THE CANADIAN PRESS
OTTAWA–Finance Minister Jim Flaherty has announced government measures aimed at stabilizing the country's troubled lending industry – measures he predicts will prod banks to further lower their lending rates.
Flaherty says the Canada Mortgage and Housing Corp. will take steps to maintain the availability of longer-term credit by purchasing up to $25 billion in insured mortgage pools.
He says the move will ease some of the pressure on banks and other lending institutions caught in the global credit crunch, thus making loans and mortgages more available and affordable to Canadians.
Flaherty says the program is an "efficient, cost-effective and safe way to support lending in Canada that comes at no fiscal cost to taxpayers."
The finance minister says Canada's banks and financial institutions remain "sound and well-capitalized, and less-leveraged than their international peers."
He says the mortgage system is also sound – Canadians have smaller mortgages relative to the value or their homes and household incomes than Americans.
But he says it's becoming increasingly clear that what he described as the severe, protracted and growing disruption of global credit markets has made it more difficult for Canadian financial institutions to raise long-term funding.
And he says that's beginning to affect the cost of mortgages and other loans in Canada.
Friday, October 10, 2008
Thursday, October 9, 2008
Canada Banks #1
Thu Oct 9, 2008 4:40am EDT
CANBERRA (Reuters) - Canada has the world's soundest banking system, closely followed by Sweden, Luxembourg and Australia, a survey by the World Economic Forum has found as financial crisis and bank failures shake world markets.
But Britain, which once ranked in the top five, has slipped to 44th place behind El Salvador and Peru, after a 50 billion pound ($86.5 billion) pledge this week by the government to bolster bank balance sheets.
The United States, where some of Wall Street's biggest financial names have collapsed in recent weeks, rated only 40, just behind Germany at 39, and smaller states such as Barbados, Estonia and even Namibia, in southern Africa.
The United States was on Thursday considering buying a slice of debt-laden banks to inject trust back into lending between financial institutions now too wary of one another to lend.
The World Economic Forum's Global Competitiveness Report based its findings on opinions of executives, and handed banks a score between 1.0 (insolvent and possibly requiring a government bailout) and 7.0 (healthy, with sound balance sheets).
Canadian banks received 6.8, just ahead of Sweden (6.7), Luxembourg (6.7), Australia (6.7) and Denmark (6.7).
UK banks collectively scored 6.0, narrowly behind the United States, Germany and Botswana, all with 6.1. France, in 19th place, scored 6.5 for soundness, while Switzerland's banking system scored the same in 16th place, as did Singapore (13th).
The ranking index was released as central banks in Europe, the United States, China, Canada, Sweden and Switzerland slashed interest rates in a bid to end to panic selling on markets and restore trust in the shaken banking system.
The Netherlands (6.7), Belgium (6.6), New Zealand (6.6), Malta (6.6) rounded out the WEF's banking top 10 with Ireland, whose government unilaterally pledged last week to guarantee personal and corporate deposits at its six major banks.
Also scoring well were Chile (6.5, 18th) and Spain, South Africa, Norway, Hong Kong and Finland all ending up in the top 20.
At the bottom of the list was Algeria in 134th place, with its banks scoring 3.9 to be just below Libya (4.0), Lesotho (4.1), the Kyrgyz Republic (4.1) and both Argentina and East Timor (4.2).
RANKINGS
1. Canada
2. Sweden
3. Luxembourg
4. Australia
5. Denmark
6. Netherlands
7. Belgium
8. New Zealand
9. Ireland
10. Malta 11. Hong Kong
12. Finland
13. Singapore
14. Norway
15. South Africa
16. Switzerland
17. Namibia
18. Chile
19. France
20. Spain
--------------------------------------------
124. Kazakhstan
125. Cambodia
126. Burundi
CANBERRA (Reuters) - Canada has the world's soundest banking system, closely followed by Sweden, Luxembourg and Australia, a survey by the World Economic Forum has found as financial crisis and bank failures shake world markets.
But Britain, which once ranked in the top five, has slipped to 44th place behind El Salvador and Peru, after a 50 billion pound ($86.5 billion) pledge this week by the government to bolster bank balance sheets.
The United States, where some of Wall Street's biggest financial names have collapsed in recent weeks, rated only 40, just behind Germany at 39, and smaller states such as Barbados, Estonia and even Namibia, in southern Africa.
The United States was on Thursday considering buying a slice of debt-laden banks to inject trust back into lending between financial institutions now too wary of one another to lend.
The World Economic Forum's Global Competitiveness Report based its findings on opinions of executives, and handed banks a score between 1.0 (insolvent and possibly requiring a government bailout) and 7.0 (healthy, with sound balance sheets).
Canadian banks received 6.8, just ahead of Sweden (6.7), Luxembourg (6.7), Australia (6.7) and Denmark (6.7).
UK banks collectively scored 6.0, narrowly behind the United States, Germany and Botswana, all with 6.1. France, in 19th place, scored 6.5 for soundness, while Switzerland's banking system scored the same in 16th place, as did Singapore (13th).
The ranking index was released as central banks in Europe, the United States, China, Canada, Sweden and Switzerland slashed interest rates in a bid to end to panic selling on markets and restore trust in the shaken banking system.
The Netherlands (6.7), Belgium (6.6), New Zealand (6.6), Malta (6.6) rounded out the WEF's banking top 10 with Ireland, whose government unilaterally pledged last week to guarantee personal and corporate deposits at its six major banks.
Also scoring well were Chile (6.5, 18th) and Spain, South Africa, Norway, Hong Kong and Finland all ending up in the top 20.
At the bottom of the list was Algeria in 134th place, with its banks scoring 3.9 to be just below Libya (4.0), Lesotho (4.1), the Kyrgyz Republic (4.1) and both Argentina and East Timor (4.2).
RANKINGS
1. Canada
2. Sweden
3. Luxembourg
4. Australia
5. Denmark
6. Netherlands
7. Belgium
8. New Zealand
9. Ireland
10. Malta 11. Hong Kong
12. Finland
13. Singapore
14. Norway
15. South Africa
16. Switzerland
17. Namibia
18. Chile
19. France
20. Spain
--------------------------------------------
124. Kazakhstan
125. Cambodia
126. Burundi
Friday, September 26, 2008
Kitchen Fix- ups that won't break the bank!
Quick and easy kitchen fix-ups that won't break the bank.
If your kitchen is looking a bit blah, there are lots of ways to spruce it up without breaking the bank -- or taking on a full renovation. Here's a rundown of ideas, all of them under $100, which will help to cheer it up.
1 Paint is one of the most versatile decorating tools there is. Painting the walls in a lovely new colour will do a lot to lighten and brighten, but don't stop there. Repainting the cabinets can completely transform your look -- after all, cabinetry takes up most of the wall space in many kitchens. Melamine paint is best for kitchen cabinets, since it's tough, easy-to-wash and can be tinted any colour you like, and it's now available in easy-to-use latex formulations. Some types of flooring, such as wood and sheet vinyl, can also be painted.
2 Change the backsplash. Peel-and-stick mirror tiles are available at most building stores, for an instant brightener. Ceramic subway tiles are another trendy backsplash look that's surprisingly easy to do, especially if you can adjust the design to avoid having to cut them. (If you want or need to cut tiles, you can rent a tile cutter at a rent-all store.) Ceramic tile is also a great do-it-yourself way to update worn-out counters.
3 Make a shirred café curtain for your window. Cut a piece of pretty sheer fabric, half the height of the window plus 2 inches for hems, and 1-1/2 times the window width. Sew 1” hems on all four sides and thread it onto an adjustable curtain rod. Mount rod across the centre of the window, leaving the top half of the window bare.
4 Thin slatted blinds in wood or PVC make a clean-looking (and easy-to-clean) kitchen window covering. Wood blinds have the added advantage that you can paint them to match your colour scheme.
5 Change all the cabinet and drawer hardware. You can get all kinds of great designs, from forks and knives to sophisticated modern looks.
6 Change the faucet. Many of the new looks are specially designed for do-it-yourself installation, using just basic tools, and there are many styles to choose from that cost less than $100.
7 Add new mouldings. For instant elegance, new crown mouldings, chair rails or beefed-up baseboards (either to replace existing skinny ones, or added as an extra course above them) are another done-in-a-day job. For a glamourous look, you can also add crown mouldings to the tops of plain cabinets. Nowadays, some types of mouldings feature premitered corners, removing the trickiest aspect of the job.
8 For a low-cost mood lifter, simply treat yourself to new tea towels, oven mitts, and potholders in a bright colour or cheery pattern.
9 Update your accessories with stylish new ones. Canisters in graduated sizes, a tall pottery jar filled with wooden spoons and cooking utensils, or a beautiful antique breadbox are lovely additions for your countertop. Add a few hanging plants for a fresh look.
10 Finish a wall with a beautiful framed posters that coordinates with your kitchen scheme, or create a vignette with a series of frames from an art or photo supply store, filled with family photos or pictures taken from an old botanical calendar. If the frames are unfinished, paint them in your signature colour palette.
If your kitchen is looking a bit blah, there are lots of ways to spruce it up without breaking the bank -- or taking on a full renovation. Here's a rundown of ideas, all of them under $100, which will help to cheer it up.
1 Paint is one of the most versatile decorating tools there is. Painting the walls in a lovely new colour will do a lot to lighten and brighten, but don't stop there. Repainting the cabinets can completely transform your look -- after all, cabinetry takes up most of the wall space in many kitchens. Melamine paint is best for kitchen cabinets, since it's tough, easy-to-wash and can be tinted any colour you like, and it's now available in easy-to-use latex formulations. Some types of flooring, such as wood and sheet vinyl, can also be painted.
2 Change the backsplash. Peel-and-stick mirror tiles are available at most building stores, for an instant brightener. Ceramic subway tiles are another trendy backsplash look that's surprisingly easy to do, especially if you can adjust the design to avoid having to cut them. (If you want or need to cut tiles, you can rent a tile cutter at a rent-all store.) Ceramic tile is also a great do-it-yourself way to update worn-out counters.
3 Make a shirred café curtain for your window. Cut a piece of pretty sheer fabric, half the height of the window plus 2 inches for hems, and 1-1/2 times the window width. Sew 1” hems on all four sides and thread it onto an adjustable curtain rod. Mount rod across the centre of the window, leaving the top half of the window bare.
4 Thin slatted blinds in wood or PVC make a clean-looking (and easy-to-clean) kitchen window covering. Wood blinds have the added advantage that you can paint them to match your colour scheme.
5 Change all the cabinet and drawer hardware. You can get all kinds of great designs, from forks and knives to sophisticated modern looks.
6 Change the faucet. Many of the new looks are specially designed for do-it-yourself installation, using just basic tools, and there are many styles to choose from that cost less than $100.
7 Add new mouldings. For instant elegance, new crown mouldings, chair rails or beefed-up baseboards (either to replace existing skinny ones, or added as an extra course above them) are another done-in-a-day job. For a glamourous look, you can also add crown mouldings to the tops of plain cabinets. Nowadays, some types of mouldings feature premitered corners, removing the trickiest aspect of the job.
8 For a low-cost mood lifter, simply treat yourself to new tea towels, oven mitts, and potholders in a bright colour or cheery pattern.
9 Update your accessories with stylish new ones. Canisters in graduated sizes, a tall pottery jar filled with wooden spoons and cooking utensils, or a beautiful antique breadbox are lovely additions for your countertop. Add a few hanging plants for a fresh look.
10 Finish a wall with a beautiful framed posters that coordinates with your kitchen scheme, or create a vignette with a series of frames from an art or photo supply store, filled with family photos or pictures taken from an old botanical calendar. If the frames are unfinished, paint them in your signature colour palette.
Friday, May 2, 2008
How To Beat A 40yr Mortgage - Tips and Advice (Newsletter)
I have found myself increasingly educating my clients and answering questions about the 40 year mortgage. Below I have listed my views on the 40 year mortgage, and also some links to articles on 40 year mortgages. I hope you find this informative and please feel free to forward this to anyone you know that might benefit from this information.
The primary benefit of the 40 year mortgage is the increase in cash flow, as your monthly mortgage payments are smaller. This allows people to purchase properties that they would not have considered if the 25 year mortgage was the only option. The following example shows how much a 40 year mortgage can decrease your monthly payments:
John and Jane Doe buy a $400,000 house in Annex (what a deal!!) at 5% interest rate, zero down payment with 25 years amortized and 40 years amortized comparison. Calculations provided below are for accelerated bi-weekly and monthly payment using RBC mortgage calculator. (https://www.rbcroyalbank.com/RBC:olbopda_fq/cgi-bin/mortgage/mortcalc.pl)
Over 25 years amortized:
Accelerated Bi-Weekly: $1,163.21
Total interest paid: $247,845
Monthly: $2,326.42
Total interest paid: $297,926
Over 40 years amortized:
Accelerated Bi-Weekly: $957.61
Total interest paid: $392,990
Monthly: $1,915.22
Total interest paid: $519,299
Difference in bi-weekly payment: $205.60 per month which translates into $2467.20 per year.
Difference in monthly payment: $411.20 per month which translates into $4934.40 per year.
The catch is that if you continue to pay according to this schedule, you will end up paying far more interest.
The way to beat the system:
1) Take advantage of your doubling up mortgage payment option and/or your annual pre-payment option of up to 10-15% of the total mortgage amount.
For the first couple years the idea is to have a lower mortgage payment, and free up some cash for other things. But as you earn more, you must take advantage of these options to pay down the principal faster. By reducing the principal, you will effectively change the interest paid, so that it reflects the interest paid on a 25 year amortization versus a 40 year amortization. The key is that you must reduce the principal so that the interest payments will accordingly be reduced. (http://www.rbcroyalbank.com/RBC:SAauCo71JsYAEAAaOmY/products/mortgages/money_saving_options.html for more info on payment options to pay down your mortgage faster)
2) Your pre-approval should be using a 25 year amortization to be really safe.
If you cannot afford the property on a 25 year amortization, then you may want to rethink buying it. Interest rates can change, and you should have some level of security. The 40 year can be used as an insurance policy in bad times, and use the double payment and pre-payment options in the good times. With any debt, one should always have some equity tucked away to account for the unknown. But, if you see future monies coming to you, then the 40 year can get you in the property while you wait for the new funds.
3) Use future increase in salary or receipt of funds.
If you decide to take advantage of this option, it is also important that you foresee an increase in salary or influx of funds in the future to take advantage of the payment options. If you are unable to do this, then you will be paying a staggering amount of interest in comparison to the 25 year.
Here are some links to articles I read on the 40 year mortgage with mixed reviews:
http://www.thestar.com/living/article/204118
http://www.thestar.com/Business/article/408925
http://www.thestar.com/Business/article/412683
http://www.thestar.com/Business/article/292254
http://moneycentral.msn.com/content/Banking/Homefinancing/P99137.asp
The primary benefit of the 40 year mortgage is the increase in cash flow, as your monthly mortgage payments are smaller. This allows people to purchase properties that they would not have considered if the 25 year mortgage was the only option. The following example shows how much a 40 year mortgage can decrease your monthly payments:
John and Jane Doe buy a $400,000 house in Annex (what a deal!!) at 5% interest rate, zero down payment with 25 years amortized and 40 years amortized comparison. Calculations provided below are for accelerated bi-weekly and monthly payment using RBC mortgage calculator. (https://www.rbcroyalbank.com/RBC:olbopda_fq/cgi-bin/mortgage/mortcalc.pl)
Over 25 years amortized:
Accelerated Bi-Weekly: $1,163.21
Total interest paid: $247,845
Monthly: $2,326.42
Total interest paid: $297,926
Over 40 years amortized:
Accelerated Bi-Weekly: $957.61
Total interest paid: $392,990
Monthly: $1,915.22
Total interest paid: $519,299
Difference in bi-weekly payment: $205.60 per month which translates into $2467.20 per year.
Difference in monthly payment: $411.20 per month which translates into $4934.40 per year.
The catch is that if you continue to pay according to this schedule, you will end up paying far more interest.
The way to beat the system:
1) Take advantage of your doubling up mortgage payment option and/or your annual pre-payment option of up to 10-15% of the total mortgage amount.
For the first couple years the idea is to have a lower mortgage payment, and free up some cash for other things. But as you earn more, you must take advantage of these options to pay down the principal faster. By reducing the principal, you will effectively change the interest paid, so that it reflects the interest paid on a 25 year amortization versus a 40 year amortization. The key is that you must reduce the principal so that the interest payments will accordingly be reduced. (http://www.rbcroyalbank.com/RBC:SAauCo71JsYAEAAaOmY/products/mortgages/money_saving_options.html for more info on payment options to pay down your mortgage faster)
2) Your pre-approval should be using a 25 year amortization to be really safe.
If you cannot afford the property on a 25 year amortization, then you may want to rethink buying it. Interest rates can change, and you should have some level of security. The 40 year can be used as an insurance policy in bad times, and use the double payment and pre-payment options in the good times. With any debt, one should always have some equity tucked away to account for the unknown. But, if you see future monies coming to you, then the 40 year can get you in the property while you wait for the new funds.
3) Use future increase in salary or receipt of funds.
If you decide to take advantage of this option, it is also important that you foresee an increase in salary or influx of funds in the future to take advantage of the payment options. If you are unable to do this, then you will be paying a staggering amount of interest in comparison to the 25 year.
Here are some links to articles I read on the 40 year mortgage with mixed reviews:
http://www.thestar.com/living/article/204118
http://www.thestar.com/Business/article/408925
http://www.thestar.com/Business/article/412683
http://www.thestar.com/Business/article/292254
http://moneycentral.msn.com/content/Banking/Homefinancing/P99137.asp
Wednesday, March 5, 2008
Great article - Why real estate and why Toronto? (Newsletter)
I would like to take a minute and reflect back upon the growth of our real estate market, and the public sentiments towards the market. A friend sent me this article which I found very interesting, as this was published in August of 2005. I can remember back to the half-empties chanting that the market was going to collapse, and that the growth could not continue, and that all the real estate market was all hype. Well looking back I have to laugh at these nay sayers, and revel in the fact that my clients have been making steady 15% year over year since 2005. I can't agree more with the tenets of this article.
Looking at our current condition, and the current nay sayers concerns about the US markets influencing Canada, I once again hope we all dig a little deeper and see the cup for half full, as it really is. Our Toronto market is a strong and growing market for the following reasons:
1) Low interest rates - cheap to borrow money
2) Affordability still good ratio to our incomes
3) Low unemployment, and large job creation
4) Millions of immigrants entering per year need housing
5) Growing recognition of Toronto as a world-class city (as witnessed by Ritz Carlton, Shangri-La, Four Seasons, Trump coming to town)
6) Excitement around new cutting edge, modern developments in previously unaccessible neighbourhoods - condo/lofts in particular
Key Points From the article below:
Nothing you will ever do in your lifetime is likely to make you as much money as buying a home and living in it.
Realistically, the best investment you will ever make will be your home.
Don't worry about timing the market in real estate. It's time in the market that will matter for you.
I'm confident and excited, and happy that I'm helping people build their fortunes and security for later in life. Enjoy the article and stay tuned for more.
How buying a house can make you rich
Nothing you will ever do in your lifetime is likely to make you as much money as buying a home and living in it, writes David Bach in The Automatic Millionaire Homeowner.
CANADIANS ARE STAYING CLOSER TO HOME!
Over the last few years, something radical happened to the way Canadians think about money and investing - something so radical that it may have forever changed the way we live our lives and plan for our futures. What happened is that a lot of people got fed up with the stock market.
The reason for this change of heart was simple. Between August 2000 and September 2002, Canadian stocks experienced their worst decline since the Depression in 1929-1932. After a bull market that began in 1998, Canadian stocks lost 43% of their value between the summer of 2000 and the Fall of 2002. To say the least, it was one brutal meltdown. Even though the Canadian stock market in general and technology stocks in particular bounced back by 2004, the effects of the meltdown linger to this day.
For many families - maybe yours was one of them - this market "correction" (which is what the experts called it) was the proverbial straw that broke the camel's back. Canadians simply decided that enough was enough. They were taking their stock market "chips" and going home - literally and figuratively.
Instead of keeping their money in stocks, many Canadians started investing in real estate - mainly in homes, home improvements, and second homes. This simple change has led to a boom in real estate and home ownership the likes of which we've seldom seen before. It's an exciting time to be building wealth in Canada, but it's also a frightening time because Canadians now have so much of their wealth tied up in their homes-about $1.6 trillion in equity, according to Statistics Canada, or about 77% of non-financial assets. According to a report from Scotiabank, the value of real estate assets in Canada rose by 27% between 2002 and 2005, more than double the 13% increase in household financial assets. Home equity now accounts for 36% of the average net worth of homeowner households in Canada, up from 29% in 2000.
And many people are wondering - maybe you're one of them - whether this is a safe place to be.
SMART HOMEOWNERS ARE FINISHING RICH - HOW ABOUT YOU?
Between 1997 and 2005, the average Canadian homeowner saw the value of his house jump by almost 50%. Since 1980, according to The Canadian Real Estatxe Association, the average Canadian home has increased in value by more than 200%. Many homeowners doubled or even tripled their wealth in just a few years because of exploding real-estate values. As prices soared, experts began warning that the real estate market was starting to look like the overheated technology market of the late 1990s. Nonetheless, as I write, the gold rush to real estate continues.
The average home price in Canada hit $237,900 in 2005 - up $15,000 from $224,729 the year before. Not as high as increases in the U.S., but that was just the average. In some markets, including Edmonton and Calgary, home prices have risen more than 8% in the same period. In Vancouver, the average price of a house is $400,000. Some people have literally bought a home, lived in it for a few years, then sold it and retired. Done. Game over.
Imagine that. Buy a home, live in it, build your wealth-and then retire rich. It may sound too good to be true. But it's not. It has happened - and it will continue to happen for thousands of people over the next few decades. The question is, will it happen for you? Will you catch this wave, miss it - or will it crash on you?
BOOM OR BUST-YOU CAN STILL MAKE MONEY IN REAL ESTATE
As I sit here in August of 2005, I have no idea when you will actually be reading what I'm writing. Maybe it's March of 2006 (when this book is scheduled to be published) - by which time the real estate market could be slowing or cooling down to more modest annual gains (or not). Perhaps this book was bought by a friend of yours who passed it along to you - and it's now 2007 and those once "certain" boom markets are going bust because of speculation. Or maybe the opposite has happened-interest rates have remained at historic lows and home prices have continued their march upwards.
In fact, it doesn't really matter when you happen to be reading this or what's going on right now in the markets. This book is not about the boom . . . or the busts. It's not about timing the real estate market. It's not about the fantasy of "getting rich overnight" in real estate.
What this book is about is the truth. And the truth is this:
Nothing you will ever do in your lifetime is likely to make you as much money as buying a home and living in it.
Realistically, the best investment you will ever make will be your home.
Don't worry about timing the market in real estate. It's time in the market that will matter for you.
Learn more about The Automatic Millionaire by David Bach.
Buy the book.
Excerpted from The Automatic Millionaire Homeowner, Canadian Edition by David Bach Copyright (c) 2006 by David Bach. Excerpted by permission of Doubleday Canada, a division of Random House of Canada Limited. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Looking at our current condition, and the current nay sayers concerns about the US markets influencing Canada, I once again hope we all dig a little deeper and see the cup for half full, as it really is. Our Toronto market is a strong and growing market for the following reasons:
1) Low interest rates - cheap to borrow money
2) Affordability still good ratio to our incomes
3) Low unemployment, and large job creation
4) Millions of immigrants entering per year need housing
5) Growing recognition of Toronto as a world-class city (as witnessed by Ritz Carlton, Shangri-La, Four Seasons, Trump coming to town)
6) Excitement around new cutting edge, modern developments in previously unaccessible neighbourhoods - condo/lofts in particular
Key Points From the article below:
Nothing you will ever do in your lifetime is likely to make you as much money as buying a home and living in it.
Realistically, the best investment you will ever make will be your home.
Don't worry about timing the market in real estate. It's time in the market that will matter for you.
I'm confident and excited, and happy that I'm helping people build their fortunes and security for later in life. Enjoy the article and stay tuned for more.
How buying a house can make you rich
Nothing you will ever do in your lifetime is likely to make you as much money as buying a home and living in it, writes David Bach in The Automatic Millionaire Homeowner.
CANADIANS ARE STAYING CLOSER TO HOME!
Over the last few years, something radical happened to the way Canadians think about money and investing - something so radical that it may have forever changed the way we live our lives and plan for our futures. What happened is that a lot of people got fed up with the stock market.
The reason for this change of heart was simple. Between August 2000 and September 2002, Canadian stocks experienced their worst decline since the Depression in 1929-1932. After a bull market that began in 1998, Canadian stocks lost 43% of their value between the summer of 2000 and the Fall of 2002. To say the least, it was one brutal meltdown. Even though the Canadian stock market in general and technology stocks in particular bounced back by 2004, the effects of the meltdown linger to this day.
For many families - maybe yours was one of them - this market "correction" (which is what the experts called it) was the proverbial straw that broke the camel's back. Canadians simply decided that enough was enough. They were taking their stock market "chips" and going home - literally and figuratively.
Instead of keeping their money in stocks, many Canadians started investing in real estate - mainly in homes, home improvements, and second homes. This simple change has led to a boom in real estate and home ownership the likes of which we've seldom seen before. It's an exciting time to be building wealth in Canada, but it's also a frightening time because Canadians now have so much of their wealth tied up in their homes-about $1.6 trillion in equity, according to Statistics Canada, or about 77% of non-financial assets. According to a report from Scotiabank, the value of real estate assets in Canada rose by 27% between 2002 and 2005, more than double the 13% increase in household financial assets. Home equity now accounts for 36% of the average net worth of homeowner households in Canada, up from 29% in 2000.
And many people are wondering - maybe you're one of them - whether this is a safe place to be.
SMART HOMEOWNERS ARE FINISHING RICH - HOW ABOUT YOU?
Between 1997 and 2005, the average Canadian homeowner saw the value of his house jump by almost 50%. Since 1980, according to The Canadian Real Estatxe Association, the average Canadian home has increased in value by more than 200%. Many homeowners doubled or even tripled their wealth in just a few years because of exploding real-estate values. As prices soared, experts began warning that the real estate market was starting to look like the overheated technology market of the late 1990s. Nonetheless, as I write, the gold rush to real estate continues.
The average home price in Canada hit $237,900 in 2005 - up $15,000 from $224,729 the year before. Not as high as increases in the U.S., but that was just the average. In some markets, including Edmonton and Calgary, home prices have risen more than 8% in the same period. In Vancouver, the average price of a house is $400,000. Some people have literally bought a home, lived in it for a few years, then sold it and retired. Done. Game over.
Imagine that. Buy a home, live in it, build your wealth-and then retire rich. It may sound too good to be true. But it's not. It has happened - and it will continue to happen for thousands of people over the next few decades. The question is, will it happen for you? Will you catch this wave, miss it - or will it crash on you?
BOOM OR BUST-YOU CAN STILL MAKE MONEY IN REAL ESTATE
As I sit here in August of 2005, I have no idea when you will actually be reading what I'm writing. Maybe it's March of 2006 (when this book is scheduled to be published) - by which time the real estate market could be slowing or cooling down to more modest annual gains (or not). Perhaps this book was bought by a friend of yours who passed it along to you - and it's now 2007 and those once "certain" boom markets are going bust because of speculation. Or maybe the opposite has happened-interest rates have remained at historic lows and home prices have continued their march upwards.
In fact, it doesn't really matter when you happen to be reading this or what's going on right now in the markets. This book is not about the boom . . . or the busts. It's not about timing the real estate market. It's not about the fantasy of "getting rich overnight" in real estate.
What this book is about is the truth. And the truth is this:
Nothing you will ever do in your lifetime is likely to make you as much money as buying a home and living in it.
Realistically, the best investment you will ever make will be your home.
Don't worry about timing the market in real estate. It's time in the market that will matter for you.
Learn more about The Automatic Millionaire by David Bach.
Buy the book.
Excerpted from The Automatic Millionaire Homeowner, Canadian Edition by David Bach Copyright (c) 2006 by David Bach. Excerpted by permission of Doubleday Canada, a division of Random House of Canada Limited. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Friday, February 8, 2008
Star Article backs CMHC presentations and Real Esate Forecast (Newsletter)
This article from the Toronto Star compares the housing starts from last year to January of this year. The economic factors I indicated in my previous newsletter/blog entry "Looking Into 2008 and Beyond" are also quoted here. Globally, it appears that Canadians, US, and foreign investors are all very optimistic in the Canadian Real Estate Market.
Canadian housing starts rebound in January
Feb 08, 2008 09:00 AM
THE CANADIAN PRESS
OTTAWA–Canada Mortgage and Housing Corp. reports the annual rate of housing starts numbered 222,700 units in January, up from 184,700 units in December.
Bob Dugan, CMHC's chief economist, says historically low mortgage rates, solid employment, income growth and consumer confidence fuelled the rise.
The corporation estimates housing starts will total 211,700 units in 2008, remaining above the 200,000 mark for the seventh straight year.
The seasonally adjusted annual rate of urban starts increased 25.2 per cent to 189,500 units in January over December.
Urban multiples surged 64.1 per cent to 108,000 units, while singles fell 4.8 per cent to 81,500 units.
Rural starts were estimated at a seasonally adjusted annual rate of 33,200 units in January.
Actual starts in rural and urban areas combined, dropped about 11.1 per cent in January compared to a year earlier.
Canadian housing starts rebound in January
Feb 08, 2008 09:00 AM
THE CANADIAN PRESS
OTTAWA–Canada Mortgage and Housing Corp. reports the annual rate of housing starts numbered 222,700 units in January, up from 184,700 units in December.
Bob Dugan, CMHC's chief economist, says historically low mortgage rates, solid employment, income growth and consumer confidence fuelled the rise.
The corporation estimates housing starts will total 211,700 units in 2008, remaining above the 200,000 mark for the seventh straight year.
The seasonally adjusted annual rate of urban starts increased 25.2 per cent to 189,500 units in January over December.
Urban multiples surged 64.1 per cent to 108,000 units, while singles fell 4.8 per cent to 81,500 units.
Rural starts were estimated at a seasonally adjusted annual rate of 33,200 units in January.
Actual starts in rural and urban areas combined, dropped about 11.1 per cent in January compared to a year earlier.
Wednesday, February 6, 2008
Sherry Cooper on CBC "The Hour" - supports Canadian Housing market (Newsletter)
Last night I was watching George Stroumboulopoulos's "The Hour" with guest speaker Sherry Cooper, who is one of Canada's Top Economists. She is the chief economist for BMO capital markets, and has been widely published as well.
I found it quite interesting to hear her views on the Canadian market, the US market, US recession and our ties to each other. The general overview of her interview is that the US is in recession, and hasn't seen the worse yet. Unfortunately, we are tied to the US markets who are just at the beginning of the negative cycle. Brought on by the aggressive and questionable sub-prime lending, the US economy is headed south and we will be affected.
Sherry Cooper did however distinguish and highlight that although we will be affected, she states: "not our housing market". She goes on to state that our housing market "is very stable", partly due to our basically non-existent sub-prime lending. She foresees that Canadian economic growth may slow due to the US recession, but seems very positive about our housing market.
So, whether influenced by my profession or straight advice from a Top Economist, the message seems to be to get your money out of the volatility of other investments and markets, and secure some safety and growth in the Canadian real estate market.
See video segment @ http://www.cbc.ca/thehour/video.php?id=1959
Enjoy.
Gavin Chen, Broker
Coldwell Banker Terrequity Realty
D:416-495-2753
www.gavinchen.ca
I found it quite interesting to hear her views on the Canadian market, the US market, US recession and our ties to each other. The general overview of her interview is that the US is in recession, and hasn't seen the worse yet. Unfortunately, we are tied to the US markets who are just at the beginning of the negative cycle. Brought on by the aggressive and questionable sub-prime lending, the US economy is headed south and we will be affected.
Sherry Cooper did however distinguish and highlight that although we will be affected, she states: "not our housing market". She goes on to state that our housing market "is very stable", partly due to our basically non-existent sub-prime lending. She foresees that Canadian economic growth may slow due to the US recession, but seems very positive about our housing market.
So, whether influenced by my profession or straight advice from a Top Economist, the message seems to be to get your money out of the volatility of other investments and markets, and secure some safety and growth in the Canadian real estate market.
See video segment @ http://www.cbc.ca/thehour/video.php?id=1959
Enjoy.
Gavin Chen, Broker
Coldwell Banker Terrequity Realty
D:416-495-2753
www.gavinchen.ca
Tuesday, January 29, 2008
Looking Into 2008 And Beyond
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