It PAYS to shop around.
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6 MONTHS TO A BETTER BUDGET
One of the challenges with proper budgeting is that ithas to become habitual in order to be effective. You can survive withoutknowing how to budget if you manage to keep more money coming in rather than goingout or have credit cards to cover the gap, but this won't last forever. EmergencyFund The crux of this six-month plan is the emergency fund.Ideally, everyone should have at least one or two months' wages sitting in a moneymarket account for any unpleasant surprises. This emergency fund acts as abuffer as the rest of the budget is put in place, and should replace the use ofcredit cards for emergency situations. You will want to build your emergencyfund as quickly as possible. The key is to build the fund at regular intervals,consistently devoting a certain percentage of each paycheck toward it and, ifpossible, putting in whatever you can spare on top. What'san Emergency? You should only use the emergency money for trueemergencies: like when you drive to work but your muffler stays at home.Covering regular purchases like clothes and food do not count, even if you usedyour credit card to buy them. Downsizeand Substitute Now that you have a buffer between you and morehigh-interest debt, it is time to start the process of downsizing. It’s odd that the naturalsolution to not enough money seems to be increasing income ratherthan decreasing spending, but this backwards approach is very familiar to debtcounselors. The more space you can create between your expenses and yourincome, the more income you will have to pay down debt and invest. This can bea process of substitution as much as elimination. For example, if you buycoffee from a fancy coffee shop every morning, you could just as easilypurchase a coffee maker with a grinder and make your own, saving more moneyover the long term. Focuson Rewards Another trick that will help your budget come togetherfaster is to focus on the rewards. A mixture of long- and short-term goals willhelp keep you motivated. This can be as simple as saving for a small luxury, oreven something bigger like buying a car with cash. Watching these goals slowlybut surely become a reality can be very satisfying and provide further motivationto work harder at your budget. FindNew Sources of Income Why isn't this the first step? If you simply increaseyour income without a budget to handle the extra cash properly, the gains tendto slip through the cracks and vanish. Once you have your budget in place andhave more money coming in than going out, you can start investing to createmore income. Now, it is possible that it will take you more than sixmonths to get your budget balanced out as it all depends on your situation,including how much or what kind of debt you have. But, even if it does take youlonger than six months to get your budget turned around, it is time well spent.
Index growth slows further in January
In January the TeranetNational Bank National Composite House Price IndexTM was up 0.3% from the previous month. It was the third consecutive month in which the index rose less than the month before. The increase was led by five of the 11 constituent markets: Hamilton (2.0%), Montreal (1.0%), Victoria (0.6%), Halifax (0.4%) and Vancouver (0.4%). Rises of less than the countrywide average were reported for Quebec City (0.3%) and Ottawa-Gatineau (0.1%). Indexes were down from the month before in Toronto (0.1%), Calgary (0.2%), Edmonton (0.4%) and Winnipeg (0.4%). After three months September, October, November in which all 11 markets of the composite index were up from the month before, it was a second consecutive month in which one or more markets were down on the month.
The price rise is consistent with the rise of home sales volume over the last several months as reported by the Canadian Real Estate Association. For a fifth straight month, the number of sale pairs entering into the 11 metropolitan indexes was higher than a year earlier. The unsmoothed composite index, seasonally adjusted, was up 0.9% in January, suggesting that the published (smoothed) index could continue its uptrend.
Canadian home sales continue their momentum to start 2021
In January, Canadian home sales increased 2.0% month-on-month, building on Decembers 7.0% gain. On a year-on-year basis, they were up 35.2%.
Provincially, sales were up in 8 of 10 provinces in January, with strong gains recorded in PEI (+20.5% m/m) and Alberta (+11.9%). On the flipside, a relatively steep decline was recorded in Nova Scotia (-8.3%).
New listings dropped by 13.5% m/m in January. The combination of rising sales and falling new listings brought the months supply of inventory measure to under 1.9 months.
The national sales-to-new listings ratio also increased to 90.7% its highest level by far. Every province was in sellers territory in December, and many of those in the eastern part of Canada had ratios over 100% (Quebec: 128.3%; New Brunswick: 116.0%; Nova Scotia: 114.3% and PEI:101.5%). This means that there were more sales than new units listed last month in these provinces. This is a rare situation, but has occurred before in the Atlantic Provinces. However, January marked a first on this front in Quebec. Elsewhere, ratios were particularly elevated in Manitoba (86.1%) and Ontario (88.6).
Strong demand and historically tight conditions were reflected in prices. Indeed, Canadian average home prices surged by 4.7% m/m in January. On a year-on-year basis, they were up 22.8%, marking an acceleration from December. However, prices were up in 8 of 10 provinces during the month, with the largest gains occurring in Alberta (+8.1%) and Ontario (7.4%).
Compared with the average sales price, the MLS home price index, a more like for like measure, increased 2.0% m/m. Single family home prices rose 2.6% m/m (and a robust 17.4% y/y), whereas apartment prices advanced by a smaller 0.2% m/m (and decelerated to 3.3% y/y). In Toronto, apartment prices increased 0.4% m/m, the first gain in 4 months.
Home sales picked up right where they left off to start 2021. Demand was likely given a lift by ultra-low mortgage rates, which dropped again during the month. Januarys robust gain coupled with a strong handoff into this year virtually ensures that sales will increase in the first quarter. However, with sales likely running above fundamentally-supported levels, we think some cooling in activity will take place, especially in the second half. A dwindling supply of inventories, when benchmarked against the current sales pace, could also weigh on activity moving forward.
With todays data showing a solid gain in prices last month and new supply collapsing across nearly the entire country, markets were historically tight. This points to further strong price gains ahead in the near-term.
Also notable was that benchmark condo prices grew for the first time in several months in Toronto. Although supply remains elevated, conditions are becoming tighter than what we saw last fall. This suggests that further gains are in store.