Canada Housing/Debt: Trust me, I'm a landlord.

The Something Awful Forums > Discussion > Debate & Discussion > Canada Housing/Debt: Trust me, I'm a landlord.

Franks Happy Place: Mar 15, 2011; It is by weed alone I set my mind in motion. It is by the dank of Sapho that thoughts acquire speed, the lips acquire stains, stains become a warning. It is by weed alone I set my mind in motion.

Ikantski posted:

I couldn't find a housing bubble thread but a meltdown thread started when Lehman collapsed. And the award for worst prediction goes to...

When I first posted about the impending housing collapse in a previous Canadian Politics Megathread, a couple of regulars freaked the gently caress out and called me every name in the book. One dude in particular whose name I have sadly forgotten (he had an Al Aqsa gang tag is all I can remember) went on and on about how totally different our banks are, it's different here, etc.

I wish that thread was archived so I could call people out, but alas, I'll just have to warm myself with the thought of his almost-certainly-presale condo being underwater. :allears:

# ? Oct 15, 2014 23:49

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# ? May 9, 2024 06:55

etalian: Mar 20, 2006

Professor Shark posted:

So Canada is juggling a looming housing bubble pop and lovely oil from Alberta, and eventually we're going to drop the balls when either bursts, right?

Things are going to suck

Yeah just like Australia you also have a commodity bubble in addition to a real real estate credit bubble, even though it's not exactly comparable since Canada's main energy export trading partner is the USA.

Still even with a stable trading partner like the USA be overly focused in just energy exports leads to other problems such as dutch disease and at the least being at the mercy of commodity price volatility.

# ? Oct 15, 2014 23:55

peter banana: Sep 2, 2008; Feminism is a socialist, anti-family, political movement that encourages women to leave their husbands, kill their children, practice witchcraft, destroy capitalism and become lesbians.

Lexicon posted:

I've long wondered this, and it still makes absolutely no loving sense to me.

The reason for that post is that my co-worker is having issues with her condo's landlord.

She's the only renter in a five year old condo on the Waterfront in Toronto. A month ago the handle on the washing machine broke, some pipes had burst earlier and most recently the lock of her mailbox broke off when she was trying to open it. She had a back and forth with the building for a while before they kicked it back to her landlord.

The landlord tried to eek out of any repairs by differing to the lease, which says that any repairs under $75 have to be covered by her (the mailbox lock would have been $80, though, so IDK). She threw the "normal wear and tear" at him. He's never showed up for repairs or done anything to improve the condo. My coworker has replaced lighting fixtures, kitchen fixtures at her own expense. Once she had convinced him he was on the hook for the repairs (which seem minor to me? The pipes would be covered by insurance as well?) he told her that she would have to source and arrange the repairman "because she has more time."

I explained to her that if this guy's kicking up such a fuss over a couple hundred bucks of repairs, he might not be doing so well on the rental income from her after insurance and maintenance fees. He's trying to screw her to be more profitable and kick the costs back on to her, regardless of what they both agreed to in the lease. I asked if he'd bought the condo off of plans and she said he had. I told her he was very likely Bad with Money in that case and had made a stupid investment and is now flailing.

Interesting she wouldn't hear any of that. "He'll make money when he sells it!" even though I pointed out that people are already losing money on downtown condos. I told her how crazy it was to [strike]spend[/strike] go in to debt for hundred of thousands on something you couldn't see or touch. She countered that "he's in IT" and "probably has it."

Apparently he drives a fancy car as well, which it pretty much a whole row of "disengaged, overextended glass condo slumlord" bingo card.

Crazy. loving crazy. No wonder we're like, a week away from getting hosed as a nation. The lack of financial literacy among my peers is really disheartening.

On the other hand, Thanksgiving was lovely because my father has finally acknowledged the housing bubble and is moving his investments away from Canadian real esate.

# ? Oct 16, 2014 03:48

namaste friends: Sep 18, 2004; by Smythe

peter banana posted:

On the other hand, Thanksgiving was lovely because my father has finally acknowledged the housing bubble and is moving his investments away from Canadian real esate.

We didn't talk about real estate at my in-laws thanksgiving dinner. Success achieved.

# ? Oct 16, 2014 03:50

namaste friends: Sep 18, 2004; by Smythe

business.financialpost.com/2014/10/15/even-canadian-real-estate-companies-dont-see-much-growth-in-home-prices-left/

quote:

One of the largest real estate companies in Canada is conceding house prices don�t have much room to go up, but Royal LePage still maintains they won�t fall.

The real estate company says price gains have already to started to slow and noted in its third-quarter report that the average price of a home in Canada rose between 4.4% and 6.1% in the third quarter compared to a year earlier.

�We are now experiencing a natural slowing in the rate of year-over-year price appreciation, with real estate markets moderating in most parts of the country, a transition to what our agents refer to as a �Goldilocks market,� one that is neither too hot, nor too cold,� said Phil Soper, chief executive of LePage, in a release. �To be clear, we expect home prices to continue to grow in the months ahead, but at a slower rate than we have seen in recent years.�

LePage said the average price of a standard two-storey home rose 5.5% from a year earlier to $441,714. Detached bungalows rose 6.1% in price to $405,101 during the same period while condos were up 4.4% to $257,377.

�In the seven years since the Canadian housing market began its recovery from the worldwide recession, home price growth has been robust, often greater than the long-term average of approximately 5%,� said Mr. Soper.

The LePage statistics are in line with data from the Canadian Real Estate Association which shows Toronto and Calgary outstripping the rest of the country in price gains, something even the finance minister of Canada says skews national figures.

twitter.com/dustywallet

# ? Oct 16, 2014 04:46

namaste friends: Sep 18, 2004; by Smythe

also

send this to all your prideful owner friends

# ? Oct 16, 2014 05:25

Health Services: Feb 27, 2009

Cultural Imperial posted:

also

send this to all your prideful owner friends

What's the source?

# ? Oct 16, 2014 05:50

on the left: Nov 2, 2013; I Am A Gigantic Piece Of Shit

Literally poo from a diseased human butt

Health Services posted:

What's the source?

The source is math. You can use excel to replicate these numbers.

# ? Oct 16, 2014 05:52

namaste friends: Sep 18, 2004; by Smythe

Health Services posted:

What's the source?

https://twitter.com/YVRHousing/status/522603584907538433

# ? Oct 16, 2014 05:59

Health Services: Feb 27, 2009

on the left posted:

The source is math. You can use excel to replicate these numbers.

Ah, of course it is. I was totally misinterpreting the chart there, thanks for pointing it out

And thanks for the link, CI.

# ? Oct 16, 2014 06:06

EvilJoven: Mar 18, 2005; NOBODY,IN THE HISTORY OF EVER, HAS ASKED OR CARED WHAT CANADA THINKS. YOU ARE NOT A COUNTRY. YOUR MONEY HAS THE QUEEN OF ENGLAND ON IT. IF YOU DIG AROUND IN YOUR BACKYARD, NATIVE SKELETONS WOULD EXPLODE OUT OF YOUR LAWN LIKE THE END OF POLTERGEIST. CANADA IS SO POLITE, EH?; Fun Shoe

Awww yiss. As I've been seeing myself, analysts have now come out and said that the Winnipeg market has stepped on the brakes. Hopefully come next summer or summer 2016 housing prices will start dropping and I'll be able to pick up a place cheap.

As long as my wife, who works in residential construction, manages to stay employed :ohdear:

# ? Oct 16, 2014 08:13

namaste friends: Sep 18, 2004; by Smythe

"The only way we're going to get affordability is supply" - Bob Rennie

https://www.youtube.com/watch?v=Th5qxYOSrpk

Vote DJ GREGOR ROBERTSON Y'ALL

# ? Oct 16, 2014 15:55

Lain Iwakura: Aug 5, 2004; The body exists only to verify one's own existence.; Taco Defender

Cultural Imperial posted:

"The only way we're going to get affordability is supply" - Bob Rennie

https://www.youtube.com/watch?v=Th5qxYOSrpk

Vote DJ GREGOR ROBERTSON Y'ALL

I cannot wait to see Rennie fall.

# ? Oct 16, 2014 16:42

namaste friends: Sep 18, 2004; by Smythe

They're pretty clear about why there's a housing bubble in australia.

http://www.abc.net.au/news/2014-10-10/private-surveys-lay-bare-australian-housing-market-problems/5805196

quote:

There is a growing mountain of evidence that Australia has fundamental housing market problems, and the nature of those problems is clear.

After a scant mention in the Reserve Bank governor's post-meeting statement on Tuesday, a speech yesterday by the head of the bank's financial stability department, Luci Ellis, made it plain that the RBA is still worried by current property price rises in Sydney and Melbourne.

Dr Ellis also made it clear that the cause for the price spike is property investment, which now makes up close to half of all new home lending even though private renters make up just a quarter of households.

"That share is noticeably higher than rental housing's share of the housing stock, even allowing for a possible faster rate of churn in investor loans. Obviously that can't continue forever," she told a conference on financial stability.

The bank has repeatedly acknowledged that a boost in property investment is an expected outcome of low interest rates.

However, it perhaps underestimated just how much property investment, and home prices, would jump by not focussing enough on two other factors.

Foreign investment boom

The first is foreign investment.

The RBA has fairly consistently downplayed this segment of the market, relying on Foreign Investment Review Board approvals numbers to show it is relatively small.

The problem with this analysis is that those annual numbers - already undermined by their lack of timeliness - have now been all but completely discredited by the House of Representatives Economics Committee.

Its inquiry into the rules around foreign investment into residential real estate revealed that FIRB only has eight staff monitoring this area, and that it relies almost totally on the honesty of the buyers to submit an application.

That means there are an unknown number of foreign investors in the market buying and owning residential property not captured in the figures.

Surveys of the real estate and development sectors consistently show the foreign buyer influence is high, particularly in Sydney and Melbourne.

The latest this week from the Australian Property Institute (API) found 96 per cent of industry players rated foreign investment a "significant driver" of residential property demand and prices in Sydney - more than half of those said it was "very significant".

The results were only slightly lower in Melbourne, with 95 per cent saying it was significant, including 41 per cent who said it was "very significant".

A lower proportion said foreign buyers were significant in Brisbane and Perth, but it was still over half the respondents.

The respondents to this survey should have a fairly good idea - they included three of the four major banks, some of the world's biggest real estate agencies (including CBRE and Colliers), as well as major developers Lend Lease and Mirvac.

Negative gearing tax breaks

The same survey exposes the other major driver of the recent residential property price surge - negatively geared investors.

In Sydney and Melbourne, nearly two-thirds of respondents saw negative gearing as a "significant driver" of demand and prices although, unlike foreign investment, none saw it as "very significant".

Interestingly, respondents saw negatively geared self-managed super funds as even more significant in driving price rises in these two markets.

The use of negative gearing has allowed investors to flood the market in record numbers despite very low rental returns.

The latest national RP Data figures show zero rental growth for houses in the September quarter and a 1.3 per cent fall in apartment rents.

In the markets where property prices are booming, Sydney and Melbourne both recorded flat unit rents and a 1 and 2.6 per cent rise in house rents respectively.

Given the concentration of the investment boom in inner-city apartments in those two cities, it is not surprising the flood of extra rentals on the market is starting to push down rents.

Negative gearing, combined with record low interest rates, has allowed investors to borrow large amounts and accept very low gross rental returns while waiting for a capital gain.

Debt outpacing housing supply

The problem that the Reserve Bank confronts is that all this investment is resulting in a lot of extra debt - Australia's housing debt to income ratio recently hit a fresh record - but relatively little extra housing supply and economic activity considering all the money borrowed.

"Part of the anticipated effect of monetary policy is to induce more construction activity. Higher prices are the incentive to get that expansion, which is indeed happening," Dr Ellis said.

"But it is worth noting that the vast bulk of that new borrowing is to purchase existing properties."

Investor lending: new vs existing dwellings
PHOTO: Investors have gradually moved further away from buying newly built housing.
Lack of supply being rated as the third main factor driving up home prices in the API survey, this adds to the concern of a lengthy boom, leaving Australia vulnerable to a housing bust.

That is why the Reserve Bank recently told a Senate committee that "something will be done" to limit more risky investor lending.

However, such loans limits are merely a band aid that may help limit the supply of investment loans, but will do nothing to dent the demand for them.

Where there is unmet demand, there will surely eventually be some form of shadow banking or regulatory workarounds that spring up to fulfil it.

For a long-term solution to Australia's high and rising, it is up to the Federal Government to address the key drivers of surging investor demand.

The first area is acting on the Economics Committee's likely recommendations around stricter enforcement of Australia's foreign investment regime to ensure that overseas buyers are adding to, not soaking up, the housing stock.

The second area is to tighten or close the negative gearing and capital gains tax discount breaks that interact to allow investors to subsidise losses before enjoying a low-taxed capital gain.

Luci Ellis says there have been fundamental changes to Australia's financial system that justify current housing prices and make a large correction unlikely.

"Australia went from being a high-inflation country to a low-inflation country in the early 1990," she explained.

"One result of that was that average nominal interest rates fell, and so the sustainable amount of debt rose relative to income - permanently.

"People should therefore not expect ratios of housing prices or debt to income to revert to their long-run, multi-decade averages."

Dr Ellis is right, but ignores the key policy changes, especially the capital gains tax discount, that are also now factored into higher prices.

If those policies do change, a significant correction could follow.

If they do not, the rampant investor demand that has led to the latest price boom is unlikely to be halted by tighter lending rules alone.

# ? Oct 16, 2014 17:20

Baronjutter: Dec 31, 2007; "Tiny Trains"

"The latest this week from the Australian Property Institute (API) found 96 per cent of industry players rated foreign investment a "significant driver" of residential property demand and prices in Sydney - more than half of those said it was "very significant"."

These are all surveys based on how people "feel" about aspects of the problem. I'm sure you could do a study of Vancouver "players" who would tell you foreign investment is a "very significant" (once again meaningless) factor. Where are the actual stats? Industry players think prices will always go up and the time to buy is now, doesn't make it true.

And where is the money coming from for foreign investment? How do they buy? Do they buy cash or are australian/Canadian banks giving them mortgages like anyone else? A ton of foreign buyers buying with foreign cash or foreign debts aren't going to hurt too much come a crash, but locals up to their eyeballs in debt are going to seriously gently caress our financial system and economy in a crash.

# ? Oct 16, 2014 19:32

namaste friends: Sep 18, 2004; by Smythe

http://vancouvercondo.info/2014/10/moving-up-in-vancouver-real-estate-not-so-much.html

lololol

e:

wow this is big.
http://vancouvercondo.info/2014/10/well-that-must-be-the-top-then.html#comments

VCI bear poster "patriotz" has bought a house. I've been following this blog for about 6 years and "patriotz" was as unwavering as I in the opinion that Canada's housing market is bullshit.

WELP TIME TO BUY A FUCKIN HOUSE

namaste friends fucked around with this message at 19:56 on Oct 16, 2014

# ? Oct 16, 2014 19:39

Lexicon: Jul 29, 2003; I had a beer with Stephen Harper once and now I like him.

So most price growth in Vancouver is in the $1.1M range (i.e. outside of CMHC coverage), implying a large number of dollars and demand in that segment, and yet people in this thread still say Vancouver is full explained by loose credit granted to greedy stupid locals!!! :downs:

Okay, then.

# ? Oct 16, 2014 20:03

namaste friends: Sep 18, 2004; by Smythe

I dunno, I can't explain it.

# ? Oct 16, 2014 20:13

ocrumsprug: Sep 23, 2010; by LITERALLY AN ADMIN

Cultural Imperial posted:

http://vancouvercondo.info/2014/10/moving-up-in-vancouver-real-estate-not-so-much.html

lololol

e:

wow this is big.
http://vancouvercondo.info/2014/10/well-that-must-be-the-top-then.html#comments

VCI bear poster "patriotz" has bought a house. I've been following this blog for about 6 years and "patriotz" was as unwavering as I in the opinion that Canada's housing market is bullshit.

WELP TIME TO BUY A FUCKIN HOUSE

I actually thought of you when I saw him posting about his house purchase. Then as the stock market started to unravel with oil this week I thought that "the last bear buying" was a supposed to be a metaphor, not like a literal thing that actually started it.

About the chart though if you look at the average price charts for Vancouver, all three segments (condo, townhouses and sfd) are basically flat since 2010. SFD values spike a bunch, but are about the same as they were four years ago. It is just that they had already gone from silly to ludacris values, and have just stayed there since.

# ? Oct 16, 2014 20:28

namaste friends: Sep 18, 2004; by Smythe

# ? Oct 16, 2014 20:57

EvilJoven: Mar 18, 2005; NOBODY,IN THE HISTORY OF EVER, HAS ASKED OR CARED WHAT CANADA THINKS. YOU ARE NOT A COUNTRY. YOUR MONEY HAS THE QUEEN OF ENGLAND ON IT. IF YOU DIG AROUND IN YOUR BACKYARD, NATIVE SKELETONS WOULD EXPLODE OUT OF YOUR LAWN LIKE THE END OF POLTERGEIST. CANADA IS SO POLITE, EH?; Fun Shoe

Lexicon posted:

So most price growth in Vancouver is in the $1.1M range (i.e. outside of CMHC coverage), implying a large number of dollars and demand in that segment, and yet people in this thread still say Vancouver is full explained by loose credit granted to greedy stupid locals!!!

Okay, then.

On one hand, no matter what is driving housing prices this high, it sucks for people who actually want to live in Vancouver.

On the other hand, if insane demand from foreign investors really is the driving force behind the housing market in Vancouver, at least the locals selling these places are securing a decent retirement. In a few decades when these houses are being unloaded it'll be (now ex) rich foreigners with more money than sense left with a house they can't sell for a fifth of what they paid for it.

At least in that scenario we won't have a ton of people putting a burden on our social safety net because they bet on the wrong horse and lost.

EvilJoven fucked around with this message at 21:29 on Oct 16, 2014

# ? Oct 16, 2014 21:25

Grand Theft Autobot: Feb 28, 2008; I'm something of a fucking idiot myself

Lexicon posted:

This is pretty much exactly why I'm skeptical of many Keynesian arguments I hear. It seems to basically amount to burning the furniture; i.e. a pretty good short-term fix coupled with far more profound long-term consequences.

The basic tenets are still true: the proper response to economic calamity is for the public sector to engage in fiscal stimulus. There are obviously ways to dick up the economy with fiscal stimulus. American military spending hosed up our economy badly during the Cold War, for example.

There are better ways to engage in fiscal stimulus and economic planning, and I think they might make an appearance in North America in this century, presumably after we suffer yet another hilariously destructive financial collapse.

# ? Oct 16, 2014 21:27

Lead out in cuffs: Sep 18, 2012; "That's right. We've evolved."

"I can see that. Cool mutations."

And now for something completely different:

"As Vancouver cemetery space dwindles, burial prices run upwards of $50K"

They're not making any more land. A cemetery plot is an investment in your family's future. Suck it, crematailures.

# ? Oct 17, 2014 00:12

etalian: Mar 20, 2006

Lead out in cuffs posted:

And now for something completely different:

"As Vancouver cemetery space dwindles, burial prices run upwards of $50K"

They're not making any more land. A cemetery plot is an investment in your family's future. Suck it, crematailures.

Turn them into condos, problem solved

# ? Oct 17, 2014 03:32

PC LOAD LETTER: May 23, 2005; WTF?!

Pervis posted:

I think there was a dedicated thread for a long while, attempting to understand it, and talking a lot about the visible bits and pieces, like Countrywide, sub-prime mortgages, home equity lines of credit, rampant speculation and a bit about Fannie and Freddie being involved eventually. I don't recall seeing all that much of things like the intricacies and obfuscation of derivatives and the opaqueness (and complete lack of regulation) of the derivatives market (MBS, CDO, and CDS), MERS, the ratings agencies complete and intentional ineptness regarding ratings on MBS (our model says house prices never go down!).

There were 3 megathreads IIRC that spanned at least a couple of years. All of that stuff got talked about at one time or another but its spread all over those threads and they were absolutely gigantic and full of the typical trolling and derails and stuff. Quite the slog to go through now but they were very informative at times.

I can't find the links unfortunately but I did post lots in them.

# ? Oct 17, 2014 06:38

namaste friends: Sep 18, 2004; by Smythe

http://www.theglobeandmail.com/life...rticle21142644/

quote:

Matthew Kennedy is a young man many people would consider to be the equivalent of a unicorn in Vancouver. This is, after all, the city renowned in popular mythology as a place with such astronomical house prices that its young will be forced to live in basement suites forever.

Mr. Kennedy bought his first condo four years ago when he was 20, using the money he had saved from the job he started right after he finished high school. The first one, at H&R Block, doing deliveries. The second, doing what his father had done and he�d loved since a kid, painting cars.

He put 10 per cent down on the $265,000 two-bedroom suite in Langley, B.C. He only needed his parents� help because the bank was antsy about him being so young. They lent him another 10 per cent, which he repaid. (His parents, with four other children and no Vancouver west-side house to cash out of, don't have money to burn.)

Mr. Kennedy, who has since married, is now looking for a slightly larger place to buy, a townhouse, with plans to rent out the original condo.

�It was a lot of work,� says Mr. Kennedy, who paid rent to his parents while he was saving for his first down payment. �There�s definitely sacrifices. I budgeted. I didn�t eat out. Some could say I missed some life experiences. But if you have that [home ownership] as your goal, anything is possible.�

Mr. Kennedy, as it turns out, is not as rare as many might think.

A recent analysis of home-ownership rates in Canada done by Vancouver-based Urban Futures shows that the proportion of young homeowners increased from 2006 to 2011, a period when prices appeared to be climbing out of reach in many urban centres, including Toronto, Calgary and Ottawa.

�The headlines that portray the current younger generation as being more challenged than previous younger generations to enter the owned side of the housing market are balanced by the data that show continued increase in home ownership rates among young age groups,� the report said.

Home-ownership rates among younger people in B.C.�s Lower Mainland went up more than the national average. Vancouver homeowners in the 20- to 24-year-old age bracket increased four percentage points, to 25 per cent, in those five years � putting young Vancouverites near the top of the list among Canadian cities in proportion of homeowners under 25. The rate went up to 37 per cent from 35 among those 25-29. It stayed around 50 per cent for the 30- to 34-year-olds.

As a result, about a third of people under 30 in the Lower Mainland own homes. That�s about 10 percentage points lower than in Calgary, but the same as the proportion in Toronto, says Andrew Ramlo, a director at Urban Futures.

UBC�s Sauder School of Business professor Tsur Somerville says part of the reason for Vancouver�s high rate of young homeowners is that the proliferation of condos and townhouses here gives them a lower-priced product to choose from compared with other cities that are dominated by houses. And they likely feel more pressured to buy early, because, like everyone else in the city, they worry they�ll be priced out if they don�t buy now.

Mr. Ramlo acknowledged that some of the home-ownership patterns in Vancouver are puzzling, given the disparity between incomes of young people and house prices.

An analysis of local incomes released last week by researcher and urban planner Andrew Yan, who works with Bing Thom Architects, showed that 25- to 55-year-olds with BAs in Vancouver make about $41,000 a year, $10,000 a year less than the median for Canada and $20,000 less than in top-paying Ottawa. The spread was even worse for people with master�s degrees� as though employers realize people are so desperate to be in Vancouver that they can pay them less.

�The relationship between incomes and prices of homes has totally broken down here,� Mr. Ramlo said. He, like others, said part of the explanation has to be that parents, who benefited from the last several decades of real-estate appreciation, are transferring their wealth to their children.

But that�s not all. It�s clear from talking to young people who are buying homes in the expensive Lower Mainland that they�re also strategizing how to crack the market on their own.

Siblings or friends will buy an apartment together until they�ve built up enough equity to sell and take their proceeds to buy their own dwellings. They�ll buy a condo in a suburb that�s affordable and rent it out to build up equity, while they continue to live in the central city. They�ll definitely make do with less space.

Because it�s equally clear that they�ve decided they�re going to buy in, no matter what. Despite what many say about the young being driven out of the Lower Mainland, they�ve decided they�re not leaving.

�People I know here couldn�t imagine going somewhere else,� said Kent Maier, 31, who just closed this month on a near-$400,000 condo a few blocks from St. Paul�s hospital downtown. Mr. Maier, a federal government employee and his partner, Fabian Gutierrez, an immigration consultant in training, came from Edmonton a year ago and say they are never returning to that city, no matter what the house prices are there. �Most people I know are buying or planning to buy. Prices are high but they�re not going to change and you might as well get in.�

For Jordan O�Donnell and husband Chris Richards � she works as a specialized tutor, he is a social-media consultant at the Vancouver airport � buying became an emotional decision about moving to a new life phase.

�This was the first step of being an adult,� said Mr. Richards, 30, who said he and his 29-year-old wife chose Richmond because that�s where they grew up and where their parents still live.

They saved enough for most of the 20-per-cent down payment needed for their $300,000 townhouse � �a real fixer-upper, 43 years old, near Garden City and Williams� � and got over the hump with the help of Ms. O�Donnell�s father. (That saved them extra costs that get tacked onto a mortgage with a less-than-20-per-cent down payment.)

Some young homeowners have become slightly evangelical about the need for others to realize it�s possible if they stop being so clueless about money.

Eesmyal Santos-Brault, a green-building consultant, bought his first condo 10 years ago when he was 28 and working at a non-profit for near minimum wage.

He didn�t think he�d even qualify for a mortgage, but his mother, a real estate agent, told him just to try. She also offered to lend him the $7,000 he needed for the minimum down payment on a Commercial Drive condo.

�She kept pushing me even though I was saying: �I can�t qualify, I�m poor, I�m just a kid.�� To his surprise, he found the bank would indeed lend him money.

�I keep telling all my artsy, environmental friends that they should do this,� says Mr. Santos-Brault, who has since bought a townhouse in Strathcona while renting out the condo.

And he worries that people � those in certain fields who believe they�re above talking about money or who come from lower socio-economic backgrounds � are handicapped by the attitudes they�ve inherited from their families or social circle.

�They don�t know anyone who owns, they don�t understand money, they just don�t think it�s possible. I keep telling them: �It�s a conspiracy to keep you as renters. Then you can pay someone else�s mortgage.��

STOP BEING SO CLUELESS ABOUT MONEY RENTAILURES

namaste friends fucked around with this message at 18:00 on Oct 17, 2014

# ? Oct 17, 2014 17:58

Baronjutter: Dec 31, 2007; "Tiny Trains"

Cultural Imperial posted:

http://www.theglobeandmail.com/life...rticle21142644/

STOP BEING SO CLUELESS ABOUT MONEY RENTAILURES

I had to sit for about 5 min in flabberghasted silence after that article, especially the bolded bit. I just don't have words. The financial illiteracy in this country is shocking, and everyone takes their advice from loving realtors.
"Building equity" "paying someone else's mortgage"

I know far too many very reasonable people who moved to Vancouver and bought, or are planning on buying, or obsessed with buying. I guess when you combine financial illiteracy with a massive social/peer pressure to buy, and a massive amount of pro-buying disinformation it's hard for people to not get caught up in it all. It's often the people that can least afford it doing it because "I'm poor, so I have to buy now when I have the chance!"

Baronjutter fucked around with this message at 18:08 on Oct 17, 2014

# ? Oct 17, 2014 18:05

namaste friends: Sep 18, 2004; by Smythe

you might as well get in

# ? Oct 17, 2014 18:07

blah_blah: Apr 15, 2006

Everyone I know under 30 who bought a Vancouver condo (myself included) got substantial help from their parents. Also, when I bought in 2009, everything I saw under 300k in Vancouver (and lots over) was a complete shitheap, things must be way worse now. The only thing more depressing than someone on minimum wage buying a 300k condo is someone on minimum wage buying a 300k 50 year old shitheap condo.

# ? Oct 18, 2014 01:04

MickeyFinn: May 8, 2007; Biggie Smalls and Junior Mafia some mark ass bitches

Cultural Imperial posted:

http://www.theglobeandmail.com/life...rticle21142644/

STOP BEING SO CLUELESS ABOUT MONEY RENTAILURES

End state: everyone buying and renting from someone else, resulting in everyone paying everyone else's mortgage. Communism has arrived and it is wearing the guise of a housing bubble!

# ? Oct 18, 2014 01:36

etalian: Mar 20, 2006

MickeyFinn posted:

End state: everyone buying and renting from someone else, resulting in everyone paying everyone else's mortgage. Communism has arrived and it is wearing the guise of a housing bubble!

it's a real estate human centipede

# ? Oct 18, 2014 01:38

Baronjutter: Dec 31, 2007; "Tiny Trains"

etalian posted:

it's a real estate human centipede

Canadian Housing Bubble: real estate human centipede

# ? Oct 18, 2014 05:49

Professor Shark: May 22, 2012

quote:

�The headlines that portray the current younger generation as being more challenged than previous younger generations to enter the owned side of the housing market are balanced by the data that show continued increase in home ownership rates among young age groups,� the report said.

...

Mr. Ramlo acknowledged that some of the home-ownership patterns in Vancouver are puzzling, given the disparity between incomes of young people and house prices.

...

For Jordan O�Donnell and husband Chris Richards � she works as a specialized tutor, he is a social-media consultant at the Vancouver airport � buying became an emotional decision about moving to a new life phase.

�This was the first step of being an adult,� said Mr. Richards, 30, who said he and his 29-year-old wife chose Richmond because that�s where they grew up and where their parents still live.

...

Eesmyal Santos-Brault, a green-building consultant, bought his first condo 10 years ago when he was 28 and working at a non-profit for near minimum wage.

He didn�t think he�d even qualify for a mortgage, but his mother, a real estate agent, told him just to try. She also offered to lend him the $7,000 he needed for the minimum down payment on a Commercial Drive condo.

�She kept pushing me even though I was saying: �I can�t qualify, I�m poor, I�m just a kid.�� To his surprise, he found the bank would indeed lend him money.

�I keep telling all my artsy, environmental friends that they should do this,� says Mr. Santos-Brault, who has since bought a townhouse in Strathcona while renting out the condo.

This is the best article that The Onion didn't write... it's staggering.

# ? Oct 18, 2014 11:53

Dreylad: Jun 19, 2001

Baronjutter posted:

Canadian Housing Bubble: real estate human centipede

Quoting this for accuracy.

Also the attitudes in that article holy poo poo. Societal expectations are a hell of a thing.

# ? Oct 18, 2014 17:10

MickeyFinn: May 8, 2007; Biggie Smalls and Junior Mafia some mark ass bitches

etalian posted:

it's a real estate human centipede

If you are only renting, does that mean you are at the tail end? Or the head?

# ? Oct 18, 2014 18:14

ocrumsprug: Sep 23, 2010; by LITERALLY AN ADMIN

MickeyFinn posted:

If you are only renting, does that mean you are at the tail end? Or the head?

It's more of an Ouroboros really.

# ? Oct 18, 2014 18:59

etalian: Mar 20, 2006

Dreylad posted:

Quoting this for accuracy.

Also the attitudes in that article holy poo poo. Societal expectations are a hell of a thing.

lmao, Canada wants to be like big brother USA, "You better own a house or condo, or you haven't achieved success in life"

# ? Oct 19, 2014 04:33

namaste friends: Sep 18, 2004; by Smythe

http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/why-canadian-homes-are-more-unaffordable-than-ever/article15588053/

quote:

Low interest rates are a form of economic junk food.

It�s true in the housing market, where low rates have glossed over a striking decline in affordability in the past two decades. A sustainably strong housing market is based on fundamentals like a reasonable match between growth in incomes and home prices, not the economic equivalent of fat and salt.

Most of us have at least a basic idea of how much house prices have gone up in recent years, but there�s been a lack of curiosity about how buyers are keeping up. For some perspective, let�s look at incomes as taken from Statistics Canada data on weekly earnings going back to 1997, and real estate price data supplied by the Canadian Real Estate Association.

Back in 1997, the average house price in Canada of $154,620 was about 4.9 times the average pretax annual income ($31,484) of an individual with a full-time job. For the year through July 31, the average price of $379,725 puts houses at about 7.8 times income. ($48,497, all figures in current dollars).

A reasonable long-term assumption is that houses will rise in price by the inflation rate every year on average, and that wages will more or less keep up with inflation. That would give us a kind of affordability equilibrium in the housing market.

But house prices have surged ahead of income. In the past 17 years, incomes have risen by an average annual rate of 2.6 per cent, while house prices have gone up 5.4 per cent. Put another way, house prices have more than doubled over that period, while incomes are up by just a bit more than half.

The surge in housing prices is the great gift of the global financial crisis five years ago. The crisis drove interest rates down to historic lows, thereby allowing buyers to shrug off a growing disparity between their incomes and the cost of buying a house. The availability of 30-, 35- and even 40-year mortgages a few years back also helped obscure the income-house price gap.

But rates have been the big stimulus for the housing market. The prime lending rate at banks and credit unions � it�s used to price variable-rate mortgages � fell as low as 2.25 per cent from 6.25 per cent in mid-2007 before edging back up to the current level of 3 per cent. The average posted rate for five-year fixed-rate mortgages fell to 5.14 per cent at mid-year from 7.24 per cent in 2007.

You can chop roughly 1.5 percentage points off those five-year fixed rates to get the discounted costs that borrowers typically pay. On a $400,000 mortgage, the decline in these discounted rates over the past five years would have saved a buyer about $470 per month.

That�s what kept houses affordable while prices left income growth behind. Can we keep living this way? A lot depends on interest rates. The Organization For Economic Co-operation and Development said last week that Canada may need to start pushing up rates next year, and that our central bank�s benchmark rate may need to more than double by the end of 2015.

But that almost certainly won�t happen. BMO Nesbitt Burns has interpreted the Bank of Canada�s latest words on rates to suggest that the status quo will rule for at least another year. So we�re good on housing, right?

Low rates were needed to stabilize the economy back in the financial crisis, and they may still be required. But let�s recognize that they�re having an unhealthy effect on housing by getting people into homes that are going to be tough to manage financially.

At some point in the next couple of years, the economy is going to surprise us on the positive side. Anyone who buys a house now or bought in the past two years or less has virtually no chance of avoiding a sizable rate increase at renewal, and that means a higher cost of living.

A more enduring foundation for affordable housing is a match between incomes and house prices. It�s sometimes said that a house should ideally cost three times your annual salary. That�s laughably out of date, so let�s say three times your household income.

With two average wage earners in a household, the ratio of price to income falls to 3.9 from 7.8. If that seems okay to you, consider that house prices in October rose 8 per cent over the same month a year earlier on a national basis. Anyone get an 8 per cent raise lately?

# ? Oct 19, 2014 04:53

etalian: Mar 20, 2006

So are fixed or variable rate loans popular in Canada?

# ? Oct 19, 2014 05:02

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# ? May 9, 2024 06:55

namaste friends: Sep 18, 2004; by Smythe

etalian posted:

So are fixed or variable rate loans popular in Canada?

They're all variable rate loans. Americans think we're insane for diving into 5 year 'fixed' loans. Although, as has been mentioned by many in this thread, the crazy 30 year fixed rate loans Americans can get are costly defacto subsidies.

# ? Oct 19, 2014 05:05

The Something Awful Forums > Discussion > Debate & Discussion > Canada Housing/Debt: Trust me, I'm a landlord.

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