To the girlies with picket-fence house dreams

Good morning. It probably doesn't surprise Btchcoin readers that many people are in search of major deals at a time when inflation is still red-hot. So, to those of you sneaking a break from work today to shop Cyber Monday deals, we see you and respect your hustle.

Your reading time is 6.5 minutes. Let's dive in.

In this edition:🏡 Big ole asset😳 Emissions talk 🎁 Gifting szn

— Vindhya Kolluru, Editor

REAL ESTATE

The latest on our least favourite topic: housing prices

As one of our favourite millennial financial girlies, Money with Katie, has said, “my biggest financial mistake was being in 8th grade in 2009 when I should’ve been buying foreclosed real estate.” So is the Canadian housing market teeing us millennials and Gen Zers up for the opportunity to *FiNaLlY* afford housing?

Based on a recent Reuters poll, Canadian housing market analysts say the average Canadian house prices will fall an average of 17.5% from peak-to-trough.

• Peak-to-trough is a metric that describes cyclical markets to compare the highest point (peak) to the lowest point (trough) over a given period. In this example, the peak of the Canadian housing market was seen in February 2022 and analysts predict the market will tumble by 17.5% of this peak to mark the ‘trough’ (aka the lowest it can go).

Although a contraction of 17.5% from the peak may sound optimistic, we need to zoom out and look at the big picture to put this number into perspective. Unfortunately, the reality is that the peak in February 2022 was so super inflated (estimated at 50% inflated) due to panic, pandemic buying and low interest rates that even a fall of 17.5% from the peak likely means that Canadian houses are still unaffordable for the regular schmegular Canadian, especially in pricey markets like Vancouver and Toronto.

Of course, what is affordable to you may not mean the same thing as it does to someone else. So we think it’s important to understand and do your own calculations based on your unique situation. When considering how much house you can afford there are two key variables to consider in that equation.

1. What is the actual cost of the house? This seems obvious, right? However, depending on the cost of the house will also determine the recommended down payment you need to front based on 20% of the purchase cost (ie on a $500,000 home you need to put down $100,000 in cash). If you don’t have the cash to cover this amount, then you will need to pay Canadian Mortgage Housing Corporation (CMHC) insurance fees on top of your mortgage.

• CMHC introduced mandatory mortgage default insurance to protect lenders (aka banks) if a borrower is unable to put 20% down when purchasing their home. CMHC fees were put in place to reduce the risk to lenders so they can feel safe in lending money to borrowers. CMHC mortgage default insurance ranges from 2.8% to 4% of your mortgaged amount (so remember to add this into your costs if you aren’t putting 20% down).

2. What are current interest rates? I know you've heard a lot about interest rates lately, so we won’t bore you with more data on this. But mortgage rates are directly correlated with the interest rates that the Bank of Canada sets, and the higher they are, the more expensive it is to borrow money to buy your home.

• To put it in perspective: Borrowing $500,000 at current mortgage rates will cost you ~$165,000 more over a 25-year amortization period than it did if you mortgaged that same amount in the summer of 2021 during the trough of interest rates. That’s a lot of coin.

The bottom line: The higher the mortgage rate, the more your house will cost you, or alternatively the ‘less house’ you can afford if you fix your payments. So all we can say is hang in there if you are looking to enter the housing market. In the words of Warren Buffet: “Successful investing takes time, discipline, and patience.” And this might just be one of those times.

— Jodi Anderson

CLIMATE

Canada's got a climate plan up its sleeves

Last week, the Government of Canada published the first climate adaptation strategy after two years of collaboration with provinces, territories and some Indigenous groups across the country, but it's still unclear how much of an impact the strategy will make on reducing greenhouse gas (GHG) emissions.

The deets: The National Adaptation Strategy promises $1.6 billion to address climate events and establishes targets to address five areas of climate resilience: health and wellbeing, disaster resilience, nature and biodiversity, infrastructure and the economy. (This strategy comes after Canada experienced an increase in climate disasters and extreme weather events in recent years, like flooding and wildfires, caused by climate change.)

• According to the feds, each dollar invested in adaptation can save $0.15 in costs down the line. Since this is an adaptation strategy, it doesn’t include actual mitigation efforts to reduce emissions that accelerate the rise in global temperatures and contribute to climate disasters.

But...Canada falls way behind G7 in reaching climate targets. The National Adaptation Strategy is a step in the right direction, but Canada has a poor record of addressing climate change through mitigation and will not be able to reach the targets agreed upon in the Paris Agreement signed in 2016 due to its continued investment in oil and gas.

How are Canadian oil companies responding to climate change? Fossil fuels are the main driver of the climate crisis accounting for around 75% of GHG emissions and 90% of carbon dioxide emissions globally. Canada is 4th in the world for oil export and production and within the top 10 worst emitters worldwide.

• Canada’s Oil and Natural Gas Producers says the industry is taking steps to reduce emissions by lowering GHG emissions per barrel of oil produced, reducing methane leaks and promoting natural gas as a cleaner alternative to coal.

• Canada’s big banks also contribute heavily to the expansion of the fossil fuel industry by financing oil projects. RBC, the largest financier of big oil in Canada, recently launched a Sustainable Finance Framework that promised $500 billion in sustainable financing by 2025.

Why it matters: Big oil companies and banks have frequently misrepresented their commitments to reducing emissions through greenwashing, or marketing environmentally friendly products, initiatives or processes in a way that is misleading or false. For example, Canada’s Competition Bureau is currently investigating the Canadian Gas Association’s claim that natural gas is “clean” when evidence suggests that its emissions are similar to burning coal. The Bureau is also investigating RBC for greenwashing after the bank claimed to be aligned with the Paris Agreement while supporting major pipeline projects across Canada.

— Sydney Piggott

Other things we read and we liked

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😳 FTX is toast. Does that mean cryptocurrency is over, too? Along with the bros?

🎁 Shop these Canadian-made gifts for your loved ones this holiday season.

🪟 A stunning look into how holiday windows come together in New York City.

MONEY CRUSH MONDAY

How one entrepreneur is bringing Indigenous businesses to the forefront

Today, Btchcoin is spotlighting Mallory Yawnghwe, who is only one of the many Canadians who launched a business during the pandemic. Yawnghwe is the founder and CEO of Edmonton-based Indigenous Box, a subscription box and corporate gift service that supports Indigenous entrepreneurs and their businesses 🎁

What's on her bookshelf: "One that I’ve read every single year since I was a teenager is called In Search of April Raintree. It’s just a reminder that I still have a lot of traumas that I'm working through for my own personal self, but I’m not alone. I also love Embers by Richard Wagamese."

What is your biggest money regret? "I try not to live with regret, but sometimes I think it would have to be taking out a student loan, even though it was necessary as we were raising two young children. We needed it, but I do regret taking out a loan sometimes."

What’s your biggest splurge? "My education. I invested thousands of dollars into getting my professional designation and I just graduated last week. We also spend a lot of money on books as a family because we’re constantly researching and learning."

➡️ Click here to read our full conversation with Yawnghwe, where we chat about her company, the morning ritual she never skips and much more.