Author Archives: Melanie Cons

5 Financial Tips for Your 30’s

So, you’re thirty. You’re not a kid anymore, you know how to act responsibly and your life is getting a lot more complicated. Getting married, having kids, moving up in your career, buying a home, all these things are in transition and it can be overwhelming. Don’t let the chaos of your life turn into chaos for your bank account. Here are 5 pieces of advice that will help grow real wealth.

  1. Live Well Below Your Means: Yes, you’ve heard the advice ‘live below your means’, but if you’re bringing in $4,000 a month and spending $3,990 of it, you’re not ‘being wealthy’ you’re ‘doing okay’. And you know what, that’s fine! But, the bigger gap you can make between what you earn and what you spend means the faster you can reach that financial goal. This leads into…
  2. Focus on The Percent of Income That You Put Away, Not the Amount – So let’s say your household brings in that $4,000 a month and you’re putting away $750; that’s a good chunk of what you earn. Then someone gets a promotion and you’re still putting away that $750 and you spend the extra. This is called lifestyle inflation and it will kill your financial success faster than anything else. In the end, it’s not about the dollar amount, it’s about the percentage. This way you’re saving more because you’re earning more.
  3. Be Proactive About Your Money, Not Reactive – You’ve probably already hit the point where you had to give yourself a little financial reality check. Did you learn from that experience long term? You shouldn’t take for granted how much money you have in the bank. Spend time looking over your expenses and see where your spending is leading you; if it’s a bad route, it’s time to course correct. Make sure you do this every month. It’s easier to keep up than catch up.
  4. Don’t Spend More Money, Spend Money on What You Value – People think that the more money they have coming in the more that you can spend. This is technically true, but it’s the wrong way to look at it. Spending money on things that provide you with fulfillment and happiness are far more important. Your friend may have just taken a 10-day cruise of the Caribbean and you think that now you can afford that as well. You may be right, but what works for them may not work for you. If you’re spending money like everyone else just for the sake of it, you’re missing the point. Spend it on what you value.
  5. Don’t Complicate the Way to Financial Success – At the end of the day, the best advice is keep it simple. There’s an entire industry out there that makes financial success sound difficult and complex, however all it takes is a little discipline and some small, simple actions. It’s like losing weight, you won’t see immediate results but keep going and over time you’ll reach your goals. Consistency is the key.

Why Should You Live Below Your Means? Here’s Why.

You always hear advice from people advocating living below your means. Why, though? Living within your means doesn’t sound like it’ll get you in trouble, you’re not overspending. So why should you pretend you have less money that you actually do? Here are a few reasons why living below your means can make your life much easier:

Debt Elimination – This is an obvious advantage of not spending more than you have and using that excess to pay off what you owe. Debt elimination takes care of the interest that you would have to pay on that debt as well, kind of like saving twice.

Saving for the Future – Where do you want to be in 5 years? What about 10 years? Will you have a nicer home? A luxury car? Maybe you want to take a European Cruise? Money impacts all of these decisions. Putting a bit of money away each month can soon add up to that vacation, down payment, or dream car.

Less Financial Stress – Have you ever lain awake at night worrying about those brown envelopes that never stop coming in the mail? You know they’re there and you don’t know how to make it stop. Living below your means is the first step in changing that process and eliminates that worry.

Ready for Financial Emergencies – What would you do if your car broke down and you needed to repair it TODAY? What if your washing machine broke down? If you’re going paycheque to paycheque, this can mean a major financial burden. If you’ve been living below your means, however, you have an ‘Emergency Fund’ that you can use to take care of those unforeseen emergencies. 

Less Worry About Work – Have you ever been in a situation where your workload constantly is increasing at work, but the salary is staying the same? Maybe there’s some downsizing and you need to be a ‘team player’ in order to keep the business afloat? If you’ve been living close to your means, then you possibly don’t have the ability to leave and find a new position because you can’t afford to take the financial hit it may take to work your way up in a new company. Not having to worry immediately about a reduction in income allows you to be freer with your job opportunities, so you don’t have to stick with something you hate.

Living below your means isn’t restricting…it’s actually liberating.

What this summer’s Canadian home sales stats are masking

If someone hasn’t been following Canada’s real estate market over the past year, the latest data from the Canadian Real Estate Association (CREA) may give the impression that not much has happened.

After all, the average price of a home in Canada this July was $481,500, up just 1 per cent from 12 months ago, according to the monthly CREA numbers released today.

National sales activity was also almost unchanged from last year, with July transactions down 1.3 per cent year-over-year. Same goes for the number of new listings, which inched 2.6 per cent lower.

But BMO Chief Economist Douglas Porter suggests these seemingly innocuous numbers don’t paint a complete picture.

“That’s an extraordinary mix of calm figures, considering the wild swings the market has witnessed in recent years. It also masks some serious regional shifts grinding away beneath the placid surface,” writes Porter in response to the data.

Specifically, Greater Toronto is stabilizing after last spring’s volatility. Sales increased a seasonally adjusted 7.7 per cent from June and an unadjusted 17.6 per cent annually. Meantime, the average selling price increased 4.8 per cent year-over-year to $782,129.

“Market balance is now very close to normal, albeit with the ongoing split between condos (solid) and single-family homes (soft),” Porter continues.

CREA President Barb Sakkau suggests the more stringent mortgage underwriting guidelines introduced at the beginning of the year are not taking as much of a toll on the Toronto market as they were previously.

“This year’s new stress-test on mortgage applicants continues to weigh on home sales but its effect may be starting to fade slightly in Toronto and nearby markets,” Sakkau says in a statement.

BMO’s chief economist notes another story lost behind the Canadawide stats: the pullback in the Prairies.

In July, the average price of an Edmonton home was $376,429, a year-over-year decline of 3.5 per cent. Calgary’s average of $462,769 was roughly flat from July 2017, but prices declined 1.5 per cent from June.

Sales activity was down from July 2017 by 5.8 per cent in Calgary and 1 per cent in Edmonton, although there is reason to expect Alberta, Porter suggests.

“Firm oil prices should support confidence in the Alberta markets, but the fact is that both sales and prices are consistently down this year for both of the big cities there,” he notes.

Yet another regional divergence is playing out on the west coast. “Vancouver and other BC cities continue to post some of the biggest sales declines in the country, with the province hit by a number of measures to cool the local market,” Porter explains.

On average, homes sold for $1,024,282 in Greater Vancouver, about the same as last year, while sales have plummeted 30 per cent since last July. However, CREA’s MLS Home Price Index shows prices on Vancouver Island were up 13.7 per cent year-over-year.

Ottawa and Montreal remain “beacons of strength,” says Porter, and local observers are predicting more growthin these markets.

For Ottawa, the average home price of $405,279 represents an increase of 3.6 per cent over last year. Montreal’s average price wasn’t far behind climbing 5.4 per cent year-over-year to $392,660 last month.

Ottawa activity in July was 6.1 per cent above last year’s level, as Montreal sales rose 6.7 per cent.

“From an overall macro standpoint, the main takeaway is that the housing market has ceased to be a major source of concern for policymakers (neither too hot, nor too cold) — at least for now,” Porter says.

Vancouver tops global increase in industrial lease rates

Vancouver’s industrial lease rates surged by 29.1 per cent over the last year. Beijing ranked second overall with a year-over-year increase of 19.8 per cent.

The price to lease industrial and logistics space in Metro Vancouver increased more than in any other market in the world during the past year, a new report says.

Vancouver’s industrial lease rates surged by 29.1 per cent over the last year (ending in the first quarter of 2018), according to CBRE’s annual Global Industrial and Logistics Prime Rents report. Beijing ranked second overall with a year-over-year increase of 19.8 per cent.

Vancouver’s prime logistics rents reached $9.93 per square foot, per year. Prime logistics rents are the highest achievable rates for top-quality warehouse and distribution space.

However, the single-year spike in lease rates was not enough to push Vancouver onto the list of most expensive industrial markets in the world.

Hong Kong topped the list of highest prime rents at $40.73 Cdn. London ranked second at $29.38, and Tokyo had the third-highest rents at $26.23. Vancouver was 25th on the list.

The report shows that strong economic fundamentals are driving demand for industrial space in the region, while a shortage of developable space has kept availability constrained, said Jason Kiselbach, a vice-president and sales manager with CBRE Vancouver.

He said Metro Vancouver has the second-lowest industrial vacancy in North America. “We’re at an all-time low supply right now (and) our vacancy is at 1.5 per cent,” he said.

“Demand for industrial space has more than doubled in the last three years, if you compare (demand) to the previous 10 years,” he told Postmedia. “That’s really a result of the growth in GDP, population and consumer spending.”

He said the biggest demand driver is port-related business.

“The Port of Vancouver … is the sixth largest port in North America and the closest in North America to the Asian markets,” Kiselbach said. “We’re really that gateway city for distribution, and demand is also coming from changes in retail and consumer habits.”

He said more consumers are buying products online, which are then shipped directly to their homes from warehouses in the region.

“Vancouver retail spending is at historic growth levels right now,” he said.

The other part of the equation is a persistent and well-documented shortage of industrial supply here, Kiselbach said.

The reported rise in Vancouver lease rates comes as no surprise to Oxford Properties, said Jeff Miller, the Canadian head of industrial properties at the real estate investor, manager and developer.

He said Oxford has about one million square feet of industrial space at two business parks in Burnaby and New Westminster. They also have another 40 acres of developable industrial property and one more building under construction.

Their own rental rates are increasing, he said.

“We are experiencing increases in every subsequent lease that we’re doing,” he said, noting that these increases are taking place in their new inventory as it comes available.

He said a shortage of industrial land, strong local economic growth and rising land and construction prices are contributing to the higher rates in Vancouver amid strong demand.

“We’ve seen interest from service companies, food (companies), and industrial supplies, but it’s clearly being led by e-commerce and logistics, who want to stay close to the population and labour,” Miller said.

“You’re only going to see new development if it’s supported by increased rents to keep up with the rising land costs and the rising construction costs,” he said.

“The market is super tight and it’s giving tenants very few options, particularly if they want to stay close, or if they want a large chunk of space,” Miller said.

Rental prices will likely continue to climb, but probably won’t match last year’s increase, Kiselbach said.

“We haven’t seen growth like that before, and I don’t think it’s going to be sustained,” he said.

The world’s most expensive markets all have very dense populations in small areas, he said.

“Because distributors can get access to a much larger population in a much smaller geographic location, they’re able to pay significantly higher rates,” he said. “I also think those markets reached a supply and demand imbalance much earlier than we did, so that’s why we lag them.”

Occupiers must start preparing for higher costs, he said.

“Their operating costs as a business are increasing significantly and there are other costs that are also increasing (such as) property taxes, wages, fuel costs,” he said. “The message for occupiers is really pay attention to these trends and plan accordingly.”

Canadian home sales tick higher in July led by GTA market

Increases in Toronto pushed Canadian housing sales higher for a third month, further evidence the country’s real estate market is regaining strength after it stumbled at the start of this year.

Transactions nationwide rose 1.9 per cent from June to 38,612, bringing them back toward the 10-year average, the Canadian Real Estate Association said Wednesday from Ottawa. Sales in Toronto advanced 7.7 per cent, while they climbed 5.6 per cent in the Fraser Valley area near Vancouver.

Benchmark home prices in the country were mixed, showing a 0.4 per cent decline on the month and a 2.1 per cent increase over the last 12 months.

Prices in Toronto fell by 0.5 per cent in July from the prior month. In Vancouver they fell 0.6 percent. It was the first time since 2013 that benchmark prices in Toronto and Vancouver fell concurrently for two straight months.

Home buyers this year faced tougher qualification rules designed to curb excessive speculation in Toronto and Vancouver, while the Bank of Canada has raised its trend-setting interest rate four times over the last year. That combination led to some steep declines in housing sales at the start of the year.

“This year’s new stress-test on mortgage applicants continues to weigh on home sales but its effect may be starting to fade slightly in Toronto and nearby markets,” CREA President Barb Sukkau said in a statement.