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.

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namaste friends: Sep 18, 2004; by Smythe

are you a loving idiot???????????????????

# ? Jun 16, 2017 18:16

Adbot: ADBOT LOVES YOU

# ? Jun 4, 2024 01:33

Subjunctive: Sep 12, 2006; ✨sparkle and shine✨

Probably, but I'm certain my house isn't going underwater even in the catastrophic case.

# ? Jun 16, 2017 18:17

Risky Bisquick: Jan 18, 2008; PLEASE LET ME WRITE YOUR VICTIM IMPACT STATEMENT SO I CAN FURTHER DEMONSTRATE THE CALAMITY THAT IS OUR JUSTICE SYSTEM.; Buglord

Not a realized loss until you sell, if you were funding your retirement through your house well...

# ? Jun 16, 2017 18:30

Cold on a Cob: Feb 6, 2006; i've seen so much, i'm going blind
and i'm brain dead virtually; College Slice

Dmitri-9 posted:

Is it a blind lot? Sounds like a job for adverse possession.

I don't know what a blind lot is, but this could be a case for adverse possession if the guy had lived there for years. Not sure how it will play out since he just bought it and THEN the owner asserted ownership.

I told a realtor friend about this article and he said that there's actually a public fund in Ontario that provides compensation and legal aid for just this type of scenario as well.

# ? Jun 16, 2017 18:33

unknown: Nov 16, 2002; Ain't got no stinking title yet!

I just had a person in TD's investment department tell me this morning that they were expecting government interest rates to stay steady or possibly even drop a bit. Reasoning was that Alberta was doing so badly that any rate increase would decimate the economy there. :stare:

unknown fucked around with this message at 18:52 on Jun 16, 2017

# ? Jun 16, 2017 18:41

Powershift: Nov 23, 2009

unknown posted:

I just had a person in TD's investment department tell me this morning that they were expecting government interest rates to stay steady or possibly even drop a bit. Reasoning was that Alberta was doing so badly that any rate increase would decimate the economy there.

I would think loving with people's million dollar mortgages would be a bigger worry than alberta.

# ? Jun 16, 2017 18:53

HookShot: Dec 26, 2005

Anyone who thinks the BoC would put Alberta's economy ahead of Ontario's is a complete moron.

# ? Jun 16, 2017 20:13

Baronjutter: Dec 31, 2007; "Tiny Trains"

HookShot posted:

Anyone who thinks the BoC would put Alberta's economy ahead of Ontario's is a complete moron.

But Alberta is Canada's economic engine, it's only a matter of time before Toronto and Montreal are replaced by Calgary and Edmonton, actually according to this article in this economic magazine based in Alberta that's already pretty much happened on all fronts from economic to cultural to moral. By 2020 Calgary will be a tier 1 global city and Alberta will have an economy rivaling California, so long as socialists and coastal terrorists don't get jealous and ruin it all.

# ? Jun 16, 2017 20:23

cowofwar: Jul 30, 2002; by Athanatos

Baronjutter posted:

But Alberta is Canada's economic engine, it's only a matter of time before Toronto and Montreal are replaced by Calgary and Edmonton, actually according to this article in this economic magazine based in Alberta that's already pretty much happened on all fronts from economic to cultural to moral. By 2020 Calgary will be a tier 1 global city and Alberta will have an economy rivaling California, so long as socialists and coastal terrorists don't get jealous and ruin it all.

Laffo

# ? Jun 16, 2017 20:29

mojo1701a: Oct 9, 2008; Oh, yeah. Loud and clear. Emphasis on LOUD!
~ David Lee Roth

Baronjutter posted:

But Alberta is Canada's economic engine, it's only a matter of time before Toronto and Montreal are replaced by Calgary and Edmonton, actually according to this article in this economic magazine based in Alberta that's already pretty much happened on all fronts from economic to cultural to moral. By 2020 Calgary will be a tier 1 global city and Alberta will have an economy rivaling California, so long as socialists and coastal terrorists don't get jealous and ruin it all.

Agreed, insofar as global warming will remove winter from Alberta and have temperatures closer to current California.

# ? Jun 16, 2017 20:34

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

One thing that's certain is that global warming is going to make the GTA even hotter and stickier in the summer with an even more oppressive farts and boiled chicken stench hanging over it.

# ? Jun 16, 2017 20:55

namaste friends: Sep 18, 2004; by Smythe

Wow so sad to go to that from being the world's most livable and vibrant city aka the best place on earth

# ? Jun 16, 2017 20:57

cowofwar: Jul 30, 2002; by Athanatos

EvilJoven posted:

One thing that's certain is that global warming is going to make the GTA even hotter and stickier in the summer with an even more oppressive farts and boiled chicken stench hanging over it.

I think we bought the only condo in Metro Vancouver that has A/C despite huge windows.

# ? Jun 16, 2017 20:58

Baronjutter: Dec 31, 2007; "Tiny Trains"

Most of my renter friends in Vancouver all have AC. Just lovely window units they installed them selves of course.

# ? Jun 16, 2017 21:00

cowofwar: Jul 30, 2002; by Athanatos

Baronjutter posted:

Most of my renter friends in Vancouver all have AC. Just lovely window units they installed them selves of course.

Sorry, I mean ducted forced air providing cooling and heating. This is not a thing in BC despite the downtown unit we rented being like 27C at night in May and too loud outside to open a window.

# ? Jun 16, 2017 21:09

Baronjutter: Dec 31, 2007; "Tiny Trains"

It's really sad because we know how to build fairly passively cooled buildings suited for the climate they're are built in, but we just don't build them because people want their lowest-bid glass curtain wall towers.

# ? Jun 16, 2017 21:28

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

But they're so pretty! *has curtains closed the entire time because of the unbearable glare, complete lack of privacy and heat overpowering the anemic (or completely broken) HVAC system*

# ? Jun 16, 2017 22:16

Juul-Whip: Mar 10, 2008

lol more like keeps them open all the time because sunlight is good and looking down on all the plebs owns

# ? Jun 16, 2017 22:49

Powershift: Nov 23, 2009

Who gives a poo poo how hot it is in a Vancouver condo.

You don't see dudes wondering how hot it is in their gold stash or their forex account.

Hell, living in them lowers the value, why would you expose your investment to that risk?

# ? Jun 16, 2017 23:07

namaste friends: Sep 18, 2004; by Smythe

I only just discovered this, but lots of people in vancouver in their 30s own condos and rent them out, only to rent condos to live in themselves.

# ? Jun 16, 2017 23:13

large hands: Jan 24, 2006

namaste faggots posted:

I only just discovered this, but lots of people in vancouver in their 30s own condos and rent them out, only to rent condos to live in themselves.

# ? Jun 16, 2017 23:17

namaste friends: Sep 18, 2004; by Smythe

http://www.cbc.ca/news/canada/british-columbia/2-mortgage-investment-corporations-facing-fraud-allegations-in-b-c-1.4164897

quote:

2 mortgage investment corporations facing fraud allegations in B.C.
40 would-be investors are out $1.1 million, according to the B.C. Securities Commission

The B.C. Securities Commission (BCSC) is accusing three B.C. men and two mortgage investment corporations of bilking 40 people of approximately $1.1 million dollars over a two-year period.

In a notice of hearing, the BCSC alleges Donald Bruce Edward Wilson, David Scott Wright and Patrick K. Prinster committed fraud between June 2011 and August 2013.

The notice says the trio operated DominionGrand II Mortgage Investment Corporation (DG Mortgage) and DominionGrand Investment Fund Inc. (DG Fund), which held themselves out as mortgage investment corporations.

The investors were told, according to the BCSC document, that their money would be invested in mortgages secured by real estate.

However, the BCSC alleges, the accused did not invest the money in mortgages and instead distributed the majority of it to their other companies, business expenses and commissions to finders.

None of the allegations have been proven.

A hearing before a BCSC panel of commissioners has been scheduled for July 11, 2017 in Vancouver.

how are we supposed to grow our economy if we trap all our small business owners in BCSC red tape

obligatory:

# ? Jun 17, 2017 00:30

RBC: Nov 23, 2007; IM STILL SPENDING MONEY FROM 1888

EvilJoven posted:

One thing that's certain is that global warming is going to make the GTA even hotter and stickier in the summer with an even more oppressive farts and boiled chicken stench hanging over it.

ah i see youre a fan of duffys tavern

# ? Jun 17, 2017 00:36

namaste friends: Sep 18, 2004; by Smythe

http://vancouversun.com/news/local-news/vancouver-real-estate-in-the-red?cn=bWVudGlvbg%3D%3D

quote:

Risky mortgages, shadow bankers threaten Vancouver housing market's stability

First in a two-part series.

Massive and risky home loans are increasing in number across Metro Vancouver, while mortgage fraud cases are also on the rise, connected to the growth of so-called �shadow banking,� a Postmedia investigation shows.

The trend of increasingly risky loans underlying Metro Vancouver�s high home prices is illustrated by Bank of Canada figures that show the rapid growth since 2014 of large mortgages made to people with relatively low incomes.

This is a growing danger for Vancouver�s real estate market, because under new tighter lending standards introduced for banks in fall 2016, the Bank of Canada says that many of these big mortgages can no longer be insured, and won�t be issued again by federally regulated lenders.

As a result of the tighter federal lending rules, borrowers trying to buy million-dollar-plus properties in Vancouver�s market are increasingly taking out dangerous loans from shadow bankers in a fast-growing and poorly regulated financial market.

There is also evidence of growing links between shadow banks and traditional banks, according to the Bank of Canada�s June 2017 report, as people borrow large amounts from shadow lenders to use as down payments in order to qualify for lower-interest loans from federally regulated banks.

�Price increases in Vancouver and Toronto have an element of speculation to them,� Bank of Canada Governor Stephen Poloz said last week, while issuing the bank�s biannual financial system review. The review showed �riskier characteristics are increasingly evident� in new mortgages.

A December 2016 Bank of Canada report estimates shadow lenders now account for $1.1 trillion in debt � about half as much as the traditional banking sector � and that over the past decade �these new players have become more important and have changed the face of the Canadian mortgage market � (as) tightening bank regulation can lead to migration of activity from the traditional banking sector to the shadow banking sector.�

Shadow lenders are non-bank lenders that increase the supply of credit in Canada�s financial system, without facing the regulatory oversight of banks. Critics say shadow banking is vulnerable to loose lending standards, mortgage fraud, money laundering, and collateral that is overly leveraged (also called re-hypothecated) � meaning debt backed by property assets is used over and over again by related lenders to issue more home loans, in ever riskier chains of debt.

Shadow lenders identified by Postmedia through a review of B.C. civil court filings, lending documents and regulatory filings, include mortgage investment corporations, hedge funds, and private lenders such as realtors, crowdfunding companies, real estate lawyers and mortgage brokers.

A number of cases involving these lenders show similar characteristics to the fraudulent loans exposed in the aftermath of the U.S. subprime lending crisis of 2008. Postmedia�s review of over 30 regulatory or civil court cases shows a trend of allegations that home buyers and real estate professionals are involved in deceptive mortgage applications that include exaggerating the incomes of borrowers, forged documents of home ownership used by multiple borrowers to obtain mortgages, phoney claims of offshore assets used to back home loans, falsely inflated collateral accepted by subprime lenders to fund real estate development loans, and falsified CRA tax return documents.

For Hilliard MacBeth, an Alberta-based author and wealth manager, the Bank of Canada loan risk statistics and the related growth of shadow banking in Vancouver and Toronto herald a crisis.

�These properties in Vancouver are so expensive that you need people either laundering money or loan fraud or people borrowing such large amounts of money that should never be allowed, in order to keep it going,� MacBeth said. �If everyone is reporting their incomes honestly in Vancouver, there is no way that housing prices can stay where they are.�

In B.C., the provincial regulator B.C. Financial Institutions Commission, known as Ficom, is in charge of monitoring the growing shadow banking sector. Postmedia�s review of Ficom enforcement hearings shows an increase in the number of alleged mortgage fraud cases in B.C., mostly linked to private mortgage lenders and mortgage brokers.

�We have experienced an increase in mortgage broker complaints in the last few years,� Chris Carter, acting registrar of mortgage brokers, confirmed. �About a third of our investigations relate to application fraud.�

The Bank of Canada warns of two key risks in Canada�s housing market.

The first is that property prices and household debt have reached such extremes in Vancouver and Toronto, that �just about anything� could trigger a correction, Poloz said last week. Highly indebted borrowers could be forced to sell in a correction, the Bank of Canada says, leading to further selling, tighter lending, and a potential domino effect on banks and shadow banks.

The other elevated risk is the potential for a shock from China�s volatile economy. China has its own shadow banking problems, the Bank of Canada says.

In China, �linkages between the banking and shadow banking systems are also becoming more complex and opaque, increasing the underlying credit risk,� the Bank of Canada�s December 2016 risk report says. �The experience of the 2007-09 global financial crisis showed that financial stability can be threatened by vulnerabilities originating in the shadow banking sector.�

As a result of the flood of money pouring from Mainland China into Vancouver real estate in recent years, some financial experts say they believe Canadian banks are directly exposed to shadow lending in China and the risks of so-called �ghost collateral� � meaning collateral that may not exist or is used continuously to secure loans for multiple borrowers.

Postmedia confirmed that Canadian banks are allowed by the federal regulator, the Office of the Superintendent of Financial Institutions, to accept collateral from China to secure real estate mortgages in B.C.

�OSFI does not dictate what type of collateral (federally regulated banks) can accept,� spokeswoman Annik Faucher said. �Whether the borrower is foreign or domestic, OSFI (allows) financial institutions to compete effectively and take reasonable risks.�

One U.S. hedge fund manager, who did not want to be identified, said: �We all know that the ghost collateral is a huge deal, and we all know that the shadow banking and other Chinese influence in Vancouver is profound. The issue it that the ghost collateral ends up re-hypothecated and laundered. So by the time it shows up in Vancouver, it will likely just look like a rich Chinese cash buyer with a suitcase of money. �

The spread of high risk loans in Metro Vancouver can be seen in Bank of Canada maps that show where new �high-ratio� loans � meaning the buyer makes less than a 20 per cent down payment on a home purchase and borrows the rest � have been issued. If the value of the loan is 450 per cent of annual income or more, the borrower is considered particularly vulnerable. The Bank of Canada will not reveal the number of high-ratio loans issued in Metro Vancouver, but says they are concerned with the rapid growth in these loans. In 2014, across Metro Vancouver, 31 per cent of new high-ratio mortgages were at least 450 per cent of the borrower�s income. In the second half of 2015, this figure rose to 37 per cent. By late 2016, it was 39 per cent.

The Bank of Canada says that under the new tighter federal rules, about 43 per cent of the high-ratio loans issued in Vancouver between September 2015 and September 2016 would have been rejected. This means either that an increasing portion of buyers in Metro Vancouver will be unable to get loans in the future or that the shadow lenders will fill the void.

There are four areas across Metro Vancouver in which more than 50 per cent of new high ratio loans are above 450 per cent loan to income. In an indication of rapid price rises or extreme speculation, South Vancouver, a neighbourhood bordering Granville Street and just north of Richmond, had an explosion in high ratio loans in 2016, from very few in 2015. The other three areas at the top of Bank of Canada�s risk scale, at over 450 per cent loan-to-income, are Burnaby�s South Slope neighbourhood, a northern part of Richmond, and a northern part of Delta.

GROWTH OF SHADOW BANKING AND GHOST COLLATERAL

Shadow lending can be as simple as a mortgage loan provided by one person to another in need of financing, or as Byzantine as the complex processes through which credit is created and exchanged and repackaged between various lenders to fund mortgages.

For example, the director of a Surrey lumber and real estate investment company explained to Postmedia that his group�s business model consists of pooling the real estate assets of an extended group of family and shareholders, and using these homes as collateral to borrow money from financial institutions. The borrowed capital is then issued in mortgages to home buyers that can�t obtain financing from chartered banks.

In another example researched by Postmedia, lending documents show that controversial �crowdfunding� developers are using single-family homes owned by investors in Vancouver to secure loans from subprime lenders that are active in B.C. in order to fund condo developments in Vancouver and Burnaby.

Ben Rabidoux, a Canadian analyst who provides market research to U.S. investors that are betting on a sharp correction in Canadian housing, said that his research with on-the-ground mortgage brokers suggests that loan fraud is a systemic concern in Ontario and B.C.

�The shadow market is absolutely booming,� Rabidoux said. �Of course B.C. has a mortgage fraud problem, but you won�t really see it until there is a problem with collateral in the system.�

Ghost collateral is explained in a recent investigation from Reuters that concludes that China�s financial system faces a potential collapse similar to the U.S. subprime mortgage crisis of 2008, due to �massive credit expansion,� and �collateral risks� connected to $17.2 trillion in outstanding loans as of April, up from $5.8 trillion in 2009.

The report says that 60 per cent of all loans issued in China�s system are backed by property, and that China�s property values are �wildly misleading� � which is part of the reason that China�s credit rating was recently downgraded. Reuters reported that Chinese lenders are prone to fraud �with loan officers turning a blind eye to the quality of collateral and knowingly accepting dubious and even fraudulent documents.�

In one 2016 B.C. Supreme Court case that suggests ghost collateral is connected to some home purchases in Metro Vancouver, a Richmond couple tried to obtain a high-ratio loan by putting down a $120,000 deposit on a $2.46 million Richmond home, in a subject-free offer.

In a statement of claim, Yan Zhao and Wei Na Hao said they were rejected by three national banks for financing to complete the purchase. They claimed the realtor who wrote the offer and a Royal Bank of Canada employee in Richmond then advised them to provide fake documents showing collateral in China in order to obtain a loan.

According to the claim�s allegations, the Richmond banker told the couple that RBC would provide mortgage financing to customers who provided certificates of deposit issued by banks in China showing they had �assets of equal value� to secure an asset-backed mortgage in B.C. They allege the banker told the couple if they didn�t have assets, they could ask family or friends in China to provide certificates of deposit, and the names on the documents could be changed.

The banker �confirmed that he had �helped� some of (the realtor�s) previous clients obtain mortgages from RBC in this manner,� the civil claim alleged.

Zhao and Hao also alleged they were told that �proof from China is the easiest to get and they could download forms from the Internet to fake proof of assets in China.�

The couple claimed that when their deal fell through they were not able to recover their deposit, legal filings say, and they are seeking return of their deposit and costs.

In Part 2 of this story on Monday, Postmedia News will look at a growing number of loan fraud cases in Metro Vancouver�s red hot real estate market, and criticism that the provincial government has too few fraud investigators.

# ? Jun 17, 2017 01:04

leftist heap: Feb 28, 2013; Fun Shoe

THIs tIMe iTs DifFeREnT!!

# ? Jun 17, 2017 03:46

James Baud: May 24, 2015; by LITERALLY AN ADMIN

BC Business magazine notices the distorting effects of the housing bubble, slightly late to the game:

https://www.bcbusiness.ca/How-the-real-estate-boom-has-left-British-Columbians-feeling-bothcut-richer-and-poorer-than-they-really-are posted:

Rachel Harriman and her husband have seven times their annual household income�which is in the healthy $100,000-plus bracket�socked away, thanks to the sale of a condo several years ago along with savings from their earnings. Justin Jacobsen, who makes a �comfortable six-figure salary� as an investment analyst, and his wife have also banked a huge wad of money. Nels Anderson and his wife have amassed about two years� worth of household income in savings.

These three Vancouver couples in their 30s are, by normal standards, more than well off. They, along with many other millennials in Metro Vancouver, have saved much more than their peers in any other major Canadian city, according to WealthScapes 2016, the latest annual report on the assets, income, spending and liabilities of Canadians published by BCBusiness research partner Environics Analytics. The 30-somethings in B.C. have savings and investments that are 50 per cent higher than the rest of their cohort in Canada. Those in Vancouver have 20 per cent more than millen�nials elsewhere in the province.

But they feel poor, for the same reason they have money in the bank or investment accounts. Even with their relatively good incomes, they can�t get into the property market�or at least not into any house, townhouse or condo that is roomy enough and close enough to where they work in Vancouver. That makes them cash rich and equity poor, in a city where real estate hysteria prevails. And all three couples, who have started families and are struggling with the different demands that makes, are enraged and frustrated about it.

�On every front, it�s all impossible,� says Anderson, who runs a video game development business. �We have zero debt, four university degrees between us and no security in anything at all.�

Anderson and his wife, Tila, pay $2,500 a month for a two-bedroom condo in the West End just big enough for them and their two-year-old, with a cramped office on the enclosed balcony. If that rental were ever to be yanked out from under them, their house of cards�complicated childcare arrangements, quick commutes to work�would collapse. But buying anything would mean more than doubling what they pay for housing, a piece of math that seems untenable.

�Obviously, there are people who are truly floundering in lived poverty out there,� says Anderson, trying to put his situation into perspective. He�s right. Many British Columbians are truly poor, without any of the three pillars of household wealth: company pensions, investments and real estate. Half of all single B.C. seniors get by on less than $25,000 a year, according to the Canadian Centre for Policy Alternatives. About 450,000 people in the province are still considered to live below the poverty line, even though 40 per cent of that group is working. But there�s also hardship among his cohort, Anderson contends. �For everyone in the middle, there�s nothing for us,� he says. �For young people, the deck is stacked against us.�

Digital designer Harriman and her husband, Eduardo Rabago, who works in software design, live in an 850-square-foot West End two-bedroom with their toddler for a modest $1,700. The only thing that seems to be available to them, if they don�t want to spend way over 30 per cent of their income on shelter, is �a house in East Van where someone died,� Harriman says.

Jacobsen is equally stymied. He and his wife, Golriz Fattahi, pay $3,000 a month for a floor of an older house near Vancouver City Hall, a roomy place they need for themselves and their two-year-old. They face having to pay double that amount if they want to buy even a small coach house in their area. One they looked at recently was selling for $1.5 million.

�It�s kind of stressful,� says Jacobsen, who at this point can�t stomach the idea of investing in such an out-of-whack real estate market. It�s made him especially resentful about the speculation and capital flight from overseas distorting Vancouver�s housing fundamentals, dynamics that make his everyday life uncertain. �You�re dealing with a landlord who you don�t know what his intention is,� he says. �My son has friends in the neighbourhood, and it would be hard to move.�

That�s one group of Vancouverites.

Then there are the others, the people who don�t look or act or have a lifestyle that says �rich.� And yet, by some standards, they are.

Judy and Peter Sauer worked at unspectacular jobs their whole lives. Peter, now 72, did property management and maintenance. He doesn�t have a company pension, just CPP and old age security. Judy, 62, worked in client services for insurance companies for 40 years. She has a company pension, but not a huge one, and a small stream of money from family oil rights.

But they bought their first house, in Coquitlam, for $47,000 in 1980. Buying and selling several more times�including one downsizing to a townhouse when Judy lost her job temporarily�they acquired their last Coquitlam house for $216,000 in 1997. This spring, they sold it for their asking price of $1.16 million and moved to a condo in New Westminster that cost only $448,000. That gives them a plump cushion to support their retirement.

The Sauers are part of a phenomenon that makes B.C. residents look, on Environics Analytics spreadsheets anyway, like the wealthiest group in Canada among a prosperous nation with ample real estate, pension and investment holdings. In fact, the company�s latest WealthScapes report dubbed Vancouver the nation�s �first city of millionaires.�

[...]

It adds up to a funhouse picture of household wealth in B.C., where income, real estate equity, pension security and total assets are sometimes wildly out of alignment. People may have high incomes and high savings, but nothing in real estate or pensions. Or they have modest incomes, but healthy pensions and reasonable slush piles of investment money. The result is groups of people who feel poor but aren�t really or feel rich who aren�t really, or those who feel both rich and not rich at the same time.

It�s a phenomenon that produces psychological stresses for the rich-but-seem-poor crowd and dangerous invitations to overspend for the modest-but-suddenly-rich cohort.

[...]

The sense of being impoverished, even if your household is pulling in $150,000 a year, also acts as a brake on other spending. �If you feel like you�re below your reference point, you will be more careful in saving up,� Hardisty notes.

[...]

It's actually pretty long, has a bunch of data tables that are full of mostly-useless averages rather than medians.

# ? Jun 17, 2017 07:21

Wasting: Apr 25, 2013; The next to go

It makes a good point that I anecdotally have observed: couples and individuals making 100-200k who limit their discretionary spending to near poverty level because they don't own a 600,000 condo or 1.2 million townhouse, and conversely, people making 50,000 a year buying new luxury cars every year because their parents gifted them a downpayment on a house 5 years ago.

Wasting fucked around with this message at 09:01 on Jun 17, 2017

# ? Jun 17, 2017 08:59

UnfortunateSexFart: May 18, 2008; ð» ððð« ð·ððð·
ð ð ð ð« ð®ð ð¾ð ð ð¡ððð

Risky Bisquick posted:

Are you interested in a 1m+ 4br/4bath unfinished basement 2 car garage 45x80 in the suburbs? Lots of people bought them

I read this and thought "yes, that would be amazing!!" Can't even get an old townhouse for $1 mill anymore here.

# ? Jun 17, 2017 10:17

namaste friends: Sep 18, 2004; by Smythe

http://www.msn.com/en-ca/money/topstories/praying-for-a-real-estate-crash/ar-BBCMeMT?li=AAggFp5&ocid=SL5MDHP

quote:

Praying for a real estate crash

A year after getting married, Alex Taylor and Rachel Tuttle decided it was time to buy a home and start a family. The two Vancouver residents were in their late 30s, and each had stable, full-time jobs�Taylor served as an urban planner while Tuttle worked for a credit union. They were debt-free, and after years of hard work, frugal living, and the sale of a previous home Tuttle had owned in England, they had a down payment ready. The couple figured they could buy a fixer-upper in Vancouver�s historically low-income Downtown Eastside neighbourhood. But soon after starting the hunt in 2015, their hopes were dashed. Detached homes were averaging $1.2 million, and even though Taylor and Tuttle qualified for a mortgage, they would have faced steep monthly payments of $4,000. They adjusted their expectations and set their sights on a townhouse on the outskirts of the city. Still, the cost was too high. �It felt very risky to put that much of your savings into one investment,� says Tuttle.

That risk hasn�t stopped plenty of their peers from diving into the white-hot real estate market. Some got in before the bubble; others took the plunge more recently in a fit of panic as it seemed prices would never stop escalating. Taylor and Tuttle sensed an opportunity last year, when the province put in a place measures, including a foreign buyer tax, to temper runaway house prices. Sales slumped, but prices are picking up again. �It�s discouraging,� says Tuttle. �We look at people who bought two years ago and they�ve now made 30 per cent on their purchase. You definitely feel like you�ve been left behind.� Taylor is tired of talking about the issue. �I know it�s mean to say and I know it would hurt those of our friends who completely over-extended themselves,� he says, �but honestly, we�re praying for a crash.�

He�s not the only one. As prices in Vancouver and Toronto have skyrocketed and affordability has eroded, scores of Canadians fear getting permanently shut out of the country�s two largest regions. Paying for all of the costs associated with a detached home in the Vancouver area requires 121 per cent of median household income; for a condo, it�s 46 per cent of income, making it Canada�s least affordable city, according to economists at the Royal Bank of Canada. Toronto isn�t far behind. Aggregate housing costs are 64.6 per cent of income, the worst level since 1990, when interest rates spiked.

Soaring prices have for months stoked resentment between the haves and have-nots of housing, as young, educated Canadians who in the past could be assured a shot at purchasing a home and achieving financial stability feel the opportunity slipping away. With every price spike, the antipathy has deepened, but the hostility has come into sharper relief after Ontario followed B.C.�s example this spring by introducing its own market-cooling measures. In May, sales dropped 20 per cent compared to the year before in the Greater Toronto Area while active listings surged 42.9 per cent from a record low. Those are the kinds of numbers that cause indebted homeowners to sweat, but serve as a balm for those on the sidelines in Toronto: like Taylor in B.C., many now openly cheer for the market to collapse.

Alex Taylor and Rachel Tuttle outside their rental home in Port Moody, B.C.
Photo by: Photograph by Christopher Morris
Nowhere is the antagonism more evident than on social media. Facebook and Twitter are home to daily (even hourly) outrages, of course, but a recent Toronto Life article touched off a firestorm and revealed deep frustrations about the state of the housing market. The author, Catherine Jheon, recounted the �nightmare� renovation she and her husband undertook, sinking hundreds of thousands dollars into a �crack house� purchased almost on impulse, with seemingly little to no concern for the low-income tenants who were evicted in the process. Many saw the couple as the worst kind of gentrifiers: privileged, callous and clueless. Jheon and her husband made numerous bad decisions during the renovation, but were still able to continue borrowing money (including from a wealthy relative) and ultimately rewarded for their fecklessness with a palatial detached house in an up-and-coming neighbourhood. On social media, readers expressed intense loathing (�I hate these people so much,�) threats of physical violence (�Dear god, I want to punch them in the face,�) and a longing for karmic justice (�I�ve never wanted the entire real estate market to completely collapse until now�).

It�s not all jealously, envy and social media griping. Missing out on home-ownership often means missing out on housing stability and security. Rental markets in Toronto and Vancouver are extremely tight, units suitable for raising families in are highly coveted, and being subjected to the whims of a landlord can make for a precarious existence. Hundreds of tenants in Toronto�s Parkdale neighbourhood, for example, have been withholding payments for more than two months to protest steep rent hikes in apartments meant to be rent-controlled. Many believe the goal is to squeeze them out so the building�s property management firm can re-list the units at market rates, well above what the current tenants are paying. Last month, the firm�s CEO nearly ran over a tenant advocate with his truck.

Everybody should be guaranteed shelter, but owning property in the city of our choosing is not a right. Nevertheless, Canada is a nation of homeowners�nearly 70 per cent of households own their dwelling (in the Greater Toronto and Hamilton Area, around 120,000 owners possess more than one residential property.) Everything in society pushes us toward home-ownership, from popular culture to social pressure, not to mention government policy. The Canada Mortgage and Housing Corporation provides mortgage insurance to buyers, transferring the risk from private lenders to taxpayers, helping to ensure the availability of low-cost capital to purchase homes. First-time buyers can withdraw up to $25,000 each from an RRSP account tax-free for a down payment, score tax rebates, and forgo capital gains tax on the sale of a primary residence. In 1983, a researcher for the University of Toronto looked at federal direct spending and tax expenditures related to housing, which totalled more than $6-billion at the time. Roughly 95 per cent of those dollars assisted homeowners; private renters accounted for the remaining five per cent. When urban and real estate economist Frank Clayton revisited the topic nearly three decades later, he found the ratio had barely budged.

READ MORE: How Canada completely lost its mind over real estate

While housing policy was crafted to ensure Canadians had equal opportunity to purchase a home, runaway prices are driving a wedge between those who can afford to and those who can�t. �Housing has helped the rich get richer, as the poor get poorer,� said CMHC president Evan Siddall in a speech this month. As prices escalate, homeowners build up equity that can serve as a retirement fund. A Manulife survey found nearly 20 per cent of Canadians expect to use home equity to help finance retirement; another survey from TD Bank Group, meanwhile, found 70 per cent of millennials expect to be working well past age 60. Tuttle and her husband fear that not owning a home means they�re falling behind financially. �The primary purpose of a house will be to have somewhere to live of course, but it would be a pretty solid and safe investment as well,� she says. �There�s not really a good alternative for people like us to put our money into other than real estate.�

House-rich Canadians are taking full advantage of price gains, tapping into home-equity lines of credit and (to non-owners, at least) flaunting their conspicuous consumption. The Financial Consumer Agency of Canada found the number of households with a HELOC and a mortgage against their home has increased nearly 40 per cent since 2011, prompting commissioner Lucie Tedesco to caution this month the trend �may lead Canadians to use their homes as ATMs.� Last year, Canadians withdrew $12.8 billion in home equity to fund renovations, according to Scotiabank Economics, and another $3.6 billion for �other� purposes. HELOCs can be risky, to be sure, but it�s a source of financing non-homeowners simply cannot access.

�A lot of people have these totally unsustainable lifestyles they�re only able to pull off because, by doing nothing but sit on their rear end, their net worth goes up by a few grand every month,� says Toronto resident Phillip Mendon�a-Vieira. �I don�t think there�s anyone who doesn�t own property who�s not secretly, like, �F�k you, guys. This is unsustainable.�� Mendon�a-Vieira has taken a keen interest in housing. He co-founded a group called BetterTO to organize discussions on issues facing the city�the first, held in March, focused on housing. The 30-year-old has shared a rental for the last two years; the owners of the house took advantage of the city�s exorbitant prices and cashed out a few months ago. Mendon�a-Vieira faces the prospect of moving again, at a time when he and his partner would like to settle down in preparation for having kids in the near future. Had Mendon�a-Vieira, who runs a small startup, and his partner, a lawyer, been in this situation a year or two ago, they might have been able to purchase a home. But then the average home price soared more than 30 per cent since the start of 2016 alone. �Frankly, it�s kind of inconceivable to own a house,� he says.

A friend, however, recently suggested buying a property with Mendon�a-Vieira and his partner, and the trio has started sending each other property listings. He�s not getting his hopes up. �If we don�t find something in the next six months, I don�t think we ever will,� he says. Renting would be an acceptable�provided they could find a unit to accommodate a family, and they had stability of tenure (as a renter in Toronto, he�s had to move about once every 18 months.) �I�d like to know I can have a place to hang my hat,� he says. �The way policy has been set up in most of Canada, the only way to achieve that is to own property.�

What makes matters more frustrating is homeowner opposition to rental and multi-unit developments. �We have a housing shortage, and a large group of people who don�t want more housing�often people who already have secure housing, and who get richer if there is a shortage,� says Daniel Oleksiuk, a member of Abundant Housing Vancouver, an organization that advocates for changing zoning practices to build more multi-unit housing. �There�s a class of landowners that passively grow wealthy, and another class that�s struggling to pay rent,� he says. �That�s not the Canada I learned about growing up.�

To take one example, a developer submitted a proposal to turn a derelict church building in the Douglas Park area of Vancouver into multi-unit development. Residents of the area�made up of multi-million dollar, single-family homes�mobilized under the umbrella of the Douglas Park Neighbours Association (DPNA). Lawn signs bearing messages such as �Ozone Yes. Rezone No� sprung up, and residents voiced their complaints to the city. By most measures, the project was modest: the developer intended to build just 10 units. Last year, the developer submitted a new proposal for only six units, plus reduced space for bicycle parking. �It�s death by a thousand cuts,� Oleksiuk says.

DPNA member Dale Leibel, who purchased his Douglas Park home in 1999, says the organization suggested a plan to the developer that would maintain the same level of density, but is more in-tune with the single-family feel of the neighbourhood (the developer was unavailable for comment). Still, the neighbourhood fears the proposal could set a precedent. �If all of a sudden there becomes multi-family applications put forward, it will change the feeling of the neighbourhood,� Leibel says. �When I walk out my door in Douglas Park, it�s alive, it�s breathing. It�s the ideal neighbourhood everybody wants, and I don�t think we want to take changes to a neighbourhood that�s working lightly.�

The DPNA opposes the current six-unit plan, too. Proposed lockout suites raise �the possibility of Airbnb rentals and higher density,� warns to the group�s website. The association lists a litany of other complaints, including noise and dust during construction and threats to property values. Meanwhile, the DPNA is offering �TAKE A STAND� t-shirts and lawn signs through its website.

At a time of nosebleed prices, debt-fuelled spending and opposition to density, who wouldn�t want the market to take a hit, if only out of spite? The reality, though, is that house-price corrections don�t take place in isolation�and there are far-reaching consequences.

One way for price growth to halt or even fall is for interest rates to rise. But affordability wouldn�t necessarily improve since mortgage carrying costs would also rise. An even less attractive remedy is a recession. A severe economic shock could be devastating for heavily indebted households, curb consumer spending and business investment, and send house prices cratering.

But recessions, of course, are often accompanied by a spike in unemployment. Anyone waiting for a crash could find themselves out of a job when and if it happens�hardly an ideal situation in which to secure a mortgage and buy a house. �You would have to be in a position to do it when the economy is going through its toughest time,� says Robert Kavcic, a senior economist with the Bank of Montreal. The ideal opportunist would need stable employment, a down payment squirrelled away and impeccable market timing. And even a 30 per cent correction in Toronto house prices would still leave homeownership a remote prospect for many. �Homes in Toronto would be more affordable, but they would still be reasonably expensive by Canadian standards,� says Jean-Fran�ois Perrault, chief economist at Scotiabank.

As it stands, the fundamentals underpinning housing markets in Vancouver and Toronto remain strong�local economies are growing, immigration is robust and interest rates are low. Vancouver�s market dipped after the implementation of the foreign buyer tax last year, but prices are rising again. By one measure, it took eight months for the city�s market to overtake its previous high. Toronto, where the provincial government put in place a similar measure in April, looks to be on the same path. �We�re more likely to see something like Vancouver rather than a prolonged fall in prices that would somehow make Toronto housing much more affordable,� Perrault says.

Symington Fedy, second from left, with her family in Vancouver
Photo by: Photograph by Christopher Morris
It�s a bitter pill for many. After 20 years of renting in Vancouver, actress and playwright Emelia Symington Fedy has come to the realization that she�ll never have secure housing�let alone own a home�in the city she loves. Fed up with her city�s real estate market, she�s packing up her family and moving to Halifax. �It�s heart-breaking,� she says, �but living here is not good for my mental health.� She had been renting in Vancouver�s Downtown Eastside for ten years, during which time she�d built a successful local theatre company, a strong community of friends, and had had two children with her husband who also works in the arts. She had no intention of moving, until pressure from the housing frenzy began weighing on her. Fearful that her landlord would �renovict� her at any moment, her �momma bear instincts� kicked in and she began craving the security of home-ownership. But in Vancouver, on two artists� salaries, that wasn�t an option. �The way rents have gone up, if we were kicked out of our [three-bedroom] home, we would have to live in a one-bedroom basement,� she says.

Instead, she and her family will live in a four-bedroom heritage home in the north end of Halifax where their monthly mortgage payments are roughly half the cost of renting a two-bedroom apartment in Vancouver. �I walked into that house and I started to bawl,� she says. �I can see us there. I can see the kids in the tiny rooms. There was something about this little nest that no one can evict me from�that feeling brought me to tears

# ? Jun 17, 2017 15:00

mastershakeman: Oct 28, 2008; by vyelkin

Out of curiosity, is the insane desire of "I must own a house to have kids" explicitly an Anglo Saxon post war idiom?

# ? Jun 17, 2017 15:13

Rime: Nov 2, 2011; by Games Forum

mastershakeman posted:

Out of curiosity, is the insane desire of "I must own a house to have kids" explicitly an Anglo Saxon post war idiom?

Yes. But only for the middle class.

# ? Jun 17, 2017 15:31

HookShot: Dec 26, 2005

mastershakeman posted:

Out of curiosity, is the insane desire of "I must own a house to have kids" explicitly an Anglo Saxon post war idiom?

You know all those ads that say "professionals only"? That's code for "no loving kids". I can't imagine how hellish it would be trying to find a place to rent if I had kids, even a dog is bad enough.

# ? Jun 17, 2017 17:19

Powershift: Nov 23, 2009

Rime posted:

Yes. But only for the middle class.

Actually, it's more for those trying to join the middle class.

The middle class desires to own 30 houses to retire off the passive income.

# ? Jun 17, 2017 17:21

cowofwar: Jul 30, 2002; by Athanatos

HookShot posted:

You know all those ads that say "professionals only"? That's code for "no loving kids". I can't imagine how hellish it would be trying to find a place to rent if I had kids, even a dog is bad enough.

For rent: single asian females only

# ? Jun 17, 2017 17:27

leftist heap: Feb 28, 2013; Fun Shoe

mastershakeman posted:

Out of curiosity, is the insane desire of "I must own a house to have kids" explicitly an Anglo Saxon post war idiom?

The CHMC was founded near the end of WWII explicitly for the purpose of housing soldiers and the subsidization train has never slowed down since. If you don't own a home you are directly and indirectly missing out on a large number of government transfers, so what should people do? It's not just some weird pathology, it's directly encouraged and subsidized by every level of government.

# ? Jun 17, 2017 18:53

Subjunctive: Sep 12, 2006; ✨sparkle and shine✨

leftist heap posted:

The CHMC was founded near the end of WWII explicitly for the purpose of housing soldiers and the subsidization train has never slowed down since. If you don't own a home you are directly and indirectly missing out on a large number of government transfers, so what should people do? It's not just some weird pathology, it's directly encouraged and subsidized by every level of government.

I didn't really think about this before I bought, and now I feel a bit guilty. How much of the transfers go to owners vs mortgage-holders, would you say?

# ? Jun 17, 2017 19:09

cowofwar: Jul 30, 2002; by Athanatos

Subjunctive posted:

I didn't really think about this before I bought, and now I feel a bit guilty. How much of the transfers go to owners vs mortgage-holders, would you say?

95% to owners, 5% to renters is a number I've read.

# ? Jun 17, 2017 20:08

Subjunctive: Sep 12, 2006; ✨sparkle and shine✨

cowofwar posted:

95% to owners, 5% to renters is a number I've read.

But f.e. CMHC is a transfer to mortgage-holders, while low property taxes is a transfer to owners. That's the split I'm interested in.

# ? Jun 17, 2017 20:48

blah_blah: Apr 15, 2006

Subjunctive posted:

I didn't really think about this before I bought, and now I feel a bit guilty. How much of the transfers go to owners vs mortgage-holders, would you say?

Most. Capital gains exemptions (by far the biggest benefit in practice) and smaller benefits like property tax reductions/deferrals go to owners regardless of mortgage status. Mortgage holders have only really significantly benefitted from artificially low interest rates in the last decade or so (and even that relative benefit is questionable because ZIRP has been a tremendous boon to savers/investors as well).

# ? Jun 17, 2017 20:48

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# ? Jun 4, 2024 01:33

UnfortunateSexFart: May 18, 2008; ð» ððð« ð·ððð·
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mastershakeman posted:

Out of curiosity, is the insane desire of "I must own a house to have kids" explicitly an Anglo Saxon post war idiom?

Do you think it's insane to want a bedroom for your child? Two bedroom condos start at $700k now.

# ? Jun 17, 2017 20:59

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

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