New Brunswick keeps coming up in the search for affordable places to live.

The creditcardGenius website recently produced a list of Canada’s Top 10 places to live and both Saint John and Moncton got mentioned. Saint John was rated best place to buy a house and Moncton was described as the best place to work and the cheapest place to live.

Both cities also turned up in a column I wrote recently on seven affordable housing markets. Other cities on my list were Lethbridge, Alta., Saskatoon, Winnipeg and St. John’s.

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Housing market stats for August are starting to roll in and resale prices in Toronto were up 20 per cent over the same month of 2019 to $951,404. This suggests we’ll see strong numbers in other markets that were hot this summer – cities in southern Ontario, plus Ottawa and Montreal at least.

There’s plenty of uncertainty ahead for housing, given that mortgage payment deferrals offered by lenders are ending at a time when unemployment remains high and there’s potential for a second COVID-19 wave. But even if house prices flatline from current levels, a lot of young people are going to face a choice with home ownership: Either they keep fighting to afford a home in the big city, or they move to one of this country’s many affordable markets and buy with ease.

The rise of remote work has opened the door to this type of move like never before. The pandemic has produced a bizarre stampede to buy houses in big cities and their suburbs, but also an opportunity to live and work in less expensive places. Globe and Mail personal finance editor Roma Luciw and I will dig into this in the second season of our Stress Test podcast. You can check out Season One here.

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Rob’s personal finance reading list

10 costs to add to your home-buying budget

Important reading for first-time home buyers – a list of costs that you must budget for, but may not know about yet.

Robo-adviser smackdown

A head-to-head comparison between Wealthsimple vs. Questwealth. Different fees, different investment approaches, different returns for clients.

Common car accidents – who’s at fault?

A look at where the fault lies in 10 common types of vehicle accidents. Reading this will make you more careful on the roads, and that means you’re less likely to have a costly insurance claim.

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The $50 a week grocery list

OK, that’s US$50, but this list is still of interest because it was compiled by a dietitian aiming to appeal to both her clients’ lifestyle and budget.

Guest Q&A

Today’s guest is Stephen Punwasi, who should be familiar to readers of this newsletter because I have so often linked to his housing blog, Better Dwelling. It’s a must-read for people who want to go beyond the hype over sales and price numbers in understanding the house market.

Q: Let’s jump ahead six months – do you see housing prices still on the boil, hitting a plateau or falling?

A: There are two significant downward headwinds coming up – the government assistance cliff, and immigration. Millions of people are on unemployment, and about 16 per cent of all mortgages are on payment deferrals. The Canadian Emergency Response Benefit ends in just a few weeks, and the first mortgage deferrals from April end in October. Whether those people are ready to take on their bills again will be a big determining factor here. If they can’t, that’s a sign prices will fall.

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The other issue is immigration, and more specifically international students. These students provide demand [for rental units] by leasing hundreds of thousands of homes. With a lot of students returning home during the pandemic, and many doing online classes from abroad, there’s going to be a lot of empty units. Some investment realtors have begun advising landlord clients to sell if they can’t take a year of no rental income, or lower rents.

Q: A reader asked me recently whether he should upsize his current home now and take on a debt load that will be a challenge, or wait for a correction to cut prices? Thoughts? Obviously, he’s worried that more price increases will push a bigger house out of reach.

A: The objective, non-emotional answer is to assess the size of risk for your market. If you’re worried prices are going to rise 5 per cent, but you’re also worried they can fall 10 per cent, it’s obvious to me what the answer would be. I wouldn’t risk 10 per cent to gain 5 per cent.

Factoring in emotion, it becomes a slightly different answer. Why are they considering taking on a debt load that’s a challenge? Is it for a bigger family? If so, it may not matter if prices take a dive in the short-term. You probably won’t think about the value of your house for another 10 years or so. In the meantime, you’ll enjoy the extra space for your family.

Q: My wife and I bought our first house in Toronto in the early 1990′s, just after the market crashed (I wish we bought a whole subdivision back then). Is it possible or likely that a similar decline happens, or is the city crash-proof?

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I think everyone wishes they bought more at the bottom of the market, but calling a bottom is as hard as calling a top. There were a lot of favourable conditions that would be difficult to forecast back then. The biggest in my opinion, is the mortgage prime rate dropping about 12 points over the past 30 years. In order to get that kind of wind under your sail today, the mortgage prime would have to be minus 10 per cent by 2050. That’s probably not something I would bet on, but I’m also not the kind of person that buys lottery scratchers.

Do I think there’s going to be a crash soon? I don’t know. What I do know is there’s a lot of bank executives and portfolio managers that are now renters in Toronto, and it’s not because they can’t afford a house. They will, however, lend you money to buy one.

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.

The money-free zone

A friend turned me on this – the New Orleans radio station WWOZ, which you can listen to online. A great mix of soul, jazz, blues, zydeco and more. I have it on a lot while I’m working.

More Rob Carrick and money coverage

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Even more coverage from Rob Carrick

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