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Trudeau gambles Canadians will take the long view on climate: Don Pittis




When Prime Minister Justin Trudeau threw down the gauntlet with his national carbon plan in Ontario Premier Doug Ford’s riding yesterday, the word “tax” did not pass his lips.

With talk of “incentives” and euphemisms such as “a regulatory charge on fuel” Trudeau began what is widely seen as a plan to make fighting climate change a key issue in fighting the next federal election.

But whatever it’s called, the Liberals could face an uphill battle against the economic and political forces of short-termism that behavioural economists say guide the decisions of most Canadians.

Don’t say tar — or tax

As someone old enough, and nerdy enough, to have used the term “tarsands” before it picked up its negative baggage and been forced to change, I fear I may soon find myself in the same position on carbon taxes.

But for many of us who have been steeped in resource economics for decades, in pollution pricing, “tax” is not a bad word. To most economic thinkers, carbon taxes forces us to take account of something that will come back and bite us in the end.

Just a few years ago, before the recent conservative backlash against carbon pricing, the carbon tax was celebrated by politicians who understood it as a clever economic tool that would smoothly and painlessly aid in the transformation to a low-carbon economy.

As this Wall Street protest banner by environmentalists shows, you only use the term ‘tarsands’ if you’re against it. Can we expect the same for carbon ‘tax’? (Amr Alfiky/Reuters)  

But as Ford and other conservative-leaning premiers weigh in against carbon taxes — just as President Donald Trump has done south of the border — it is not at all clear that putting a price on carbon will be an easy political win.

In trying to convince Canadians to think decades into the future, and accept short-term pain for long-term gain, Trudeau’s Liberals will come up against the twin obstacles of behavioural economics and the principal of laissez-faire, both of which stand in opposition to planning for the very long term.

‘I’ll be dead soon’

“It is known from behavioural economics research that people are often driven by short-term gratification — that is, people tend to choose the immediate, albeit smaller reward,” says a scientific article on the psychology of economic decision-making.

In behavioural economics, based on experiments that show we fail to follow the “rules” of standard economics, it’s hard to trace the evolutionary logic that has led us to accept a small reward now rather than a larger reward later.

Perhaps it is because when humans were evolving the complex set of internal rules that now govern our impulses, people who waited too long died before getting their reward.

“Climate change? That’s a you problem,” says a women addressing potential voters in a humorous video that tries to convince young Americans to take voting seriously, “I’ll be dead soon.”

Those who think climate change is fake news are welcome to add their comments below. But if you trust the view of the vast majority of scientists who insist that climate change will eventually bring economic ruin to vast swaths of humanity, then an Ontario government news release promising the financial benefits of doing nothing certainly proves the behaviourialists’ point. 

“Eliminating carbon taxes will save the average family $260 per year and help reduce gas prices by 10 cents per litre,” says the release from the Ontario Ministry of the Environment, Conservation and Parks. 

The fact is, humans, as well as wanting our rewards now, are in general very poor at planning for future crises. While almost everyone would certainly escape from the path of a flooding river, people commonly build in low areas known to flood every few decades despite the inevitable future cost.

Most people fail to save for retirement unless forced. even when the alternative is an old age of misery. Even on a shorter time scale, people commonly refuse to evacuate homes in front of a hurricane, having to be rescued after the fact.

Have it all now

But in their latest campaign the Trudeau Liberals appear to have enlisted the help of their own behavioural economists.

“We will send a climate change action incentive directly to Canadians to help them adjust to an economy in which pollution is no longer free,” said Trudeau yesterday.

Short-term thinkers afraid of losing Ford’s $260 will get a cheque for $307 to cover the cost of the carbon tax in advance, rising to $718 by 2022. The long-term benefits of saving the planet from destruction are tossed in for free.

While such a strategy could bring some voters onside, business groups opposed to the carbon tax may be harder to convince.

The principle of laissez-faire — the free-market idea that business does best without government interference — has proved itself to be a winner in the past. Of course, that argument is ignored when the government interference involves things like bailing out a pipeline with taxpayer cash.

But if the voters can be convinced, economists insist that businesses, by necessity, will learn how to be just as successful within the new carbon tax regime. Oops — I mean carbon pricing system.

Follow Don on Twitter @don_pittis


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11-Step Guide to Buying A House




Purchasing a home is likely going to be one of the largest purchases you will make in your lifetime, which is why it is so important to follow the right steps when starting on your home-buying journey to ensure that the entire process goes smoothly from start to finish!

We’ve put together a step-by-step guide to buying a home, to help you get off on the right foot when it comes to buying a home. Click the download button below to download these steps in PDF form.

1. Decide to buy a home

Make sure you are ready both financially and emotionally!

2. Get Pre-Approved

Work with a mortgage broker or your bank. They will work with you on what you require to submit an application. Once approved, this will determine how much you can afford to spend on a home.

3. REALTOR® Consultation

Work with a RE/MAX agent to help guide you through the process. The right agent will discuss your price range, ideal locations, current market conditions and much more!

4. Start Your Search

Your REALTOR® will get you information on new homes that meet your criteria as soon as they’re listed. They’ll work with you and for you to ensure you find your dream home.

5. Current Market Conditions

Your experienced RE/MAX agent is a valuable resource as you consider different properties. They will be there when you have questions regarding the homes you’re interested in – they can tell you what is a good deal, and when to walk away.

6. Make an Offer

Your REALTOR® will help create your offer tailored to your needs including the right subject clauses down to the closing date that works best for you.

7. Negotiate

You may receive a counter offer but don’t be worried! RE/MAX agents will negotiate for you to ensure you get the best possible price for the house you love!

8. Accepted Offer

It’s crunch time! The next few weeks are busy as you need to schedule and remove every one of your subject clauses by the specified date. You’ll likely need to schedule an inspection, appraisal, financing approval, and several others. You will also need to provide a deposit to put down on the home. The deposit will be a pre-determined amount given in-trust to your REALTOR® to show the sellers you are committed to this home. Don’t worry, that money goes towards the purchase of said home if all goes well! This is a busy time but be sure to reach out to your RE/MAX agent if you have any questions or are unsure about next steps.

9. Subject Removal

Once you have completed all your subject clauses, and everything went smooth, it is time for you to sign on the dotted line and consider your new home to be yours (almost!).

10. Official Documents

You will need to provide your RE/MAX agent with your preferred lawyer or notary to have the official title transferred into your name. You will meet with the lawyer or notary in person to sign all the legal documents before you move in. This typically happens a few days before you take possession of your new home.

11. Move In!

Congratulations, you are officially a homeowner! The date pre-determined by you is your move-in day! You can now move into your new home. Your RE/MAX agent will be there ready and waiting to hand you the keys. Enjoy!

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Know When to Rent ‘Em, Know When to Buy ‘Em




We’re told it’s always better to buy than rent. Everyone—from our parents to the banks to the government—encourages us to buy, buy, buy our homes.

But times have changed, and I dare say that these authority figures might be slightly out of touch. The jaw-droppingly high cost of real estate in big cities is encouraging millennials to rent instead of own, causing homeownership rates to drop. At 30 years old, 50.2% of millennials own homes versus 55% of baby boomers at the same age. As a millennial homeowner, I can’t help but wonder if I’m generationally displaced.

There’s an old misconception out there about renting that needs to be addressed. You’re not “throwing away your money” if you’re renting. While that familiar axiom might be true sometimes, there are plenty of circumstances in which it does actually make more sense to rent than buy.

You Might Choose to Rent If…

…You Invest What You Save

Renting tends to come with lower carrying costs than owning. Typically, all you’ll have to worry about paying as a renter is, well, the rent (clearly) and perhaps a share of utilities. This leaves you with extra monthly cash to invest, which can ultimately put you on even financial footing or better with a homeowner.

As always, there’s a familiar caveat here: You need to be financially disciplined for this strategy to pay off. One mistake I see a lot is that those who rent tend to fall prey to something called ‘lifestyle inflation.’ Rather than investing what they save as renters, they just rent nicer apartments, eat at fancier restaurants, and put more money into their wardrobe than their RRSP. But this money vacuum can be easily avoided by:

1. Budgeting to find out how much you have left over to invest each month after factoring out all your expenses, then;

2. Funneling that leftover money directly into your investments. Some robo-advisors, like Wealthsimple, allow you to do this automatically via pre-authorized contributions, which set recurring transfers from your chequing account into your investment portfolio, at whatever amount and interval you choose.

…You Have Rent Control, aka the Urban Holy Grail

Depending on where you live, you might be lucky enough to benefit from the urban miracle known as rent control. That means your landlord can only increase your rent by the rate of inflation, which in turn keeps your cost of living way down and leaves you with more money to invest. In Canada, rent control is now implemented in most big cities like Toronto and Vancouver (although not in Montreal).

…You Have a Mobile Lifestyle

Renting makes it easier to move; if you’d like to relocate it’s usually as simple as giving your landlord 60 days written notice. But when you own a home you’re more tied down, and the obligation to be near your property may prevent you from chasing new adventures in faraway lands. I once turned down a fantastic job opportunity in Dallas, Texas for this very reason.

…You’re on a Tight Budget

Renting tends to be more affordable than buying in big cities like Toronto and Vancouver. I know, I know, renting is still unreasonably pricey in certain neighborhoods. But buying in those same areas can be arm-and-a-leg expensive.

When you rent, all you have to come up with is the first and last month’s rent; no need to scrimp and save to pull together a massive down payment on a house, which, incidentally, will take you two to four times longer to save than it did your parents.

And homeownership leads to a lot of other costs aside from mortgage payments. When you buy real estate, you’ll need to pay closing costs, which typically add up to between 1.5%–4% of the property’s purchase price and can include a home inspection fee, real estate lawyer fee, land transfer taxes, and homeowners insurance (sometimes you’ll have to fork over an entire year’s worth of home insurance as one lump sum).

There’s also the elephant in the room that nobody likes to speak about: repairs and maintenance. Homeowners are responsible for paying the big bucks for costly home repairs, such as a new roof and furnace, and are advised to set aside 3–5% of a home’s value toward home repairs and maintenance each year. Renters, on the other hand, can just call their landlord whenever they need repairs (provided the landlord actually picks up). Still, it’s important that tenants know their rights when renting to be aware of which fees do and don’t fall under their responsibility.

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A Montreal Real Estate Broker Answered 5 Qs About Buying A Property To Rent Out




You’ve probably heard that Montreal’s real estate market is on fire. But how can you get in on the action? According to Alex Marshall, a local real estate broker, buying a property as an investment for the purpose of renting it out is a great way to go about it.

Marshall, who’s part of the Keller Williams Prestige team, sat down with us to explain why and how to purchase an investment property. These types of properties are also known as revenue properties.

Why do you recommend buying a revenue property?

Marshall used personal experience to highlight the advantages of owning a revenue property. He’s currently renting out the Saint-Henri loft he bought in 2010.

“Not only is my tenant paying off my mortgage, but I’m making a couple 100 bucks a month as well,” Marshall said.

Marshall was also able to take out a line of credit on the property, he said, and use the equity to buy an additional property.

“You actually don’t need to live in the property that you buy. I’m seeing clients who are in apartments with low rent [who] don’t want to move but have got the money right now … and are looking for smart ways to invest,” he said.

What are some tips to help people save up for a revenue property?

When Marshall was saving up to buy his first property, he said he worked a second job. 

“There’s a lot of value to having that side hustle … even if it’s at Subway or it’s at a landscaping company on Saturdays. It will add up significantly in the long run,” he said.

He gave the example of adding $5,000 to your annual income.

Marshall said you can qualify to borrow roughly four times your annual salary for a mortgage so $5,000 could actually provide you with an extra $20,000 of buying power.

“That might get you a second bedroom, that might get you a parking spot, that might get you a larger space,” he said.

The pandemic, Marshall said, has also helped some of his clients save extra funds.

“You can’t travel, you can’t go to the restaurant, you can’t go to the theatre, you can’t go to the bar. So a lot of people right now are finding themselves with almost a disposable income,” he said.

Marshall also recommends looking into Canada’s Home Buyers’ Plan program, which allows you to withdraw up to $35,000 — — tax-free — from your registered retirement savings plan (RRSP) to put toward buying or building a qualifying home. 

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