Housing

[fellowtraveller]

Not sure what you mean by that.

The market rent is the amount that two parties agree to pay.

Given that I pay about half of what my landlord costs are I suppose you could come to that conclusion

I mean you told us that for some reason you were paying well under market rent for your area, I have forgotten why he charged so little.

I raise the issue because you use that personal anecdote to explain away any reason to own a home.

[msj]

I mean you told us that for some reason you were paying well under market rent for your area, I have forgotten why he charged so little.

I raise the issue because you use that personal anecdote to explain away any reason to own a home.

I don't recall ever stating that I pay well under market rent in my area.

I am paying the going rate for a downtown ocean view condo (which has the added bonus of saving the wife and I from needing a second car).

As for my personal anecdote - I have pointed you to a link showing a chart which shows that real rents have been generally falling for decades.

If you were to look at the other charts in that link you would find that house prices, over the past decade or more, have been generally rising.

It's not my fault you are unable to relate a personal anecdote and compare it to statistic evidence to come to a conclusion.

There are times in people's lives to buy certain assets.

For me, that time meant buying a business.

Why not? Interest rates are cheap, the interest is tax deductible, and the ROI has been over 20%.

If I bought a home all I could say is that the interest rates are cheap.

No, I can buy a house in another year when the business debt is retired, I have my 20% down payment, and house prices are in my price range (3 times gross income, no more than 22 times rent).

They have been moving in the right direction in recent months so we will see if the trend becomes my friend.

If not, I'm not going to lose any sleep over it.

I've done the math and I will know when the time is right to buy a house - and a second vehicle.

Unlike many people, I understand and actually price out the entire cost of any major purchase.

You should see my spreadsheet for when I bought into the business.

[CPCFTW]

You can also get much higher leverage, if you want, using various investment instruments, such as leveraged ETFs and options. You can have an essentially unlimited amount of leverage buying options. It's all a matter of your risk tolerance, of course.

That is true but I was trying to compare assets with reasonably similar risk profiles... that's why I mentioned a diversified portfolio.

[GostHacked]

I am in a good position now... and looking to acquire some land a little outside of town. Then eventually build a house on that land and slowly develop a small portion of the overall land.

Anyone have experience in just buying land? What is the market like on that?

[msj]

Oh look! subprime car loans.

Who said this kind of stuff doesn't happen in Canada?

Of course it does - I have been seeing it for years (in housing) and one of these days it's going to bite us all on the @ss.

[August1991]

I hardly follow this market but I liked the quote at the end of this news report:

New listings for detached, attached and apartment properties in the Greater Vancouver region totalled 5,617 in June, down from 6,927 new listings in May and from 5,793 new properties a year ago.

The total number of residential property listings on the board's MLS service was 18,493, up 3.27 per cent from May and up 22 per cent from this time last year.

Despite the drop in the number of sales, the housing price index for residential properties in Vancouver was still up 1.7 per cent from a year ago.

CTV Edited July 4, 2012 by August1991

[msj]

I hardly follow this market but I liked the quote at the end of this news report:CTV

If you followed the market then you would know that the "housing price index" created by the marketing team at the Multiple Listing Services is new.

It's a wonderful way to muddy the waters and the Real Estate boards will use it across Canada to make people believe that the coming "buyers market" is either a "receding sellers market" (as the G&M would have one believe this morning) or even a "buyers market."

Of course, what is important right now, is to watch over the next many months as inventory levels rise.

Once this kicks in for good (which can take many many months, if not years) then the price declines truly begin.

One just has had to pay attention to the US market when things looked fine in and early to mid 2006 but not so much by late 2007 (and the writing was on the wall my mid-2008).

While Canada is unlikely to see a 35% decline from peak to trough like the US market it looks like some markets like Vancouver and Toronto will see a decline in that range.

This shows just how truly stupid humans can be: to not learn from the neighbours and to do almost exactly what they have done but 6 years later.

History doesn't repeat but it does rhyme.

[August1991]

Of course, what is important right now, is to watch over the next many months as inventory levels rise.

Once this kicks in for good (which can take many many months, if not years) then the price declines truly begin.

One just has had to pay attention to the US market when things looked fine in and early to mid 2006 but not so much by late 2007 (and the writing was on the wall my mid-2008).

While Canada is unlikely to see a 35% decline from peak to trough like the US market it looks like some markets like Vancouver and Toronto will see a decline in that range.

So, you're trying to time the market.

And you're using three year old US market price changes as a model.

----

Who wouldda thunk?

But hey, if it works, more power to you!

Edited July 5, 2012 by August1991

[msj]

So, you're trying to time the market.

If by timing the market you mean buying a business (rather than a house) to earn 2.5+ times my previous income and paying off the debt on that investment within 5 years, then, sure, I've timed the market.

Oh, and I also have liquid assets too.

Pretty soon I will be buying a house and maybe I will end up buying it for cash (my local market has turned down).

And you're using three year old US market price changes as a model.

No, I have posted in this thread, and others like it, statistics showing Canadians becoming as indebted as Americans, house prices rising faster than income growth, prices rising faster than rent income, and other metrics showing unsustainable bubbly like conditions.

You and others prefer to say "it's different" or come up for some other excuse to justify our Canadian bubble.

One day this bubble is going to end and it ain't going to be pretty.

That's the problem with debt - it still hangs over peoples heads while the good feeling that one gets from the asset evaporates once prices stop rising and then start falling.

[bush_cheney2004]

....No, I have posted in this thread, and others like it, statistics showing Canadians becoming as indebted as Americans, house prices rising faster than income growth, prices rising faster than rent income, and other metrics showing unsustainable bubbly like conditions.

This is not the first time that Canada has surpassed U.S. consumer debt to income ratios...it happened 12 years ago as well. Somehow Canadians managed to survive....

[msj]

This is not the first time that Canada has surpassed U.S. consumer debt to income ratios...it happened 12 years ago as well. Somehow Canadians managed to survive....

Where have I stated that they won't survive?

For that matter, where have I stated that people who have seen their house prices drop by 65% (in Las Vegas, for example) wouldn't survive?

[bush_cheney2004]

Where have I stated that they won't survive?

For that matter, where have I stated that people who have seen their house prices drop by 65% (in Las Vegas, for example) wouldn't survive?

Good...then there is no need for alarm. Let the false value of "bubbly" optimism have its day of reckoning, just as before. I have never understood such lament over the loss of gains that were never real.

Edited July 6, 2012 by bush_cheney2004

[msj]

Good...then there is no need for alarm. Let the false value of "bubbly" optimism have its day of reckoning, just as before. I have never understood such lament over the loss of gains that were never real.

Where is the alarm?

I am merely pointing out a number of facts that any adult should be able to comprehend.

But I see, much like the recession thread years ago, both you and August either don't comprehend or like to troll pretend.

[bush_cheney2004]

Where is the alarm?

I am merely pointing out a number of facts that any adult should be able to comprehend.

But I see, much like the recession thread years ago, both you and August either don't comprehend or like to troll pretend.

I can't speak for another, but what is your angle then? Why don't your points deserve a collective "so what"?

If you had it all figured out, you would already own that penthouse in Vancouver debt free.

I like to watch the stupifying prices people pay for crap real estate in Toronto via HGTV cable television shows.

[msj]

I can't speak for another, but what is your angle then? Why don't your points deserve a collective "so what"?

Because bubbles can impact everyone. Even those like me who are soon to have no debt are impacted as people stuggle to pay the mortgage while the economy grinds away slowly.

That's what we are looking at - we could have a recession much more severe than we otherwise would have had had the government not intervened (via credit loosening and "emergency" interest rates) and made some bone-headed short term policies that are going to hurt us over the long run.

Sure, if one is an American who has seen his country go through the worst recession since the depression, then why not shrug and say "so what."

If you had it all figured out, you would already own that penthouse in Vancouver debt free.

Due to my age I find that doubtful.

Although, granted, had I saved up my paper route money when I was a kid and invested it differently then perhaps I could have.

I like to watch the stupifying prices people pay for crap real estate in Toronto via HGTV cable television shows.

I prefer regular porn over housing porn. Something like "Bubbles Galore."

[TimG]

we could have a recession much more severe than we otherwise would have had had the government not intervened

I have been wondering about this. What if the fed did not juice the market in 2001? What if the US had clamped down on doggy loans in 8 years ago? We would have seen a lot slower growth in the economy which, in turn, would have affected the non-housing sectors in ways that cannot be known. In the worst case the sluggish economy could have turned into a recession since lack of confidence feeds on itself.

I don't mean to rationalize the excesses of the past. Just point out that we cannot really know what 'would have happened' if different policies were adopted. There are simply too many variables.

[bush_cheney2004]

Because bubbles can impact everyone. Even those like me who are soon to have no debt are impacted as people stuggle to pay the mortgage while the economy grinds away slowly.

I have no debt...so the storm rages without concern.

That's what we are looking at - we could have a recession much more severe than we otherwise would have had had the government not intervened (via credit loosening and "emergency" interest rates) and made some bone-headed short term policies that are going to hurt us over the long run.

Frankly, I wish it would hurry up and come as people like me want interest rates to go up...way up!

Sure, if one is an American who has seen his country go through the worst recession since the depression, then why not shrug and say "so what."

I did...it was the most painless "worse recession since the depression" we've ever had. What is the current Misery Index compared to the 1970's for a seasoned American?

Due to my age I find that doubtful.

I'm willing to grant you every advantage born of economic brilliance regardless of age. Show me the money.

Although, granted, had I saved up my paper route money when I was a kid and invested it differently then perhaps I could have.

See..that's the thing. I could have invested $20,000 in Microsoft stock a long time ago, but I don't regret not having done so.

People make choices, without regard to macro economics. Let them succeed or fail....

I prefer regular porn over housing porn. Something like "Bubbles Galore."

Not going unnoticed on those shows is the desire for Toronto owners wanting/needing desperately to rent/sublet part of their expensive properties.

[msj]

I have been wondering about this. What if the fed did not juice the market in 2001? What if the US had clamped down on doggy loans in 8 years ago? We would have seen a lot slower growth in the economy which, in turn, would have affected the non-housing sectors in ways that cannot be known. In the worst case the sluggish economy could have turned into a recession since lack of confidence feeds on itself.

I don't mean to rationalize the excesses of the past. Just point out that we cannot really know what 'would have happened' if different policies were adopted. There are simply too many variables.

Fair enough - we can't really know.

I'm of the view that we should do what's best for the economy to run (proper bank regulations being paramount) and let recessions happen to clean up capitalism.

The US has (yes, has still) terrible bank regulations that, thankfully, Canada does not have (although ours is not as good as many people think).

We know, historically, that debt bubbles (and that's what I'm really talking about here but I use the term RE bubble since this is what people seem to understand) effect the economy much more than regular recessions (you would have to go to the recession thread to find the links).

So, no, I don't buy your argument.

However, I am thankful that the CPC have come to their senses and have finally fully reversed their mortgage policy follies they changed back in 2006.

[dre]

Good...then there is no need for alarm. Let the false value of "bubbly" optimism have its day of reckoning, just as before. I have never understood such lament over the loss of gains that were never real.

Jesus what tripe. Basically youre saying that unless everybody is going to die, theres "no need for alarm".

Why do you even bother to post this kind of giberish?

[dre]

Fair enough - we can't really know.

I'm of the view that we should do what's best for the economy to run (proper bank regulations being paramount) and let recessions happen to clean up capitalism.

The US has (yes, has still) terrible bank regulations that, thankfully, Canada does not have (although ours is not as good as many people think).

We know, historically, that debt bubbles (and that's what I'm really talking about here but I use the term RE bubble since this is what people seem to understand) effect the economy much more than regular recessions (you would have to go to the recession thread to find the links).

So, no, I don't buy your argument.

However, I am thankful that the CPC have come to their senses and have finally fully reversed their mortgage policy follies they changed back in 2006.

The thing is the .COM bubble was caused by poor monetary policy and Greenspans idiocy in the first place. Rates were slashed during the 90's as well. The fed rate went from just under 10% to about 5% beteen 1990 and 1996. The FED also ignored its own formula otherwise rates would have been on their way up again in 2003.

This is simply a result of the predominant monetary philosophy.... which is essentially that theres never a bad time to create money regardless of whats happening in the economy, and to avoid recessions at all costs even if the cost is a much greater recession in the future.

Its what happens when a disfunctional political system meets a disfunctional monetary and banking system. And it will just keep getting worse, and the Fed has a little less in its arsenal each time around.

I guess if we have a recession NOW, with rates already very low, they will need to move those rates into negative territory. That will be fun... "Get your synthetic paper money! -4% interest!".

[bush_cheney2004]

Jesus what tripe. Basically youre saying that unless everybody is going to die, theres "no need for alarm".

Why do you even bother to post this kind of giberish?

Just to piss you off....why do you bother to read such tripe? Go spend your time trying to find another American contract instead...sheesh.

[guyser]

Not going unnoticed on those shows is the desire for Toronto owners wanting/needing desperately to rent/sublet part of their expensive properties.

Very few do so no matter how HGTV sets it up.

[BubberMiley]

Very few do so no matter how HGTV sets it up.

The episodes centring on Toronto are never shown much further south than Regina anyways.

...get it?

[Topaz]

So today the new mortgage rules today, I can see real estate slowing down some some parts of Canada. In my view, I don't see why the Tories couldn't have put the 25 year rule on houses over $500,000, since that price range would be the most one to have problems with paying off the mortgage. Now, the lower end of the scale, meaning 100,000 to 300,000, homes will probably be bought up by the higher incomers. I think it going to be tough for first time buyers to buy a house unless the prices of houses start to drop and there's also the increase prices of owning a home, with property taxes, utilities, insurance etc.

[guyser]

The episodes centring on Toronto are never shown much further south than Regina anyways.

...get it?

Actually I dont....Should I ?