Housing market breathes again

TMG The Mortgage Group

After months of somewhat depressing news for the housing industry, Canada's housing market is showing signs of life. The buzz now is about a soft landing rather than a bubble bursting. Demand has increased in most parts of the country and new construction activity is increasing. Home prices are rising as well. Despite warnings from analysts about a housing bubble, housing-market data are showing few signs of a sharp correction. A housing bubble is a type of economic bubble that occurs periodically in real estate markets, characterized by rapid increases in valuations of housing until they reach unsustainable levels and then decline.

Jim Flaherty tightened mortgage rules for a fourth time last year, concerned that an overbuilding of condos could lead to sharp price declines. Former Bank of Canada Governor Mark Carney identified record household debt as the biggest domestic risk to the economy.

However, our low interest rate environment has kept any bubbles or sharp corrections in check.  Now, the impact of Flaherty's changes seems to be fading.

Households that put their purchase decisions on hold because of the stricter deadlines are now becoming more active. The latest data from Statistics Canada show that the number of homes changing hands is relatively steady, after a period of steep year-over-year sales declines. Even condo developers, who scaled back their activity, seem to be jumping back in.

Even the Canadian Real Estate Association (CREA) has updated its forecast for home sales activity. May's sales were up 3.6 percent from April, a sign of momentum and the largest month-over-month increase in almost two and a half years. However, affordability may continue to be an issue as home prices tick upwards.

Benjamin Tal, deputy chief economist with CIBC predicts that prices will go down in the next year or two, but not by much. "Prices have held up so far because, as demand has fallen, so has the number of homeowners listing their properties for sale, Tal said in an interview with the Globe be and Mail. "I do not see smoke. I see a boring, slow process over five to seven years that will take fundamentals and prices back in line."

All the signs point a recovery in the housing market and consumers are deciding to move forward with their purchase intentions. It's a great time to discuss options with your mortgage professional who can help you navigate the waters of interest rates and mortgage products to find something that fits your financial goals.

Canada’s housing market defies doomsayers

Andrea Hopkins, Reuters

The Financial Post

 

 

TORONTO — Daniel DiManno sold his Toronto house for less than he had hoped and wanted to see if prices would cool before he bought a new one. But Canadian mortgage rates are rising again and that’s spurring DiManno and others to jump back into the market, cutting short an already brief housing downturn.

 

“I saw that they are going to increase rates, so I called my bank last Friday and locked in 2.5% for 120 days,” said the 31-year-old accountant, starting the clock on a four-month search for a new home before borrowing gets more expensive.

 

After nearly a year of cooling sales and plenty of concern that Canada could head for a U.S.-style housing crash, demand has roared back in key markets. What’s still unclear, however, is whether the recent surge is a reinflation of a real estate bubble, a final rush of buyers before rising rates choke off demand, or just a sign of market resilience.

 

The rise in mortgage rates comes after North American bond yields jumped on fears that an improving U.S. economy will cause the Federal Reserve wind down its monetary stimulus program, known as quantitative easing, more quickly than expected.

 

After a long cold spring that dampened house hunting, May sales of existing homes rose 3.6%, the biggest monthly gain in almost 2-1/2 years, returning the market almost to where it was before Canada’s Conservative government tightened lending rules in mid-2012 to stave off a housing bubble.

 

Housing starts also jumped much more than expected in the month, adding to evidence that late-spring buyers have breathed life back into a market that some had forecast was heading over a cliff.

 

Toronto real estate agent Steven Fudge said he was starting to believe the market was back in balance after a cool-down. But the specter of higher rates has brought buyers back, marking either a new phase of a bubble or the last kick of a dying mule, he doesn’t know which.

 

“In the last couple of weeks, there’s been a real strong murmur … anticipating a bump in rates,” said Fudge, a sales representative at Bosley Real Estate Brokerage, which operates the Toronto property website urbaneer.com. “It’s like fuel on the market. There’s now a whole bunch of buyers locking in 60- to 90-day mortgage pre-approval.”

 

One of his clients lost a 17-player bidding war this week for a downtown Toronto house. The home, listed at C$499,000 ($476,500), sold for more than 25% over asking.

 

“I’ve been counseling buyers to be cautious,” he said. “It really feels like almost anything can happen.”

 

IS IT A BUBBLE?

 

The question of whether the late-spring surge marks a reinflation of a real estate bubble is hanging over the industry.

 

The federal housing agency, the Canada Mortgage and Housing Corp, this week revised up its outlook for sales, construction, and price increases in 2013 and 2014, effectively declaring the downturn over.

 

“The market was moderating in the second half of 2012. Then we’ve had an inflection point, and went into a moderate positive trend since the beginning of 2013,” said Mathieu Laberge, deputy chief economist at CMHC. “We should see this type of trend for housing starts going forward.”

 

The agency, which insures the majority of mortgages Canadian banks issue, expects average national prices to rise 1.6% in 2013 and 2.1% in 2014, which would be the “soft-landing” policymakers want and a long way from dire predictions of a 10% to 25% price crash.

 

“I’d say we feel good. I mean, we’re not out of the woods yet, but we feel good,” said Brian Hurley, chief executive of Genworth Canada, a unit of Genworth MI Canada Inc and the largest private residential mortgage insurer in Canada.

 

Hurley acknowledges he was feeling afraid last year when sales dropped and analysts worried that tighter mortgage rules had squeezed too many buyers out of the market.

 

Prices fell in Vancouver, which had been Canada’s hottest market, but national prices gains never slowed below an annual 2%.

 

To be sure, some say it is too soon to celebrate the end of the mild downturn, and a spring bounce is not a measure of strength. If buyers want to get into the market before rates rise, won’t that just steal demand from the future?

 

Mortgage rates have begun to inch higher as global bond yields climb. Canadian mortgage rates are typically priced off the government’s five-year bond, which now yields 1.80%, up from a 60-year low of 1.076% in June last year.

 

But others believe the spring surge may reflect demand that was held back by the tighter rules, and the housing market’s failure to really cool means a bubble is starting to inflate again. Official Canadian interest rates are not expected to rise until late 2014, so mortgage rates won’t rise fast or furiously.

 

“A lot of forecasters like myself are expecting a relatively flat market, but there’s a significant upside risk that if rates remain at current levels indefinitely, you’re going to start to heat the housing market back up,” said Craig Alexander, chief economist at Toronto-Dominion Bank, Canada’s second-largest lender.

 

© Thomson Reuters 2013

Do you have what it takes to be a landlord?

Chris Seepe

Special to The Globe and Mail

 

 

The following article is from Canadian Real Estate Wealth Magazine.

Despite the long list of potential hazards, the possible rewards of being a landlord often outweigh the downsides. Here are the top 10 reasons why you should become a landlord.

1.) You use tenants’ money to pay your mortgage and build your equity. You can raise the rent each year (with restrictions) and adjust for current market rent rates when a property becomes vacant. Long-term investors buy real estate that generates positive cash flow, and either hold it until the tenants have paid off the mortgage or until there’s a compelling reason to dispose of the income stream in return for a lump sum; for example, to buy something bigger/better or to create a retirement annuity income stream.

2.) Real estate assets can be leveraged to bargain for additional real estate investments. Unlike stocks, mutual funds, term deposits, etc., you do not have to pay for the whole real estate investment yourself. Lenders will give you the extra money you need (mortgage) in exchange for receiving interest and the property as collateral if you default on the scheduled payments. When the property’s value has increased enough, some lenders will let you borrow against that value (your equity), which you can use as down payment to buy another property.

3.) Real estate is tangible and more easily collateralized than most other types of investments. Ask ex-shareholders of Northern Telecom, Enron, Bre-X, and other “blue chip” failures. Lenders generally offer a higher ratio of loan amount versus the value of a real estate property than they would offer on a portfolio of stocks, for example. The building and/or land will still exist if the worst should happen. Mainstream lenders also love the low-risk appeal of rental housing properties insured by the Canada Mortgage and Housing Corporation, and offer very attractive interest rates.

4.) A modest increase in rental income and/or decrease in operational costs can have a significant positive impact on property value. For example, increasing net operating income (by reducing costs and/or increasing rent) by $1,000 per year and applying a 6 per cent capitalization rate (better-than-average in today’s southern Ontario market) can add about $16,650 to the value of a property, using the Income Approach. This does not include appreciation for other reasons such as high demand for, and low supply of, rental space, improvement in the neighbourhood, etc.

5.) Several current tax policies (RCCA, capital gain, etc.) discourage long-term owners from selling their rental housing properties because the proceeds of a sale may only equal the cash flow they would receive from keeping the property for a few years. Combine this with the discouraging rent control policies which make investors/ developers unwilling to tie up their money in building a rental property. They may have to wait a decade or more for a return on their investment, when they can build a condominium and get their money back– often with a huge profit–in just a few years. So what’s good about that? Rental housing inventory is shrinking, resulting in high investor demand and high sale prices for existing inventory (seller’s market), and increases in average rent rates (low vacancy).

6.) A well-maintained and fully occupied rental property rarely depreciates. Unless they have been damaged by stigmatism or an eroding neighbourhood (e.g.. increase in crime), values have traditionally increased over the long term.

7.) If the very worst should happen, you still have a low (or no)-cost place to live.

8.) Legitimate and reasonable expenses reduce your taxable income. Tax deductions include mortgage and credit card interest, depreciation, a reasonable salary with employment deductions, a percentage of your local travel expenses, relevant long-distance travel (e.g.. trade show), portion of home office and workshop costs, etc.

9.) Despite the perceived stereotype, many landlords enjoy the satisfaction of helping to provide good-quality housing to self-sufficient people in need.

10.) Multi-residential investments are arguably the most stable, depression/recession-resistant, and relatively secure type of real estate investment you can make. Everyone needs a place to live; not everyone needs a place to work. Buying a place to live is not possible for many young people and remains elusive for many adults too. Some adults choose the apartment living lifestyle for its freedom from housing related issues.

Treat your investment like a business, and your tenants like valued customers; know your rights and those of your tenants; maintain tight control on your cash flow; act promptly in everything you do; surround yourself with high-quality industry professionals, and you’ll experience the success you’ve dreamed was possible, especially if you can expand your holdings.

From Canadian Real Estate Wealth Magazine, a monthly publication focused on building value through property investment, covering topics such as values and trends, mortgages, investment strategies, surveys of regional markets and general tips for buyers and sellers.

My condo fees are crazy! What’s a reasonable rate?

Ricky Chadha

Special to The Globe and Mail

 

 

Question: I'm looking at buying a downtown condo, but man, those fees are crazy! What do you consider a reasonable rate per square foot?

Answer:
Various factors can contribute to condo maintenance fees – building amenities, utilities, location, age of building. But the definition of what‘s “reasonable” is always very subjective.

So I will give you my subjective opinion: The amount we pay for condo maintenance fees is generally way too much these days, especially in downtown Toronto.

Just a few years ago, 50 to 65 cents per square foot (psf) was acceptable for the average condo situation. More recently, we’re seeing price of between 70 and 80 cents psf for many buildings.

Condo fees in older buildings at the Queens Quay waterfront and elsewhere in downtown Toronto run anywhere from $700 to $800 per month for units that are just over 1,000 square feet. That averages to about 75 cents psf.

Building age becomes a factor in condo fees. Older buildings require more repairs in general, along with modernization of common-area décor such as hallway carpets and lobby areas. These costs ultimately gets passed on to condo owners in fee increases of course.

But newer buildings can have their own issues. The rise in condo fees in some new builds is attributed to sub-par building materials and construction (we’ve all seen the widely reported stories of glass falling from balconies, some of which have led to class-action lawsuits from condominium residents and others affected).

When you purchase a condo, the fees may be perfectly reasonable in your view. But that doesn’t mean they won’t increase at a very unreasonable rate in future years.

So how do you avoid getting hosed on condo fees?

A lawyer’s review of a condominium status certificate will come in very handy. This certificate is a snapshot into the overall financial health of a condominium. Your lawyer will be able to review the information in the document and give you an opinion of the financial health of the condo.

In my opinion, the two most important pieces to look at within a status certificate are the Reserve Fund (and study) and any Special Assessments.

The Reserve Fund refers to the amount of money the condo corporation has in the bank to deal with both regular and unforeseen maintenance and repairs. The actual amount that should be in the Reserve Fund is largely dependant on the size of the building (i.e. number of units) and the age of the building. The older the building, the more money they should have.

Complementary to the Reserve Fund is the Reserve Fund Study. These are projections of how the Reserve Fund will look in future years. If the study doesn’t indicate appropriate planned increases to the fund in future, that’s a red flag.

Any Special Assessments to a building can be a cause of concern. Such assessments are additional payments or a levies that a condominium board has to impose on residents when shortfalls or unexpected expenditures occur, and there isn’t enough money in the Reserve Fund to cover for it.

These are particularly of concern for smaller condominiums or lofts, where the burden is spread across fewer owners. I once had a client who had a beautiful authentic hard loft conversion. Because the building was a old former factory, there were issues with the roof and a Special Assessment was issued because of shortcomings in the Reserve Fund.

Since there were only 28 units in the building, each owner had to ante up almost $10,000!

While there are no guarantees with the future health of any building, some due diligence can save you a lot of headaches down the road. Under no circumstances would I proceed with purchasing a condo without a lawyer’s review of the status certificate.

Finally, consider that a condo fee of $475 per month is equivalent to about $100,000 in purchasing power with today’s mortgage products. You can buy a lot more house if you don’t have condo fees to worry about.

Ricky Chadha is a broker with Royal LePage Estate Realty in Toronto, and specializes in applying social media and other digital tools to the business of real estate.

The content provided in The Globe and Mail’s Ask a Real Estate Expert is for information purposes only and is neither intended to be relied upon nor to be a substitute for professional real estate advice.

The case for locking in your mortgage

ROB CARRICK

The Globe and Mail

 

 

You can’t go wrong if you respond to this week’s mortgage rate increases by locking in for five or 10 years.

But at least consider the alternative: Variable-rate mortgages sound risky in today’s volatile interest rate environment, but they’re actually a quiet corner of the mortgage world right now.

We’ve had several rising-rate episodes in the past few years, but they’ve invariably fizzled. In each case, one of the many global economic trouble spots has gone critical and caused rates to retreat. Will this latest rate spike unwind itself, too? Can our low-rate utopia last indefinitely?

Smart borrowers today work on the assumption that the answer is no. The question, then, is how to best keep mortgage costs low today while also protecting against future increases.

Let’s consider the lock-in option, first. That’s where people with variable-rate mortgages convert at no cost into a fixed-rate mortgage, and new home buyers go with a five- or 10-year fixed rate mortgage. It happens to be an excellent time to lock in, even if some banks have boosted their special five-year fixed mortgages rates by 0.2 of a percentage point this week.

The banks were responding to a big runup in the yield on the five-year Government of Canada bond, which sets the trend for five-year mortgages. But thanks to a highly competitive mortgage market, lower rates are still available. Kim Arnold, a broker with Dreyer Group Mortgages in Vancouver, said earlier this week that she was able to get a very competitive five-year rate of 2.89 per cent for clients.

“Rates are phenomenal, even with this latest increase,” she said. “It’s certainly not a bad time to lock in.”

David Larock of Integrated Mortgage Planners in Toronto sees zero urgency for locking in, mainly because of the potential for yet another global economic scare to send rates lower. Europe’s problems with high government debt levels and slow economic growth could do it. So could Japan’s rickety economic fundamentals, worry about weakening growth in China or uncertainty over the sturdiness of the U.S. economic recovery.

Low inflation is another constraint on rate increases, Mr. Larock said. “I think the Bank of Canada is probably more concerned about getting inflation to go up as opposed to going down.”

It’s this line of thinking that leads Mr. Larock to make a case for the variable-rate mortgage, where your rate rises and falls along your lender’s prime rate.

The prime, in turn, is guided by the Bank of Canada’s benchmark overnight rate of 1 per cent, which hasn’t moved since September, 2010, and is expected to remain steady until the latter half of next year.

“The prime rate moves when the Bank of Canada changes their rates, and they’re not going to jump around like the market does in terms of what happens with five-year Government of Canada bonds,” Mr. Larock said. “These bonds are subject to the vagaries of large institutional investors, and to the ebb and flow between the stock market and bonds.”

Another reason to look at variable-rate mortgages is that the discounts have improved recently. Mr. Larock said it’s now possible to get a variable-rate mortgage with a discount of as much as 0.5 of a point off prime in some provinces.

That means a rate of 2.50 per cent, which compares to a range of 2.72 to 3.29 per cent for discounted fixed-rate mortgages over five years, depending on which lender you deal with.

If you go with a variable-rate mortgage, you’re vulnerable to the short-term rate increases the Bank of Canada will eventually start using to keep economic growth under control.

Toronto-Dominion Bank’s economics department expects a half-point rise in the overnight rate in the fourth quarter of next year.

As for five-year fixed rates, they could retreat again in the weeks and months ahead if there’s another global economic scare. But TD chief economist Craig Alexander said the broader trend in the bond market is the start of a move toward more normal levels. Next year, he sees the five-year Canada bond yield at 1.85 per cent, up from 1.60. “I think bond yields are going to grind higher, but 1.85 per cent on a five-year Government of Canada bond is still incredibly low.”

The best strategy for most people today is to lock in quickly to today’s best five- or even 10-year rates (read my case for the 10-year mortgage online at tgam.ca/DqYG). As Ms. Arnold, the Vancouver mortgage broker, put it, “I don’t honestly think anyone can make a mistake by locking in.”

----------

Mortgage Rate Survey
A range of best rates available from banks and through mortgage brokers

Type	Best rates available (%)
Variable rate	2.50 to 2.60
One-year	2.39 to 2.59
Two-year	2.49 to 2.69
Three-year	2.49 to 2.69
Four-year	2.69 to 2.89
Five-year	2.72 to 2.89

 
Source: RateHub.ca

Canadian housing "Balanced and stable"

In recent weeks two of the big players in the Canadian real estate market have issued their latest reports, offering calm words – “balance and stability” – for the country’s housing market.


The Canadian Real Estate Association (CREA), the national body that represents the real estate industry, and Canada Mortgage and Housing Corporation (CMHC), the government agency that tracks housing and insures mortgages, are in agreement that the market remains balanced and will remain stable for the next year, or so.

CREA: Market behaving as it should

CREA's March report shows the market is behaving as it should, albeit with smaller numbers. While recognizing that actual sales have dropped from a year ago, CREA points out that they have been stable since the introduction of new mortgage rules last summer. The association's March report shows sales rose 2.4% from February, which is what would be expected as the home-buying season warms-up. The report also shows that home prices are rising to keep pace with inflation.

Sales to new listings show balance

When it comes to balance, CREA focuses on the ratio of sales to new listings. The report shows that ratio at 50.3%, up slightly from 49.9% in February. A range between 40% and 60% is considered balanced which puts the current figures right on target. A little more than 60% of regional markets in Canada are operating in balanced territory.

CMHC: Economy will shift balance... slightly

This year's first-quarter CMHC housing report shows Canada's housing market has been in balance since 2010, with a slight bias toward sellers. It expects that bias will shift somewhat toward buyers over the next two years. CMHC cites improving economic conditions, low interest rates, employment growth, immigration and a reduction in new home starts as factors keeping the market in check.

CMHC: Sales & Prices will rise thru 2014

CMHC is forecasting a modest 0.5% drop in housing re-sales for 2013, with a 4.7% increase for 2014. The agency also predicts price increases will keep pace with inflation posting a 2.7% increase from 2013 to 2014.

It's worth noting that CREA and CMHC use different methods to arrive at their numbers so they sometimes don't appear to match-up. They do, however, generally point in the same direction.

Even Mark Carney sees balance

Even the Bank of Canada Governor has remarked on the balance in the Canadian market. During a recent parliamentary testimony, Mark Carney used typically cautious language, saying "We're encouraged by the evolution of house prices in a number of markets. We're on the path to a balanced evolution of the household sector and we have to continue to be vigilant."

Title insurance

First National, "You're Home"


Title insurance –
Do you have it, do you need it?

Your property's title provides the legal proof that you are the owner. Given the negative impact that any potential errors or misrepresentations on your title can have on your property's value, buying a little insurance protection should be considered.

What am I insuring?

Title insurance is not mandatory but it is routinely recommended by lawyers, lenders and realtors because it protects you from potential losses against fraud, survey errors, encroachment issues and existing undisclosed liens. Some policies also include a rider for "building compliance" coverage, which means that if you buy a property that was renovated without proper permits, and if the changes were not in compliance with current building code regulations, the title insurer will compensate you for all or part of the cost of correcting any issues.

A title insurance premium is a one-time fee and the coverage lasts for as long as you own the property. Many policies also allow the amount of coverage to appreciate along with the value of the property, up to a maximum of double the original purchase price.

Can you buy insurance for a property you currently own?

Yes, you can, however the rules are slightly different because any pre-existing conditions cannot be as easily determined. However many existing homeowners have still decided to purchase a policy to protect against mortgage fraud. This can happen when fraudsters steal personal information and forge documents to transfer title of the property.

Are there other advantages to title insurance?

In some cases title insurance can eliminate the need for a new, up-to-date land survey but it does not replace the role of a lawyer in a real estate transaction.  It is an added layer of protection that can settle claims for losses that would otherwise require you to file a lawsuit.  If this extra protection appeals to you, title insurance is offered by several companies and can be purchased through your lawyer, a title insurance company or an insurance agent/broker.

What does title insurance cost?

The cost of title insurance varies depending on the scope of coverage, the type of property and its value.  One firm advertises rates ranging from $185, for a condo under $200,000 purchased directly from a developer, to $374 for a home valued at up to $500,000.

Need to know more?

The Government of Ontario has this handy website:
http://www.fsco.gov.on.ca/en/insurance/brochures/Documents/undstitins.pdf

For information on coverage that's best for you, speak with your lawyer, your realtor, and/or your Mortgage broker.
  
If you are unsure about whether or not you already have title insurance check the package of documents you received from your lawyer. You can also contact your lawyer or realtor directly and ask them.

Planning to move? Buy first or sell first?

First National, "You're Home"


Any homeowner looking to sell and buy another home has to answer a lot of questions. Some factors to consider are location, timing and budget; and some are even as simple as should you buy first or sell your home first.

These questions can be answered with a critical and honest look at the facts and figures.

There are two key factors that play into this decision, your personal risk tolerance, finances and the local housing market.

Selling first – The tradition has changed

Traditionally, the recommendation has been to sell first, then find a new place. Doing things in this order allows you to answer the critical and financial questions with more certainty. You'll know how much money you have and what you can afford to buy. And, it makes it much easier to put in a clean, firm offer on a new home.
However, the housing market has changed, especially in Canada's large urban centres where it tends to favour sellers. With high demand, multiple offers and homes that routinely sell for well above the asking price, sometimes buyers find themselves looking for a home longer than they anticipated. This can lead to time pressures as the closing date for the existing home approaches or you may need to rent or make other arrangements until you find your next home.
Ways around this include extending the closing date on the existing home for as long as possible or renting until a suitable new property is purchased.

Buy first

Those who opt to buy first, and then sell, need to have a very clear picture of their finances, as, it is possible that you run the risk of paying the mortgage of two homes at a time. The financial pressure to sell the old home could mean taking a lower price which could, in turn, change the affordability of the new home.
Bridge financing can be a solution, but you need to have a committed purchaser for the existing property. It is also possible to make the agreement to buy the new home conditional on the timely sale of the old property but, again, in a competitive market an offer without conditions will likely win, even if the amount is a little lower.

No right or wrong answer

It comes down to what you are comfortable with. Consultation with a realtor will give insights into local market conditions and whether they appear to be favouring buyers or sellers. An examination of your finances with a mortgage professional will give a clearer picture of how to manage your budget and plan for potential rental costs of bridge financing.

4 ways we deceive ourselves to keep spending

By: Krystal Yee, Special to The Star
TheStar.com


One of the keys to financial independence is to stop making poor spending decisions and unnecessary purchases. Here's how.

No matter how good we think we are at managing your finances, we are all guilty of lying to ourselves from time to time to justify indulgent spending. While splurging on occasion is healthy, one of the keys to financial independence is to stop making poor spending decisions and unnecessary purchases.

Here are four common ways we justify unnecessary spending:
 

I work hard, so I deserve it 
  

A few weeks ago, I was in Prague for a couple of days. As I waited in line for a tram, I overheard two 20-something women discuss how they couldn’t afford their six-week trip, but they were happy they did it because they “deserved it after a hard semester.” They each financed their trip with a credit card, and fretted for a few moments about how they planned on paying it back. “We’re young!” one of them said. “We only live once.”
 

Luxuries like vacations are a good thing if you can afford them. If you can’t pay for it in cash, wait and save up for it until you can, or go for a less expensive option. The last thing you want is to have to continue to work hard into your retirement in order to pay off all of the things you thought you “deserved” along the way.
 

The savings aren’t worth it 
  

Most of my friends don’t comparison shop. They don’t clip coupons, they don’t ask for better rates, and they don’t bring back receipts for price adjustments because “the savings isn’t worth it.”
 

A few years ago, I was speaking to a friend who had about $4,000 in a “savings” account that offered 0.05 per cent interest. On top of the low rate, she was also paying a monthly fee for her chequing account. I asked why she didn’t move her money to a bank with a higher interest rate (at that time, PC Financial was offering 4 per cent interest) and free chequing accounts. She replied by saying, “it’s not worth the hassle, and I don’t need the extra money.” Even though she was in debt, she wasn’t willing to trade a few hours of her time in exchange for a free monthly chequing account or a higher interest rate.
 

When you take a little bit of time each month to go over your finances to make sure you’re getting the best prices on the items and services you pay for, you could potentially save hundreds of dollars each year.
 

It’s an investment 
  

Sure, you might need new clothes and shoes when you land your first job out of school; looking professional truly is an investment in your career. However, buying a $500 pair of shoes is not an investment. A true investment is something that will make you money over time, not plummet in value the moment you leave the store.
 

It’s a once-in-a-lifetime opportunity 
  

If I indulged myself in every “once-in-a-lifetime” opportunity that has come my way, I would be broke. However, when something fun and unique comes along, it’s hard to say no.
 

Nearly 10 years ago, a friend asked me to go backpacking in Asia for a summer. “We’ll never get to do something like this again,” she said. I turned her down even though I wanted to go. I was a student with a limited income – plus, if I could have somehow come up with the money to fund a trip to Asia, it would have been better off put towards my debt. Spending money to increase my debt load (while decreasing my net worth) didn’t make sense to me.
 

What other lies do we tell ourselves in order to justify spending we can't afford? 
  

Krystal Yee lives in Vancouver.

Home building to pick up pace later this year: CMHC

Andrea Hopkins, Reuters
More from Reuters

 

TORONTO — New homebuilding in Canada is expected to regain momentum in the later part of 2013 and into 2014 as employment, economic growth and migration boost demand for housing in a market that had slowed, the Canada Mortgage and Housing Corp said on Tuesday.

“So far in 2013, the average monthly growth rates of MLS (multiple listing service) sales, new listings and prices have all been increasing. This follows a period of average monthly declines that held sway over the second half of 2012,” Mathieu Laberge, deputy chief economist for CMHC, said in the federal agency’s second-quarter outlook.

Canada’s housing market slowed dramatically in mid-2012 after the government tightened mortgage lending rules to head off a housing bubble. It was the fourth such move in five years. But the market has rebounded in recent months.

In its quarterly outlook, the CMHC said housing starts will be in the range of 173,300 to 192,500 units in 2013, with a point forecast, or most likely outcome, of 182,900 units, down from 214,827 units in 2012. Starts are expected to range from 166,500 to 211,300 units in 2014, with a point forecast of 188,900 units.

Existing home sales will slow to a range of 412,000 to 474,800 units in 2013, with a point forecast of 443,400 units, down from 453,372 in 2012. In 2014, sales are expected to move up in the range of 435,800 to 501,400 units, with a point forecast of 468,600 units.

Price gains are expected to slow in 2013 but regain some strength in 2014. CMHC’s point forecast for the average price calls for a 1.6% gain to $369,700 in 2013 and a 2.1% gain to $377,300 in 2014.

© Thomson Reuters 2013