Privacy In The Clouds

Since the launch of Google's cloud application, Google Drive, this past Tuesday, I've been closely monitoring and reading responses, reviews, and analysis' of the new application.  Of course, there has been an outrage, and Google has been targeted for the invasiveness of their approach.

So what's the big deal?  A lot of it is the verbatim used in Google's privacy policy, but this is the clincher

"When you upload or otherwise submit content to our Services, you give Google (and those we work with) a worldwide license to use, host, store, reproduce, modify, create derivative works (such as those resulting from translations, adaptations or other changes that we make so that your content works better with our Services), communicate, publish, publicly perform, publicly display and distribute such content."

It's a jam packed paragraph, but this is what has scared most people.  Essentially, Google cannot steal your data, but have a freedom to use your data.  Google claims that their mission in collecting data is to innovate and invent.  For example, the ability to create an application that can pull a meeting from your Google calendar, determine where you are 30 minutes prior to the meeting, and offer you directions.

There are two main fears that have erupted from this; what Google can do with your publicly shared information, and what google can do with the private information you store on the cloud system.  

The scary thing is, is that Google can pretty much do anything with your publicly shared information.  Google maintains that your intellectual property will remain as such, that they just basically have the green light to use your information if they please.  Essentially, this is a classic case of possibility versus probability.  Is it possible that they can use my handsome face as the Google design of the day - yes, but is it probable that they will - no.

What is a little grey is what they can do with your private information.  Everyone has looked something up on the internet that they wouldn't exactly advertise, but you kind of look left and right and make sure you're alone, then go ahead and search!  We all know that it's not entirely private, the data is transmitted and interpreted somewhere and goes to someone.  What's more disconcerting is what you would store on your cloud system.  A lot of self employed individuals and small business are using cloud systems; it's a good way of backing up your information, and you can access it from virtually anywhere.  But where is the fine line of ownership?  Are consent forms going to have to state "I consent to ABC Inc accessing my information and storing it on Google Drive"?

There are clearly no answers that the public will like, but, that's kind of the can of worms that the world wide web opened, isn't it?

(Read Google's terms of service here)

My Favourite Green Products

In honour of today being Earth Day, I wanted to compile a list of the coolest things on the market that promote green living.

Eco Friendly Portable Dishwasher

This thing is already so cool, the fact that it's eco-friendly just makes it a million times better.  It's a completely portable dishwasher, and it recycles the little water it uses from one cycle to the next.  It's perfect for bachelors like myself, because I always have to wait until my dishwasher is semi-full, and then I don't have any dishes left to use!  So, instead of running a not-so-full load, you can wash dishes, save money, and save the earth all at the same time.

Spinpower I4 - iPhone Bicycle Charger

This is just ridiculously ingenious.  This charger makes use of the kinetic energy of a moving bicycle by turning into electricity that is then used to power your iPhone.  Really.  Insanely.  Amazing.


Skinny Player - Stick On Music Player Powered By Body Heat

This cool little device is a motivation to be eco-friendly and exercise!  It's kind of a reward system, it's made to be worn while running or walking, so if you start to slow down on your workout, you don't get any music.  You buy them with pre-loaded albums on, and there's no need to plug in or use batteries.

Feng Shui Decorating

Applying ancient Feng Shui principles has been an upward interior design trend for years.  You hear stories of success, and stories of fear when practicing (or not practicing) Feng Shui correctly.   Now, the growing condo market in the 905 is calling in the big rigs to ensure success.  SigNature Communities recently hired Feng Shui Master Paul Ng to ensure positivity, serenity and harmony for Tao Condominiums.

Ng was brought in early in the process, to ensure that certain Feng Shui taboos were not committed - like having the kitchen next to a bathroom.  The building promotes tranquility and peace, with a zen-like lobby, and a gym with a yoga room.

What exactly is Feng Shui?  It's an ancient Chinese practice focusing on the arrangement and placement of space and environment to help improve life by achieving positive qi or harmony with the environment and surroundings.  An in depth look at Feng Shui is quite intricate and complicated, and a full comprehension would require years of study into all of the facets and beliefs under the principle.  For our pedestrian understanding, here is a simple guide for Feng Shui decorating:

26 Secrets of Feng Shui - Improve your luck

Everything You Need To Know About Mortgage Loan Insurance

Mortgage loan insurance...mortgage default insurance...CMHC insurance...Genworth insurance....Canada Guaranty insurance....1 in 3 Canadians are insured, but barely anyone knows what it is.  People often mistake mortgage default insurance for mortgage life insurance, or something that covers you if you default on your mortgage payment.  Mortgage loan insurance actually protects the lender if the borrower were to default, protecting the lenders' investments.

Canadian Mortgage and Housing Corporation (CMHC) is a crown corporation that was founded shortly after the end of World War II.  It started as an initiative by the Canadian government to assist returning soldiers in buying a home.  From there, CMHC spearheaded more and more housing initiatives that help Canadians buy homes.  Their most notable to date, is being able to offer Canadians the option to buy a home with only 5% as their down payment.  Before mortgage loan insurance, facilitating a mortgage with only 5% down was not only too high of a risk for any lender to take, but too high of a risk for any investor to take in a lender.  By offering insurance to the lenders, CMHC benefits buyers in allowing them to buy with less down payment, it benefits investors by giving them the peace of mind of knowing that their investment is safe, and it's benefiting the lenders by allowing them to lend risk free, and attract investors risk free.

In Canada, there are three insurers; CMHC, Genworth Financial Canada (GE), and Canada Guaranty(CG).   What's the difference between the three?  There are slight differences in products available, and what the different companies will insure, but the main differences lie in the ownership.  CMHC is the only government owned insurer, whilst Genworth and Canada Guaranty are private suppliers.  CMHC not only provides Canadians with mortgage loan insurance, but provides research and insight that is pivotal to the Canadian housing market.  They use their research and information to construct lending guidelines and criterion in which all of Canada's lending institutions base their mortgage products on.

If you are purchasing a home with a downpayment of 5%-19%, you are required to obtain mortgage loan insurance.  The premium is calculated against the purchase price, and the amounts range from 1% for 19% down to 2.95% for 5% down payment.  The premium increases with longer amortization, and with varying characteristics (ie. self employed, new immigrant).  The cost is amortized into the term, and a portion of the tax is due up front at the lawyers office on the day of closing.

For more information, visit www.cmhc-schl.gc.ca, www.genworth.ca, www.canadaguaranty.ca

The Canadian Real Estate Market From A Realtor's Perspective - Part II

As the spring market fast approaches, this past month has been a media frenzy.  Maclean's first print issue in March featured a cover with a family walking up to a burning house, with the headline "You're About To Get Burned - Canada looks exactly like the US before its devastating housing crash - maybe even worse" splashed across the front. Days after this issue was released, The Star retorted with "Canada's Real Estate Market To Cool, Not Crash".  The National Post published their two cents with "Ghost Of Fannie Mae Haunts Canada's Housing Agency" and "Why We're In Trouble If Housing Craters".  The Globe contributed with "Home Sales Seen Rising, Prices Dipping In 2012 and "Carney Sees An End To Rock Bottom Rates".

I can only imagine what an average Canadian reader must think.  The discrepancies and differences in opinion are from different ends of the earth.  I can't say that I'm right, and anyone else is wrong, but what I can offer is my hands on opinion of what we see happening, and what I think will happen.  So, I'm going to pick this apart for you - Realtor style.  My three-part article will address the fears of the Canadian housing  market following in the tragic steps of the American Housing Crisis.  We're going to look at three of the main Canada versus the U.S. comparisons - household debt, interest rates, and housing prices.


Part II - Interest Rates


We are just getting out of having the absolute lowest mortgage rates available in Canadian history.  The media was in a frenzy, pitting banks against the broker channel, and dissecting everything related.  The rates were very low, however, we cannot negate the restrictions that came with these low rates - I think this is a defining factor between Canada and the U.S.  These low rates came with restrictions such as pre-payment privileges, penalties, and amortization stipulations.  What makes us different, is that these rates were directed to a particular type of mortgage holder - one that can commit to the structure, payment amounts, and term of this mortgage.  This helps ensure that people do not go rate crazy and borrow as much as possible, spreading themselves thin.  


I've noticed that our lenders and insurers have tightened their lending ropes as of late.  There are restrictions on square footage, beacon score requirements upwards of 700, and niche lenders.  I conducted a little experiment the other day.  I emailed a mortgage broker in the U.S., letting them know that I wanted to buy a property.  I told them I was a Canadian citizen wit 5% down.  They assured me it was no problem to obtain a mortgage, even told me it would be low documentation.  This is what enticed Americans to spend credit with no ends - the ease of obtaining a mortgage.


Sub-prime mortgage lending was a huge contributing factor in the downfall of the US housing crisis.  The amount of sub-prime borrowers jumped dramatically at the peak of the housing crisis - you could walk into a convenience store and obtain a mortgage.  Once the market started to dramatically plummet, the amount of the mortgage surpassed the value of the homes.  The United States offers non-recourse mortgages, which means that the lender is only entitled to the collateral, and has no recourse on what is owing after that.  So, for the people who had a mortgage amount of $500,000, and the home was only valued at $300,000, they could walk away from the situation with no recourse on the difference.  This was logical, right?  People were literally packing their bags and walking away from their homes instead of paying into empty value.  The government had to step in and help the pieces that Fannie Mae and Freddie Mac could not pick up.


Scary - yes.  Do I think we can follow in the footsteps of our downtrodden neighbours?  Absolutely not.  Aside from the fact that our lenders are so stringent, our insurers follow the same suit.  CMHC, Genworth and Canada Guaranty have a more gruesome process than most banks, especially when it comes to sub-prime lending.  Our sub-prime lenders weigh heavily on the property when dealing with clients with tender credit.  If they wouldn't buy the property themselves, they are not funding it.  This is the same outlook the insurers have on sub-prime borrowers.  


You can't simply compare low rates to low rates.  The dynamic of borrowing and lending is different in Canada than it is in the U.S..  Canada's conservative mortgage lending strategies are our saving grace.

The Canadian Real Estate Market From A Realtor's Perspective - Part I

As the spring market fast approaches, this past month has been a media frenzy.  Maclean's first print issue in March featured a cover with a family walking up to a burning house, with the headline "You're About To Get Burned - Canada looks exactly like the US before its devastating housing crash - maybe even worse" splashed across the front. Days after this issue was released, The Star retorted with "Canada's Real Estate Market To Cool, Not Crash".  The National Post published their two cents with "Ghost Of Fannie Mae Haunts Canada's Housing Agency" and "Why We're In Trouble If Housing Craters".  The Globe contributed with "Home Sales Seen Rising, Prices Dipping In 2012 and "Carney Sees An End To Rock Bottom Rates".

I can only imagine what an average Canadian reader must think.  The discrepancies and differences in opinion are from different ends of the earth.  I can't say that I'm right, and anyone else is wrong, but what I can offer is my hands on opinion of what we see happening, and what I think will happen.  So, I'm going to pick this apart for you - Realtor style.  My three-part article will address the fears of the Canadian housing  market following in the tragic steps of the American Housing Crisis.  We're going to look at three of the main Canada versus the U.S. comparisons - household debt, interest rates, and housing prices.

Part I - Household Debt

 The U.S. kicked off the housing crisis with a household debt average of $1.30.  Today, the Canadian household debt is $1.51.  So, with every $1 we make annually, we owe $1.51.  These simple numbers are enough to scare the pants off of a lot of Canadians.  But, let's take a true look at the nature of this debt.  What is the average credit score across the U.S versus Canada?  The average American credit score in 2005 was around the mid 600 mark, whereas the average Canadian credit score today is in the low to mid 700s.  To state the obvious, Canadians can carry debt very responsibly, and our debt is manageable. Canada 1 - U.S. 0.

So how is it that Canadians owe so much more money than Americans?  Maybe we don't.  When publishing the average American household debt,  there is a large factor that is not included in this calculation.  In fact, this omittance is actually responsible for part of the decrease of the household debt that Americans have been bragging so much about as of late.  Approximately $254 billion dollars of delinquent loans, charged off debt, and mortgage foreclosures were unaccounted for when calculating household debt in 2008.  These unpaid debts are charged off when they reach serious delinquency, and are lost in an abyss.  That is a staggering amount that would dramatically affect the household debt, especially when you think about this discrepancy having occurred for years.

Another thing to consider is assets and investing.  This is definitely my hands on experience talking, but there is a vast amount of real estate investors in the downtown Toronto core alone.  So, we have to ask ourselves, how much of that $1.51 of debt is servicing itself?  The Toronto condo boom birthed so many investment savvy buyers that we now have anyone from 23 year olds to retirees purchasing investment properties.   According to CRA, Canadian families with an after-tax income of $50,000 to $74,999 have a median net worth of $260,300, and families with an after-tax income of over $75,000 had a median net worth of $505,700.  The average American household has a net worth $182,000 (median income is just under $50k).  Let's factor this in for some rough calculations.  Using $100,000 income, that would mean that Canadians owe $153,000 and Americans owed $130,000.  If we add the net worth to that income, and then divide that by the debt, we are looking at a household debt of $0.42 for Canadians and $0.46 for Americans (I used the Canadian median of $260,300 to be nice).  

All of my calculations are rough, but my purpose was to illustrate ambiguity, and to illustrate the nature of Canadian debt.  I see buyers every day circulating their liquid money for investment purposes.  An investment doesn't always pay off within the same year, so it won't reflect cap rates, projected income or returns on investments.  I also see responsible buyers, who are not exceeding their means, and manage their debt comfortably.