Monthly Archives: April 2018

More News About Canada’s Looming Debt Crisis

Kathy McWilliam Uncategorized April 17, 2018 Leave a reply

 

 

Does it sound alarmist? Akin to some conspiracy theories?

Not at all. Articles are proliferating about the situation Canadian consumers find themselves in these days, and the numbers are scary,

Here are a few articles you might want to read, and decide for yourselves if there is a looming crisis to prepare for, or if you need to re-think the way you approach personal debt and personal consumption:

 

 

 

Will You Have to Borrow to Pay Your Bills This Year?

Record High Debt and Declining Net Worth

The Cracks Are Starting to Show

 

The Newsworthy – April 15, 2018

Kathy McWilliam Trends in Housing April 15, 2018 Leave a reply

In this issue:

What Are Millennials Worrying About RIGHT NOW?

Jobs?

The housing market?

Featured Links

  1. The Rental Crisis
  2. Can you even buy a condo in the GTA these days?

Millennial Special!  What’s on your Mind?

# 1 JOBS?

Where are the best places to find jobs right now in Canada? The answer might surprise you!

 

 

Here’s a list of the Top Ten, from Huffington Post, April 10:

 

  1. Moncton, NB
  2. Abottsford, BC
  3. Oshawa, ON
  4. Vancouver, BC
  5. Kelowna, BC
  6. Toronto, ON
  7. Quebec City, QC
  8. Saskatoon, SK
  9. Edmonton, ALTA
  10. Halifax, NS

That’s right – two of the top ten are in Atlantic Canada, where house prices are lower!


Somebody Said Something about the Millenial Workforce

‘Young millennials are on track to surpass four job changes by the age of 32, and that will only increase thanks to  global competition. More than ever, ‘learnability’ and agility is critical. Don’t limit or pigeon-hole yourself to one role. Look at the big picture and how to apply your skill set to different roles to open up your horizons.’

The woman who said that is Cathy Preston, Vice President of Individual Markets at RBC Insurance. She has put a lot of thought into how you can put your ‘picked-up-on-the-fly’ skills to use, to create your own niche and carve out growth, and, ultimately, your own success. She sensed something that I feel about millennials, as an aged boomer who has had the opportunity to work temp with lots of you: that you have super-valuable soft skills AND tech-skills galore, that you are tolerant, hard-working and intelligent. The world will be an undeniably better place when you take your turn at the wheel. (You could definitely read more, but that’s just me, and I understand – who has time?)

Below, I’ve included a link to her full article, but I’ll sum it up here:

Cathy Preston says there are 5 skills millennials need in order to survive in today’s economy:

  1. Build your social skills
  2. Build your network – personal contact is still the easiest way to get work
  3. Keep learning and don’t get stuck by thinking that you can’t gain new and better skills by starting at the bottom
  4. Be professional – make sure you always look and act like whatever part you’d like to play
  5. Find a mentor – successful people are great sources of knowledge about how to get some success of your own

To read the whole article and hear about Cathy’s personal journey, click on this link:    5 Skills


# 2 THE HOUSING MARKET?

There is a chart in the BuzzBuzz news article (link below) ‘Millennials Really Do Have It Harder in Today’s Housing Market’, by Penelope Graham, who explains why it is tougher for millennials to break into the real estate market that even those groups who had to pay much higher interest rates when they were doing it.

Even the use of the term ‘break into’ implies that it’s a struggle, and some one or something is trying to prevent entry. In fact, an industry exists that makes the job really hard, for obvious reasons: banks hate to lose money, and they like sure bets.

The chart was built with Toronto data, but the general principles apply to any area of the country. All agree that millennials have it tougher than any other group that made the chart and here are the reasons why:

  • Home prices vs Income growth – the minimum household income required to handle the cost of housing is not keeping up with housing costs
  • It’s getting harder to pay off debt – household debt, including increasing consumer debt, is getting harder to manage, and the average debt-to-income ratio is now hovering around 59%. Banks don’t want it to be more that 43%.

Here’s How I See It

There is no quick fix, despite the government’s attempts to cool the market. It takes a while before demand results in lower prices across the board, and these years are your prime years. There are so many factors over which you feel you have no direct control.

But what you can control is your own spending, income-production, debt-reduction, and savings. Maybe it’s time to look back in history and read up on the attitudes that resulted from the experiences of The Great Depression: no credit purchases then, by gum! If you didn’t have cash money, you just didn’t shop!

So what is a millennial to do? Fix your debts the hard way, with self-control and self-denial. Do you know of anyone with a property to sell that you would like to buy? Make a deal, mano-a-mano. Look into lease options and make your own agreement. Shake it up! Skip the banks, for now. They are not the solution – you are.

To read the source article for this outburst, click on the following link  Why You Can’t Make Headway


Featured Links

Affordable Housing Crisis

Rent Jumping in Toronto

Can’t Even Afford a Condo In the GTA


 

The Newsworthy April 7, 2018

Kathy McWilliam Thought Starters April 8, 2018 Leave a reply

Have You Done Your 2017  Canadian Taxes Yet? If Not, Here Are Some Things You Should Know.

Some things have been added; some things have been taken away. The feds want a zero bottom line impact, while trying to please now and future voters.  So what was their solution? Read below and then click the link to get more details.

 

 

 

Added

  • More help for folks with fertility problems – you don’t need to prove a medical problem to qualify and you can go back as far as ten years to adjust your returns. It can take a long time to hatch a baby!
  • Nurse practitioners have been added to the list of professionals who can certify a disability.

 

Removed

  • The federal education and textbook deduction is gone.
  • You can claim the transit deduction up until June 30 of 2917. After that it disappears.
  • Arts and fitness programs for kids can no longer be deducted.

 

Given with one hand, taken away with the other

  • Even though the federal education and textbook deduction is gone, the tuition deduction remains, including for occupational skills programs taken at a post-secondary institution.
  • The caregiver deduction has been increased to $6,883 and rolled into one deduction from three, but your dependent, if 65 or older, must be infirm to qualify.

 

Click here for more and consult a taxation expert to see how these changes may affect you: HuffPost on Taxes

 

Here are a few other links you might like:

Tips for Getting Through Your Exams

 

The Canadian Media Landscape Is Shrinking

 

Latest Trends in GTA Real Estate

 

 

 

Lease Options Solve Sellers’ Problems Too!

Kathy McWilliam Home Owners April 5, 2018 Leave a reply

There are several situations in which a straight-forward real estate purchase and sale transaction is not necessarily a seller’s best solution.

1. They may be responsible for managing and disposing of a property for an elderly relative who has moved into an extended care facility. 

With a lease option agreement in place, they can receive rental income for the term of the agreement, and sell the property to the tenant-buyer at the end of the agreement. The rental income can help pay for the extended care, with a lump sum at the end to use in the best interests of their loved one.

2. They may need to move to another locality,  and find another home, quickly – so quickly that covering the costs of the property they already have while they are trying to sell it will be financially disastrous for them.

With a lease option agreement in place, they can receive rental income to cover their existing mortgage, insurance and taxes during the term or the agreement. At the end, they will be able to sell the existing property at current market value.

3. They have become widowed, or they’ve had a relationship break-down, so that they are suddenly responsible for carrying the costs of their existing home by themselves. 

With a lease option agreement in place, they can down-size to a living situation they can afford on their own. Meanwhile, the monthly rental income will cover their costs, and they will be assured of a sale at the end of the agreement.

4. It’s a buyers’ market, and their house is not generating a lot of interest. They’re thinking seriously of taking it off the market, even though they really need to move on.

There is a market for houses like theirs, even in a buyers’ market, of people who don’t yet qualify for a traditional mortgage. With a lease option in place, they can move on and collect rent while the tenant-buyer lives in their home, repairs their credit and/or saves for their down-payment. By the end of the lease option agreement, the tenant-buyer qualifies for a mortgage and a normal closing takes place. Then, the sellers get their equity out.

Should I Rent or Should I Buy?

Kathy McWilliam Housing Options April 5, 2018 Leave a reply

The common old ‘saw’ is that when you pay your landlord’s mortgage, your landlord’s equity increases and you have nothing to show for it.

In a perfectly predictable future that would be true, in most situations. We have seen, however, that property prices and the cost of financing can vary, sometimes wildly. People have been burned, yes they have, and the reputation of home ownership as the safest of investment bets has taken a bit of a beating.

So let’s look at home ownership for you as an investment and compare it to renting. We’ll assume that you are equipped for either scenario – you have access to funds for a down-payment, closing costs, home ownership costs like taxes, insurance, maintenance and on-going utilities costs. You are equally able to pay rent and/or condo fees, parking, utilities, damage deposit, first/last month’s rent for a unit in your desired location.

The money you use for a down-payment on your own home is very much a direct contribution towards your home equity, and seen that way, the larger the down-payment, the better. The money you use for deposits (damage deposit, first/last month’s rent) on a rental unit can garner you some interest earnings and the longer you remain in the rental unit, the more interest you will accumulate. That assumes you will not incur any major damage expenses over the period of your lease, of course.

What of your periodic rent or mortgage payments? It is obvious that the rent you pay a landlord improves his/her equity position and rental earnings (providing he/she charges the right rent).  What you get in return is freedom from responsibility for home-related expenses. You also have the opportunity to invest your savings in other ways: stocks, bonds, etc.

So given that renting has many advantages, especially for the foot-loose and fancy-free, why is home ownership still the holy grail for millions? What is its’ continuing allure even among folks who refer to homes as ‘money pits’?

First, there is the common-sense response that ‘I have to pay to live somewhere – why not pay myself? Because once your mortgage is paid off, the asset is yours. And during the mortgage period, you are able to experience the home as if it were yours alone already, to renovate, to improve, to sell, to enjoy.

The common old ‘saw’ is that when you pay your landlord’s mortgage, your landlord’s equity increases and you have nothing to show for it.

In a perfectly predictable future that would be true, in most situations. We have seen, however, that property prices and the cost of financing can vary, sometimes wildly. People have been burned, yes they have, and the reputation of home ownership as the safest of investment bets has taken a bit of a beating.

So let’s look at home ownership for you as an investment and compare it to renting. We’ll assume that you are equipped for either scenario – you have access to funds for a down-payment, closing costs, home ownership costs like taxes, insurance, maintenance and on-going utilities costs. You are equally able to pay rent and/or condo fees, parking, utilities, damage deposit, first/last month’s rent for a unit in your desired location.

The money you use for a down-payment on your own home is very much a direct contribution towards your home equity, and seen that way, the larger the down-payment, the better. The money you use for deposits (damage deposit, first/last month’s rent) on a rental unit can garner you some interest earnings and the longer you remain in the rental unit, the more interest you will accumulate. That assumes you will not incur any major damage expenses over the period of your lease, of course.

What of your periodic rent or mortgage payments? It is obvious that the rent you pay a landlord improves his/her equity position and rental earnings (providing he/she charges the right rent).  What you get in return is freedom from responsibility for home-related expenses. You also have the opportunity to invest your savings in other ways: stocks, bonds, etc.

So given that renting has many advantages, especially for the foot-loose and fancy-free, why is home ownership still the holy grail for millions? What is its’ continuing allure even among folks who refer to homes as ‘money pits’?

First, there is the common-sense response that ‘I have to pay to live somewhere – why not pay myself? Because once your mortgage is paid off, the asset is yours. And during the mortgage period, you are able to experience the home as if it were yours alone already, to renovate, to improve, to sell, to enjoy.

There is the emotional tug towards home ownership, a desire to have a patch of earth, a stable base.

Third, home ownership is attractive as the kind of investment that, though ponderously slow in its’ process, is pretty much effortless. You can tweak it from time to time, for instance, by changing from a monthly to a bi-weekly payment schedule you can chop a year or two off the length of the mortgage. Then, at the end of the mortgage, you have something you can convert to an income-generating asset of another type, or simply live mortgage-free. The only questionable aspect is what the future value of the home will be at mortgage end.

Second, there is the emotional tug towards home ownership, a desire to have a patch of earth, a stable base. This often comes with parenthood, but you don’t have to be a mama to be emotionally drawn to the idea of putting down roots that include your own tree, in your own yard.

Third, home ownership is attractive as the kind of investment that, though ponderously slow in its’ process, is pretty much effortless. You can tweak it from time to time, for instance, by changing from a monthly to a bi-weekly payment schedule you can chop a year or two off the length of the mortgage. Then, at the end of the mortgage, you have something you can convert to an income-generating asset of another type, or simply live mortgage-free. The only questionable aspect is what the future value of the home will be at mortgage end.

Most people can live with that level of uncertainty.

How Else Can You Protect Your Gains?

Kathy McWilliam Tenant Buyers April 5, 2018 Leave a reply

Lenders like Stability and Reliability – They Want to See the Whole Picture


In addition to a healthy credit rating, here are the other things lenders like to see:

  • that you can save money, so make sure that you have a savings account and squirrel money away regularly;
  • that you are stable in your employment, so don’t jump from job to job unless a fantastic job comes your way and if you passed it up, you’d be absolutely  miserable for the rest of your life;
  • that your living arrangement are stable, so make friends with your landlord and stay put!

 

What They DON’T Like to See:

  • Frequent changes of address;
  • Overdrafts;
  • NSFs;
  • Late Payment Charges

 

Fine-tuning your credit rep takes time, patience and determination – keep your eye on the prize!