Tag: The Rent is Too Damned High

Canadians Losing the Battle to Save For Retirement

Money WorriesPeople sometimes ask why I seem to be so focused on housing and its costs as a financial advisor, and I think the answer is best summed up declining rates of RRSP contributions. Currently many Canadians seem to be opting out of making a RRSP contribution this year, with both Scotiabank and BMO conducting separate and disheartening surveys about likely RRSP contribution rates. Unsurprisingly the answer most Canadians gave to why they would not be contributing this year was because they “did not have enough money.” These surveys also found that 53% of Canadians did not yet have a TFSA either for similar reasons. The expectation is that by 2018 Canadians will have over a trillion dollars of unused contribution room.

These kinds of surveys invariably lead to a kind of financial “tut-tutting” by investment gurus.

http://youtu.be/1pQJxGIFzdo

As one member of BMO’s executes put it, an “annual contribution of $2,000 to an RRSP… costs less than $6 per day.” which is true but does not really spell out a viable path to a retirement, merely the ability to make a contribution to a RRSP. While there is nothing wrong with the Gail Vaz-Oxlade’s of the world handing out financial advice and directing people to live debt free, Canadians simply do not live in some kind of financial vacuum where all choices boil down to the simple mantra of “can I afford this?” Frequently debts are incurred either because they must be (educational reasons, car troubles, etc.) or because it is not feasible to partake in an economic activity without taking on debt (like buying a house). Similarly it is not practical to assume that every decision be governed exclusively by a simple weighing of financial realities. It’s true it would cost less to live in Guelph, but many people do not wish to live in Guelph and would rather live in Toronto (Nothing personal Guelph!)

What we do have though is a precarious situation where the economy is weak (but maybe improving), which sets government policy through low interest rates. Low interest rates means borrowing for big ticket items like homes in places where supply is limited, like the GTA, or Vancouver or Calgary. This in turn keeps both house prices and debt levels high. It’s telling as well that a growing number of Canadians are beginning to look at their homes as a source of potential income in retirement. All of this seems to be happening while different financial “experts” argue whether the Canadian housing market is actually over valued, or not

This is where I get a chance to make a personal plug for the benefits of my role. While I don’t have much say in government policy, or even directing housing development in big cities, it is rewarding to know that financial advisors like me have a significant impact on the savings rates of those Canadians that work with us. A study called Value of Advice Report 2012 reported that Canadians that had a personal wealth advisor (that’s me) were twice as likely to save for retirement, and that the average net worth of households was significantly higher when they had regular financial advice from an advisor (again, me). The RRSP deadline this year is March 3, so please give me a call if you haven’t yet made your RRSP contribution. 

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by The Walker Report of Walker Wealth Management and Aligned Capital Partners Inc

Successful Cities Don’t Always Feel Successful

Toronto Boom Town

In the ongoing tedious and sad affair that is Rob Ford, I came across an interesting article from Edward Keenan written just before Mayor Ford won his election. The pertinent part of the article I feel is where the Ford campaign’s genius was to define the election around the idea that Toronto is a city in decline. This idea, which caught on as the election narrative suited the Ford camp well, and by pointing to traffic, city projects and basically the realities of a city that is rapidly growing made it appear that Toronto really was broken.

But Toronto isn’t broken, and many of the problems that we face are actually the problems of a city that is incredibly successful and growing rapidly. It’s ironic that the outward signs of our success are some of the things that aggravate us the most, but its a reminder that strong economies don’t look like lazy towns on a Sunday afternoon but instead are chaotic, busy, hot and frustrating. It’s also interesting that many of the problems that successful cities face (and things that define a successful city) don’t ever change, regardless of the age. Noise, construction, overcrowding, congested traffic and suburban resentment are the hallmarks of prosperous cities.

Since I am a great believer that cities are our economic future I think its worth pointing out that the problems we face today we faced in the past, and will continue to face in the future. Cities that are actually in decline have a totally different set of problems. So its better to worry about constant traffic congestion and debate how best to expand our public transit than to wonder whether we should have public transit at all. If you’d like to see Toronto dealing with this in the past, may I recommend Toronto Boom Town by Leslie McFarlane, National Film Board of Canada, a ten minute long video from 1951, looking at Toronto, a booming city of tomorrow!

Great Further Reading: The Unwanted Sound of Everything We Want by Garret Keizer, Triumph of the City by Edward Glaeser, Some Great Idea by Edward Keenan

by The Walker Report of Walker Wealth Management and Aligned Capital Partners Inc

The Rent is Too Damned High: Stop Stopping Condos!

Driving through mid-town the other day I caught a sign that said “Stop the Alaska Condo”. Not knowing anything about it I looked it up and was met with an inspiring, modern design to replace 28 family units with 130 new units of housing around Yonge and Strathgowan.

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The Proposed Alaska Condo

Of course there is a neighbourhood association who are protesting its development. Reasons to protest include “safety” (left considerably vague), that it will introduce a number of new people and cars and that it isn’t in keeping with the village’s rustic aesthetic. The Uptown Yonge Neighbourhood Alliance acknowledges the need of urban redevelopment, just not that urban redevelopment.

Cities are more than just crowded places that people live. They are the modern backbone of vibrant economies. Toronto itself accounts for 11% of Canada’s total GDP, and depends on a growing number of people to provide tax revenues, employment and businesses. In his book Triumph of the City, author Edward Glaeser outlines how cities provide networks that spawn a creative class and strengthen our economies.

But far more concerning is how in modern times cities have also become a mess of regulations that are stifling growth. Not economic growth, but residential growth. Urban density helps make neighbourhoods more prosperous and with a wider more successful variety of services. But as is the case with the Alaska Condo, proposals to increase density often face strong resistance. I tend to view this resistance as not only cutting off one’s nose, but as immoral too. Toronto is a bustling city, whose cost of living continues to skyrocket because of lack of housing. In the rush to try and prevent change to our city we are not only choking off our future economic vitality, but punishing people financially with ever increasing home ownership and rental costs, even as more and more of our economy depends on service sector work and less on manufacturing.

I have no doubt that the members of the Uptown Yonge Neighbourhood Alliance feel very passionately about their cause, but I’m afraid it boils down to little more than NIMBY-ism. People need places to live, and the Yonge & Strathgowan area will benefit from some lower cost housing and all the new residents, who will bring money, taxes and businesses to the area.

Further Reading: The Rent is Too Damn High by Matt Yglesias

by The Walker Report of Walker Wealth Management and Aligned Capital Partners Inc