215 Responses to “CMHC to help cash-strapped owners”
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March 25th, 2009 at 4:25 pm
Huge layoffs still ripping through the economy. Good news from local bullshit media. Ozzie Jurock has a new ‘how to ‘ book out.
IBM to cut 5,000 jobs in U.S.March 25, 2009 4:51 PM ET advertisement
Article tools E-mail this article Print-friendly version Discuss this articleStocks mentioned in this articleInternational Business Machines Corp (IBM) Stock Quote, Chart, News, Add to WatchlistSun Microsystems Inc (JAVA) Stock Quote, Chart, News, Add to WatchlistRelated newsBusiness HighlightsWall Street gives up some ground after huge gainsHospira, Carnival, Walt Disney are big moversGold prices fall on move out of safe-haven assetsOil rallies to near $54 a barrel
All Thomson Reuters newsNEW YORK (Reuters) – IBM will cut about 5,000 jobs in the United States, adding to similarly large cuts in the past few months, sources with knowledge of the matter told Reuters on Wednesday.
The job cuts will account for over 4 percent of IBM’s U.S. workforce, which totaled around 115,000 at the end of 2008. The sources, who were not authorized to speak publicly on the issue, said the cuts will mostly be in IBM’s global services business, which includes outsourcing and consulting services.
I know Nokia has also added another 1000 layoffs to the list in addition to the previous announcements.
Anyone thinking that just because it hasn’t been announced on CKNW doesn’t mean it’s not happening
March 25th, 2009 at 4:25 pm
grindingtoahalt:
The odds of a depression scenario have dropped considerly from the perception 6 months ago.
If we enter a depression, it will have little resemblence to the one in the 30′s. So many things have changed since then that comparisons are simply wild guesses. If anything a modern depression will look like Japan in the 90s.
March 25th, 2009 at 4:18 pm
Depression is a word the sticks in every politicians craw even when the facts are staring them in the face.
Why this recession is so bad
First things first: Even though it may seem obvious to most that this is the worst downturn since the Great Depression, the economy has experienced other serious recessions in the past, particularly in the mid-1970s and early 1980s.
But this recession dwarfs those two for several reasons.
In terms of length, the longest post-Depression economic decline was 16 months, which occurred in both the 1973-75 and 1981-82 recessions. This recession began in December 2007, which means that it will enter its 17th month next Wednesday.
The current recession is also more widespread than any other since the Depression. The Federal Reserve’s readings show that 86% of industries have cut back production since November, the most widespread reduction in the 42 years the Fed has tracked this figure.
http://money.cnn.com/2009/03/2.....2009032517
The only thing thats differant is the social safety net which delays total collapse. The economic numbers are in fact worse than the Great Depression and eventually even the spin doctors will have to come out of the ‘happy closet’ and admit it. That will only happen when they have lost thier own jobs and htey no longer hold a maandate to lie.
March 25th, 2009 at 4:00 pm
“Ella, you’re the one engaging in semantics now, not I.”
No, I’m just speaking English.You commended perma-bulls for their foresight. By your definition a perma-bull could not have foresight. It’s a completely pointless argument.
But you only came on here to insult people anyway, not for a real discussion.
March 25th, 2009 at 3:59 pm
Local newspapers are not adjusting themselves to the reality of economic opinion. It appears that optimism is a local phenomena but as news from elsewhere bores in Vancouver will increasingly become mired in the fact that we have entered a serious recession. Personally , I think we have three factors pushing the “don’t worry be happy news stream” in the local rags. One is advertising from the developers desperate to bail, second is the provincial election as advertised by the cash rich Liberals, third, Olympic sponsors contractually bound to advertise the ‘good news’. These three factors will go down one by one in succession and will result in a longer, delayed and more serious recession that most people realise.
“Seven in 10 Canadians believe the economy is getting weaker, which is one of the highest levels since Environics started tracking this question in 1986. In Greece, 78 per cent think the economy is worsening.
Half of Canadians believe their economy is already in recession, while 91 per cent of Japanese think theirs is.
Fifty-six per cent of Canadians say the current economic climate is the worst in their lifetimes, which puts Canada in the middle of the global pack on the issue. By comparison, nearly 89 per cent of Americans feel this way, while only 29 per cent in China do.
Twenty-nine per cent of Canadians believe the U.S. and former president George W. Bush are to blame for the economic situation, while 45 per cent of Japanese think so and only 17 per cent of Americans do. Globally, national governments were blamed most often for the crisis.
After the U.S./Bush, 14 per cent of Canadians feel their federal government is to blame for the crisis, followed by the financial industry (six per cent) and corporate greed (six per cent).
Consumer confidence has weakened globally, with negative sentiment ranging from 20 per cent in China and Germany to 83 per cent in South Korea. Half of Canadians say this is a bad time to buy, putting Canada in the middle of the pack.
Three in 10 Canadians are worried about losing their jobs, a level that is well below other countries. In Russia, for example, 71 per cent are very concerned or somewhat concerned about job loss. ”
From the looks of it, Canadians are just catching up on the bad news which has been prevalent throughout the world for many months. It’s getting worse out there and it’s going to get a lot worse there. And I agree with the hypothesis that someone posited ” Why would developers desperatly discount now if they thought it was going to get better and be able to get full price or more by this fall”. The fact is they know it’s getting worse and they’re trying to get out now by finding the last dregs of the Greater Fools out there.
March 25th, 2009 at 3:36 pm
realpaul: I think the opinions on that article are kind of extreme. Firstable, the average american cant understand what just happened to them and they probably never will unless they go through 12 years of proper schooling. Second, Israel and the arab countries, as well as India and Pakistan, have been in conflict for hundreds of years. Their conflicts mostly affect their region but have not real influence in the western world.
Yes there will be inflation, protests and a wider gap between rich and poor like the US has never seen before. But it has happened before in other countries which have recuperated from it and that are doing fine now. Look at Argentina, Chile, Brasil, etc. IMHO what this world conflict will bring is redistribution of wealth among the world which from my point of view would be a positive thing if developing countries would take a bigger share of that wealth instead of any of the 1st world countries. However, given the circumstances you would need a crystal ball to determine what future lies ahead.
March 25th, 2009 at 3:31 pm
Big Brother is here. Thinking about travel to the US? Something to consider.
Immigrant detention system ensnares American citizens
Our view: Process leaves detainees in cruel netherworld, cries out for reform.
Hector Veloz, 37, is a U.S. citizen. His father is a decorated Vietnam War veteran. Yet for more than a year, until last summer, Veloz experienced what can only be described as a Kafkaesque nightmare. He was swept up into the U.S. immigration detention system and held in a prison in Arizona, far from his California home, as officials tried to deport him.
A unique case? Unfortunately not. The bursting-at-the-seams U.S. immigration detention system is all too often an arbitrary and cruel netherworld where normal U.S. justice standards don’t apply.
Immigration officials detained about 378,000 people last year, at least three times the number detained a decade ago. On any given day, about 33,400 people are held in some 350 facilities, including in regular prisons among criminals.
March 25th, 2009 at 3:30 pm
Ella, you’re the one engaging in semantics now, not I.
I stand by my point: perma-bulls want everyone to believe that all the time is “a good time to buy real estate.” The perma-bears want everyone to believe “you’d be nuts to buy real estate right now.”
Yes, there are current bears who are cautious right now. But there are perma-bears on this site you will permanently reside in their parents’ basement.
Patriotz can’t even recognize inflation risk, even when he/she’s been exposed by Raven. But the perma-bears don’t want to engage Raven (or Dave). Easier to hand out a minus than to debate.
My point is illustrated by how the scoring gets dished out by the readers of these comments:
Confirm your bearish world view: +30
Argue something less than a bearish world view: relentlessly minus until the comment disappears.
March 25th, 2009 at 3:29 pm
“Looks like “Raving” has been outed, nice one TA. She’s screaming like a lunatic, too funny. Whadda fooooooooooooooooool…LOLOLOLOLOLOLOL”
Outed by TA? LMAO. Nope, try again.
March 25th, 2009 at 3:21 pm
Reality bites the bulls
Home price drop sharpest in Calgary: report
OTTAWA — Canadian home prices continued to slide in January, falling at an annual pace of 2.4% and continuing a retreat in value that started in February 2008, the Teranet-National Bank composite house price index shows.
Price declines were sharpest in Calgary, down 8.2% year-over-year, while Vancouver was off 4.2% per cent.
“This reading extends and deepens the home-price disinflation that began last February. It confirms that in early 2009, after more than five years of seller’s market conditions, Canadian housing as a whole was a buyer’s market,” the report said. “January was also the fifth straight month in which the composite index was down from the month before, extending the first run of consecutive monthly declines since March 2007.”
March 25th, 2009 at 3:18 pm
Looks like “Raving” has been outed, nice one TA. She’s screaming like a lunatic, too funny. Whadda fooooooooooooooooool…LOLOLOLOLOLOLOL
March 25th, 2009 at 3:13 pm
HUGE GDP BOMBSHELL DROPPED
Canada’s budget officer sees 8.5% drop in GDP
OTTAWA — Canada’s independent parliamentary budget officer on Wednesday forecast the economy would deteriorate far faster than the government had expected when it produced its budget in late January.
The budget officer, Kevin Page, said gross domestic product figures and unemployment levels would prove much worse than the minority Conservative government predicted on Jan 26.
Mr. Page told the House of Commons finance committee that based on private-sector forecasts and his own assessments, he expected GDP to contract by about 8.5% in the first quarter of 2009 and by 3.5% in the second quarter.
In the budget, the government cited private-sector forecasters as saying GDP would shrink by 0.8% in 2009 as a whole.
“Recent economic data and the parliamentary budget office’s updated survey of private-sector forecasters suggest a further significant deterioration in the outlook for the Canadian economy relative to Budget 2009′s fiscal planning assumptions,” Mr. Page said.
He also forecast nominal GDP would contract by 15% in the first quarter and by 4% in the second quarter. The budget cited forecasts that nominal GDP would fall by 1.2% in 2009.
http://www.financialpost.com/story.html?id=1427431
This is real bad news for the bulls. Someone earlier had pointed out that the developers and other eal estate whores would not be wildly discounting and desperate to get out of the market if in fact they believed thier own bullshit that the market would be improving anytime soon.
March 25th, 2009 at 3:10 pm
“I commend the perma-bears for their foresight.”
“perma-bear” and “perma-bull” are ridiculous terms. You either think a market is good value or you don’t.
“perma-bears” wouldn’t have foresight, since they would never buy. Bloggers like mohican and Ben Jones and Paul B have done well in real estate before, and intend to again.
If you would like to believe that everyone who thought the market was overvalued in 2005 always did and always will that is fine. Just don’t expect to be taken that seriously in the discussion when you’re holding a straw man in your lap the whole time.
March 25th, 2009 at 3:06 pm
“Private health insurance is not more efficient than private insurers.”
should read: than universal health coverage.
March 25th, 2009 at 3:06 pm
“You can’t make a blanket recommendation for everybody to not enter the market.”
That’s a valid point. Not everybody has to sell at the same time. Not everybody gets unemployed at the same time.
If you bought your house for cash and under no conceivable scenario could you fail to pay your municipal taxes, your utilities and your maintenance, why would you not buy a house if that’s what you wanted to do?
Buying a house does not boil down to “investing” for most people. Even though the bears like to think that’s what motivates everyone to move out of their parents’ basement. Some people seek to buy their own home for a variety of non-monetary reasons. That’s just the way it is. Right or wrong.
I commend the perma-bears for their foresight. And for calling “shenanigans” on the vested interests. But too many of you people are stuck in neutral, trying to make the world be what you think it should be, not as it is.
In short, you’re guilty of the same thing the perma-bulls are: spinning your story to confirm to your own worldview.
That makes you either:
1. deluded
2. dishonest.
March 25th, 2009 at 3:05 pm
“Heres a good read from someone who doesn’t live in thier parents bsmt.”
sorry, who are these people?
“Governments always believe the solution to every problem is more government.”
Oh, brother. I am so sick of this argument. This was the breakthrough set of talking points that ushered Reagan into power almost 30 years ago.
All this means is “let’s let the market sort this out” which turns into “let’s get the government to hire private contractors since the market is more efficient”. But, it isn’t.
Blackwater and KBR are not more efficient than the US army. Private health insurance is not more efficient than private insurers. There are always middle men and a need for profit margins. Private contractors are not electable, and they will not operate at cost.
The problem isn’t too much government. It’s bad, corrupted government, and especially bad, corrupted government that know it’s more about rich donors and power brokers than constituents when it is election time. The way we’ll get better government is to get involved in government ourselves and/or to support media streams that ask tough, impartial questions.
We all know what a super-great job the media did warning us about this financial crisis. We all know how objective they were about the housing run-up. Ask yourself why. The answer isn’t too much government.
Reagan and Thatcher had their revolution and it just ended. I don’t know what’s next, but I’m not going backwards. Next, please.
March 25th, 2009 at 2:56 pm
“The only solution is less government and an honest money system. Until we get that, the problems will just increase. Very easily, we could be looking at World War III.”
Damn republicans still not admitting that what got us into this mess was less government.
March 25th, 2009 at 2:49 pm
“Your arguments here have been juvenile , boring, circular, simple minded and redundant with excessive rhetorical tautology. You seem to grasp only the perimeter of rudamentary concepts as if learned around a dining room table of an cunning illiterate bumpkin.”
RIGHT….Your protomorphic troglodyte azz should easily dispute me, yet you remain obmutescence, only to emerge under a gabbro to show that you can use a reverse online dictionary?! Climb back into your orifice and die a slow financial death, you impecunious simian!
March 25th, 2009 at 2:44 pm
realpaul:
Realpaul, presumably you endorse and agree with that article.
How do you reconcile it with you not owning real-estate? If you believe the hyperinflation scenario put forth by Bob, then you should load up on debt now because it will get massively devalued. Personally, I can’t wait until I can pay my mortgage off with a loaf of bread.
March 25th, 2009 at 2:40 pm
Raven:
#173 Raving , I would have to ascertain a medium of communication. At present I don’t have any children to practice on except you and you haven’t said anything worth commenting on except this stupid whining. Is ‘trogodyte’ a word which has made such a gravid impression on you that you trot it out when mummy spanks you? How about we start you off with a ‘word of the day ‘ program?
Ravings word of the day is ” DUH”.
March 25th, 2009 at 2:26 pm
Heres a good read from someone who doesn’t live in thier parents bsmt.
“BM: When Americans who are losing their houses, cars, pensions and their jobs realize what these fools have done, they’re going to be very angry. $11.6 trillion is just a staggering number, and while the people in the banking system are busy stealing from the taxpayers, Obama doesn’t realize it—he’s destroying the country.
TGR: Do you think the people actually will realize this? How will they find out? The media isn’t talking about it.
BM: Funny thing you mentioned that. That’s exactly what scares me so much. A lot more people realize it. Peter Schiff (economics commentator) does, Gerald Celente (Trends Research Institute) does. Lots of people do. They write about it in British newspapers; they write about things they wouldn’t dare to here. There will be riots in the United States in three to six months; there’s going to be civil disorder. The government knows it; the military knows it; the police know it, and sooner or later the American public will know it. I think people are waking up. We are in a depression; this is not a recession. This is not something the world’s ever gone through before. Interestingly enough, a get-together of 50,000 people in New York City—government employees who did not want government spending cuts—almost turned into a riot.
TGR: Bernanke and Obama say this is a worldwide problem, so it calls for a worldwide stimulus package. Does the world go along with that?
BM: Governments always want to expand power. That’s why they clipped coinage back in Roman times. That’s why they use inflation to increase government spending. Governments always believe the solution to every problem is more government. The net situation—the cause was too much government; therefore, the solution cannot be more government. The only thing these guys know how to do is open the taps. But where’s the money going to come from? I’ll tell you something mathematically: the amount of cash that Bernanke, Geithner and Obama are talking about spending, there isn’t that much free savings in the world. The programs simply cannot exist because there isn’t enough money.
Interest rates and inflation are about to shoot through the roof. Geopolitical tensions are increasing at a staggering rate. A couple of weekends ago, we had a spy boat 70 miles off China, and it came to a confrontation. What’s going on with Israel and Iran, and what’s going on between Pakistan and India, are heading for confrontations. We have a very dangerous, unstable world. The only solution is less government and an honest money system. Until we get that, the problems will just increase. Very easily, we could be looking at World War III.”
March 25th, 2009 at 2:13 pm
Raven does know what its talking about. Owning real estate is very high risk.
March 25th, 2009 at 2:12 pm
“Prices have fallen 10% since then, Mr. “Anonymous”.”
that’s equal to relators commission nope? That’s why Daman is getting disappointed he wants prices to fall atleast 30% so dumbass can re-enter!!!!!Anyway patriotz:Uncle Please take no offence,All these indexes has nothing to do with home ownership.There is no comparision to buy or rent,There is no comparison between investing the difference in other markets.Owning and Renting is a choice not any comparision as Raven said My dad’s reason to buy the house was to put a roof over our heads.There is a point Observer did not come to get it,Dave wants the owner to renew his mortgage but Observer is making him sell after 5 year.I believe Observer should wait for the owner to pay off his mortgage then lots of latte over latte ever after.Why i am telling you all this? Because buyers on the fences are runining out of time,if you guys wanted to rent let the buyers enter in because home prices will cross $800.000 mark this time before April 2010 I believe rebgv or gerth turner would never come forward to compensate the priced out bears as a bloggers posters you can easily disappear do you have money to compensate anyone? If someone believe prices going to stable for while still the owner can enjoy equity that does not exist,Learn something from Daman he knows indexes are different than reality,He is getting desperate to lower down mortgage instead of paying rent.
March 25th, 2009 at 1:54 pm
Raven Says:Reply to this comment
March 25th, 2009 at 1:10 pm
truthin-advertising,
Oooh, can I big words so I can sound intelligent like you? I have yet to hear you make your case why you disagree with me.
Polysyllabic TROGLODYTE!
—————–
Lol. I don’t think he actually lives in a cave. Then again, rent on caves is probably cheap!
March 25th, 2009 at 1:42 pm
“If you take a look at Craigslist you will find a huge number of empty condos for rent, which is part of the underutilization I’m talking about.”
There’s also alot of scams on there too about renting out condos, which inflates the perception of the number of units that are available for rent. The story is that the owners have some incredible reason not to live in their condo (“got promoted and now work at WHO in the UK”), so send the security deposit and they’ll send you the keys.
March 25th, 2009 at 1:32 pm
Dave:
Given current global economic conditions, I am now more bearish than I was last summer and I think there is still room to go on the downside.
In other words, you were wrong last summer. And don’t use “global economic conditions” as an excuse, as though they were something external to the housing market, rather than a direct result of its collapse. The whole point of investment analysis is to anticipate and incorporate contingencies, not to make excuses for missing them.
http://vancouvercondo.info/200.....l#comments
March 25th, 2009 at 1:13 pm
Dave:
What do you mean by underutilization? Surely you can’t be referring to vacancy rates which are extremely low.
That’s just the official vacancy rate for purpose built rentals, not all the others. If you take a look at Craigslist you will find a huge number of empty condos for rent, which is part of the underutilization I’m talking about. There are also many more that are not for rent right now, but will be soon when their owners give up trying to sell them and rent them out, or sell them to someone who will.
The other part, which is really much larger, is all the houses that are underoccupied by their owners, either by design – owner-occupied speculation – or because of maturing children leaving. Economic forces will push the utilization of these properties higher in the future – as there will not be nearly enough new buyers able to afford their current low utilization – which means a large pent-up supply which is not found in any statistics.
March 25th, 2009 at 1:10 pm
truthin-advertising,
Oooh, can I big words so I can sound intelligent like you? I have yet to hear you make your case why you disagree with me.
Polysyllabic TROGLODYTE!
March 25th, 2009 at 12:50 pm
Raven:
#107 Raving, I realised that I may be speaking over your head, but that was kind of the point and you still didn’t get it. Not surprisingly you don’t have ‘pleonasm’ in your vocabulary nor do you own a dictionary to find out what it means it would appear. Providing a reflection of your limitation was being kind.
You said
“Why? Things aren’t clear for you the first time around?” The word ‘Pleonasm’ does not refer to or infer clarity dumbass.
I would suggest a night school English class if simple words in common use deter you from having an intelligent conversation.
Your arguments here have been juvenile , boring, circular, simple minded and redundant with excessive rhetorical tautology. You seem to grasp only the perimeter of rudamentary concepts as if learned around a dining room table of an cunning illiterate bumpkin.
At least try to add something of interest to the conversation instead of parroting the childish nonsensicle claptrap you have written thus far on this board.
Quite a few posters have been quite kind and very patient with your snivelling repetative rhetoric, you missed that too.
March 25th, 2009 at 12:48 pm
Anonymous:
In January, Metro Vancouver’s index measure, after falling from June’s peak, was 4.16 per cent below its measure in the same month a year ago.Congratulations Dave.
Dave’s prediction of a 5% fall followed by flat prices was made in August 2008, not January 2008. Prices have fallen 10% since then, Mr. “Anonymous”.
March 25th, 2009 at 12:43 pm
Thanks Anon. I haven’t seen that index before and I don’t know how reflective their methodology is of reality, but it mirrors the same trend as HPI.
My original prediction of a 5% correction was the middle of a range of between -10% and 0%. Your link would say I was correct (at least to date), while the HPI would say I missed the mark by 5% (again, to date).
The market has been flat the last couple of months and it wouldn’t surprise me to see that continue at least until the summer (or even a bounce). Given current global economic conditions, I am now more bearish than I was last summer and I think there is still room to go on the downside. We shall see.
March 25th, 2009 at 12:41 pm
Raven:
“There is no risk in not buying a house, any more than there is a risk in not buying stocks. Only holders of assets incur risk on that asset.”
Your risk is inflation.
That’s a living cost risk, not a risk of not owning a house. The risk of an asset is uncertainty of return. If you don’t own an asset you have no uncertainly of return on it.
Owning a house can hedge the risk of rental costs, but it carries its own inflation risks as well, not least of which is rising interest rates. Especially right now.
March 25th, 2009 at 12:22 pm
Reference:#115
“It’s pretty similar to my outlook in that I think we will have slightly declining prices this Fall (say 5%) followed by a flat market. I differ in their assessment in that it is likely the flat market would continue for longer than one or two years, which I base on past trends (i.e. a flat market typically exists for 6 to 7 years).”-Dave.
Dave was right in his prediction
The Teranet National Bank index measures prices from the sales of homes that have traded at least twice. In January, Metro Vancouver’s index measure, after falling from June’s peak, was 4.16 per cent below its measure in the same month a year ago.Congratulations Dave.
March 25th, 2009 at 11:43 am
“Don’t be silly. How many landlords live on the street? They just live somewhere else – sometimes even in rentals.”
My dad’s reason to buy the house was to put a roof over our heads without the fear of increasing rents and problematic landlords. He did not look at this as an investment and certainly he was no where close to service the house as a rental property while it initially cashflowed negative while paying rent somewhere else.
March 25th, 2009 at 11:28 am
“There is no risk in not buying a house, any more than there is a risk in not buying stocks. Only holders of assets incur risk on that asset.”
Your risk is inflation.
March 25th, 2009 at 11:23 am
It was break even with respect to renting, as we have already noted. But it was only a break even because a greater fool bought the property. And the greater fools ran out in May, 2008.
No, it was only break even ON PAPER because we held down expense and rent as constant.
Our analysis ignores that over the 8 years, rent went from $1000/month to $1875/mo. Assume rent increased a constant $125 every year. Also, the mortgage principle is being paid down over that time so interest costs also went incremently down. Expenses (property taxes & insurance) went incremently up with inflation. Also, after 5 years, the mortgage was renewed with interest at 6%. Opportunity cost also fell to 3%.
Recalculated NPV:
Initial cash: -$66,250
Interest: 7.9% (average)
Cashflow year 1: -$12,380
Cashflow year 2: -$10,710
Cashflow year 3: -$9,000
Cashflow year 4: -$7,350
Cashflow year 5: -$5,680
Cashflow year 6: +$4,190
Cashflow year 7: +$5,850
Cashflow year 8: +$7,650
NPV: -$93,140
Adjusted for factors that actually happened over 8 years, the total return was $157,000-93,140= $63,860 (not considering selling costs).
The point of this: NO ONE knows until hindsight whether and investing in a property is going to be profitable or not. We cannot predict where interest, inflation, migration, supply and demand are gonna go over the longterm. Unless you are sure of what your cashflows are over 25 years, your NPV is going to be WAY off.
March 25th, 2009 at 11:19 am
patriotz:
What do you mean by underutilization? Surely you can’t be referring to vacancy rates which are extremely low.
Real incomes have been steady or marginally up. You can pick and choose your dates to show otherwise but the long term trend supports my position.
March 25th, 2009 at 11:14 am
Dave:
Rents haven’t kept up with income growth over the last 20 years.
The gap is not very big. Real rents have been declining but so have real incomes. Also, the underutilization of housing stock today compared to decades ago is not favourable for increasing real rents in the near future.
March 25th, 2009 at 11:03 am
You can rent, and rents cannot rise faster than incomes.
In the short or medium run they can. Rents haven’t kept up with income growth over the last 20 years. That suggests there is room for rent to appreciate faster than inflation to catch up to the long term trend.
March 25th, 2009 at 10:35 am
dingus:
Uh-huh. And is someone waiting out a market correction similarly OK with the risk that the correction won’t be as rapid or as severe as they think?
There is no risk in not buying a house, any more than there is a risk in not buying stocks. Only holders of assets incur risk on that asset.
You do not have to buy a house to have a place to live. You can rent, and rents cannot rise faster than incomes. Even if you never buy a house, you haven’t lost anything.
March 25th, 2009 at 10:21 am
Raven:
Patriotz, let’s go with my Dad breaking even. In your opinion then, was he better of renting?
It was a break even with respect to renting, as we have already noted. But it was only a break even because a greater fool bought the property. And the greater fools ran out in May, 2008.
March 25th, 2009 at 10:18 am
Raven:
But we would be out on the streets…hmmm
Don’t be silly. How many landlords live on the street? They just live somewhere else – sometimes even in rentals.
March 25th, 2009 at 10:18 am
Patriotz, let’s go with my Dad breaking even. In your opinion then, was he better of renting? Price/rent was 265 and you said it was 150 back in 1997.
March 25th, 2009 at 10:16 am
Before someone brings it up, the landlord situation might (or might not) be subject to Cumulative Net Operating Loss provisions, but of course its all hypothetical.
March 25th, 2009 at 10:14 am
“BTW if he had been renting the house out, he would have made money after taxes, because the operating loss is fully deductible against income, but only 1/2 of capital gains are taxable.”
But we would be out on the streets…hmmm
March 25th, 2009 at 10:12 am
Raven:
Alright, break-even. So did my Dad walk away with $157K capital gains, tax-free or not?
Yes, and he also walked away with a non-deductible operating loss of about the same amount.
BTW if he had been renting the house out, he would have made money after taxes, because the operating loss is fully deductible against income, but only 1/2 of capital gains are taxable.
The non-taxability of personal residences works both ways.
March 25th, 2009 at 10:03 am
Let’s put it another way. SFH in Vancouver is about $665K. Using 2000 as CPI base, that SFH is worth $549,881. How is knowing this help you make your decision to buy or not to buy?
March 25th, 2009 at 9:59 am
Raven: Why? What value do you get out of knowing that $100 today is worth $85.06 in 2001 (other than knowing that your money is eroding and you need to invest in an inflation hedge?)
That basically is my point, yes.
March 25th, 2009 at 9:56 am
Wow some people are really reaching. I don’t know if Dave is an agent, surely he must be, but it’s patently obvious that a buyer who is looking to buy will be way better off waiting 2-3 years. I don’t give a sh!t what they are paying for rent. Most people don’t even know if they will have a job in 2 years. Do people not look at the economy as well as the housing market? Why would a FTB go out and buy a condo when everyday people are losing their jobs and developers are slashing their prices by up to 40% off? And it’s only just started…
March 25th, 2009 at 9:55 am
“Same ballpark, different magnitude. But you are not including sales fees. Throw those in and I think you end up about zero.”
Alright, break-even. So did my Dad walk away with $157K capital gains, tax-free or not?