-new-listing ratio soaring, which is a good proximate indicator for future house price increases.”

In other words, prices in Toronto appear to be feeding on themselves. Why? It’s the psychology of FOMO – the fear of missing out. Purchasers fear that, unless they buy now, they’ll miss out on ever owning a home. Potential sellers fear that, if they sell now, they’ll miss out on windfall profits from inevitable price jumps. Based on the past few years, these have become rationally held beliefs. Speculation is now wisdom.

If you’re already a homeowner, it’s wonderful. If you’re a young person, an immigrant or middle-class, it’s depressing. If you’re an economist or a banking regulator, it’s terrifying.

Toronto has long shown signs of a classic bubble, and so has Vancouver. And when housing bubbles burst, they send tsunamis rushing through the financial system, and the entire economy. Just look at what happened in the United States in 2008.

That’s the danger. And the best way to address it is to try to carefully let some air out, before the balloon pops.

A real estate sold sign hangs in front of a west-end Toronto property Friday, Nov. 4, 2016. THE CANADIAN PRESS/Graeme Roy (Graeme Roy/THE CANADIAN PRESS)

So what’s been driving prices in Toronto and Vancouver? A lot of things – some of which can’t be changed, or shouldn’t be.

There are the Bank of Canada’s record low short-term interest rates, a response to weak domestic and global economic conditions. Should Ottawa be agitating for higher borrowing costs, across the entire economy? Obviously not.

The Bank itself is also reflecting a worldwide savings glut, which has pushed global bond yields and mortgage rates to the floor, while pushing up the value of a lot of investment assets. Can Ottawa or the provinces address that? Not really.

Some of the price increases are a reflection of population growth, with the Greater Toronto Area adding nearly 400,000 people between 2011 and 2016, and Greater Vancouver growing by 150,000. Should government policy aim to stop people from moving to these successful cities? Absolutely not.

However, housing in Toronto and Vancouver has also been driven skyward by other factors. Greater Montreal, Canada’s second-largest market, has the same low interest rates, and over the last five years, it’s added twice as many people as Vancouver. But Montreal prices have not been bubbling.

The price boom in Toronto and Vancouver has been far beyond what population and income growth would suggest. For example, there tends to be a long-run relationship between average incomes and average housing prices. That’s because, as Yogi Berra might have put it, people can’t afford what they can’t afford – except when they can. In Toronto and Vancouver, the unaffordable is now the norm.

Average home prices are normally expected to be about three times median family incomes. As of last summer, that’s roughly where things were in Montreal, Ottawa and Calgary. But in Toronto, prices were more than eight times family income. Vancouver? Nearly 12.

Last year, the situation finally pushed British Columbia to act. The government introduced a 15 per cent tax on foreign buyers, which appears to have had an impact. Vancouver prices actually dipped late last year, reversing steep gains earlier in 2016.

The levy, which doesn’t apply to immigrants, had a dual effect. It discouraged non-resident speculators, while also signalling to the entire market that prices might not go up forever.

(Unfortunately, B.C. recently undermined the measure, by watering down its application, and creating a price-inflating program of interest-free loans for first-time homebuyers.)

Ontario Finance Minister Charles Sousa is now also musing about a foreign-buyers tax for Toronto. As in Vancouver, it might calm the market, and it’s hard to see how it could hurt. Non-resident investors are likely only a small part of the picture – the data is still poor – but they may be having a significant impact on prices and psychology.

Economists keep sounding alarms about a Canadian housing bubble; the latest comes from the Bank of International Settlements. A popped bubble will harm the entire country, but the entire country is not in a bubble. There’s no need for a national plan to throw cold water on buyers from Halifax to Ottawa to Edmonton. Policy has to go after the problem where it makes its home, in Southern Ontario and B.C.’s Lower Mainland.

Source: The Globe and Mail – Published Friday, Mar. 17, 2017

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Census 2016: Canada’s population surpasses 35 million

Canada’s population increased to 35,151,728 last year largely driven by growth in the West, according to 2016 census data released Wednesday by Statistics Canada.

The country’s population has grown five per cent since the last census in 2011, when it was at 33.5 million, the highest rate of growth among G7 countries. However, the growth rate declined from the 5.9 per cent increase recorded in 2011.

About two-thirds of the increase recorded in 2016 was due to net immigration into the country, while the rest was from new births.

The majority, or 66 per cent, of Canadians still live within 100 kilometres of the southern border with the U.S.

The number of private dwellings grew nationwide by 5.6 per cent to 14.1 million.

The population continued to boom in Western Canada. The quickest pace of growth was recorded in Alberta (11.6 per cent), Saskatchewan (6.3 per cent) and Manitoba (5.8 per cent). The three prairie provinces recorded the most growth in the country for the first time since Confederation, according to Statistics Canada.

Alberta had been the fastest-growing province in the 2006 and 2011 censuses as well.

The rate of growth was higher than in 2011 in both Alberta and Manitoba, the only two provinces that registered an increased rate of growth from the last census.

It is important to note that the census was collected in May 2016, so does not fully take into account the recent economic slump in Alberta.

“The census compares 2011 to 2016, and we’ve seen 15 strong years of growth in Alberta,” says Karen Mihorean, director general of the education, labour and income statistics branch of Statistics Canada.

Mihorean said Alberta is unique among Canadian provinces for having strong numbers in all three factors that contribute to population growth: immigration, interprovincial migration and new births.

British Columbia also grew faster than the national average, by 5.6 per cent. Just under 32 per cent of Canadians now live in the four western provinces, compared to 38.3 per cent in Ontario, 23.2 per cent in Quebec and 6.6 per cent in Atlantic Canada.

Low growth in Atlantic Canada

The four Atlantic provinces recorded the lowest growth in the country: 1.9 per cent in Prince Edward Island, one per cent in Newfoundland and Labrador (where more deaths than births occurred in some years) and 0.2 per cent in Nova Scotia. New Brunswick’s population decreased by 0.5 per cent, the only province with a decline since 2011.

“From East to West, population growth gets stronger and that’s a trend we’ve seen for the last few censuses,” says Mihorean. “In Atlantic Canada, it’s a case of seeing people leaving these provinces for other parts of the country.”

– 2011: Canada census shows people moving west

Ontario remained Canada’s most populous province at 13.4 million, an increase of 4.6 per cent from 2011. But Ontario’s growth rate was lower than the national average for the second consecutive census period, the first time that has happened in more than half a century.

Quebec’s population grew 3.3 per cent to 8.2 million, followed by British Columbia at 4.6 million, Alberta at 4.1 million, Manitoba at 1.3 million and Saskatchewan at 1.1 million. The population in Atlantic Canada was 2.3 million, with just under 924,000 residing in Nova Scotia.

The North was home to nearly 114,000, led by the Northwest Territories. The population of Nunavut, which at 12.7 per cent had the highest growth rate of any province or territory due to its high fertility rate, moved ahead of Yukon.

Western cities record greatest growth

While the rate of growth slowed in Canada’s three largest metropolitan areas, 35.5 per cent of Canadians now call Toronto, Montreal and Vancouver home.

Toronto remains the country’s largest metropolitan area at 5.9 million, increasing by 6.2 per cent since 2011. Montreal’s population has surged past the four million mark to 4.1 million, while Vancouver’s population now stands at 2.5 million, up 6.5 per cent.

With growth of 14.6 per cent, the highest of any metropolitan area in the country, Calgary is now Canada’s fourth largest city at 1.4 million, moving ahead of Ottawa-Gatineau (1.3 million). Also at 1.3 million, Edmonton is the only other Canadian city with more than a million residents.

The six fastest metropolitan areas were all in Western Canada: Calgary, Edmonton, Saskatoon, Regina, Lethbridge, Alta., and Kelowna, B.C., with all but the last posting growth of more than 10 per cent.

At the other end of the country, however, all of Atlantic Canada’s metropolitan areas recorded a slower rate of growth than in 2011, while the population of Saint John fell by 2.2 per cent — largely due to residents moving to other parts of Canada.

Sylvan Lake, Alta., was the fastest-growing census agglomeration, growing by 19.6 per cent since 2011, while Campbellton (mostly in New Brunswick but partly in Quebec) had the greatest decrease at 9.3 per cent.

Among municipalities with at least 5,000 residents, Warman, Sask., had the highest rate of growth since 2011 at 55.1 per cent, followed by the Alberta communities of Blackfalds (48.1 per cent) and Cochrane (47.1 per cent). Bonnyville, Alta., had the fastest rate of decrease at 12.9 per cent.

The population and dwelling counts mark the first set of data from the mandatory short-form 2016 census to be released by Statistics Canada. Further releases, including those related to gender, language, immigration and labour, will follow throughout 2017.

The data will assist decision-making across all levels of government and provide sociologists, demographers, urban planners and businesses with a wealth of information.

Source: CBC.ca – Éric Grenier

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