Tag Archives: RUBINA AHMED-HAQ

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Canadian household wealth falls for the first time in a decade

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Canadian household wealth falls for the first time in a decade

After nearly a decade of growth, Canadian household net worth is down

New data from Environics Analytics shows the average household in Canada is less rich than they were a year ago. Called WealthScapes, the study looks at how wealthy Canadians are across the country. For a decade, that number had been going up mostly because of higher real estate price.

Now with a slowdown in the housing market when it comes to sales and prices, the net worth of Canadians has fallen as well.

The study says “After almost a decade of wealth accumulation, the average Canadian household net worth declined slightly in 2018. While the latest financial snapshot of Canadian households includes some positive trends, growing debts, shrinking pensions and a sharp drop in liquid assets are putting pressure on families.”

The analysis by Environics Analytics shows Canadian net worth fell by 1.1 per cent in 2018 compared to data gathered in 2017. The average Canadian household has $7,594 less. The average Canadian net worth is $678,792.

This happened despite Canadian households not taking on significantly more debt. Peter Miron, senior vicepresident, research and development and the architect of WealthScapes at Environics Analytics, says, “Despite being relatively prudent in terms of their debt acquisition and repayment in 2018, Canadian households felt the effects of a significant decline in equity market valuations over the fourth quarter of the year.”

But, there are pockets in Canada that did buck the trend and see their net worth increase. The city of Moncton posted the largest gains in household net worth at 2.2 per cent. The study says the New Brunswick city is not just relying on real estate prices rising to see residents’ net worth rise. “Moncton’s households were actively building their savings faster than anyone else in Canada in 2018, on average stashing, away $11,097.”

The richest households continue to be in the big urban centres. The average household net worth in the Toronto grew by 0.1 per cent in 2018 to $977,698. Environics says, this growth was due to an above-average savings rate as well as slightly above-average real estate performance in 2018.

The richest Canadians are still in Vancouver, despite their household wealth falling more than the average, by 1.3 per cent. The average Vancouver household net worth was $1.14 million.

For all of Canada, though, there are other bright spots in this report.

Miron says, “On a more positive note, Canadians are actively taking steps to reign in their debts and build up their savings. In fact, four provinces saw the average debt per household decline in 2018.” Those provinces are Alberta, Saskatchewan, Newfoundland and Nova Scotia.

Household salaries are higher as well. The average household income in Canada was up by 3.4 per cent to $99,654. Canadian household net worth falling for the first time in 10 years is not a positive story. But, depending on where you look, there are places in Canada that are doing better financially. And it’s not all because of higher real estate values, rather more because of higher salaries and better savings rates. From a personal finance perspective that is a very good news.

Rubina Ahmed-Haq is a journalist and personal finance expert. She is HPG’s Finance Editor. She regularly appears on CBC Radio and TV. She is a contributor on CTV Your Morning and Global Toronto. She has a BA from York University, received her post graduate journalism diploma from Humber College and has completed the CSC. Follow her on Twitter @alwayssavemoney.

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Why condo co-ownership is gaining popularity

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Why condo co-ownership is gaining popularity

More Canadians are partnering up with friends and family to buy a condo. New data from Teranet, the provider of Ontario’s online property search and registration, shows co-ownership in condominiums specifically was more than 37 per cent in 2018. With condo prices continuing to rise year over year, for many, pooling their money is the only option to get into the condo market. For others it’s a more creative way to manage a huge responsibility, like owning real estate. Here is what the latest data shows.

The trend is growing

Compared to data from 2012 more condo purchases are being made with more than one person on title. Condos with only one person on title in 2018 was 48 per cent. That is down from 57 per cent in 2012. Parents are pitching in more too. For example, units owned with parental assistance is at more than 14 per cent. Compare that to 2012 when only nine per cent of condos were purchased with help from mom and dad.

Owners close in age

The data from Teranet show co-owners are relatively close in age. That number has also risen slightly. In 2012, 50.1 per cent of the province’s homes had several owners on title, with the age gaps being 20 years or less. This proportion went up to 51.6 per cent by 2018. The rise is small, but shows more people, young or old, are choosing to buy together, whether it be young people buying their first home, or retirees deciding to downside together.

Financing options

Owning a house with a friend of family member means you will need to apply for a co-mortgage. Some financial institutions are now launching products that are specifically aimed at this group of people eager to find a way to buy their first home. There are many factors to consider in a co-ownership situation. This will include how the regular monthly bills will be handled, who will get what room and how emergency costs can be covered. As well, have an exit plan if you co-own a property.

Consider the future

Unlike when you buy with your spouse or long term partner, life can change at different times. One co-owner may meet someone and want them to move in. Another may get a new job and want to sell the home and take the equity to buy a house elsewhere. Draw up a plan now of how you will handle the sale of the home and what each co-owner’s expectations are.

With co-ownership of condos on the rise, more needs to be done to protect all those involved in the transaction to make sure the real estate purchase is worth it for everyone.

Rubina Ahmed-Haq is a journalist and personal finance expert. She is HPG’s Finance Editor. She regularly appears on CBC Radio and TV. She is a contributor on CTV Your Morning and Global Toronto. She has a BA from York University, received her post graduate journalism diploma from Humber College and has completed the CSC. Follow her on Twitter @alwayssavemoney.

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Canadians remain pessimistic about the economy, despite positive data

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Canadians remain pessimistic about the economy, despite positive data

The economic headlines are positive. Canada’s economy is growing, unemployment is near a record low and wage growth has finally started to tick up. But despite all this good economic news, a new poll commissioned by the CBC says most Canadians are still worried about paying for the basics, like food, utilities and housing. To understand this disconnect it’s important to put the results of the poll into perspective.

What did the poll find?

The poll conducted by Public Square Research and Maru/Blue for CBC of 4,500 Canadians finds that 83 per cent of those surveyed said the cost of living was a bigger concern to them than climate change, social inequality, finding a job or even terrorism. Canadians are overwhelmingly worried about the rising cost of living and how they will pay for the basics in the future.

Good economic data

This sentiment comes even though Canadian economic data has been very good. Canada has been performing very well, despite a number of global economic setbacks. For example the trade tensions around the globe that have affected us too. In the last few months we experienced China banning Canadian canola oil as well as the U.S. slapping tariffs on our aluminum and steel. However, the latest GDP data shows our economy is growing better than expected. As well, unemployment remains near a four-decade low. In the first six months Canada added 248,000 new positions; almost all of them are full time. That is the strongest six-month stretch of job growth to start a year since 2002.

The disconnect at work

Canadians are working, but not all of us are working in well paying jobs. Many Canadians are working part time, temporary or contract position. This alone can create job insecurity and make workers feel uncertain about their financial future. According to the website compareyourincome.org, they take publicly available data on income to understand how income is distributed in the country. The average income of the top 10 per cent of income earners is 8.6 times higher than that of the bottom 10 per cent. The average income in Canada is $44,000 but economic resources are not evenly distributed across the country.

The disconnect in housing

Housing costs, especially in cities such as Toronto and Vancouver, have skyrocketed. The old ratio was, you should spend maximum 30 per cent of your after tax income on your rent or mortgage. Now many are spending double that just so they can afford an apartment or home near where they work? We are also carrying record high debt and a lot of your money may be going towards servicing that debt that you have accumulated over more than a decade. The latest numbers from Statistics Canada show we owe a $1.78 for every dollar of disposable income we have.

The disconnect in child care

Outside of Quebec, child care is a growing concern. In many cities parents shell out thousands of dollars a year to have their children in quality care. Down the road parents are also concerned about the cost of their child’s post-secondary education and how they’ll save for it.

If you’re feeling financially insecure, it’s time to start making some changes. Start paying your debt; your loans are the most vulnerable to change in the economy. Take a critical look at your job, ask yourself could you be making more money if you updated your skills. Are you being paid fairly for the work you’re doing? Look into courses that are offered at your workplace. See if there is something you can take for free that will make you more attractive for a promotion or a pay raise. If you’re worried about the cost of living rising, the key is to start protecting yourself now.

Rubina Ahmed-Haq is a journalist and personal finance expert. She is HPG’s Finance Editor. She regularly appears on CBC Radio and TV. She is a contributor on CTV Your Morning and Global Toronto. She has a BA from York University, received her post graduate journalism diploma from Humber College and has completed the CSC. Follow her on Twitter @alwayssavemoney.

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Fixed mortgage rates hit two-year low

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Fixed mortgage rates hit two-year low

Mortgage rates in Canada have been ultra-low for more than 10 years, but in most cases the variable rate has still beat out the fixed rate. Until now.

Recently, the Canada five-year benchmark bond yield fell to 1.29 per cent – the lowest level in two years. The big banks have responded by slashing fixed rates on mortgages. Anyone shopping for a mortgage right now should take a closer look at the five-year fixed. This could be a big money saving option. That’s because in many cases, it’s cheaper than the variable rate. It also means peace of mind knowing your monthly payments won’t change for the next five years

M2M condos by Aoyuan International.

How low are fixed rates

To put fixed rates into perspective, the five-year benchmark bond yield is lower compared to last year at this time. Then it would cost up to 2.06 per cent. It is also much lower than the long term average of 3.52 per cent. This is leading big banks to ramp up their mortgage business. As is always the case, banks are enthusiastic to sell mortgages and are willing to offer the lowest rate to get your business. With low bond yields, many are offering rates lower than three per cent fixed.

Good for homebuyers

This is all great news for anyone shopping for a mortgage right now. If you have job security, fixing your rate, rather than going variable (for the next five years), could mean better cash flow if rates were to rise.

Looking at variable, too

It’s important to understand how variable rate works as well. The Bank of Canada’s floating benchmark rate is tied to the variable rate. When the Central Bank raises rates, commercial banks raise prime, which affects your floating rate loans, such as variable rate mortgages and lines of credit. The Bank of Canada raised rates five times between the summer of 2017 and the fall of 2018, but has since held rates steady at 1.75 per cent. In the past, the Bank has cited global trade tension between the U.S., low oil prices and record high debt levels as a reason to leave rates unchanged.

Not all good news

It’s important to note that plunging bond yields may be great for borrowers in the market for a mortgage right now, but they do spell trouble for the economy. Low bond yields often indicate a slowing economy. It can also encourage Canadians to pile on more debt. If trade tension were to ease and the new United States, Canada and Mexico agreement was to firm up, bond yields would rise. This would push fixed rates up right away.

Turning attention to the U.S.

So far, the U.S. Federal Reserve has held rates steady, but has indicated it is open to a rate cut if the economic conditions allow it. If the U.S. Federal reserve was to cut rates, that would put pressure on the Bank of Canada to do the same.

Do your own stress test

Regardless of how low of a rate you secure, you still have to pass the federal stress test. That is the higher of the following — a rate two points higher than your contract rate or the Bank of Canada conventional mortgage five-year rate.

It’s important not to get carried away with how low the rate it is; calculate your affordability, not only using the stress test, but also by adding in the cost of emergency repairs and extenuating circumstances. All of these events can cost a lot of money. If you’re already stretched financially, managing them can be difficult. Make sure you can afford the mortgage you’re taking on for the long term.

Rubina Ahmed-Haq is a journalist and personal finance expert. She is HPG’s Finance Editor. She regularly appears on CBC Radio and TV. She is a contributor on CTV Your Morning and Global Toronto. She has a BA from York University, received her post graduate journalism diploma from Humber College and has completed the CSC. Follow her on Twitter @alwayssavemoney.

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Are American style mortgages coming to Canada?

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Are American style mortgages coming to Canada?

Are American style mortgages coming to Canada? Bank of Canada Governor Stephen Poloz has encouraged financial institutions to start looking at new ways to offer mortgage products – including establishing longer term mortgages, much like those in the U.S.

Poloz recently spoke to a group of finance and mortgage professionals, impressing upon them that mortgage products need to innovate. Among other suggestions, he proposed the idea of longer mortgages. “One basic idea would be to encourage more diversity in mortgage durations. It is true that most financial institutions offer fixed-rate mortgages longer than five years.”

Few Canadians, he says, take advantage of longer mortgages, but that could change. “Forty-five per cent of all mortgage loans have a fixed interest rate and a five-year term. In comparison, just two per cent of all mortgages issued last year were fixed-rate loans with a term longer than five years.”

The U.S. has had 30-year mortgages for decades, but in Canada, most mortgages are still five-year terms that are renewed as we amortize our loan.

So, are these long-term products a good idea for Canadian consumers? There are pros and cons.

Pros

Longer mortgages are a great option for anyone who doesn’t like to spend time renegotiating the terms of their mortgage agreement every five years. Most of us take on a 25-year amortization, but are forced to talk to the bank every five years when the term is up.

Longer mortgages would be especially good for those who don’t shop their mortgage around and stay with the same financial institution until the end of the amortization.

Cons

But for anyone who likes to save money, it’s not a good deal. If you compare the data, in Canada we make smaller interest payments on our loan compared to homeowners in the U.S. The five-year fixed mortgage was created in Canada, albeit in the 1800s, so homeowners had the opportunity to pay more down at the end of the term, without penalty. As anyone who has a mortgage knows, there is a limited sum you can pay above and beyond your regular payment. Also, every five years you can renegotiate the rate – which during an environment of falling rates, is very advantageous.

Poloz also seems to like the idea that was announced in the spring federal budget – that the Canada Mortgage and Housing Corp., beginning this fall, will help first-time homebuyers by taking an equity share in their home, up to 10 per cent to help lower their payments. He calls this an example of how the mortgage industry is innovating.

Still, when it comes to longer term mortgages, don’t expect this change to happen anytime soon. It’s all just talk right now. But coming from the Bank of Canada governor, that is significant. He emphasizes that the system is not broken – it has served Canadians and financial institutions well. But he also says the mortgage industry is pretty much the same now as when he got his first mortgage in the 1980s. And that, he says, feels a little stagnant.

The mortgage experience across Canada is very different, he says. This means there has to be several products available that give homebuyers options, because no one homebuyer is like another.

Rubina Ahmed-Haq is a journalist and personal finance expert. She is HPG’s Finance Editor. She regularly appears on CBC Radio and TV. She is a contributor on CTV Your Morning and Global Toronto. She has a BA from York University, received her post graduate journalism diploma from Humber College and has completed the CSC. Follow her on Twitter @alwayssavemoney.

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Is getting a tax refund a sign of poor tax planning?

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Is getting a tax refund a sign of poor tax planning?

By now most of us have filed our tax return. Individual returns were due April 30, while self-employed persons had until June 17 to submit all their paperwork. For many of us, the dread of filing our tax return is often followed by the joy of a big tax refund. But now CIBC says a tax refund is actually a sign of poor financial planning. After all, a refund is your money that you overpaid throughout the year in income tax to the Canada Revenue Agency (CRA.)

But that may be too harsh of a characterization. Even by the results of a CIBC poll on our tax refund situation, the majority of Canadians do get a tax return. Does this mean most of us are bad at tax planning? Now that the anxiety of tax season is behind us, let’s take a closer look and see how we can optimize our taxes for 2019.

Reducing tax at the source

If you have been receiving a large tax refund year after year, and would like that money to stay in your hands, you can ask your employer to deduct the income tax you pay at the source. Do this by completing a one-page T1213 form called Request to Reduce Tax Deductions at Source. You can indicate various deductions or credits that you qualify for that result in a tax refund. You could also do this in a year where you might be making a larger than usual RRSP contribution. Maybe you have room left over from previous years that you want to use now. This does mean that if you make more in overtime or in another job, you may be subject to a tax bill when you file your return. If you find you’re making more money than you anticipated, you have to save accordingly to pay your CRA tax bill.

Invest the money

The CIBC poll found that 63 per cent of us view our tax refund as a “windfall of unexpected money” to put towards our goals. Nothing could be further from the truth. A tax refund is your money that is being returned to you. The CRA has been holding that extra tax you paid, and that money has not been earning any interest for you. If you do get a large refund, the best way to use it is to invest it back into your RRSP. When the money is in your RRSP, make sure to buy an investment that suits your risk tolerance. This does two things: It gets you into the habit of using your tax refund properly and watching it grow in value; and it kickstarts your contributions for next year.

Know your situation

The CIBC poll found that 39 per cent have “no idea” what our tax situation will be until we review our paperwork with an expert. If you are part of this group, change that situation this year. Know what your marginal tax bracket is. That is the income tax you paid on the last dollar you made in 2018. Investigate now all the credits available to you in 2019. For example, there are new credits for people with severe mental impairments to get a service dog; there are credits for those trying to get pregnant using in vitro fertilization; and there are increased credits for capital costs incurred by self-employed workers. By knowing what credits you qualify for, you may be able to plan your year more tax-efficiently.

CIBC called the feeling we get after we receive a refund, “intaxication” – a play on the word intoxication. This may be the case for those of us getting a large refund, but if you use that money for good to pay down debt and invest, then the euphoria you feel from that refund will be worth it.

Rubina Ahmed-Haq is a journalist and personal finance expert. She is HPG’s Finance Editor. She regularly appears on CBC Radio and TV. She is a contributor on CTV Your Morning and Global Toronto. She has a BA from York University, received her post graduate journalism diploma from Humber College and has completed the CSC. Follow her on Twitter @alwayssavemoney.

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Financial confidence, women and their money

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Financial confidence, women and their money

It doesn’t matter whether you’re single, in a relationship or sharing accommodation, it’s up to you to be fiscally responsible for your own financial situation. It may be a harsh reality, but most females can anticipate being single at some point in their lives, and need to plan their finances accordingly.

Facts and figures

A new book, called Bank On Yourself: Why Every Woman Should Plan Financially to be Single, Even If She Is Not, validates that 90 per cent of women will need to manage their own finances, simply because they chose to remain single, or due to death and divorce.

Co-author, Leslie McCormick, says, “While general financial planning principals can apply to both men and women, what is different are the circumstances that are more likely to impact women financially. Women have longer life expectancies, and the expense those extra years bring, and the wage gap, make it harder to build wealth. Single women need to plan accordingly.”

The tides are changing, but, sadly, there are women who have never managed money for themselves, and relied on a partner to do so – someone else paid the bills and saved for the future.

Pay equity

Although there have been improvements over the last few decades, the wage gap continues to exist, and women make less. Statistics Canada reports, that despite the fact that women make up almost half of the work force (48 per cent), they still make 87 cents for every dollar compared to what a man makes for the same job. And while maternity/ paternity leaves can now be shared, statistically women who work full time, take more time off to have children and care for them. To help make ends meet, women are more likely to take on part time jobs at minimum wage.

Financial literacy

In order to make up for this shortfall in working years and in salary, women need to save more for retirement. The average lifespan of a man in Canada is 79, whereas for women it’s 84. This means that women have to plan for a longer retirement with less money. As a result, women should be saving more during their working years. TIAA, a retirement service provider in the U.S., suggests that for every 10 per cent a man saves, a woman should save 18 per cent of her income, before taxes, to have the same lifestyle as her male counterparts.

Every adult should know how much it costs to run a household – not just the bills and their due dates, but also about budgeting for unexpected costs. The authors of Bank on Yourself, have this advice, “Take your financial inventory, assess your income and expenses. Identify your vision for your future, put a plan in place to make your vision your reality, set your budget, track your progress, review and repeat.”

According to Bank on Yourself, only 31 per cent of women say that they are confident in their financial ability, compared to 80 per cent of men. The Financial Consumer Agency of Canada, and ABC Literacy Canada, provide great resources to help build your financial literacy.

Rubina Ahmed-Haq is a journalist, personal finance expert and HPG’s finance editor. She appears on CBC TV and radio, CTV Your Morning, Global Toronto, and writes for ratesupermarket.ca. Follow her @alwayssavemoney. AlwaysSaveMoney.ca

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How the new government initiative could help condo buyers

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How the new government initiative could help condo buyers

The federal government wants to help you buy your first home. In the 2019 budget, the government unveiled brand new plans that, it says, will help young buyers who have been shut out of the real estate market.

This includes the new First-Time Home Buyer Incentive and the expanding of the ‘Home Buyers’ Plan. Both can be used to buy a condo unit. Here is what you need to know.

Criteria to qualify

The new First-Time Homebuyer Incentive will allow eligible first-time homebuyers to apply to finance a portion of their home purchase through a shared equity mortgage with Canada Mortgage and Housing Corp. (CMHC). Eligibility means you have to have the minimum down payment for an insured mortgage. That is five per cent for a resale home and 10 per cent for a new home. Your household annual income cannot exceed $120,000. Lastly, the insured mortgage cannot be greater than four times the participants’ annual household income. Meaning the mortgage cannot exceed $480,000.

Pay back rules not clear

It’s not clear how much has to be paid back; is it an equal equity share or money borrowed plus interest? Those terms and conditions are expected to be released by CMHC. But the government clearly states that no ongoing payment will be required while you own your first home or still have a mortgage payment on it.

How it claims to help

The thinking is this will lower your overall monthly payments, effectively making your home more affordable to live in then if you had to carry a larger mortgage. Here is an example the federal budget detailed:

If a borrower purchases a new $400,000 home with a five percent down payment and a 10-per-cent CMHC shared equity mortgage ($40,000), the borrower’s total mortgage size would be reduced from $380,000 to $340,000, reducing the borrower’s monthly mortgage costs by as much as $228 per month.

Old program limit increased

Along with this new initiative, the government proposes to increase the Home Buyers’ Plan withdrawal limit from $25,000 to $35,000. First-time homebuyers who have money saved in their RRSP can withdraw that amount without penalty to use towards the down payment on their first home. That money has to be paid back into the RRSP over 15 years. If you borrow the maximum amount you would need to deposit $2,333 a year back into your RRSP. Bear in mind that is on top of all the regular mortgage payments you would be making.

Little to help affordability

Critics say this will do little to help young people in Canada’s most expensive markets such as Toronto and Vancouver, as average home prices are in the seven figures. But these schemes could be advantageous for anyone looking to buy their first condo unit. According to the latest figures from the Toronto Real Estate Board, the average price of a condominium apartment was $558,728 at the end of 2018.

Before the new initiatives were announced in the federal budget, Jason Mercer, TREB’s director of market analysis, said, “The condominium apartment segment continued to be a key entry point into the GTA homeownership market in 2018. Higher mortgage qualification standards meant that many first-time buyers were looking for more affordable housing options.”

If you’re a first-time homebuyer shopping for a condo in that price range, you could be in luck. But for most others, these plans will do little to help Canadians afford to live in the most expensive cities.

Rubina Ahmed-Haq is a journalist and personal finance expert. She is HPG’s Finance Editor. She regularly appears on CBC Radio and TV. She is a contributor on CTV Your Morning and Global Toronto. She has a BA from York University, received her post graduate journalism diploma from Humber College and has completed the CSC. Follow her on Twitter @alwayssavemoney.

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Cost of living and retirement savings are barriers to homeownership

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Cost of living and retirement savings are barriers to homeownership

Anyone living in a big Canadian city such as Toronto knows the cost of living is high. Everything from basic needs, such as food, clothing and shelter to non-essentials are expensive, and according to a new survey they are also barriers to homeownership for young families.

Basic living costs biggest barrier

Conducted by Sotheby’s International Realty Canada and the Mustel Group, the survey found that “across Canada’s key metropolitan areas, young, urban families identified the cost of covering basic living expenses, such as rent, groceries and utilities, as their leading financial barrier to saving for homeownership.” One third of Canadians surveyed said this was their primary obstacle. In Toronto, the number was slightly higher with 35 per cent saying basic cost of living was keeping them from saving for and owning a home.

But the barriers don’t stop there. Would-be homeowners say even non-essential lifestyle expenses such as dining out, travel, entertainment and fitness memberships were also preventing them from breaking into the real estate market.

Giving up a lot to get there

The report surveyed more than 1,700 families living in Canada’s largest cities, including Toronto, Vancouver, Calgary and Montreal. It focused on families where the heads of the family are between the ages of 20 and 45. The majority, 51 per cent, said they were willing to minimize or reduce non-essential lifestyle spending to reach their real estate ownership goals. This includes cutting out dining out and travel. Many were also willing to give up clothing or technology purchases. To save, more than 37 per cent of families said they have reduced or eliminated health and fitness expenditures. A further 15 per cent say they are reducing if not eliminating car ownership.

Retirement on the back burner

The most concerning finding is one in five homeowners worried that prices will continue to rise are delaying saving for retirement. The implications of this can be significant. The shorter time you save for retirement the shorter time that money has to grow. A 2018 CBIC poll called “Am I saving enough to retire?” found the magic number Canadians needed to retire is $756,000 but they found as many as 90 per cent don’t have a retirement plan. The poll findings also show that almost a third of those nearing, or on the cusp of retirement aged 45 to 64, have nothing saved for their retirement. For those who have saved, the average value of their nest egg is $345,000 – only half as much CIBC says you need to retire.

What is the best decision?

Buying real estate should not come at the cost of ignoring other financial obligations. One easy solution is the look for properties that are less expensive. Condos are often the best choice for first-time homebuyers. If a more expensive property is what you desire, spending more time saving for your down payment will lower your payments when you finally purchase. The reason many young families are willing to sacrifice, is 78 per cent of those surveyed by Sotheby’s and the Mustel Group believe their home will either outperform or match the performance of their financial investments in the next five years. If the last 10 years is an example, that would be true, but it’s important to understand that as interest rates rise, so will the cost of borrowing and that will put downward pressure on home prices, too.

The bottom line? Financial sacrifice is necessary when buying a home in most Canadian urban centres, so plan and prepare.

Rubina ahmed-haq is a journalist and personal finance expert. She is HPG’s Finance Editor. She regularly appears on CBC Radio and TV. She is a contributor on CTV Your Morning and Global Toronto. She has a BA from York University, received her post graduate journalism diploma from Humber College and has completed the CSC. Follow her on Twitter @alwayssavemoney.

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