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#3 Oversupply will drive priced down.

#7 Houses in outlying areas will be worth nothing.

Well #7 eradicates #3, they can’t both be true, if housing in outlying areas is abandoned it’s no longer housing and the oversupply disappears.

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The overbuilding was not the result of meeting demand for housing, it was all about meeting the demand for speculative vehicles. Once the speculators are slowly roasted year after year by declining prices, then eventually nobody will be thinking that housing is a “great investment.” Once that belief system has been eradicated via everyone who acted on it being destroyed financially, then housing will once again be viewed as shelter rather than a speculative vehicle for investment or “get rich quick” deals.

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http://tinyurl.com/bigdrop

Oversupply and Compression: How the Median House Price Will Fall from $215K to $70K

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“If you lived here, you’d be home by next Thursday.”

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You guys are killing me with all this! “Save me from myself!” It’s like asking your buddy to hold your money at a casino because you’re a compulsive gambler.

Maybe dude had a girlfriend he didn’t trust. If they were common law at the time of the purchase he’ll be in court anyways.

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Your right, his girlfriend would have pissed it away on clothes and jewlery. THe logical decision would have been to get himself a boyfriend. THat way at least the could borrow the wardrobe!

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This would not be capital gain….interest income would be taxed at 43.7% x 126,000 = $55,000 (instead of $63,000).

Good, his girlfriend would have another $8,000 to spend on clothes, jewellery, etc.

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Top tax bracket in BC is 43.7% (fed and provincial together). He could have. Top capital gains tax (which this would fall under I believe) is 21.85%.

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Taxman would have taken about 50%, which would net him about $63K.

$63K forgone is not bad considering he had to figure out a few things:

a) His girlfriend would have found a way to piss away $63K in clothes, jewellery, etc.

b) She would also find a way to take a cut of the $3.6 MM windfall

c) Could have invested $3.6 MM in presales last year….hmm, how would that investment look like today?

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The $126k figure is based on a conservative GIC rate of return of 3.5%. The point being that the cost for taking the time to think over his windfall is shared by the taxman.

Financially speaking that was not the best decision for sure but considering that numerous studies have shown the adverse effect of winning the lottery, taking time to think about it might not be as bad an investment as it seems. Mind you a year seems a bit much but that’s a luxury he can certainly afford.

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Don’t recall mentioning gross or net in the previous post actually. Just drawing your attention to the fact that he stuffed it under the mattress and lost potential investment income. Where he invests it or how much tax he pays is utterly immaterial. He simply made a poor financial decision. I ‘trust’ you get it now.

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Too funny. So making zero is better than 129k before taxes? I’m glad your not my accountant

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LOL! Exactly! Their logic is ironclad!

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So a good chunk of my salary goes to the taxman… does that mean should I just tell my employer I don’t want to get paid?

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I love deadpan deliveries like this. LOL

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paper gains paper losses…..

you’d have to sell to lock in your capital appreciation….. everything else is just BS

…and he does sound a bit desperate…

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Hah! It’s almost like they’re trying to sell you something.. and will say anything to get the deal done.

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Another reason not to trust any bloger for financial advice. A good chunk of that $126k would have been going to the taxman.

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Well, you just can’t:
http://www.cbc.ca/canada/briti.....stler.html

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I find it more amusing that they contradict themselves without batting an eye.

“Yes, ladies and gentlemen, the average price of a detached home is up 3.9% from last year.” (goes on to explain how this makes owning cheaper than renting)

“As sellers wise up to the current market you can expect price reductions, cash bonuses and free plasma TV’s.”

So, essentially they’re saying, prices are going up, and that’s GREAT! Oh and by the way, prices are coming down and that’s AWESOME!

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