Leaving debt as a legacy

There’s an article in the Globe and Mail about the rising number of ‘Grandpa debtors‘ – people past the age of 55 who have debt problems.  There are a few reasons sited for this shift: easy credit, lack of emergency savings and relying on real estate as a retirement plan:

Real estate can also be a factor in some of these dire debt situations, Mr. Elyea said. Some older debtors head into retirement with $50,000 still left on their mortgages, and then start using their credit cards to pay them because their income has dropped and the CPP and OAS aren’t enough to cover the payments.

There’s also the trap of considering your home to be your retirement nest egg, said Mr. Elyea, which can backfire because of the unpredictability of the housing market.

“In our Tri-Cities practice [covering Coquitlam, Port Coquitlam and Port Moody], that’s where a lot of people bought houses at the height of the market when anybody could get financing, and now they’re all [valued] below what they paid for them,” he said.

If you do find yourself in a situation where your debt has gotten out of control, see a professional, said Mr. Eylea, whether it’s a bankruptcy trustee or a money coach who can let you know about your options.

Here’s the full article.

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Renter
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Renter

Not related to this topic. If a tenant received his landlord two month notice to take back the suite for personal use or family members to live and moved out. After a couple of months, he found out the landlord rented the suite to another tenant or converted the suite to a family hotel, what kind of remedy the previous tenant has against the landlord?

Anonymous
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Anonymous
Larry’s stats package is out: http://www.yattermatters.com/2012/05/its-cold-outside-for-vancouver-real-estate/ Vancouver Real Estate Average Prices: Detached Attached Apartment April 12 – $1,106,683 April 12 – $580,733 April 12 – $445,458 April 11 – $1,204,587 April 11 – $573,318 April 11 – $483,424 April 10 – $1,003,884 April 10 – $551,385 April 10 – $427,847 Vancouver Real Estate Inventory – Active Listings Detached Attached Apartment April 12 – 6,858 + 15% April 12 – 2,543 + 15% April 12 – 7,137 + 18% April 11 – 5,944 April 11 – 2,208 April 11 – 6,035 Vancouver Real Estate – Units Sold Detached Attached Apartment April 12 – 1,131 -19% April 12 – 483 -22% April 12 – 1,190 0% April 11 – 1,408 April 11 – 622 April 11 – 1,201
Karen
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Karen

Regarding the question above, there might be some remedy/redress available through the Residential Tenancy Branch – it would probably require a hearing though, and there are fees for that, as well as a fairly long waiting time (I think). Look on their website to see what information is available there or try to get through on their phone lines (busy).

Also, I definitely recommend calling the Tenant Resource and Advisory Centre. They are a nonprofit – overstretched and busy, but again, there might be info on their website and when you do get through on their phone line, they should have some useful info.

Karen
Guest
Karen

I wonder if that’s true – about many homes in tri-cities areas being worth less now than at peak. I know that individual homes here and there are in that situation, but I wasn’t aware that that would be true on a broader scale in certain areas.

chilled
Member
chilled

@Renter:

http://bit.ly/KDetf4

But hey, you could also spend the day sorting through numerous inaccurate opinions if you prefer!!!

GVREB
Member
GVREB
FOR EXCLUSIVE RELEASE ON VCI Real Estate Market Sales Volumes Fall Further in Greater Vancouver VANCOUVER, B.C. –May 1, 2012 – April saw the Greater Vancouver real estate market continue to falter as sales volumes decreased below all relevant comparative periods including a 10 per cent decline in detached sales from the previous month. Continued education of Canadian buyers on the risks of high debt levels as well as reduced expectations of future increases in real estate prices has inserted an increased level of caution in buyers. GVREB reports that residential property sales of detached, attached and apartment properties reached 2,806 in April. This total represents a 13 per cent decrease compared to the 3,225 sales in April 2011. Looking back, sales activities were 20 per cent below the 3,512 units sold in April 2010 and also 5 per cent… Read more »
GVREB
Member
GVREB
CORRECTED VERSION FOR EXCLUSIVE RELEASE ON VCI Real Estate Market Sales Volumes Fall Further in Greater Vancouver VANCOUVER, B.C. –May 1, 2012 – April saw the Greater Vancouver real estate market continue to falter as sales volumes decreased below all relevant comparative periods including a 4 per cent decline in detached sales from the previous month. Continued education of Canadian buyers on the risks of high debt levels as well as reduced expectations of future increases in real estate prices has inserted an increased level of caution in buyers. GVREB reports that residential property sales of detached, attached and apartment properties reached 2,806 in April. This total represents a 13 per cent decrease compared to the 3,225 sales in April 2011. Looking back, sales activities were 20 per cent below the 3,512 units sold in April 2010 and also 5… Read more »
Anonymous
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Anonymous

http://business.financialpost.com/2012/05/01/putting-torontos-housing-boom-in-perspective/

Too much reliance on housing appreciation for wealth accumulation and retirement security is very dangerous. Retirement nest eggs in Spain have been obliterated, and nest eggs in the U.S. have shrunk considerably. Too much household debt is also very dangerous. It increases vulnerability to interest rate risk and to economic risk of income losses or job losses.

Patiently Waiting
Member
Patiently Waiting

@Karen: Maybe if they bought older condos. The lowend of the Tri-cities market, from my observations, is below what it was in 2007-2008 and 2010-2011.

But the article says “houses” which means SFH to me. In that case, no, Tri-cities SFH are higher priced across the board than they’ve ever been. But the use of the word “houses” may have been error considering we pay the same for leaky condos as others pay for a house and lot elsewhere.

Anonymous
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Anonymous

The global financial system is once again at risk of meltdown. The United States, the world’s biggest economy, is struggling under trillions of dollars of debt that it realistically can’t hope to repay and the eurozone is sinking deeper into its own debt crisis.

Meanwhile, the Canadian housing market is, according to many observers, looking more and more like a bubble, partly due to the CMHC that has backstopped nearly 60% of outstanding mortgages in Canada, packaging up a large proportion for sale to investors around the world.

http://business.financialpost.com/2012/04/30/has-osfi-got-what-it-takes-to-oversee-canadas-housing-agency/

Patiently Waiting
Member
Patiently Waiting

@Patiently Waiting: To illustrate my last point: http://vancouver.en.craigslist.ca/pml/reo/2932161704.html

An older condo, across the street from Blue Mountain Park, offered for $153900 (reduced) and a claim of $900/month rent.

klipsh
Guest
klipsh

How much money you need to save for pension if you don’t have defined pension an plan to draw around 50k a year when you retire?

patriotz
Member

@Anonymous:

Too much r Reliance on housing appreciation for wealth accumulation and retirement security is very dangerous.

That’s better.

patriotz
Member

@klipsh:
I would say about 18% of $50K annually, which not coincidentally is the limit for RRSP contributions.

klipsh
Guest
klipsh

thanks patriotz,
good to know that i am on track.

Devore
Member
Devore

@Anonymous:

Has OSFI got what it takes to oversee Canada’s housing agency?

If OSFI doesn’t, who does? CMHC’s board, which reads like the credits scroll on Property Virgins? We’re talking an entity with a balance sheet the size of the national debt, guaranteed by the taxpayer, not some corner store.

Anonymous
Guest
Anonymous

@Renter: ….Not related to this topic. If a tenant received his landlord two month notice to take back the suite for personal use or family members to live and moved out. After a couple of months, he found out the landlord rented the suite to another tenant or converted the suite to a family hotel, what kind of remedy the previous tenant has against the landlord?…….

There are provisions in the landlord tenancy act to cover this specific occurrence. The landlord has to pay a penalty equivalent to two months rent.

Anonymous
Guest
Anonymous
@klipsh: How much money you need to save for pension if you don’t have defined pension an plan to draw around 50k a year when you retire? Ballpark, 900K. If you can earn 4% (hint, don’t buy a rental property!) that will pay you $51,552 per year for 30 years. This assumes you have it in a registered account which pays no tax on growth until you withdraw the money. I know a lot of people here are going to say 4% is too low but you have to be very conservative with your investments when you’re on a fixed income. One simple way to do your own calculation is to use a mortgage calculator. You just have to interpret it differently. In this case, the interest rate is the amount you can generate on your savings, the ammortization is… Read more »
WFT?
Guest
WFT?

On the last thread there was talk about all the vacant shops on South Granville. The vacancies on Robson are also a story.

The new Vacancy on Robson is one of the kitty-corner starbucks at Robson and Thurlow.

It is not closing due to slow business but due to a greedy landlord who wants exorbitant rent and a demolition clause that allows starbucks to be evicted on a month’s notice if the landlord feels like tearing the building down for a condo tower.

http://www.cbc.ca/news/canada/british-columbia/story/2012/04/30/bc-kitty-corner-starbucks-closes.html

I suspect that landlord greed and redevelopment desires are the cause of many of the vanancies on Robson and South Granville.

Anonymous
Guest
Anonymous
@Anonymous: …… I know a lot of people here are going to say 4% is too low but you have to be very conservative with your investments when you’re on a fixed income…. Please show me where I can get 4%. Seriously, I’ve had RRSP’s for more than 20 years and there’s no way I’ve received a total return of 4% per year over the 20 years. ……. and your investments are able to grow by 5% per year (effective rate is 7.1%) for 35 years…… Easy to say for an Certified Financial Planner. If you’re including the RRSP tax rebates in the return calculation, that’s great but you have to pay that tax again when you take the money out and it could be at a higher rate depending on your income at retirement. I know RRSP’s grows tax… Read more »
Anonymous
Guest
Anonymous

@WFT?: ….I suspect that landlord greed and redevelopment desires are the cause of many of the vanancies on Robson and South Granville. …..

How can any business in this city exist when the land they occupy is worth more as condos than the business could possible be worth? This is what will kill this city (or more accurately: keep it from being revived as it’s already a cadaver)

klipsh
Guest
klipsh

Anon: “If you can earn 4% (hint, don’t buy a rental property!) that will pay you $51,552 per year for 30 years.”

I have some money sitting in my business account (i am self employed). I am considering these funds to be for retirement. Question: Could I invest that money into something without tax implications? Right now I am not making anything on these funds and i have 6 figure amount.

Anonymous
Guest
Anonymous

@klipsh:

Sounds to me like you should talk to a profressional advisor rather than risk your retirement to online opinions 😉

jesse
Member

@klipsh: “Question: Could I invest that money into something without tax implications?”

Please take this advice: you need to hire an accountant.

Makaya
Member
Makaya

Here is a comment posted on the whisperer’s blog:

“A friend of mine is a real estate lawyer that only handles foreclosures. All of the business has been okanagan and sunshine coast but lately he has seen them creeping into the lower mainland and he saw his first in North Vancouver last week.”

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