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March, April and May are the housing market’s biggest months, and real estate watchers are busy prognosticating whether Toronto’s sluggish-of-late market will see a rebound this spring. One of the more in-depth accounts, courtesy of the Globe and Mail, hones in on how first-time buyers are faring. Below, five key facts about this segment of the market—including what might convince them to take the plunge.
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In today’s Globe and Mail, personal finance columnist Rob Carrick has some good news for those who have been trying without success to get into Toronto’s housing market before prices rise out of their reach. Carrick writes that, with housing markets cooling in several cities, including Toronto, many are forecasting that prices will plateau or even fall. Meanwhile, interest rates are expected to stay at their current very low levels for a while longer. That means first-time buyers can relax and take some time to build up bigger down payments, thereby saving themselves some money on interest payments and mortgage default insurance—and if new buyers do so en masse, it’ll bring housing prices down even further, saving them even more dough. Read the entire story [Globe and Mail] »
Even with sedatives, I couldn’t sleep. I kept losing weight. I was crying every day. One night, I lost my temper with my son Ben, then 16, because I wanted his attention and he wouldn’t get off the phone with his girlfriend. Blind with rage, I grabbed his most precious possession—his laptop—and tried to throw it out the bedroom window. My 13-year-old, Sam, wrestled me in a bear hug and made me stop.
For months, I had been clinically depressed. Like something out of an Ian McEwan novel, a single incident had destroyed the clean plot lines of my life. A story I’d written for my employer, the Globe and Mail, on a school shooting in Montreal had sparked a nasty backlash. The Globe failed to stand behind me, and when I fell ill, the paper and its insurer ruled I wasn’t sick.
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Jan Gandhi and Omar Jabri share a love of big-city life: the people, the architecture, the fashion, the logarithmic bustle of human energy that comes from high-density, high-rise living. They first met as articling students with different Bay Street law firms, introduced by mutual friends. Together they moved to New York, where Gandhi worked as in-house counsel for MTV and Jabri as an intellectual property lawyer, and they lived in an apartment in Chelsea. Gandhi became addicted to flash-sale websites, filling her wardrobe with deeply discounted designer fashions. Flash sales are enormously popular in New York. She saw an underserved market in Toronto, so she hatched a plan to return and launch her own site.
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After years of crushing mortgage payments and escalating maintenance costs, one homeowner sold her house and signed a lease on a place a few blocks away. Life has never been sweeter
Our last house was a little gem. Few homes in Leslieville are stately or architecturally impressive—it’s a neighbourhood of unremarkable brick semis with the rare Victorian or Tudor flourish—and the one my partner and I owned for two years was no exception. But inside, stripped down to its simple bones, with Benjamin Moore cloud white walls and dark wood floors, a cute IKEA kitchen and mid-century decor from local vintage shops, the place had charm. We bought it for $450,000 in 2007, a deal, if not a steal, for a home on a coveted street less than a five-minute walk from all the amenities required by the middle-class hordes: good coffee, a busy playground, decent restaurants. Soon, however, our house began to make exhausting demands: the furnace needed to be replaced, then the roof; the basement felt damp in the summer humidity, and in the winter our barely insulated bedroom, with its ancient windows, was so cold we had to run a space heater through the night.
There was no money to fix any of it. Our line of credit and credit cards were maxed out. We had two comfortable incomes, but after mortgage payments, utilities, property taxes, car payments, insurance, daycare and groceries, there was little left over. We added up the sums, living expenses against income, on increasingly complicated spreadsheets—it would be years before we would be in the black. Meanwhile, the company I worked for faltered during the recession. First the frills were cut: fewer couriers, no fancy Christmas parties, no taxi chits. Then jobs; I lost mine in early 2009.
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Canada’s biggest banks seem to be the subject of a strange amount of scandal of late. This month alone, a massive lawsuit was leveled against Royal Bank of Canada, ex-RBC advisers admitted to forging client signatures and a former Bank of Montreal adviser was banned from working in securities. Now, there’s a spat with Canadian insurance brokers, who lodged a complaint with the Office of the Superintendent of Financial Institutions (yes, it’s a real office) and alerted Finance Minister Jim Flaherty that RBC and BMO are openly disregarding rules against promoting insurance on their websites. (Under the Bank Act, banks are allowed to own separate insurance companies, but they’re prohibited from selling or marketing insurance.) Naturally, big insurance wants big banking as far away from its business as possible, and have lobbied hard to have rules in place to keep banking and insurance operations distinct. But large-scale financial institutions are still pushing hard into the territory—the insurance biz made up 10 per cent of RBC’s total profits in the three months ending January 31—and with big, big dollars at stake, we don’t expect them to stop. To the insurance brokers of Canada, we wish you luck. You’ll likely need it. [Globe and Mail]
Last fall, the Royal Bank of Canada—with $27 billion in annual revenue, $752 billion in assets and 74,000 employees, the biggest and most prudent bank in the world’s safest banking system—announced that new employees would no longer be eligible to receive what is probably the company’s most important workplace benefit: the comprehensive retirement insurance plan. It insures the Royal’s Canadian employees, or at least those hired before January 1, 2012, against all sorts of risks. The risk of reaching retirement age at a time when stock markets are down, or interest rates are low. The risk of outliving one’s retirement savings. Inflation risk. Risks you’ve probably never even heard of, like reinvestment risk and liquidity risk. Even the risk of earning below market returns.
This generous program wasn’t unique to the Royal. Many employers, particularly big companies, once offered similar plans. Some still do, though their numbers are dwindling. You may be wondering, “Why have I never heard of retirement insurance?” You have. It’s called a pension.
We’re heading for a pension crisis. The federal government says so. The opposition says so. Most provinces say so. The library shelves of the land groan beneath the weight of studies. The first class of baby boomers hit 65 this year, and we’re still not ready. The economist Michael Wolfson, formerly the assistant chief statistician of Canada and now at the University of Ottawa, estimates that half of all Canadians born between 1945 and 1970 who have average career earnings between $35,000 and $80,000 are facing a drop of at least 25 per cent in their post-retirement standard of living. Which is perhaps not surprising given that most of us don’t have a pension plan.
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The Buyers: Dan Carmichael, a 39-year-old account executive for Dell Computers, and Dawn Carmichael, a 36-year-old medical insurance broker.
The Story: The Carmichaels liked their three- bedroom house in Markham, but they wanted something bigger—preferably with a fireplace and in the same school district as their current home, for their two kids—and had been casually surfing MLS for two years. When Dawn discovered she was pregnant with their third child, they realized they’d have to move fast if the baby was going to have his own room. The couple listed their house, and it sold in a week—with a 120-day closing. With their two due dates fast approaching, the Carmichaels set a budget of $550,000 and started out on a blitz-like two-month hunt.
Noted safety expert William Shatner has teamed up with good neighbour State Farm Insurance to take up the annual tradition of warning Americans about the dangers of deep-fried turkey, just in time for next week’s U.S. Thanksgiving. This time around, they decided to go quasi–Terrence Malick, complete with portentous orchestral music, slow-panning shots and Shatner intoning as only Shatner can: “Fire, metal, oil and turkey are glorious when in harmony, but their power is unrelenting in careless hands.” Oh, and there are also some cheesy flame effects.
On a bright morning in August, Judi Lloyd drove through Twin Pines with the air of a visiting dignitary. The preternaturally cheerful 57-year-old real estate broker was on her way to list a home. The Mississauga trailer park is located just off Dundas, one of the city’s main arteries. Like all of Lloyd’s visits to the park, the trip quickly turned into a mixture of socializing and networking as she waved to and chatted with residents from the driver’s seat of her black Ford Escape. She gestured at the mobiles we passed, noting the histories and special features of each. “You wouldn’t even know that’s a trailer,” she said, pointing at a 48-by-24-foot mobile on a spacious, pie-shaped lot. “If someone dropped you in there and you didn’t see the outside, I swear you’d think it was a little bungalow.”
1| Bob and Ena Barclay, paid $8,000 for their mobile home 45 years ago
2| Stephen Plume, paid $125,900 for his mobile home in 2007
3| Debi Little, paid $105,000 for her mobile home in 2011
4| Patrick Rostant, paid $140,000 for his mobile home in 2009
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When the warm weather hits, the car-obsessed and their vintage toys come out to play, top down, engines gurgling, exhaust pipes fuming. But who are they and where do they come from?
Mark Doust
Purchasing Manager, Etobicoke
To behold Mark Doust’s 1953 Austin-Healey 100/4 is a revelation: the car is gorgeous, curvy and lithe, pinched around the waist like a wasp, and streamlined for speed, right down to the collapsible windscreen that slides forward at its base to reduce resistance. “You can never drive like that, of course—it just directs the bugs to your teeth,” Doust says, laughing heartily. Read the rest of this entry »
Middle-class life isn’t what it used to be. Thanks to a heated real estate market, a strong dollar, new taxes and stagnating incomes, Toronto has become, improbably, one of the world’s most expensive cities. Is it worth it?
(Illustration by Julien Pacaud; skyline photo by Brian Summers)
Today, an average Saturday, I spent the following: $6 on a round-trip TTC ride; about $17 on groceries from the Wychwood Barns farmers’ market (organic Crispin apples, an olive boule and free-range eggs); $34 on two bottles of wine (one decent, one plonk); almost $20 on the recent Superchunk CD and $11 on toiletries. Lunch was cheap and simple: a peanut butter sandwich, an apple and a few spoonfuls of raspberry yogurt. Dinner was free: homemade rice-and-bean burritos at a friend’s house. On the way home from that modest dinner party, waiting forever for the Dufferin bus, I almost splurged on a cab, but it seemed wasteful. Then I got home and booked a flight to New York on Porter for a friend’s 40th birthday: another $326. There’s also what I spend on my mortgage, property taxes, insurance, utilities, cellphone, Internet, YMCA membership, charitable donations and credit card debt. All of that adds up to roughly $65 a day. So, as a childless, home-owning, not-terribly-extravagant-but-not-entirely-miserly-either Torontonian, this one day at the tail end of 2010 cost me—not counting the airfare, which, for argument’s sake, I’m setting aside as an exceptional expense—about $153.
That doesn’t sound like a lot, but it’s about $20 more than what I make every day, after taxes. And it leaves nothing, obviously, for home repairs, clothing, vet bills, investments, medical expenses, birthday presents, savings, recreational drugs, holidays or the kid that Liz, my fiancée, and I have been talking about having this year but which, if things continue in this fashion, we’ll have to postpone having until we get jobs that net us more than $50,000 each a year. Read the rest of this entry »
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The Bank of Canada released its data on inflation yesterday, and the good news is that inflation is still lower than the breakneck days of 2008 (when spiking oil prices made people temporarily care about saving the planet, and their pocketbooks). The bad news is that inflation has been trending up since last December and is now—just in time for the retail frenzy that is Christmas—getting awfully close to passing the Bank of Canada’s inflation target.
Drawing out this drama even further, U.S. judge Amy St. Eve has set the terms of Conrad Black’s bail. The media baron needs to post $2 million, secured by a friend—and the last week has shown just how many friends and wealthy well-wishers Black has. He also cannot leave the United States, meaning a reunion with family is going to have to happen stateside.
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It wasn’t supposed to be like this. Our recovery from the Great Recession happened faster than expected, we got in the mood to buy again, and the housing market spontaneously returned to bidding wars and double-digit gains. Experts say we’re in a bubble that’s ready to pop. The question is, how bad will it be?
Christopher Wahl
We’ve seen bubbles before. The last time the market went pffft was in the spring of ’89. The country entered a deep recession, mortgage rates hit 13.5 per cent, and the market was glutted with condos that speculators couldn’t off-load. Over the next seven years, the price of resale houses downtown dropped by 28 per cent. Owning a house was a burden.
The birth of the current bubble-like conditions can be traced back to 2008, when we smugly discovered our market was safe from the financial evils that led to the housing collapse in the U.S. We were intoxicated by good news: speculative investing was comfortingly low, our interest rates dreamy. Neighbourhoods like Parkdale, the Junction and Leslieville were lusted after by young couples and families in want of $400,000 fixer-uppers. The upwardly mobile had ballooning debt and stars in their eyes. Among the singles flooding into sparkling new condominiums were women in their mid-20s to late 30s, a boom demographic. One industry source estimated that they represented 40 per cent of the market, significantly higher than a decade before.
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