Family Formation & Housing

For young couples starting families, buying their first home and/or other real estate. Covers mortgages, credit cards, interest rates, children’s education savings plans, joint accounts for couples and the like.

Do men and women have different Savings Habits?

By Danielle Kubes

Special to the Financial Independence Hub

In an online survey about savings habits, financial comparison site Ratehub.ca reports that although Canadian men and women save almost the same amount of money, men have a greater level of confidence in their financial planning.

Inspired by 2014 Statistics Canada data that says Canadian women have lower financial literacy scores than men and were less likely to consider themselves “financially knowledgeable” (31% of women versus 43% of men), Ratehub.ca set out to discover if there truly is a gender divide. 

The company digitally surveyed a random sample of 1,087 Canadians in November, with respondents self-identifying their gender.

“Our survey revealed that while men and women differ in aspects of their financial planning, at the core, their personal finance goals and concerns are nearly identical,” the report says.

Both genders have similar financial goals

Indeed, both genders report almost the exact same financial goals. At the top of list of priorities is retirement, followed by travel and then having an emergency fund.

Both men and women prefer to save and invest in registered accounts, especially the registered retirement savings plan (RRSP) and tax-free savings account (TFSA). What they choose to invest in within these accounts — guaranteed income certificates (GICs), exchange traded funds (ETFs), stocks, or other products — is unknown.

Yet men and women diverge most in how confident they are that they’ll have enough money to retire: less than half of women, 41%, say they’re confident compared to over half of men surveyed, at 56%.

Odd, because both genders save almost the same amount of their salaries, with women saving 26% and men 29%.

The gap could potentially be explained in how able they are to grow those savings through investing. Eighty-five per cent of men invest their money, while only 76% of women do.

Of those that do invest, less women than men self-manage their investments, potentially indicating another worrisome lack of confidence in their financial knowledge.

This is supported by the original Statistics Canada data, which found women were less likely to state they “know enough about investments to choose the right ones that are suitable for their circumstances.”

Confidence doesn’t mean financial knowledge

But does confidence translate to actual financial knowledge? Apparently not. When Statistics Canada quizzed Canadians who rated themselves financially literate, one in every three women failed, while one in every four men failed. Continue Reading…

TREB vows to take battle over housing market data to Supreme Court

By Penelope Graham, Zoocasa

Special to the Financial Independence Hub

Real estate consumers will have to wait a little longer to access transparent housing market data: the Toronto Real Estate Board (TREB) has vowed it will take its fight to keep such information private all the way to the nation’s highest court, in response to losing its latest appeal.

The Federal Court of Appeal has rejected the real estate board’s arguments that the sharing of its database would violate both its copyright and home sellers’ privacy. It contains extensive details on past sold homes, including their asking versus sale prices, the length of time they lingered on the market, as well as the commissions earned by real estate agents.

Currently, agents can only divulge this info directly to their clients; posting it publicly on a website or emailing it to a subscriber base has been prohibited by TREB (and it has aggressively shut down past attempts to do so, including Zoocasa’s past solds emails in 2015).

Challenging Information gatekeepers

However, restricting this data was challenged by the Competition Bureau of Canada, which took TREB to the Competition Tribunal in 2011. After the case was initially dismissed and appealed, the Bureau won in 2016 (a decision immediately appealed by TREB).

The Bureau successfully argued that withholding the data was not only to the detriment of consumers, but hurt the business models of virtual online offices (VOWs for short, referring to online real estate brokerages).

The Appeals Court upheld this ruling last week, saying TREB’s database did not qualify for copyright protection, and throwing out their privacy argument. While based around the Toronto real estate market, the implications could be nationwide, setting an important precedent for how all real estate boards collect and distribute data. Currently, only Nova Scotia releases it in Canada, though it is common practice in the United States.

Better data benefits consumers

Lauren Haw, Zoocasa’s Broker of Record, says better access to sold data will help consumers make educated decisions when buying or selling real estate. For example, having access to comparable solds records can help buyers determine whether a Toronto townhouse, condo or detached home is fairly priced.

“The ability to share and display market data (such as past-sold prices) with consumers is a positive development for the real estate industry,” she says. “We strongly believe in a model where consumers are educated and able to work with experienced agents that act in an advisor capacity: not as gatekeepers of information.”

Continue Reading…

October home sales stronger as buyers beat Mortgage deadline: CREA

By Penelope Graham, Zoocasa

Special to the Financial Independence Hub

October ushered in slightly stronger home sales across the nation leading to tighter buyer conditions, but losses in Canada’s largest markets continue to “overwhelmingly” drag the average well below last year’s activity levels, reports the Canadian Real Estate Association (CREA).

Sales remain weak Year over Year

According to CREA’s October report, overall sales rose 0.9 per cent month over month, but remain 4.3 per cent under 2016’s number. Compared to peak activity experienced in March, sales are down an even steeper 11 per cent. It was the seventh month in a row that sales have underperformed on an annual basis. And, with the majority of the downturn experienced in the Greater Toronto Area and surrounding Golden Horseshoe markets, it’s clear detached houses, townhomes, and condos in Hamilton and Toronto are proving less of a draw.

However, fewer homes listed for sale in October made the market more seller-friendly, down 0.8 per cent over the month. This could indicate the flood of Toronto real estate listings that followed the Ontario Fair Housing Plan may be subsiding, as well as typical seasonal factors: fewer people want to deal with selling their home as the holiday season approaches.

Buyers rush to beat Mortgage Rule deadline

The slight improvement could also be due to new mortgage qualification rules, which will make it tougher for all borrowers of new mortgages — regardless of their down payment size — to qualify, and will reduce the amount of home they can afford. CREA President Andrew Peck says that as the changes will take effect in January, buyers now are rushing to get into the market in order to avoid the new requirements.

“Newly introduced mortgage regulations mean that starting January 1st, all home buyers applying for a new mortgage will need to pass a stress test to qualify for mortgage financing,” he stated. “This will likely influence some home buyers to purchase before the stress test comes into effect, especially in Canada’s pricier housing markets.”

CREA’s Chief Economist Gregory Klump agrees, saying short-term improvement may be temporary.

“National sales momentum is positive heading toward year-end. It remains to be seen whether than momentum can continue once the recently announced stress test takes effect beginning on New Year’s Day,” he stated. “The stress test is designed to curtain growth in mortgage debt. If it works as intended, Canadian economic growth may slow by more than currently expected.”

Home prices continue to rise across Canada

Real estate continues to get more expensive throughout Canada, with the national average price rising 5 per cent to $506,000, and the national MLS Home Price Index benchmark up 9.7 per cent year over year. However, the pace of price growth appears to be slowing: that’s the smallest increase seen since March 2016. Not factoring in Toronto and Vancouver, the average price would be $383,000 – $120,000 lower.

Toronto: following Vancouver’s footsteps?

Continue Reading…

Is a HELOC right for you?

By Alyssa Furtado, RateHub.ca

Special to the Financial Independence Hub

A home equity line of credit (HELOC) is a convenient way to access the value in your home. You might have seen commercials on TV or been offered one by your mortgage agent. Not only can you get a much lower interest rate than you can with an unsecured line of credit, you can also be approved for a sizeable loan. It’s tempting to have quick access to a lot of money, but is a HELOC right for you?

A HELOC is a secured line of credit that uses your home as security. As with a mortgage, the money you borrow is secured by your home. In Canada, as long as you can show that you can carry the debt, you can borrow up to 65% of the value of your home, provided you keep at least 20% of the value as equity.

For example, if your home is worth $1 million and you owe $400,000 on your mortgage, you can borrow up to $400,000 against your home ($1 million x 80% = $800,000 – $400,000 owing = $400,000).

There are many upsides to getting a HELOC. Depending on the value of your home, you can potentially borrow a large amount of money. Interest rates on HELOCs are significantly lower than on unsecured lines of credit (typically about prime + 0.5%). You can take out money or repay it at any time without penalty. And you can go up to 25 years before you have to pay back what you’ve borrowed.

One of the most appealing HELOC features is that the minimum monthly payment is just the interest that’s accrued. Using a HELOC calculator on that $400,000 line of credit example above, the monthly payment at today’s best HELOC rate of 3.7% is just $1,233. The minimum monthly payment on a traditional line of credit is typically 2% of the outstanding balance: $8,000 on a $400,000 balance. Even a traditional mortgage would require a much higher monthly payment. This feature alone is a big part of why HELOCs are so appealing.

Possible downsides of HELOCs

However, HELOCs also have their downsides.

Because the minimum monthly payment on a HELOC is just the interest, it can feel like it doesn’t cost you much to borrow money. But when you don’t repay the principal, your costs over the long run are actually much higher than with a traditional loan.

Let’s look at an example comparing a regular $50,000 loan with a rate of 4.7% repaid monthly against borrowing $50,000 at 3.7% from your HELOC repaid in a lump sum at the end the loan term.

If you pay the loan over five years, your monthly payment will be $936.83 and you’ll pay $6,209.80 in interest over that time.

Continue Reading…

Should buyers make a move in slower Autumn housing market?

By Penelope Graham, Zoocasa

Special to the Financial Independence Hub

Depending on where you live in Canada, purchasing real estate in recent years hasn’t exactly been a cakewalk. Tight supply and rampant buyer demand (and alleged speculative investing) have pushed home prices to what some experts argue are unsustainable levels in the nation’s hottest markets.

However, following a slew of new policy changes introduced over the last year — such as Metro Vancouver’s foreign buyer tax and the Ontario Fair Housing Plan — those red-hot conditions have changed, with real estate boards from both markets reporting slower sales in the months following.

That’s made a dent in the national numbers, reveals the latest analysis from the Canadian Real Estate Association: with a 11 per cent drop in sales from last September. This is despite the typically busier autumn market, which is often the last chance for buyers to make a serious go of it before the snow — and holiday season — sets in. Seasonally adjusted activity was up slightly month over month at 2.1 per cent.

Too soon to call for market stability: CREA

While this could indicate market conditions are starting to settle after what has been a turbulent spring and summer market, it’s too soon to call it a trend, say CREA’s analysts.

“National sales appear to be stabilizing. While encouraging, it’s too early to tell if this is the beginning of a longer-term trend,” stated CREA President Andrew Peck.

Calmer sales activity hasn’t translated to greater affordability, though: home prices continued their ascent, with benchmark prices rising in 13 of MLS’s tracked markets. It’s the first time in seven years that all markets have seen simultaneous growth, with the national average price coming to $487,000.

However, prices are increasing at a slower pace than at the market’s peak, and that’s mainly due to the lost steam in the detached house segment since March. One- and two-storey single family homes appreciated by 7.9 and 7.2 per cent respectively, compared to the sizzling condo market, which saw 19.8 per cent appreciation, and townhouses at 13.5 per cent.

Continue Reading…