That’s a bit dramatic isn’t it?

This piece is hardly a revelation to anyone familiar with a calculator, but it’s refreshing to see such title on Business Insider: Why I Would Rather Shoot Myself In the Head Than Own a Home.

How do banks make money? Very simple. They borrow from you at cheap interest rates and then lend to you at higher interest rates. What? How do they do that? Well, when they pay you 0.5% on your checking account its as if they are borrowing from you at a very cheap interest rate. When they then turn around and give you a 6% mortgage loan, they are lending to you. They make money on the difference between the 6% and the 0.5%. It’s a great business and I often advise people to become the bank when they have that opportunity.
It’s such a great business, in fact, that banks have spent 200 years drilling it into us with billions in advertising that the “American Dream” is to own the white picket fence, the paved driveway, maybe borrow more to make an extension to the house. Put in a swimming pool. Tear down some walls. Nobody can ever kick you out. You’re not flushing your rent down the toilet. You’re owning! You’re keeping up with the Joneses (the most successful, yet mysterious, family in American mythology, that we all have to keep up with. What happens behind closed doors when the beatings occur, when little Bobby Jones cries himself to sleep, the Joneses will never tell us) At least, in 30 years you will own. But at least you’ve fixed in a mortgage rate so inflation won’t kill you. And having your own home means you now have “roots”.

Read the full article over at Business Insider.

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Londonernow
Member
Londonernow
Actually its even more profitable and less risky than that since the crisis in 2008 the various Central Banks around the world such as the US Fed have been lending to the banks at zero to 0.5% interest rates and the banks have in turn been buying government bonds paying 3%+ (and also funding their way underwater loan books). This is a free money trade for the banks, with no credit risk (so they don't have to lend to individuals and corporations) and is a direct transfer from the taxpayer to the banks. This was all said to be done to save the world, so that the banks didn't go bankrupt and meant to allow the banks to mend their balance sheets. However, the banks have acutally used these taxpayer funded profits to pad their executive bonus pools. Nice eh!
Londonernow
Member
Londonernow
Actually its even more profitable and less risky than that since the crisis in 2008 the various Central Banks around the world such as the US Fed have been lending to the banks at zero to 0.5% interest rates and the banks have in turn been buying government bonds paying 3%+ (and also funding their way underwater loan books). This is a free money trade for the banks, with no credit risk (so they don't have to lend to individuals and corporations) and is a direct transfer from the taxpayer to the banks. This was all said to be done to save the world, so that the banks didn't go bankrupt and meant to allow the banks to mend their balance sheets. However, the banks have acutally used these taxpayer funded profits to pad their executive bonus pools. Nice eh?
Londonernow
Member
Londonernow

Sorry about the duplicate comment. Can one be removed please.

Thanks,

jesse
Member

If you believe Garth Turner you too can borrow short and invest long, just like a bank! Want to know more? Arrange for a free no obligation consultation.

space889
Guest
space889

@jesse: Interestingly while he warns about the perils of rising interest rates on mortgages, rising interest rate on HELOC used for investments is nothing to worry about apparently.

Devore
Member
Devore

It may be harsh, but sometimes you need to shock people to get through to them. On shows like Suze Orman and Till Death Do Us Part, some of the things are pretty drastic. People are oblivious.

Take the first part of that article. Most people think their savings account is money in the bank. No one stops to think why the bank is paying THEM money to keep their money safe. Shouldn't it work the other way around? To them, that's just how things work, because that's how they worked for decades. But in fact a savings account is a very low interest loan to the bank. Behind the scenes, banks get to do things with that money. That's fractional banking, and has certain unpredictable consequences, because it's just not that easy to regulate it.

vreaa
Member

"Imagine you own a beach house in a resort area and you decide, at the end of a beautiful summer, to revive the memories of your youth by organizing a BBQ and bonfire on the beach in front of your home. You invite all your local friends, you organize the food, and you ask everybody to bring along their families, their friends, and their own booze…"

from 'It Is Dangerous To Blame The Consequences Of A Speculative Mania On One Sector Of Our Community: Let’s Make Sure We Don’t Do That.'

http://wp.me/pcq1o-2jm

Patiently Waiting
Member
Patiently Waiting

“The strength of the upper-end segment continues to defy expectations,” Elton Ash, regional executive vice-president, Re/Max of Western Canada, said in a statement.

“That demand remains largely domestic speaks to the solid underpinnings of the market, while underscoring the appeal of Canadian real estate on an international stage. Western Canada, in particular, will continue to see the upside benefit of investment from abroad.”

Read more: http://www.vancouversun.com/business/Rising+wealt

Also
http://www.cbc.ca/news/canada/british-columbia/st

The REIC is trying to shift attention away from equity-rich boomers to foreign buyers. I think they are in denial. The crash is going to hit some of the "wealthiest" Canadians the worst, and I can't say I don't feel a little bit of glee in that LOL.

WFT?
Guest
WFT?

So this bubble is in it's 10th year. Is this a record duration for a bubble?

Best place on meth
Member
Best place on meth
@vreaa: One sector of our community? That’s the problem, they’re not part of our community. They’re either “immigrant investors” or outright foreigners. >>There is a very real subsequent risk that many of those who suffer the consequences of the imploding Vancouver RE bubble will mistakenly blame foreign buyers and, by extension, specific ethnic groups, for the whole phenomenon, and for the inevitably devastating outcome.<< You're reaching here, his is not about ethnicity or "Chinese" people, it's about China, an extremely corrupt country from which we are accepting people of dubiously acquired wealth (perhaps outright criminals). I'll be happy to accept their refugees but not their "business" people and I will certainly not accept the investor program being so slanted toward China with 75% of the total coming from that country when they are 20% of the world popluation. In WWII… Read more »
Worrywart
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Worrywart

Why is anyone worrying about who to blame IF the bubble bursts?

You are all putting the cart before the horse.

Dirty foreign speculating/laundering money vs local money – who cares?

Why don't you worry about that AFTER the bubble bursts – IF it ever does.

Tens years and running strong.

Try worrying about how the latest mortgage changes failed to dent the market. Its almost the end of May and sales are still pretty strong with zero price changes.

WFT?
Guest
WFT?

One of the headlines on BNN is that Australia's four largest banks had their debt ratings cut by Moody's.

whydoItry
Guest
whydoItry

The real estate bubble ended around 2007 when we had the greatest volume of sales. What has happened since then, is various government stimulus programs to keep prices from declining as sale volumes declined. While the programs stabilized the markets in central Canada, Vancouver just happened to be at the end of the whip and the affect of these programs was an explosion in prices here. So, now most Vancouver home owners are close to being paper millionaires with home prices in the downtown east side being similar to Santa Barbara, California. When prices start sliding, there are going to be a lot of people trying to cash in at the same time. And there are a lot more of them, than mainland Chinese buyers.

vreaa
Member
@Best place on meth: "You're reaching here, his is not about ethnicity or "Chinese" people, it's about China, an extremely corrupt country from which we are accepting people of dubiously acquired wealth (perhaps outright criminals)." — You know it's not about 'Chinese people'; I know it's not about 'Chinese people'; but does that reflect what all Vancouverites think? (Going by media reports, what does the man-in-the-street see as the cause for sky high Vanc RE prices? Speculative mania or 'foreign buyers'? How good are people at distinguishing between 'foreign buyers' and locals of Chinese origin?) We know that the imploding bubble will cause economic distress. There is a subsequent risk that there will be increased ethnic tension because a percentage of the population won't understand the origins of the problem, and will be tempted to scapegoat. The way to prevent… Read more »
registered
Member
registered

@13 whydoItry Says: "And there are a lot more of them, than mainland Chinese buyers."

That's coloured by Rennie-think. You'll never, ever, hear the CREA-liars say what should be blisteringly obvious to everyone; mainland buyers can be as driven to buy in Vancouver by local appreciation as locals. Instead CREA-liars will always scramble to cover the elephant in the room and say they're buying here for prestige, it's 'the new luxury market', etc..

It's not a matter of there being enough mainland buyers to offset a deluge of sellers, when prices turn those main landers too will become sellers.

Anonymous
Guest
Anonymous

@vreaa:

If it looks like a duck and talks like a duck…

I can assure you that absolutely all new developments in Burnaby's Metrotown area are bought up by Chinese buyers.

I'm not sure if they are foreign or local nationality, but they are 100% positively Chinese ethnicity.

So really what is your point???

sore loser
Guest
sore loser

I've been following the advice found on this blog for the last 5 years or so. Sadly, I am further from owning any RE in Vancouver now that I ever was.

And that's an undeniable fact. No anecdotes here. No sir.

All the stupid, uneducated and irrational buyers are so ahead of me now, it's not even funny.

I feel ashamed to be educated, prudent and reasonable.

That's what this New World Order did to me.

I feel violated and hopeless.

FUCK YOU banks and governments. FUCK YOU!

Best place on meth
Member
Best place on meth

@Anonymous:

>>>I’m not sure if they are foreign or local nationality, but they are 100% positively Chinese ethnicity.<<<

Local buyers can do what they want, they're locals and their ethnicity doesn't interest me.

Foreigners should be barred from buying here, the immigrant investor program should be shut down, we shouldn't be inviting criminals from China into Canada who are admittedly falsifying documents and income statements and who continue to make their money offshore after they immigrate.

That's the difference.

sore loser
Guest
sore loser

@Best place on meth:

It costs mere $800,000 to become Canadian. So once they pay, you don't care – right?

Best place on meth
Member
Best place on meth

@sore loser:

See reference to shutting down the immigrant investor program.

Criminals should not welcome here.

Johnny-O
Guest
Johnny-O

@sore loser: Do not despair!

I have said it before, the market can stay irrational and stupid much longer

Than an individual can stay solvent. We are already reading reports of

Individuals being pushed into more debt to keep their million dollar homes.

Helocs have skyrocketed and people are burdening themselves even more in this

Easy credit environment meant to rescue the banks and the economy.

When or if the banking crisis fixes itself there will not be any sympathy for all

These over extended property owners and you will probably be able to pickup

The prices at the tax payers expense.

whydoItry
Guest
whydoItry
Asians only buy in rising markets. They are very skittish investors and believe entirely on luck. There success in investing is simply to follow what others are doing. Kinda like what everyone else has been doing too. So, you don't own a house. Go cry me a river. Being mortgage free is your reward. How about living in a home with a half million dollar mortgage and seeing the interest rate double just before its time for you to re-finance. Its been great pulling the equity out of the home for a new car, vacation and the kid's education. Just hope you don't get relocated by the company you work for. There goes that middle management promotion that you have to turn down because you have to be in Toronto or Calgary. Yeah, so renters – go cry me a… Read more »
Runawayscreaming
Guest
Runawayscreaming
To those of you concerned there will be race riots in Vancouver because of a bubble pop I must ask whether you think of everything in terms of comedy sketches or do you honestly believe that at some other time in human history there were race riots because of a real estate bubble? Somehow I cannot visualize a mob of angry white and brown Vancouver mortgagors with pitchforks and torches burning random Chinese-looking Vancouverites at the stake in the town square because they are mad about real estate. On the other hand I can visualize foreign speculators and Chinese "Investor" Immigrant Program criminals being forced out to sea at gunpoint and I would be happy to throw gasoline on that fire. However, I know that's not going to happen even in my most pleasant daydreams. The real estate con artist… Read more »
Anonymouse
Guest
Anonymouse

@Best place on meth:

"See reference to shutting down the immigrant investor program. Criminals should not welcome here." and "China, an extremely corrupt country from which we are accepting people of dubiously acquired wealth (perhaps outright criminals). I"

Do you actually have any evidence regarding the number of immigrant investors who are criminals, or are your comments based on prejudice alone? For an economy that's growing so quickly do you really think it's so difficult for individuals to strike it rich legitimately?

Best place on meth
Member
Best place on meth

@Anonymouse:

Do I have evidence of exactly how many of them are criminals? Are you seriously asking me for precise numbers?

We have plenty of evidence thanks the the G & M expose that there is an entire industry in China based on falsifying documents for clients to fraudulently get them access to Canada through the immigrant investor program but you're asking me exactly how many?

If their wealth is acquired legitimately then why are they using the services of scam artists?

Let me put it this way, your questions are incredibly stupid and irritating most of the time, although I don't have an exact number of how many.

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