Report on Business Article on Fees - Rob Carrick - "Help, My Adviser is Blowing Smoke on Investing Fees"
I no longer pay for a Globe and Mail subscription. I see it as almost an arbitrage as I get (most of) the paper for free on the Apple App Store.under the Globe and Mail. Avoiding "paywalls" wherever possible.
So if you have access to a hard copy, an on-line subscription or the iPhone App (the cheaper chicken - as a friend of mine says), you can read the article yourself.
Basically, the reader writes in to Rob stating:
"We've asked them many times about their fees and we never get a straight answer, and a few times have been told that it is too complicated to explain"
At High Rock, we think it is pretty simple, actually. In fact, we feel so strongly about fee transparency that it is part of our Voluntary Code of Conduct for the Stewardship of Your Wealth (: highrockcapital.ca/uploads/3/4/2/5/34254660/our_voluntary_code_of_conduct_as_stewards6.pdf)
By way of background, there are two types of Fees that investors will pay to invest:
So the question this reader/writer in Rob's article should ask her Adviser is "what Fees do I pay you and what are the total MER's I am paying if you buy me any structured products, etf's, mutual funds etc...anything with a Management Fee on it?"
And is the reader/writer in Rob's article speaking to an Adviser with an "e" or an Advisor with an "o"? And Adviser must have a fiduciary duty to their clients (High Rock is regulated as an Adviser) and an Advisor is an unregulated title that anyone can use. If this reader/writer has an Adviser, they sure better tell her what her fees are...that is the law! (Reminder -> Fiduciary Duty = Client's Best Interests at all Times).
Complicated slide, but this is what it would look like and it would require the Adviser to calculate all of the MER's the client is paying. Not rocket science so you should ask them to do the work. You have a right to know exactly what your ALL-IN FEES (Management Fees to the Adviser and MER's) are:
The key thing to understand is that there are new fee disclosure rules coming in but, in our opinion, they don't go far enough. In fact, I was interviewed for an article Barry Critchley wrote in the Financial Post back on June 2, 2015 (highrockcapital.ca/in-the-news.html) where I told Barry that the Securities Regulators were not going far enough on their new fee disclosure rules. The Adviser doesn't need to explicitly tell you what all the MER's you are paying add up to. These are those hidden or embedded fees that 99% of investors don't really understand so wouldn't it make sense that these fees be explicitly explained and divulged to the end client?
Now here is High Rock's fee transparency model:
And if that is not self-explanatory enough, here is a full and transparent explanation of our High Rock fees:
At High Rock, we go above and beyond the regulatory requirement on fee disclosure. Maybe that is why the Small Investor Protection Association (SIPA) has recognized High Rock as a "New Breed" within the investment community. Read Scott's blog on this from last week (highrockcapital.ca/scotts-blog/small-investors-protection-association-sipa-recognizes-high-rock-as-a-new-breed)
And if you want to see how fees can affect your portfolio over longer periods of time, have a look here or listen to our Private Client Intro Webinar here (highrockcapital.ca/private-client-division.html)
Stunning. Fees matter - a lot. Ask the questions of your Adviser/Advisor and make sure you get straight answers.
What is the benefit of High Rock's Private Client division? We are not Stock Brokers, Investment Advisors, Financial Advisors, etc...we are a Portfolio Management company with an Institutional Division where we manage money for a division within Scotiabank and some other small corporations. The synergies between our Institutional and Private Client divisions means that we manage more of our client money in-house so we don't have to buy mutual funds or structured notes/products with high fees.
Why not take the next step and explore High Rock's Private Client division? Listen to what we have to say about how we invest, fee transparency, client service, and our wealth forecasting. If you like what you hear and see, take the next step and avoid the middleman and the fees that go with them.
This email from a lovely lady (who is not even a client yet) who was referred to me by another client (also a lovely lady), and needed to buy a car.
Buying an automobile can be right up there with some of the most stressful events we each have to deal with. Buying a home, getting married, health issues etc all take up more emotion and are way more important, to be sure, but buying a car is, nonetheless, stressful; with pushy salespeople, lack of clarity on pricing, hidden costs, etc. Personally, I used to hate it.
So this prospective client called me at home on my cell on Monday night and explained her car situation to me. Long story short, she was a bit frustrated and stressed over the past week dealing with some dealers/salespeople. I suggested she allow me to put her in touch with my neighbour and friend who owns a group (about the third largest group in the country, I believe) of dealerships under the banner, Performance Auto Group (www.performanceautogroup.ca/). They own stores from luxury brands like Audi, BMW and Mercedes to Jeep, Mazda and Subaru. 23 brands across 31 locations. Have a look.
I put her in touch with my friend directly late afternoon yesterday, he put the sales manager in touch with her, they quoted her a better price than she would see anywhere else and she ended up buying the car by the time she went to sleep. Easy. No haggling. Heck, I think they might even deliver it to her house from Brampton to North York. Now that is service. Thanks for the extra effort guys!
My wife and I would only buy our cars through our friend. I don't have to stress and haggle with him. I know I will not get a better price nor service anywhere else. And he is a heck of a nice guy too boot.
Anyway, I have referred a couple of other clients to Performance Auto Group and thought we should make it better-known that if you do need a car, please contact us at High Rock and we would be happy to put you in touch with my friend and we know you will be well-taken care of and leave their store happy. And when our clients are happy, we at High Rock are happy.
Safe summer driving.
High Rock Capital is pleased to sponsor the #1 Snowboard racer in North America, Darren Gardner. Darren is an Olympic medal hopeful for 2018 South Korea.
It is a long, hard, tough road and we are happy to help support him. If you would like to do the same, or you just love golfing in Muskoka, he is hosting a golf fundraiser on Friday July 21st.
Details and registration can be found here: darrengardner.ca/fundraiser. Windermere Golf and Country Club on Lake Rosseau...what's not to like? Maybe play hooky from work and go up Thursday night, stay at the Windermere Hotel, have drinks and dinner and wake up and golf the day away.
I see myself as reasonably athletic but I just can't golf. Scott and his lovely wife Mary will be there as they are real golfers. I will be there for drinks and dinner (of which I am reasonably good at both eating and drinking!).
If you find yourselves in Muskoka Friday July 21st and, looking to hit some balls, why not help out a great athlete and a great family and join Scott and Mary for a round.
Cool picture. I keep telling him he needs to get his hip just a little closer to the snow to really carve the board...unreal, isn't it?
We haven't shown this chart in quite a while because it was behaving better, reflecting a better wholesale economy in the USA where Sales were increasing faster than Inventories were building...a good sign.
After the ratio spiked (meaning inventories were building faster than sales) in 2015 and 2016, it began to decline (meaning sales were faster than inventory building). The peak in the ratio back in 2015 and 2016 was at or near recession levels like we had seen back in the recessions of 2000/2001 and 2008/2009 (note the peaks in the ratio during those recessionary periods).
But as the decline in the ratio started falling in 2016, it was showing an improved economic situation. Nonetheless, we did not ignore it and watched it every month when published. Today, we watched for sure, as the ratio started moving higher, once again. No need to sound alarm bells but worth paying closer attention to over the next two months of releases to see if this is just a blip or if sales are really declining quickly to reflect renewed economic weakness.
Here it is over the longer term:
And here it is over the past year for a shorter-term perspective. It was showing relatively flat growth since January 2017 (which is ok but not great) but then showed a bit of a spike up in May 2017.
May very well be nothing but we will watch it more closely over the next couple of months and, put it into the mix, along with some of our other metrics, to asses overall market risk.
I hadn't looked in awhile but thought about it today. Scott shows this chart every once in awhile on the Tuesday Webinar (highrockcapital.ca/current-edition-of-the-weekly-webinar.html).
The chart below shows the level of Margin Debt (orange) on the NYSE at US Dealers and the S&P 500 (white)(SPX).
Margin debt is basically the loans that a dealer provides to allow you to buy more stock to leverage up the stock positions in your portfolio. That is to say, if you only have $100,000 to invest, a dealer may lend you margin of 50% so you can now invest up to $150,000 in certain stocks. So you now have $150,000 invested and at work vs only $100,000 without the margin.
What the chart above shows is that Margin Debt is obviously at an all-time high at 54% ($540 of margin debt per $1,000 of equity value balances). As you can see, after the credit crisis, margin debt was at a low of around 17%. What you will also notice is that Margin Debt tracks extremely closely to the SPX.
The thing about leverage (provided here by margin debt) is that, it cuts both ways.
When the asset price (SPX in this case) rises, you a) make even more money than you would have if you only used your equity and no leverage and b) as your asset price rises, the equity in your account rises and the dealer will give you even more leverage (hence the tight correlation between margin and SPX). Self-fulfilling, isn't it?
But the other side of the sword is falling asset prices. If your equity value falls, the dealer will issue what is called a "margin call" and either you provide more capital to your account or...you sell some of your stocks to meet the margin call and that can lead to a general sell-off in the stock market as is seen in 2008/2009.
This leverage embedded in the market can create something similar to what is called "negative convexity" in the bond market. What this means is that, the more the SPX market goes up, the more you want/need/are able to buy more stocks but the more the market goes down, the more you must sell. Bottom line - margin debt creates more potential volatility in the market. .
With short term interest rates rising, margin debt costs will undoubtedly rise too.
Would you increase your level of margin debt borrowing if you knew the cost of that borrowing has risen recently and may rise even further in the near future? And with stocks, that you are leveraged to, are all-time highs? And with Tom, Dick and Harry all utilizing margin debt?
I am not so sure I would.
On Bloomberg, there is a popular screen, WEI (World Equity Index), that shows the major stock indices in the Americas, EMEA (Europe Middle East and Africa) and Asia/Pacific It gives a good snapshot of how all these indices are doing on the day and year to date (YTD, or several other time periods you can chose).
Green means the index is up over the period of time and red means it is down over that period of time. Here is the WEI page at the close for Thursday July 6, 2017:
Focus on the second column from the right...the %YTD which is in each country's home currency.
Anything stick out? That's right, the S&P/TSX (Toronto Stock Exchange Composite Index) is the only major stock index on this screen that is "red" or down YTD (at -1.37%). Crazy. As the title says, "It Ain't Easy Being Green"...and it sucks being red - the only red.
It has been a tough equity investing market in Canada the past 6 months, that is for sure. I thought I would drill down a little bit more to see how certain industry sectors have done YTD.
Given over half of our Index is in three sectors, I took a smattering of some of the biggest stocks to see how they have performed on an individual daily total return basis YTD. As follows by industry sector and by stock YTD at today's close (Source: Bloomberg YTD to July 6, 2017).
Banks are 24% of the Index
Royal Bank +6.6%
Mostly up but also off their highs from March 2017. Remember, total return includes dividends and those dividends being reinvested back in the individual company's stock.
Materials are 11.4% of the Index
Barrick Gold -5.0%
Given the rout in the commodity space, it is hard to find any individual names that are anywhere close to positive YTD. And I just took the two largest ones for a sample. Midsize and small companies have been hurt far more.
Energy is 20% of the Index
Imperial Oil -21.1%
If these large, integrated, diversified energy companies are off 15-20%, what do you think smaller Exploration and Production companies are off? Try 40-50% YTD. Yikes.
Maybe it is time for some "reversion to the mean" and some global portfolio rebalancing by International money? That would sure be nice for We The North during our 150th Birthday but for that to happen, I fear we will need to see an overall turn in the commodity markets. Now the C$ strengthening as it has of late, will not help with International security flows into Canada.
The key to investing in some of these beaten down sectors, like oil, is to get the macro call correct first and then drill (pardon the pun) down to the security selection process. So far, oil is much less volatile than it was in 2015 and 2016 and way less volatile than in 2008 and 2009. Regardless, even though volatility has come down at these lower prices, and most oil producing companies can produce Free Cash Flow at U$45 WTI, the equities of these companies are volatile as all get out and on a weakening trend overall. We remain extremely cautious on our overall energy exposure.
Sure would be nice to see Canada painted green.
The Toronto Real Estate Board (TREB) just released their full report on the state of the housing market in the GTA for the month of June. As a bit (much shorter) of a follow-on to my four-part blog postings on the City of Toronto Housing Market (highrockcapital.ca/pauls-blog/city-of-toronto-housing-introduction-and-part-1-of-a-4-part-series) I thought I would give a quick summary of what came out for June in the City of Toronto.
Detached homes were down sequentially at 2,196 in June vs 2,242 in May. The average Active Listings for the past 6 Junes is 1,944.
Semi-Detached were 487 in June vs 515 in May and an average over the past 6 Junes of 388.
Condos Active Listings actually increased to 2,708 in June vs 2,509 in May and an average over the past 6 Junes of 4,487.
Overall, including all types of homes, Active Listings still increased to 6,000 in June vs 5,829 in May (vs 6 past June average of 7,225). All of the increase in overall Active Listings in June came from the Condo market.
Detached new listings came off pretty substantially at 2,096 in June vs 3,123 in May but vs the 6 past June average of 1,371 still historically high for the month of June.
Semi-detached came in at 561 for June vs 843 in May and a 6 past June average of 374.
Condos came in at 2,971 for June vs 3,616 in May and a 6 pst June average of 2,097.
Overall, including all types of homes, New Listings dropped from 8,451 in May to 6,295 in June (vs 6 past June average of 4,276). The biggest drop in New Listings comes from Detached homes declining substantially.
Detached sales were 848 in June vs May at 1,146 and 6 past June average at 1,256.
Semi-detached sales were 273 in June vs 348 in May.
Condo sales were 1,702 in June vs 2,038 in May.
Overall, for all types of homes, Sales are -20% mom (month over month) and -31% yoy (year over year).
(I focused more on Detached so don't have 6yr averages for semis and condos but both are down from previous 2yrs).
Detached prices were $1,386,524 in June vs $1,503,868 in May and April's peak at $1,578,542. This mom decline is -8% and a yoy increase still in place of 10%. From the April peak, prices are -12%.
Semi-detached were $987,404 in June vs $1,062,318 in May and April's peak at $1,104,047. This mom decline is -7% and a yoy increase still in place of 8%. From the April peak, prices are -11%.
Condos were $552,679 in June vs $564,828 in May and April's peak at $578,280. This mom decline is -2.2% and yoy increase still in place of 23%. From the April peak, prices are -4%.
Overall, for all types of homes, prices are -8% mom and +7% yoy.
Months of Supply
Detached months supply (Active Listings/Sales) increased in June to 2.6 vs May at 2.0 and vs a 6yr average of 1.7 and peak over that 6yrs at 3.1.
Semis are at 1.8 in June vs May at 1.5.
Condos are at 1.6 in June vs 1.5 in May.
As expected. Sales down and prices down but New Listings coming off quickly.
Active Listings ramped up huge in April and May but actually came off slightly (all in Detached and Semis while Condos still increased) in June. Looks like a peak on a chart basis.
New Listings coming off hard might just provide a slight bit of positive news for the market starting to finding it's footing. Again, the biggest decline in New Listings came in Detached although Semis and Condo New Listings were down too.
These two metrics leave the ratios of Sales/Active Listings still declining mom but the Sales/New Listings actually increasing mom for all home types.
Bottom-line - I can tell you, anecdotally, from the midnight MLS search of New Listings we get, that the Listings being emailed each night with our search criteria are now down to one, maybe two, listings vs last April and May when we saw 6-10 listings. I would suggest that both buyers and sellers are starting to act a bit cagey. Buyers will want to wait to see if prices continue to come off while sellers know they missed an opportunity already and have clearly pulled both existing and new listings. At some point, the market will find an equilibrium. Prices are likely to continue to come off through the seasonally slow summer period before that equilibrium is found.
An asset is worth what someone else will pay for it.
Well over one month ago, our High Rock Private Clients may have noted that their cash began to be held in a High Interest Savings Account (HISA) at monoline mortgage lender, Equitable Bank (EQB).
The fact that we started holding our excess cash in an EQB HISA weeks before a subsidiary of Warren Buffet's Berkshire Hathaway invested in EQB competitor and stressed monoline mortgage lender, Home Capital (HCG), says nothing of our investing prowess. To be sure, we are invested for entirely different reasons. The Berkshire subsidiary owns both seriously over-collateralized debt of HCG along with a chunk of equity. We own a one day deposit of EQB, no equity.
We had owned EQB HISA's before (a year ago) but had basically steered clear of them since then due to the market dynamics surrounding HCG and a lack of clarity on exactly how Canadian Deposit Insurance Corp (CDIC) actually works (ie, how it would pay out if the deposit-taking institution defaulted). So I rolled up my sleeves and did a bit more work on how CDIC actually works - how accounts are covered, for how much and how it pays out.
The CDIC insures eligible deposits that are issued by CDIC Member Institutions (all the big banks, along with both HCG and EQB and a ton you may not have heard of....basically, any deposit-taking institution is a Member Institution).
CDIC considers various accounts as "categories" for insured purposes. Categories fall under the following and are all insured separately for $100,000 per category for principal and interest combined:
Effectively, what this means, is that you could have up to $100,000 in deposits in each of those 8 categories ($800,000 in total) and be fully-insured on your principal and interest.
This much I knew, but still we avoided holding EQB HISA's for quite a period of time. As mentioned, my lack of understanding on the payout on insured deposits of a failed Institution was my fear. If HISA's are meant to be "cash", I would not want to be wrapped in a time-consuming event where it would take months, or longer, to get the cash payout from CDIC upon a bank failure..if it cash, I want it the next day or so.
So I made two separate calls to CDIC (they were excellent) and was able to get a lot more information about their "payout process", CDIC's creditworthiness and how they actually fund themselves.
Payout Process - Problem #1
Shockingly, CDIC is transitioning to electronic payout ability but, at this stage, it is a written cheque. That I found crazy. What I was pleased to learn was that, payouts occur within three business days of the failed member institution failing. Three days I can live with. T-bills are one day so three days is in-line. Problem #1 solved.
Creditworthiness - Problem #2
I knew this was largely the credit of the Government of Canada but, what the heck, might as well check, just to be sure. They actually file their quarterly and financial statements, like any publically-traded company, on their website. So I opened up their Annual.
What I found was about $700 billion in insured deposits with provisions for losses on those insured deposits listed as a liability of $1.3 billion. On the asset side, they list about $3.4 billion in Total Assets plus a Line of Credit with the Government of Canada for $20 billion (Total Available Funds of $23.4 billion). Obviously the $23.4 billion does not cover the entire $700 billion but the probability of every single deposit-taking institution in the country failing at the same time is extremely low. So realistically, based on their assumptions, they have $23.4 billion to pay out $1.3 billion of potential (modeled) losses. Well-covered I would say. Problem #2 solved.
Funding Process - Problem #3
Here, I am no expert but what I was able to find was that CDIC has a formula for charging deposit-taking institutions. For instance, in 2016, they pulled in $361 million in premiums from various deposit-taking institutions. And from what I can tell, if there is a failure by a deposit-taking institution, it is largely the DSIB's (domestically systemically important banks - the big banks) that will make up the shortfall for funding CDIC. Problem #3 solved.
After doing that research, I concluded (along with some associates who confirmed my thought process) that if you invest in any deposit (HISA, GIC) of ANY of these CDIC Member Institutions, and ensure your deposit is under $100,000 per category, then you are really taking on the credit risk of the Government of Canada. Had HCG been allowed to disseminate this information to the broader public, they wouldn't have had to fall into the waiting arms of Mr. Buffet because there would not have been a run on their deposits. Warren's benefit that CDIC does not allow members to "advertise" how it really works.
By way of comparison,:
So, same credit (Government of Canada, up to a max of $100,000 per account) and even shorter a maturity at one day vs one month. Not bad.
And given the credit-risk (Government of Canada) of holding deposits of any CDIC member institution, up to a maximum of $100,000 per account/category, we should be agnostic as to which member institution's deposits we hold. HCG, EQB, B2B Bank, General Bank of Canada...you get the picture.
But we will stick with EQB at this stage and collect our 1.75% on cash balances.
In case you are just tuning in to my blog on the City of Toronto Housing, you can get caught up by clicking in the following links in order:
Today is the conclusion, which will be substantially shorter.
As I mentioned in the Introduction/Part 1, like any other asset, I do not think there is a "one-size-fits-all" solution on the decision to buy or sell a house. Some of the line items that might matter to an owner or prospective owner are:
Short Term (1-12 months)
As I showed in Part 2, there are quite a few negatives we can derive from TREB data. The simple fact of the matter is that the three largest Canadian cities have gone through/are going through a massive catch-up to other international cities on a pure value basis (house price to income ratio). The result was sharp increases in prices to the point where some (government officials, most notably) described it as a bubble. I am not sure I would describe it as a bubble but I would be onside with describing it as "overdone" in the short term. Just like any other market, it just went up too far, too fast.
The result of prices going up so quickly is that it finally dragged in some reticent sellers, as can be seen in New and Active Listings increasing rather dramatically in the month of May alone. Remember, June's numbers will likely be out later this week, so we shall see what they bring but I suggest it will be much the same - Active Listings up, Sales down and Prices down sequentially again.
There is really not much more to add other than to say that, in the short term, prices are likely to come off a fair bit and until the market reaches more of an equilibrium. Think about it, the market went from being "super tight" on the supply front (Listings at all-time lows) and, what in the money management business we call "bid without" (no offers around and lots of bids) to the exact opposite - flooded with supply (New Listings) and now "offered without" (lots of offers and no bids)....all in one month!
And so, with a gun to my head, you probably want to ask me "how much is the market going to come off in price?" Not really my wheelhouse but I am pretty confident prices will come off just given the imbalance in the market right now. My best guess? - I bet prices, which peaked in April (Detached homes) come off about 20% by the time they find equilibrium and base out. The last time we saw a period of Sales to Active Listings ratio around this level through 2011 through 2013 and those were years when prices were basically increasing at a rate of only about 1-2% on a yoy basis. This seems a fair bit more severe to me so the market will have to see lower prices to drag in buyers. Remember, the object of any market (the St Lawrence Market, the Stock Market, the Housing Market) is to match buyer and seller. If prices are too high and transactions stop occurring, then prices need to come off to find an equilibrium where buyers and sellers transact.
The biggest risk to this -20% scenario is that, in the short-term, and given the public policy we have seen, that the market falls even more. My biggest concern is that buyers get completely spooked by the Province's measures and the housing market turns into a complete vacuum and prices fall 30-50%. Don't forget, the housing market is not normally a liquid asset. What we have seen the past year is not "normal".
The one positive that could help the market stabilize is the Bank of Canada (BoC). The BoC has been talking recently about raising interest rates and the government bond curve has risen in yield in response. Mortgage rates will follow and it is these expectations that mortgage rates may increase that may drag in some buyers at new, lower house prices.
Medium-Term (1-3 years)
My best guess here is that prices will stabilize in about a year. It will then take them another 2 years or so to start recouping those losses and to get back to where they were in April 2017 (the peak).
Variables would include: BoC interest rate policy, Federal/Provincial public policy, immigration, C$, etc.
Bottom-line, I think it will take about 1-3 years just to find equilibrium at the base and then work on a very slow basis to the point where the market can start recouping the losses.
Longer-Term (4+ years)
Over the longer-term, I am quite positive on the housing market in Toronto. This view is largely based on immigration, the population growth in the city and, most importantly, the public policy that was put in place in 2005. The Province (and the City) want the core of the City to grow, not the suburbs.
And my bullish stance is especially true for Detached houses. The premium of Detached house prices over condos will continue to widen substantially. Intensification of densification being the primary reason. Land will trade at a substantial premium. In fact, according to Census data, the City lost 5,335 Detached houses between 2011 and 2016 (torn down and turned into townhouses?) and lost 1,180 Semi-detached houses over the same period. Not only will there not be any new stock of detached and semi-detached in the city, they are actually tearing them down and putting up multi-units!
I am of the view that the City of Toronto housing market got a fair bit carried away the past year but it was driven by capital flows that quite simply forced prices up to start the process of playing catch-up to other major international cities. We still have a ways to go but it will take more time, as it should.
As I mentioned earlier, making buy/sell decisions on the housing market should be a personal one, not a one-size-fits-all.
For example, if you are 65+ years old, retired or planning on retiring in the next year or so, you might want to think about selling now and taking some money off the table. If I am wrong, and the market sells off substantially more (50%) and that would wipe out your retirement plans, then you need to really think about that type of downside. As we now know, public policy can alter prices substantially (in both directions). If you are 65+ years old, and I am wrong about prices stabilizing over the next few years, then it might be tough to withstand a typical, full-cycle real estate correction/recovery which are more like 20 years long. I am not of the view that this is a typical cycle due to the public policy put in place in 2005 but it is a risk, nonetheless.
If you are 65+ years old and do not need to worry about capital to fund your retirement and love your current house...don't sell. You probably have worked hard all of your life and saved appropriately and deserve to live where you want to live. Good for you.
If you are younger (25-40 years old) and can afford a detached or semi-detached house, you would be wise to start looking now and use this coming correction in the market to buy. I would focus on being as close to downtown and public transportation as you can afford, along with as big a lot size as you can manage...you may see a fancy, modern house you fall in love with but don't forget, all those finishings depreciate...the land doesn't. Location and size are key under this new public policy.
If you are 25-40 years old and cannot afford a ground-level dwelling, then maybe a condo makes sense but do not forget that condo supply will continue to grow as the city densifies substantially. Don't expect prices to rise much, if at all.
Conclusion (of the Conclusion)
We are going to see City of Toronto house prices come off over the next few months (at a minimum) and year but over the longer term, detached (and semis, to a lesser degree) will keep increasing due to the change in public policy from 12 years ago. Understanding this change in public policy (both the Greenbelt and Places to Grow Acts 2005 and the Immigration policy) is key.
If you want an opinion, please feel free to reach out to Scott or I. As mentioned, for each of our clients we perform a Wealth Forecast when they start with us and then every six months after. Home ownership is a big part of the Wealth Forecast so we are very comfortable modeling that asset into our overall analysis.