For the last two newsletters of the year, I asked people in the investing, financial planning and real estate worlds to send me a summary of a trend or theme they think will be big in 2023. Here’s the first batch of responses, which have been edited for length and clarity.
Keisha Telfer, Transitions Realty – Year of the downsizer
With travel back to pre-pandemic levels, life is active again and boomers will be returning to those pre-pandemic plans that were sidelined for the last few years. People will be looking for a simpler home arrangement allowing for travel, hobbies and volunteering. With a more balanced housing market expected, with inflation stabilizing and with interest rate increases slowing, Transitions Realty believes 2023 will be the year of the downsizer.
Tuli Parubets, mortgage agent – More stress for people with mortgages
The two big themes of 2023 will be high interest rates and an economic slowdown (or recession). People with variable-rate mortgages are already seeing the negative effects of high rates. Those with fixed rate mortgages maturing in 2023 will have to contend with a nasty renewal and those with maturities in 2024 and 2025 might start worrying about how to deal with the eventual higher mortgage payments. Related to all this, there will likely be a material drop in home renovations as borrowers will be reluctant to borrow at such high rates.
Jackie Porter, Carte Wealth Management – Families talking about estate planning
With the biggest wealth transfer to another generation underway and many clients dealing with the loss of a parent or loved one since the pandemic, I think the trend is having practical conversations about estate planning. What do these conversations look like? They’re about where the will and powers of attorney are located so executors can find them easily; whether people have thought about their digital assets and how they should be dealt with; and, whether they have discussed advanced care issues with their loved ones.
Bryan Yu, chief economist at Central 1 (serving credit unions) – Housing supply trouble
The new home construction market is holding up remarkably well despite the resale market downturn. This is not surprising given as starts lag existing home sales and multi-family projects are planned years in advance. That said, housing starts will pull back sharply in 2023-24 due to the slowdown in pre-sales and high borrowing costs. This will bring housing supply into focus challenges as immigration picks up sharply with massive federal government targets. We are setting ourselves up for a severely undersupplied market by 2024-25, and another surge in prices as pent-up demand is unleashed with lower interest rates and strong gain in population.
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Rob’s personal finance reading list
Cutting back on Christmas
A look at how the soaring cost of living has some people cutting back on some or all of their spending for the holidays. There’s an interview with a young man who can’t afford to get back home to celebrate Christmas with family.
A loyalty card lesson
All about how some credit cards offering loyalty points cap the amount of spending you can do per year to earn points. After the cap, your spending no longer generates reward points. Now for a look at the highs and lows of travel hacking, which means maximizing points offered by travel reward credit cards.
The house that sold four times in three years
It’s in Brampton, just east of Toronto, and you can see the rise and fall of the housing market in how the selling price changed each time.
In search of a safe retirement withdrawal rate
Lots of retirees will have to draw down on their savings to cover their income needs, but how much can you safely withdraw without putting yourself at risk of running out of money? Some new research suggests 3.8 per cent is a sustainable annual withdrawal rate.
Ask Rob
Q: Are Canadian bond ETFs a good idea to buy now? If so, what are the best ones?
A: I’d say so, if you can wait at least 12 to 24 months or more to be rewarded. Bond prices have fallen hard this year, but they should rebound after we reach the peak for interest rates. Bond prices and rates move in opposite directions. Bonds have actually had a pretty good time of it lately as a result of growing confidence that a rate peak is close. Here’s a link to the Canadian bond instalment of the Globe and Mail ETF Buyer’s Guide.
Do you have a question for me? Send it my way. Sorry I can't answer every one personally. Questions and answers are edited for length and clarity.
Today’s financial tool
A review of how cash and non-cash mutual fund distributions are taxed in non-registered accounts. Worth a read if you’re holding funds outside of TFSAs and registered retirement funds.
The Money-Free Zone
A century caught on camera: 100 years of photo journalism by Globe and Mail photographers. Incredible stuff – I thought I’d take a quick look at these photos and ended up spending an hour.
What I’ve been writing about
– Why take on stock market risk if you can reach your goals with low-risk GICs and bonds?
– Renting is a personal finance dumpster fire, yet it’s also the hottest trend in housing
– The last time interest rates were this high, we were a simpler country of amateur spenders
More Rob Carrick and money coverage
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Even more coverage from Rob Carrick:
- 🎧 Catch up on Stress Test: Is the middle class dead for millennials and Gen Z? • Gas prices are soaring. Are electric vehicles an affordable solution? • Crypto is booming, but should you invest? • How are young Canadians dealing with soaring rents? • Inflation is squeezing our finances. What can we do about it? • Is a hot housing market squeezing Canadians out of their small towns?
- ✔️ The housing file: How bad is housing affordability? Even a crash won't help • Sell the family home to lock in profit and then rent? Better not • Why young adults can't afford houses: Hard work got you more in the past than it does now • Five reasons you should not buy a house till you're at least 30 • Now more than ever, owning a house is not a retirement plan
- 📈 Investing: The 2022 ETF buyer’s guide: Best Canadian equity funds • The 2022 Globe and Mail digital broker ranking: Does the zero-commission revolution flip the script on who’s best? • With bonds sinking, conservative investors are waking up to risks they never saw coming • A five-step plan for dealing with the sad fact that almost every investment is falling lately • The best financial advice in advance of retirement? Work on your marriage • One-year GICs are the best deal in town for safety seekers • What to do if the financial plan you paid thousands for disappoints
- 💰 Your money: Are you prepared for the pandemic wealth boom to blow up in our faces? • This hard-working 24-year-old is nailing it financially. But where’s the happiness? • Who should and shouldn’t worry about the wave of rate increases this year, and what every stressed-out borrower should do right now • Don’t make this potentially costly assumption about the CPP Survivor’s pension
