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 social entrepreneur / 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.

Update

My wife and I went for our honeymoon in Montreal in 2016. Love the subway system there. Do rather wish we lived there instead.

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?