August 31, 2017

Natalie Obiko Pearson of Bloomberg comes up with an explanation of housing costs that’s as good as any I’ve seen:

In the spring of 2012, Dustan Woodhouse, then a 40-year-old Vancouver mortgage broker, broke the cardinal rule of saving for retirement: he liquidated his retirement fund, took the tax hit and plowed the rest into the local real estate market.

“People told me I was crazy,” says Woodhouse, 45, whose plan is to buy and have paid off 10 such investments by his late sixties. “But that’s our pension — that’s what that property is.”

Woodhouse’s decision to flout traditional investment strategies has so far proved to be a winner. With the roughly C$60,000 ($47,000) he had in hand, he took out a mortgage and bought a wood-shingled townhouse near a coastal inlet east of Vancouver for C$240,000. Five years later, he figures his house has risen about 60 percent in value if sales of nearby properties are anything to go by. In the meantime, he’s accrued a nest egg of roughly C$24,000 from rental income, even after accounting for expenses, mortgage payments and taxes.

The price of a typical detached home in Vancouver rose 69 percent in the five years through July, compared with a return of 51 percent for the S&P/TSX Composite Index, the country’s benchmark equity index, and 7.6 percent for Canadian government bonds. Some 41 percent of baby boomers said home equity made up more than 60 percent of their household wealth, according to a survey by Manuflife Bank published in May. For 21 percent, it made up more than 80 percent.

HIMIPref™ Preferred Indices
These values reflect the December 2008 revision of the HIMIPref™ Indices

Values are provisional and are finalized monthly
Index Mean
Current
Yield
(at bid)
Median
YTW
Median
Average
Trading
Value
Median
Mod Dur
(YTW)
Issues Day’s Perf. Index Value
Ratchet 0.00 % 0.00 % 0 0.00 0 1.1976 % 2,361.5
FixedFloater 0.00 % 0.00 % 0 0.00 0 1.1976 % 4,333.2
Floater 3.67 % 3.70 % 115,797 17.99 3 1.1976 % 2,497.3
OpRet 0.00 % 0.00 % 0 0.00 0 0.1574 % 3,088.6
SplitShare 4.72 % 3.89 % 53,690 1.32 5 0.1574 % 3,688.5
Interest-Bearing 0.00 % 0.00 % 0 0.00 0 0.1574 % 2,877.9
Perpetual-Premium 5.40 % 4.84 % 55,641 6.06 17 -0.0650 % 2,781.1
Perpetual-Discount 5.31 % 5.34 % 60,821 14.87 20 0.0256 % 2,928.3
FixedReset 4.37 % 4.42 % 144,887 6.33 98 0.1589 % 2,391.6
Deemed-Retractible 5.10 % 5.41 % 101,235 6.08 31 0.0807 % 2,875.6
FloatingReset 2.63 % 3.13 % 41,034 4.17 9 0.1534 % 2,619.7
Performance Highlights
Issue Index Change Notes
BAM.PF.D Perpetual-Discount -1.24 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-08-31
Maturity Price : 22.02
Evaluated at bid price : 22.39
Bid-YTW : 5.55 %
BAM.PF.B FixedReset 1.12 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-08-31
Maturity Price : 22.30
Evaluated at bid price : 22.67
Bid-YTW : 4.64 %
CM.PR.O FixedReset 1.19 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-08-31
Maturity Price : 21.64
Evaluated at bid price : 22.07
Bid-YTW : 4.38 %
PWF.PR.Z Perpetual-Discount 1.22 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-08-31
Maturity Price : 24.41
Evaluated at bid price : 24.80
Bid-YTW : 5.30 %
MFC.PR.C Deemed-Retractible 1.26 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 21.72
Bid-YTW : 6.78 %
MFC.PR.M FixedReset 1.34 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 21.86
Bid-YTW : 6.01 %
BAM.PR.B Floater 1.36 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-08-31
Maturity Price : 14.11
Evaluated at bid price : 14.11
Bid-YTW : 3.70 %
SLF.PR.H FixedReset 1.40 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 20.99
Bid-YTW : 5.89 %
BAM.PR.C Floater 1.44 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-08-31
Maturity Price : 14.09
Evaluated at bid price : 14.09
Bid-YTW : 3.70 %
SLF.PR.J FloatingReset 1.51 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 16.85
Bid-YTW : 7.99 %
Volume Highlights
Issue Index Shares
Traded
Notes
IFC.PR.E Deemed-Retractible 181,000 YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 24.78
Bid-YTW : 5.62 %
CM.PR.R FixedReset 145,965 YTW SCENARIO
Maturity Type : Call
Maturity Date : 2022-07-31
Maturity Price : 25.00
Evaluated at bid price : 25.14
Bid-YTW : 4.55 %
RY.PR.B Deemed-Retractible 110,442 YTW SCENARIO
Maturity Type : Call
Maturity Date : 2017-09-30
Maturity Price : 25.00
Evaluated at bid price : 25.08
Bid-YTW : 1.90 %
RY.PR.R FixedReset 81,190 YTW SCENARIO
Maturity Type : Call
Maturity Date : 2021-08-24
Maturity Price : 25.00
Evaluated at bid price : 26.80
Bid-YTW : 3.60 %
TD.PF.C FixedReset 52,400 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-08-31
Maturity Price : 21.42
Evaluated at bid price : 21.76
Bid-YTW : 4.36 %
TRP.PR.J FixedReset 42,875 YTW SCENARIO
Maturity Type : Call
Maturity Date : 2021-05-31
Maturity Price : 25.00
Evaluated at bid price : 26.61
Bid-YTW : 3.67 %
There were 14 other index-included issues trading in excess of 10,000 shares.
Wide Spread Highlights
Issue Index Quote Data and Yield Notes
GWO.PR.S Deemed-Retractible Quote: 24.70 – 25.25
Spot Rate : 0.5500
Average : 0.3933

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 24.70
Bid-YTW : 5.41 %

BAM.PF.D Perpetual-Discount Quote: 22.39 – 22.78
Spot Rate : 0.3900
Average : 0.2682

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-08-31
Maturity Price : 22.02
Evaluated at bid price : 22.39
Bid-YTW : 5.55 %

BMO.PR.B FixedReset Quote: 26.13 – 26.40
Spot Rate : 0.2700
Average : 0.1559

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2022-02-25
Maturity Price : 25.00
Evaluated at bid price : 26.13
Bid-YTW : 3.79 %

BNS.PR.D FloatingReset Quote: 22.24 – 22.49
Spot Rate : 0.2500
Average : 0.1378

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 22.24
Bid-YTW : 4.53 %

TRP.PR.A FixedReset Quote: 19.26 – 19.56
Spot Rate : 0.3000
Average : 0.1962

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-08-31
Maturity Price : 19.26
Evaluated at bid price : 19.26
Bid-YTW : 4.45 %

RY.PR.O Perpetual-Premium Quote: 25.20 – 25.47
Spot Rate : 0.2700
Average : 0.1729

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2024-11-24
Maturity Price : 25.00
Evaluated at bid price : 25.20
Bid-YTW : 4.81 %

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