Its Friday in rainytown, lets do the open topic thing:
-Buy only what you can afford
-Emotional rollercoaster of leveraging
-Loonie at five week high
-US home price decline sets record
-UK Mortgage approvals down 44%
-New Home sales at 12 year low
-Tips on surviving a recession
What are you seeing out there? Post your news, links and anecdotes here!
"So essentially you're not taking other peoples incomes into your factor of what local homes should cost?"I'd love to take other people's incomes… it would help me buy real estate… but the "other people" might have objections if i took their income…"Ooookay" is just the sound of you going one way and me going the other. that's still allowed, right?
Dosh is an agent, of COURSE he's going to say "buy now".Never mind that if you rent now and buy later you can live in a bigger, better place now AND later. His only concern is to keep things going a little longer.Mark my words, if you buy now you will regret it, whether it's within your means or not. Losing half of the value in the biggest purchase you will make in your life doesn't sound like fun to me. Especially if you knew that waiting for a couple of years would let you get twice the home for the same price.
Dosh said…"Buy what you can afford and let the rest take care of itself".Well Said.Actually that's what the artical meant for and all these Freako,Mold,and Panda etc.are involved to disscuss buying vs renting an years old issue.Yim Yip's article is meant to get into the market and does not force people to buy what they can not afford.He is trying to differenciate a fact when one think of R.E. price goes up or down he goes tend to go up,what does that mean?Let's say Panda is renting a million dollar house on west side but willing to buy only after 50% fall.bring yim yip back here r.e.tend to go up………so price won't fall but panda will run out of age and time…..now bring back yim yip again he goes buy what you can afford mean…Panda should leave west van and… Read more »
If you want to get super rich the best way to do it is to find an asset class that has gone up tremendously over the last five years and has completely detached from fundamentals.. That means that 'it's different this time' and you're practically gauranteed to get super-rich!Worked for me with Nortel and 360 Networks…
you're not taking other peoples incomes into your factor of what local homes should cost?I know you were replying to Richard and not me, but I cant let that one slip. You do know about our local incomes right?They ain't that high.
Ooookay….So essentially you're not taking other peoples incomes into your factor of what local homes should cost?Yeah, well Gee. Thats just part of the reality around here. Buy what you can afford and let the rest take care of itself.
what is the market value of your legal tender against the claims that held against it, which is the Government of Canada? None! ZiltWTF vanman?!? you sound like a completly looney doom and gloomer – Are you saying that the only thing that has 'real value' is property? Whats that deed printed on? OH.. paper.If things get so bad that GIC's aren't honored I think there may be some issues with land deeds, etc, but I really dont think things are going to get that badBut by all means if you think its necessary dig a giant concrete pit in the ground and fill it with gold and canned food. Good luck with your version of the future!
Money saved from renting is NOT equity, because legal tender has no claims against anything. It's just a piece of paper.I am not done with this assinine argument just yet. A man wins $14 million playing Loto 6/49. He shoudl be excited, but he is not because his winnings, legal tender has no claims against anything. It's just a piece of paper.Well vanman, give me all your money. It has no value to you apparently.
So you don't know when is a good time , but you do know now is not a good time? Where does your knowledge end?As an analogy, which is easier to predict? Which current fads will die out, or what will become a future fad? Asymetry IMHO.Second, times when price to rent is relatively high is probably a bad time to buy, and vice versa.
Money saved from renting is NOT equity, because legal tender has no claims against anything. It's just a piece of paper.WFT are you talking about? Fine, he bought stocks for the whole lot.
Do you agree with me that all BC owners were once renters in the first place?!?……I don't know why spent 500 words on this. It is fairly black and white. Since rental income (or rent equivalent) doesn't come close to matching carrying/opportunity cost, there is absolutely no building of equity. Rather, there is a loss of equity vis a vis a renter.And many of them bought into the 80s market, paying sky high prices and double digit interest rates.1. Mr. X bought in 1981. Mr. Y rented 2 years before an buying equal dollar amounts worth of property. Mr. Y's property is worth 54% more to this very day. Market timing is not easy, but let's not pretend that entry does not matter.
If you want to get super rich the best way to do it is to find an asset class that has gone up tremendously over the last five years and has completely detached from fundamentals.. That means that 'it's different this time' and you're practically gauranteed to get super-rich!
"So you don't know when is a good time"Yes, i already said i don't."…, but you do know now is not a good time?"I did not mean to imply I KNOW now is not a good time. It is just an OPINION, which i had no intention of dressing up as "NEWS"." Where does your knowledge end?"I know enough not to believe everything I read in the papers and the internet. "And as far as affordability goes thats an individual thing. How do you know that there aren't millions of people earning over $100k per year here? The more you have on hand the less of a big deal 'affordability' becomes."Ooookay….
You said:The Vanman: I can’t find a single post extolling the virtues of renting for life, and your challenge to pin point perfect time to enter the market is a straw man’s argument.I say:We as adults make choices. Renting for life is a choice, an individual made choice. I have a friend who loves to bicycle tour all over the world for as long as I've known him. Owning a home makes no sense. His home would be left empty for the majority of the year. He's not a bum either as he used to teach at McGill. It was a lifestyle choice.My wife always told me that he wasted his talents to a bike. He could easily make lots of money, instead he lives a life as a traveling bum. I respect him for what he does. But generally,… Read more »
Blogger Re-diculous said… Thank you Freako – that claim had to be addressed. I might add that all those with interest only mortgages ain't accumulating any equity – again, appreciation/depreciation asideI say:Except Freako neglected to tell you and many of us one thing.Money saved from renting is NOT equity, because legal tender has no claims against anything. It's just a piece of paper. When money was no longer pegged against the gold standard, it's worth is determined by the Federal Reserve. We now know that money depreciates every year. It's called inflation.Can a home on a piece of land be re-printed again and again by the Government of Canada? Hmm, I don't think so. But heh, maybe Freako knows something I don't.
Freako said;Actually, right now it is the renter accumulating equity if he reinvests the rental savings. Appreciation/depreciation aside of course.I say;Do you agree with me that all BC owners were once renters in the first place?!? And many of them bought into the 80s market, paying sky high prices and double digit interest rates. Lots bought in the 90s where the afford ability index were 65%? How are they doing right now?!? I know some of them had finished paying, owning homes outright that are now worth 1.2 to 2 million dollars. Some had already sold, realizing profits already. I'm not saying that it was easy to mortgage a home. Me and my wife went through hardship with our kids. It certainly wasn't a walk in the park either. But we came through and so did many others including Mr.… Read more »
So you don't know when is a good time , but you do know now is not a good time? Where does your knowledge end?And as far as affordability goes thats an individual thing. How do you know that there aren't millions of people earning over $100k per year here? The more you have on hand the less of a big deal 'affordability' becomes.
"When do guys think it's the right time to get into the RE market?"You got me there. I really don't know. But then, I don't write advice and post it as news in the local paper."Please give me an exact year and date after 2007. Can you or could you?"No I can't. That's one of the problems i have with the "news" he gives. For one thing, good news to me answers "What, why, when, where". His piece is missing out on a lot of those."Jim Yih's article never did mention market timing, nor did he advocate to buy anything other than to say that owning a home is better than renting. Are you guys putting words into his mouth?"Not me who wrote these BIG BOLD WORDS"IT'S BETTER TO GET INTO THE MARKET" – Jim YihAnd you know, if someone… Read more »
Weekly REBGV numbers are up on my site:http://www.nvcondos.ca/index.jspHappy New Year!
The Vanman: I can’t find a single post extolling the virtues of renting for life, and your challenge to pin point perfect time to enter the market is a straw man’s argument.Is it a good time to buy specifically in Vancouver, and specifically at this time, when the affordability index is at 70%? The obvious answer is: NoThe last time the affordability index was this high, a combination of a price crash, and a reduction of 1500bsp brought the affordability levels back in line.I don’t think we can count on another 1500bsp cut in interest rates, but I am quite sure a price crash will bring the affordability level back to long term trend.As for Patricia, she is a pumper, and not in the good way, I can’t be sure, but I do believe she is a VP at the… Read more »
Thank you Freako – that claim had to be addressed. I might add that all those with interest only mortgages ain't accumulating any equity – again, appreciation/depreciation aside
Buying a home ultimately is better than renting since you are accumulating equity. Regardless whether you are going through an up or down market, you still need a roof over your head. Actually, right now it is the renter accumulating equity if he reinvests the rental savings. Appreciation/depreciation aside of course.
m-: thanks for the comment on tax deductibility. Of course, one may wish to check one's particular situation with an accountant 🙂 My main point is not deductibility specifics but that Yih's article is overly simplistic if he doesn't even allow for such possibilities to exist.
Panda: keep in mind that mortgage interest for investments is only tax-deductible if you have an investment with a reasonable chance of making a profit. CRA does not consider capital gains as part of your expectation of making a profit.A significantly cashflow-negative "investment" property, where the tenant is not paying enough to cover all of the strata fees, taxes, maintenance, and mortgage interest is not technically a for-profit business, and if CRA finds out, you'd lose the tax-deductibility of mortgage interest and other costs associated with the property. Another risk to add to the pile…
Yih's piece can be picked apart in a number of ways. He doesn't seem to acknowledge in the second one that mortgages for investments are tax deductible. And also if "Jim Yih's article … say(s) that owning a home is better than renting" then he is making a broad-based statement that is often false. Eg, some people go bankrupt owning, or spend most of their lives house-poor. And yes, in fact some can make much better use of their capital in equity markets or elsewhere. It would be much more interesting if the Sun printed an intelligent article arguing against home ownership (like that will even happen!).