Solving Toronto's Homeless Problem

How many homeless people are living in Toronto?

What would we need to do to permanently solve Toronto's homeless problem?

Homelessness is much more common in large urban cities like Toronto, Vancouver, Edmonton, Calgary, and Montreal. It is a constant presence and a symptom of a city's bloated real estate prices and the people who fall through the cracks of society.

In 2005 federal authorities in Ottawa estimated that Canada has 150,000 homeless people across the country - however homeless advocates say it is closer to 300,000. (And since 1 out of every 6 Canadians live in the GTA we can estimate that there is about 50,000 homeless people in the GTA.)

According to a 2007 report the annual cost of homelessness in Canada is approximately $6 billion in emergency services, community organizations, and non-profits.

Mathematically that means homelessness is costing governments approx. $20,000 per year per homeless person.

Also, contrary to stereotypes, only 6% of homeless people suffer from schizophrenia. Depression and affective disorders affect 20 to 40% of homeless people.

What is also interesting is that some of these homeless people do have jobs - but they sleep on the streets because they cannot afford to rent an apartment. They end up temporarily homeless, sometimes for months at a time, living on the streets until they can find a place they can afford. (There are national statistics for this on the StatsCan website, but I have been unable to find statistics just for Toronto.)

This tells us several things:

#1. Renting an apartment in Toronto is too expensive and there isn't enough low income housing in Toronto.

#2. There is a market for smaller apartments that are priced for people in a lower income bracket.

#3. There needs to a safety net for people who are "temporarily homeless" to help them find a new apartment quickly.

#4. For the 6% of homeless people (approx 3,000 people) who suffer from schizophrenia there needs to be a safety net to help get these people treatment.

So really what is needed is the following is...

Special places for the 3,000 schizophrenic homeless people in Toronto. This would require a significant investment in real estate and care services.

A government agency designed to help people who are temporarily homeless to find a new place quickly.

More subsidies for low income housing. Enough for approx. 47,000 people.

More new apartment buildings being designed with a portion of the apartments designed for lower income people. If every new apartment / condo building in Toronto was required to have just 1% of their units designed for lower income people we could solve this problem pretty quickly.

We should also note that the Canadian government USED TO have such measures in place. Back during the 1980s there was abundant support for instutions geared towards helping schizophrenic people, and the building of new structures for low income housing was dramatically higher - in 1986 alone the Canadian government supported the building of 30,000 new units - but over the years the numbers kept dropping, reaching a mere 7,000 in 1999.

So really supporting such measures would really be about going back to the ways things used to be done in the 1980s and earlier.

Now you might think "Hey, doesn't Toronto already have homeless shelters?"

Well, yes, we do. But homeless shelters are not a permanent solution - and their rife with crime, theft, sexual assaults, assaults, drug problems. Most women refuse to stay in homeless shelters because they're not considered safe. Even women-only shelters are dangerous.

Quotes about Homelessness in Toronto by charity worker / activist Edward de Gale

"Canada is the second coldest country on earth and with a climate like Canada’s, energy, like food and housing is a necessity of life." - Edward de Gale.

"It is a little known fact that the inability to pay basic utilities/energy is the second leading economic cause of homelessness in this country." - Edward de Gale.

"Over 50,000 households a year have their power disconnected in Ontario while thousands of others struggle to provide the necessary energy to stay warm and cook meals. That’s one household with their power cut every 10 minutes, every hour, of every day, for a year." - Edward de Gale.

"Many Ontario households must choose between eating and heating, and seniors and those with special needs must choose between medication and heating." - Edward de Gale.

"Families, with minor children, unable to provide basic utilities/energy for their children are vulnerable to child protection orders because they are unable to provide the necessities of life." - Edward de Gale.

Edward de Gale is the executive director of "Share the Warmth", a local Toronto charity dedicated towards helping homeless people and getting them off the street. He founded the charity in 1995 and by 2002 it had grown to help 4 million people in 400 communities across Ontario. 18 years later it is still growing strong. [Source: Edward de Gale wins 2002 City of Toronto Community Service Volunteer Award.]

The Future of Montreal Condos

Regardless of the ups and downs in the condo market, what is really interesting is the long term results of condo developments in metropolitan Canadian cities like Vancouver, Toronto and Montreal.

Montreal in particular because of the city is located on islands in the St Lawrence River, which means people living there can't really expand outwards so much - and opens the door to rampant upwards development.

According to Statistics Canada the population of Montreal will reach 4.541 million by 2031 if population growth is low. But it could reach 5.275 million if population growth is high. (Statistics Canada has 3 working models for predicting population growth in Canada, providing a range of forecasts.)

The current population is 3.9 million in the Greater Montreal Area.

This means StatsCan is predicting growth of approx. 600,000 to 1.4 million in the space of 18 years.

Other Canadian metropolitan cities are expected to experience similar growth, which will result in more expansion of suburbs.

But in Montreal, because the city is an island their ideal direction is not outwards, but upwards. Which means new condo developments need to start thinking how they can accommodate a lot more people... which employs using new architectural technology in order to make buildings stronger, more affordable and more energy efficient.

The energy issue will also be a big thing by 2031. Electricity prices are expected to skyrocket in the next 18 years so having more energy efficient buildings will save on heating and air conditioning.

One way would be to make buildings more like greenhouses, so their internal temperature is regulated by the sun in the winter and during summer months. There are a myriad other advances in energy efficient windows, as demonstrated by the image on the right. Another way is windows that can be electronically tinted to reflect more sunlight to change the refraction rate.

More energy savings can also be gained by using basic geothermal for heating and cooling the building.

Construction costs can be reduced by using new materials, prefabrication in factories (which also raises quality of the construction work), and maintenance costs can be reduced by designing buildings which require very little maintenance.

These cost savings will be more important for people looking to buy a Montreal condo because the overall higher costs of living in the future will cause people to be more frugal with their money. People will want to buy a place that will save them money over the long term and get them great value for their investment.

Montreal also benefits from the fact that at its lowest point it is currently about 100 feet above sea level. When arctic and antarctic ice caps melt within the next 12 years Montreal will be UNAFFECTED by the rise in sea level because the resulting rise in sea level will only be 28 meters (92 feet), which will leave Montreal high and dry by a good 8 feet while Halifax, St John's and many coastal towns in the Maritimes will be flooded.

Which means there will be even greater stress on housing availability as Montreal and similar cities will be swamped by people looking for new places to live as their own homes have been flooded. The result will be people looking for new accommodations and an abundance of cheap labour.

This means that long term investment in Montreal's real estate is a really wise decision. Its guaranteed to go up thanks to the constant population growth, but there is also the chance of prices skyrocketing when the Maritimes is flooded before 2025.

Ignoring doom and gloom predictions for the Maritimes, in contrast Montreal's future is very sunny. It has a stable economy, is always hiring new graduates from its many universities, it is a tourism destination, and it has a well rounded transportation system.

It makes me wish I lived in Montreal instead of Toronto.

Land in Western Australia / the Outback

Australia is one of those countries I don't really long to see.

Asia, love it there and have already been there twice. South America - I can't wait to visit Bolivia and Brazil. Africa... Egypt, Morocco, Tunisia, Zimbabwe... all fascinating places. And Europe of course, lots of things to do there.

But Australia?

I guess I am just not a fan of kangaroos, crocodiles, and Australia's landscape.

However I do like a bargain when it comes to real estate - and Australia has a lot of bargains when compared to the real estate prices in Canada.

And I also enjoy looking at the real estate prices of obscure parts of the world... eg. You can get a plot of land on the side of volcano in Hawaii for $5,000 USD. True, its on the side of an inactive volcano... which means no local water... but it is in Hawaii!

Western Australia (WA) on the other hand has vasts regions of desert and scrub brush for sale. Some of it is former farmland that has gone belly up due to extreme droughts.

Its the kind of place where you can buy 680 square miles of land for $360,000 Australian dollars, according to the website Satterley.com.au provide land for sale in WA.

There are homes in more habitable regions too, like in Perth, Beaumaris Beach, Brighton, Catalina, Eglinton, Erindale Grove, Jindalee Beachside and Princeton... but I really need to post a map of Western Australia so you know where these places are.

I went browsing on various Australian real estate websites and found some interesting deals.

#1. A plot of residential land in Perth for $8,500. Nothing built on it yet, waiting for a developer.

#2. 2032 square meters of land in Doodlakine for only $19,500. (Australian towns have such funny names.)

#3. $114,000 for abandoned farmland near Perth. 206 acres worth. See photo below.

I think my point here is that if the prices are low enough there is a certain romanticism to the idea of suddenly picking up and moving to a different country and trying something new.

Even more so if you're already independently wealthy - or have enough that you don't really worry about food any more.

However I must admit Hawaii is more enticing than Australia. I am sorry to the good people of Australia for saying this... but its freaking HAWAII! Its one of the most desirable places to live in the world.

And if you love sailing you could always just buy a ship and then sail from place to place... something I have frequently dreamed of doing, if I could find a way of doing it financially.

OFF TOPIC - Where does one look for used ships online? I tried Googling it and found on Kijiji an used 29 foot Westerly sailboat in Nova Scotia for $20,000.

So I guess my point here is that depending on what your real estate / career / travel aspirations are you can find cheap land in many strange parts of the world - and failing that, buy an used sailboat and then just sail to many strange parts of the world. Assuming of course that you have the financial means to get food and other things you might need along the way.

So if you're living in Toronto - or Perth - or wherever you happen to live, and have saved up a tidy nest egg... absolutely, why not follow your dreams and move somewhere interesting (or sail there)?

You only live once.

What Will Home Refinancing do to Your Net Worth?

When mortgage interest rates fall to historic lows as they have done in the past couple of years, it’s very tempting for homeowners to want to refinance their mortgage and get a better deal on it. This can make a lot of sense, as getting a lower interest rate can save you thousands. But before you start barraging your banker or broker for a better deal, first stop and figure out what refinancing will do to your overall net worth.

Refinancing your mortgage may lower your costs in the short-term, and that can tip the money scales in your favor. With refinancing you can stretch out your amortization period and arrange for a lower monthly payment. This frees up extra cash, and is one of the reasons so many homeowners opt to refinance when rates are low – it’s like they’re getting two savings at once! But, short term benefits also often have long-term consequences and in the case of refinancing, those consequences will affect your net worth.

This is because your home is a liability on your household’s balance sheet. And even though in the case of debt, a home is always considered to be “good debt,” the balance sheet does not discern between good and bad. It’s a liability, which means it’s not good. And when you refinance so that you can make lower monthly payments, it will take you longer to pay it off and you could potentially add thousands of dollars in interest onto your total mortgage amount. That in turn, will subtract thousands of dollars from your net worth, decreasing it by as much as those interest costs.

But will refinancing always lower your net worth?

Not necessarily. You can still refinance to take advantage of those low interest costs; just ensure that you keep your amortization the same and that you continue to make the same monthly payments (or even more!) as you did before. That is only the true way to refinance without decreasing your total net worth. And even when using this option, you still need to be very careful.

Home refinancing usually comes with many different costs including closing costs and legal fees, to name just a couple. Be sure to fully review what it will cost you to refinance your home loan, and compare that against the savings. Do you have a positive or a negative after your calculation? This is the only way to know whether or not you’ll be increasing or decreasing your net worth through a refinance; and whether or not you should do it!

Could Software predict the Rise and Fall of Real Estate?

For decades economists have been trying to predict the rise and fall of stock market prices - and some have even postulated that it would be possible to create computer models using software which would predict how stock market prices would go up or down over both the short and long term.

But the problem with making such predictions is that there are too many factors and you can't predict accurately where things are going to go. Especially with the stock market, which is notoriously volatile.

Even with real estate it is difficult to make predictions for the future unless there is a large factor that is guaranteed to happen.

Many people turn to experienced economists to try and get predictions. But even they can be wrong when it comes to their doomsday predictions or predictions of sunny skies and smooth sailing. Its like trying to predict the weather - even the expert meteorologists suck at predicting when it will rain.

For example in 2011 economist David Madani sent shock waves through the Toronto real estate industry when he predicted that Toronto’s overheated housing market was due for a 25% correction which would result in much lower prices.

Two years later, prices have continued going up to the current point where prices have now stagnated.

David Madani is still waiting expectantly for Toronto's housing boom to falter.

Meanwhile myself, I must admit I am doing the same thing. In 2012 I predicted Toronto's condo market would collapse approx. 40% by 2015-2016 due to the over-abundance of condos that will come on the market around that time. I will be waiting expectantly to start seeing some downward movement in condo prices in Spring 2015... But that is 2 years and a couple months away, so I've got plenty of time to wait.

David Madani says he remains convinced that the most prolonged housing boom in history, fuelled largely by low interest rates, is headed for a hard landing, particularly in Toronto’s “overbuilt” condo sector. So he is looking at the same big factor I am looking at... But why was he predicting that back in 2011 and when did he think it would happen?

Well he thinks things will start to change this year - Spring 2013.

“What’s critical is what happens in the Spring,” says Madani. “If we continue to see increases in active listings as sales continue to decline, then we’ll start to see more obvious signs of prices dropping.”

The March-to-May period is traditionally the peak buying and selling season and a barometer of consumer confidence when it comes to real estate. But he is banking his prediction on a mighty big "if" that something will happen in 2013 when many more solid-minded economists are saying nothing major will happen with the prices until 2014 at the earliest.

It is true that many veteran real estate watchers can’t agree where the market is headed. There is simply too many factors to consider - and chief among them is consumer confidence, which is an often unknown factor that you cannot predict which way it will go until the time actually comes and then we see changes.

Which begs the question - could we design a piece of computer software to make predictions for us instead? If we feed enough - ENOUGH - data into the computer concerning prices, interest rates, sales rates, mitigating factors etc. shouldn't it be able to predict what the sales and prices in the near future will be?

It wouldn't be able to predict long term changes, but it might be able to predict small term changes based on current trends in the market - and using historical data we could check the accuracy of predictions.

The average sales price of a GTA home was up 4.1% in January 2013 over a year earlier, up to $482,648.

However we should note that it has actually dropped from the benchmark price by almost 1.5% just in the last six months, according CREA figures.

It really is the issue of bidding wars - a blood sport for those who can't really afford it - and some Torontonians are bidding way too much and banking on the economy to stay good and housing prices to continue going up. Sellers in Toronto have become so used to having bidding wars that they are now holding out for high prices - while buyers are realizing that they are better off waiting for deals.

So the question is, who will blink first? Will buyers give in and buy anyway? Or will sellers give in and finally lower their prices?

“Buyers and sellers remain in a standoff,” says John Andrew, Queen’s University business professor and real estate expert. “Sellers are holding out for their prices and buyers are waiting for deals. I think it’s too early yet, but there will be a correction.”

Thus predictions of slowdowns and dropping in prices has buyers interested - and sellers worried.

If someone were to make real estate software which could accurately predict when a slowdown in sales will happen - and when prices will drop - and how much prices will drop, well then that would make many real estate agents, buyers, sellers and economists sit up and pay attention.

But no such software exists.

Indeed, when you talk about real estate sofware usually people think of property management software - or online real estate databases (MLS)... things like that.

Even if someone - eg. an university professor with some serious computer skills - were to create a computer model that predicts future real estate prices then other real estate experts would step forward to naysay and claim the software is bugged and faulty, trying to point out inaccuracies in the software's predictions.

And they would be right to do so. We use such software to predict weather patterns, and it still fails despite people trying for decades to get it to accurately predict the weather.

But we have reached a point wherein the computer model is "reasonably accurate". Its off a little, but its pretty darn close to the target.

So I have to wonder, if we can do that for the weather and its reasonably accurate, maybe it is time we try and do that for predicting real estate prices?

Canadian Mortgages Vs US Mortgages

The Canadian mortgage market has been sitting on the edge of a precipice ever since the American market burst in 2007. Six years later skeptics and pundits alike are still trying to predict when the housing market and the corresponding mortgage market will burst in Canada.

6 years later in 2013 the proverbial dam still hasn't burst.

If you want to buy a home in Canada you should first arrange financing and think in terms of whether you can actually afford this mortgage - or whether it is better to wait until real estate prices come down in 2015-2016 - when the dam is expected to finally burst.

According to CIBC economist, Benjamin Tal, there are many rational reasons why the Canadian mortgage market continues to sit on the edge of a precipice - and is firmly entrenched there, waiting for the eventual avalanche.
 

Tal admits that all is not well with Canadian housing. It is floundering and there is a lot of doubts and lack of confidence in the market, and yet Canadians keep buying homes and condos anyway because people need a place to live and they're tired of waiting for the market to collapse. Patience is a virtue, but everyone has their limits for how long they will wait.

 

"Any comparison to the American market of 2006 reflects deep misunderstanding of the credit landscapes of the pre-crash environment in the U.S. and today’s Canadian market.”says Benjamin Tal.
In a nutshell the Canadian and USA mortgage markets differ in the following ways:

The U.S. mortgage interest tax deduction - This American tax benefit played only a limited role in stoking the U.S. housing bubble. The absence of this rule in Canada means that Canadians can't claim mortgage interest on their income taxes, and thus they have to be more prudent and careful about whether to buy a house and get a mortgage.

Lender recourse - Canada’s recourse system (which keeps people on the hook after foreclosure) does “not provide a full shield from a substantial fall in prices,” says Tal. In the USA, only 12 states have no-recourse law. According to some sources the probability of mortgage default is actually up to 20% higher in non-recourse states - meaning Americans in the USA were more likely to default on their mortgages - which meant the banks would take bigger losses.

When you default on a loan (any kind of loan) in Canada, lenders send the hunting dogs after you in the form of really annoying phone calls from collection agencies and letters from lawyers - but if you don't have any money or assets or a job, they really can't do anything to you. And worse comes to worse, you declare bankruptcy and have bad credit for 7 years.

Canada’s low arrears rate - Canada’s minuscule default rate is pretty stellar and is slightly less than half that of the American average default rate (pre-2006). However we should note that Canada's other debts (credit cards, student loans, lines of credit) have skyrocketed since 2008, suggesting that many Canadians are paying off debtors by borrowing money from other sources - and eventually that money has to be paid back.

In contrast in the USA: “In a short eighteen-month period in 2007-08, the serious mortgage arrears rate in the US surged by more than 300%," says Tal.

So Canada hasn't reached that point yet. But we could if Canadians continue to pile on consumer debts with credit cards/etc.

The American arrears spike was also largely caused by legal underwriting that was either near-criminal or even outright criminal on the part of the banks giving out mortgages. 

Rate Sensitivity - Canadian mortgages are more vulnerable to interest rate hikes than the average American because our terms are far shorter (5 years versus 15-30 years).

Less subprime - The American crash and "Great Recession" was largely the result of subprime mortgages and risky floating rates. Canada still has subprime mortgages but they are comparatively rare because Canadian banks are more cautious about who they give mortgages to.

However this doesn't completely protect Canada. Foreign investment in Canadian real estate has created a bubble in major cities, and if something ever happens to hurt the bubble then those markets will collapse in a flash. If a collapse happens in Canada it won't be subprime mortgages, it will be foreign investors pulling out all at once which will sink the ship.

Negative Equity - One-third of American mortgages in 2005-2006 were already in negative equity. Over 50% of the mortgages had less than 5% equity, thus “making [Americans] highly exposed to even a modest decline in prices,” says Tal.

In Canada however only 15-20% of new mortgages have less than 15% equity. Plus negative equity is virtually non-existent in Canada, and out of fear such mortgages were phased out pretty quickly by Canadian banks.

No teasers - Millions of Americans got teaser mortgages with rates that reset a few hundred basis points after 2 or 3 years. So they would start a mortgage thinking they got a deal and could afford it, but when the rates reset they were screwed and couldn't afford the home they had purchased - and were locked into it so they had no choice but to default. Over $2,000,000,000,000 dollars worth of mortgages were reset in 2006-2007 alone.

Canadian banks don’t give teaser rates. Borrowers must prove they can afford the normal higher rates in advance.

Tighter housing supply - New Canadian housing starts have exceeded household formation by only 10% in the past decade. That means that Canadians have a comparatively small number of available homes whereas the USA was building new homes like crazy, building so many that it was outpacing demand. The USA was outpacing demand by 80% right before the crash.

Note: In Toronto and Vancouver the new condo market is outpacing demand by approx. 40%, and those condos will be finished being built by 2014-2015, which means Toronto's condo market should implode by that time.

Debt-to-income Ratio - The debt to income ratio doesn't really matter as long as the economy in Canada stays stable. Yes, Canada's debt to income ratio is really bad and is growing worse... but as long as the economy and employment rate stays the same Canadians should be okay.

Better credit - Canadian credit scores have improved since 2008. In contrast during the four years heading into America's Great Recession, the ratio of “risky” borrowers rose by 10+ percentage points and comprised 22% of the market. Many Americans simply had really bad credit, largely due to a floundering economy during the Bush era.

Yes, Canada hasn't been touched yet. But if we keep piling on household debt and spending beyond our means the collapse will come eventually.

Vancouver Real Estate to collapse in 2013

Now when I say collapse what I really mean is a gradual decline of prices over 2013 and 2014 of roughly 25%.

Home and condo prices / sale records in Vancouver have taken a dive in 2012. Prices for single-family homes, condos and townhouses are down 4.5% and sales are down approx. 25%.

Normally the Vancouver housing market sells 88,000 homes per year. That is the average sold from the 2002 to 2011. The average typically doesn't fluctuate more than 5 to 10% above or below.

In 2012 sales dropped to 64,000 as of December 28th 2012. With only a couple days to go before the end of 2012 we really don't expect Vancouver's home sales to get above 68,000.

Especially when buyers aren't that interested in buying right now, due to combination of new mortgage changes, interests rates and the fact that almost everyone in the Vancouver real estate industry is predicting a collapse in 2013.

So here is the thing... Lets do some math. Lets say they did manage to sell 66,000 before the end of 2012. That means Vancouver's home sales are down by 25%. That is a huge drop!

To be fair the Vancouver real estate market, especially the condo market, has been in a slump since 2009. They've been kind of waiting around, half expecting a crash, but nothing really happening that would become the tipping point.

Something like a recession, to push the real estate market over the cliff. Instead its just been stagnated and in 2012 its even been in a slow decline as buyers have stopped buying.

To have a huge rapid decline, like a drop of 25 to 50% in the space of a year or two, you would need something bad to happen that would hurt the local economy. A fiscal cliff.

But it just isn't happening, which is why I am currently predicting Vancouver will continue to see a gradual decline well into 2014. I don't think we will see a huge decline in the Spring of 2013. I think we might see a sharper decline in the Autumn of 2013...

But I think Vancouver's home prices will overall drop about 20 to 25% by the beginning of 2015, and I think it will then suddenly drop an extra 15% in 2015 as Canada is hit by a recession.

Now you might say this is a pretty radical and detailed prediction for the future of real estate in Vancouver. And you are certainly free to think and say it.

But my predictions are based on pattern observation. I see a pattern developing in Vancouver, and I think that pattern shows a gradual decline until a recession in 2015.

To confirm, here is my precise predictions:

Spring 2013 - Sales slump. Normally Spring is the best time of year for real estate sales, but in 2013 it will be down on sheer volume and prices will drop about 3 to 6% compared to an all time high.

Autumn 2013 - Sales worsen. Inventory of unsold homes becomes worse. Prices drop an additional 4 to 7% by the end of the year, making the total for the year down 7 to 13%.

Spring 2014 - Pre Recession Slump. People keep expecting prices to level out and reach bottom, but prices continue to drop another 4 to 8%.

Autumn 2014 - Sales slow to a crawl. Starts to bottom out when prices hit approx. 24 to 29% below the May 2012 average price.

2015 - The recession hits Canada full throttle and prices plummet an extra 10 to 15% in 2015.

Now you might think this seems a bit extreme. But I should tell you that Vancouver's index price for single-family homes, condos and townhouses stood at $596,900 in November of 2012 – a drop of 4.5 per cent since hitting $625,100 in May of 2012 (the highest point).

All it needs to is for the average price for that index to drop another 4% to $575,000 by May of 2013. Or worse, to an average of $556,000.

And by the following year, May 2014 to drop to somewhere between $531,000 and $469,000.

I predict Vancouver's condo market will be the most effected and see the deepest slide in prices during the next 3 years. New condo builds will crawl to a stop by 2014.

How accurate my estimates are a matter of debate, but it will be interesting to wait and see if I am right.

Additional note, I am expecting one of two things in 2016.

Either prices will stay slumped, with only marginal 1% gains in 2017... Or a swift rebound of 4 to 8% in prices. But that will depend on how deep the recession is during 2015 - 2016.

I am expecting a similar slide in Toronto, but I don't expect it to dramatically effect prices in Toronto until 2014, and I am predicting the price changes in Toronto to be much more delayed and sudden. Gradual decline in Vancouver, sudden impact in Toronto.

Various other markets across Canada will also see varying degrees of gradual decline and sudden impact. I am predicting more gradual declines in Western Canada and these changes will spread eastward. When it reaches Toronto and Montreal the effect will be like an iceberg hitting the Titanic.

2015 is also when a huge surplus of condos will go on the market in Toronto due to new buildings that will be finished by that year. The surplus will be dumped on the market in 2015 and people expecting a crash in 2014 will have decided to wait a year, causing prices in 2014 to slump. When the Toronto condo market bursts in 2015 it will be sudden and dramatic, but not unexpected.

I predict condo prices in Toronto to drop 40% during the 2015 and 2016 time period and house prices to drop 20%. There will be a marginal (1 to 2%) rebound of prices by 2017.

Why I LOVE polished concrete

Whether you are building your dream home or looking to flip a house for a handsome profit, polished concrete is the way to go.

I first saw polished concrete and realized its potential when going to York University here in Toronto, Canada. One of the buildings had polished concrete walls and floors and it was smooth and shiny like marble, but without the expensiveness of marble.

I immediately envisioned whole buildings and even sidewalks with polished concrete. Everything shiny and smooth.

I think it really comes down to the fact that people like smooth and shiny things. Consider the following:

Marble
Silk
Satin
Glass
Stainless Steel
Chrome

They all just scream luxury.

Lets say for example you want to purchase a table. Do you want a rough-hewn table that has never been polished or even sanded? Or a polished wood table which looks so clean you could eat off of it.

Check out the website http://forrestconcrete.com for example. It has polished concrete floors, concrete countertops and they do a variety of residential and commercial work. So as a company they obviously know what they are doing.

If you browse their website and similar websites (or if you do a Google image search) you can see lots of images of the amazing things companies can now do with polished concrete.

For example, you can use pieces of other rock to polish into the surface and make the concrete look even shinier than a normal polish. By using quartz dust for example you can make the surface sparkle, by using marble dust you can make it literally look marble (or as I like to call it, "faux marble").

Another thing they can do, instead of dust, is use tiny chips of colourful rocks. Thus whether you use dust or rocks you can make different colours, shades or even a rainbow of different colours by overlapping various colours and grinding/polishing them into the surface of the concrete.

You can make designs, shapes, patterns and even mosaic-like artwork. It will be more costly for sure, but there is a lot of amazing things that can be done with building materials these days.

You could even, from a distance, make the floors look like polished wood and only up close would you realize its just the same colour.

And that is just the architectural playfulness. You can also make tabletops, coffee tables, kitchen counters, chairs, decks, balconies, columns...

Knowing me, I would probably make artwork and sculptures if I had an ample supply of concrete and a grinder to polish it with. Or even better, artwork that doubled as exercise equipment for parks so adults could do chin ups on it. :)

Oh I forgot pools! Yes, you could also make a pool. You just wouldn't want to dive in and bang your head on it. That is painful whether its concrete or not.

The example I've been using of Forrest Concrete is in South Carolina, but there are certainly lots of companies locally you might wish to check out.

In Toronto for example there is:

floorlab.ca

concreteartfx.com

torontopolishedconcrete.ca

uniquetouchconcretedesign.com

concrete-polishing.ca

ttmfinishes.com

concreteyourway.com

marblerenewal.ca

and a dozen or more other vendors. So yeah, no shortage of concrete polishing companies in Toronto.

So whether your home is a house or a condo you can certainly shop around and get something special for your home.

Or office! Doh, I forgot offices. Polishes countertops in reception or a desk with a polished concrete surface. Or a boardroom table. OOOOOOOOoooo!

Anyway, I think my point has been made. So many possibilities to create shiny surfaces that amaze friends, guests and clients.

Mortgage Life Insurance

I think the title of this post is pretty self explanatory.

Basically what Mortgage Life Insurance is life insurance so that if you die, and thus cannot pay your mortgage payments, your family members can collect the insurance and the lump sum will be enough to pay off the remaining mortgage on your home.

Although in theory, you could just get a standard life insurance policy, with a big payout, enough to cover the mortgage and a little left over.

Except that the actual value of the mortgage goes down over time. Which means that in theory the cost of the insurance should also go down over time. Except that isn't how it actually works. Instead the premiums keep going up as the person gets older, even if they are in perfect health.

Thus Mortgage Life Insurance ends up being very profitable for insurance companies because the premiums keep going up and the payouts decrease over time. It is so profitable that many banks now sell Mortgage Life Insurance too whenever someone asks for a mortgage and the bank employee gets a commission every time they sell someone a policy. Some of it even verges on "Tied Selling", meaning they give you the mortgage and pressure you into the insurance to the point that you don't have any other choice.

1st Note: Tied Selling is illegal in many countries, including Canada.

2nd Note: Buying Mortgage Life Insurance is not mandatory when buying a mortgage. There is no laws requiring it. (In some countries bicycle stores are required by law to make sure you have a bell and helmet if a child wants to buy a bicycle. Because if the kid gets killed on the bicycle and they weren't wearing a helmet, the bicycle store can be liable for not asking if they owned a helmet. In theory they are supposed to sell you a bell and helmet if you don't have one.)

3rd Note: This should not be confused with Private Mortgage Insurance, which is meant to protect the lender against the risk of default on the part of the borrower.

When the Mortgage Life Insurance commences, the value of the insurance coverage starts off being equal to the capital outstanding on the repayment mortgage and the policy’s termination date will be the same as the date scheduled for the final payment on the repayment mortgage. Thus when the mortgage is paid off the insurance is likewise terminated. The insurance company providing the Mortgage Life Insurance calculates the annual rate at which the insurance coverage should decrease in order to mirror the value of the capital outstanding on the repayment mortgage. Even if the client is behind on mortgage repayments, the insurance will adhere to its original schedule and will not keep up with the outstanding debt if the person falls behind on payments.

Some mortgage life insurance policies will also pay out if the policyholder is diagnosed with a terminal illness from which the policyholder is expected to die within 12 months of diagnosis, but many will refuse to pay and declare the policy void. Insurance companies sometimes add other features to a Mortgage Life Insurance policy to reflect economic conditions, problems in the domestic insurance market and various domestic tax regulations.

The thing is that when it comes to actually buying Mortgage Life Insurance there are a lot of companies out there, and you don't know which ones actually will payout if there is ever a problem such as the policy holder being diagnosed with cancer and then their family being left out to dry with the insurance company refuses to pay.

Thus lets pretend for a moment you are considering getting Mortgage Life Insurance... Which company should you hire? How much should the premiums be? What are the guarantees they will actually pay out?

Well, the wisest answer is to shop around and ask. Compare prices. Don't be pressured with a big sales pitch or shiny one-time discounts (those are tricks to get you to sign up today).

Why? Because I honestly can't tell you which companies are the best. Although in theory you could research various companies online and try to determine which ones have a good reputation. Proceed cautiously and don't assume that just because its a bank trying to sell you the mortgage that they are any more reputable. Banks are in the insurance business to make MONEY. And that person trying to be all friendly and selling you the policy just wants their commission for kissing your behind.

Now you might think, oh what the heck, just get the first policy you come across. No. Proceed cautiously and wisely. Especially if you already have health problems and the insurance company may try to refuse to pay out to your relatives after you are gone.

Note: Car dealerships do the same thing, selling you insurance car loans. Buyer beware.

Amazing Dream Kitchens to Die For

Okay, maybe not worth dying for. After all if you're dead, you can't enjoy the beauty of these interesting and inspired kitchen designs. As kitchens go they're pretty amazing.

Of course, what is the point of having your dream kitchen if you don't know how to cook or bake?

Yes, you could host really amazing dinner parties... again, assuming you know how. Or hire a caterer. But what you really need is private cooking lessons in a topic of your choice. Let's pretend for a moment you really like Italian food, so you could get yourself Italian cooking lessons in Toronto. Makes perfect sense, right? Or if Italian isn't your thing you could get cooking lessons in Toronto on the topic of your choice.