The Passion of Karen Kinsley
‘Home buying is an incredibly important decision. It should be your home first and an investment second.’
.‘It doesn’t matter if mortgage rates are 21 per cent or three per cent. The bottom line is you’ve got to make sure you can afford what are getting into.’
In 1981, Karen Kinsley was fresh out of university and thought she was a pretty tough negotiator after sealing a mortgage on a two-bedroom condo in Ottawa’s east end.
“I negotiated a vendor take-back mortgage and then negotiated a one-per-cent discount on the rate. I thought I got a great deal at 21 per cent,” says the University of Ottawa Commerce grad, who has risen up through the ranks at Canada Mortgage and Housing Corp. and recently signed on for a second term as president and CEO of the crown corporation that oversees financing, new design and research initiatives to promote housing across the country.
“I was in my 20s and thought the condo was a palace,” says Kinsley, who has been named one of Canada’s most powerful women for the past three years by the Financial Post Magazine and Ottawa’s top CEO by theOttawa Business Journal in 2009.
CMHC was also named one of the National Capital Region’s top employers by MediaCorp, a Toronto-based publishing company which collects data on employee benefits.
She calls herself a perfectionist who has a habit of dribbling a bit when sipping water or coffee. Two traits that help explain her dedication to the industry and an impish nature that bubbles up during a wide-ranging interview.
“I probably paid $80,000. It was 1,200 square feet, open concept and absolutely perfect for a young person,” says Kinsley, who stayed in her St. Laurent Boulevard palace for about three years before leaving for Toronto and a senior financial job with Bill Teron and his international development company.
The job and Teron changed her life, planting the seeds that have grown into her passion for the housing and development industry and a career that has her at the head of a complex organization with 2,100 employees at 700 Montreal Rd.
Just as Teron was returning to the private sector after his own stint as president of CMHC in the late ’80s, Kinsley was offered a six-month contract with CMHC in Ottawa. “I said, ‘Great. Something short term and maybe a bit of a break from the pace of working for the private sector.’
“I was wrong on both counts. Twenty years later, I am here and I never did get a break. I have to tell you, I have never regretted a day. It has never been boring and there is always a challenge or two.
“It’s a passion for me,” says Kinsley, who says her enthusiasm for the real estate sector has broadened through her career at CMHC.
Yet her concern for fiscal control and prudent buying has never varied, even as mortgage rates rise and dip.
“It doesn’t matter if mortgage rates are 21 per cent or three per cent. The bottom line is you’ve got to make sure you can afford what are getting into,” Kinsley says.
Interest rates are going to rise, she says, and there is room for concern Canadians will pay too much for a house they really can’t afford. “You only have to look south of the border to see financial horror stories.
“We have seen terrible examples when people have been encouraged to take on debt they couldn’t afford.”
North of the border, it’s vital for consumers to be prudent when buying a home and to keep a wary eye on overall debt loads, says this chartered accountant. CMHC studies show most Canadian households are in fairly good financial shape and are working hard to pay off their mortgages.
On average, Canadians using CMHC-backed mortgages, had built up equity of 45 per cent of the value of their home. These are Canadians who did not have a traditional 20-per-cent down payment, but instead had five or 10 per cent down and legally had to turn to CMHC to be approved for bank financing. CMHC’s mortgage portfolio is huge at $473 billion, covering millions of Canadians, usually buying their first home.
Kinsley welcomed the federal government’s recent changes to borrowing, reducing mortgages to 30-year amortization from 35 years and stricter rules on down-payments when buying real estate as an investment.
“It is important to realize, on one hand, that Canadians are being prudent managing their debt loads and that we are in healthy shape, but, and there is a but, we must remain prudent going forward.
“We cannot be complacent based on the position we are in,” says Kinsley who lives in an older home in Westboro, with her husband, David Cluff, a retired public servant, and their two teenage children. The Kinsley-Cluff family is not shouldering a 21-per-cent mortgage and instead of moving, they decided to renovate and stay in the mature neighbourhood.
“This home is right for us at this time. We converted a garage into a family room, so we have a one-car family room.”
Given the time, Kinsley the mother would encourage her children to buy a home. “My best advice to them is to look at their lifestyle preferences and their total resources available and think hard before making a home-buying decision.
“Home buying is an incredibly important decision. If you are travelling then renting is equally an important housing option,” says Kinsley, who found her self buying a home in Toronto in the ’80s, when prices were high. “Then we also sold when prices were rising,” says Kinsley, who prefers to buy a home to be a home. “It should be your home first and an investment second.”
Which is why it’s important to look beyond the price, look at the design of the house to see if it suits your lifestyle and then at the neighbourhood, she says.
If you are buying as an investment, the rules change and a house is no different than any other investment, including stocks. “It’s got to suit your profile and you have to know what you are doing. Most of all don’t invest on a whim.”
Mostly, Canadians should not use equity in their homes as a bank card, financing a lifestyle, indicates Kinsley.
And while individuals should remain financially prudent, Kinsley would like to see the housing industry grow more adventurous, adopting stringent green standards when building.
It also makes sense for Canadians to investigate the benefits of buying green, putting money into added insulation and upgraded windows, instead of shiny granite.
“I am convinced if you show people the benefits, they will do the comparison and do the right thing,” she says optimistically.
She is also convinced builders should take a new look at building more affordable housing, mixing units into communities with higher, market-based prices.
The idea of subsidized communities doesn’t work, says the woman who gives no thought to retiring. “I am happy when I am working and busy,” she says.
And if Karen Kinsley ever gets tired of days at CMHC, then Bill Teron has a standing job offer.
“I would give her a job tomorrow. She would not sit at home. I assure you of that.”
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