FFFA! Density, Affordability, Retirement

Hey! It’s that time of the week again!

You made it to the end of another work week and that means it’s time for our Friday Free-for-all!

This is our regular end of the week news round up and open topic discussion thread for the weekend.

Here are a few links to kick off the chat:

Even real estate consultants hate condo towers
Crappy buildings spur inspectors retirement
home is retirement plan for 24% of Canadians
Budget uses ‘make believe’ family income
homes: Buy one get one free

So what are you seeing out there? Post your news links, thoughts and anecdotes here and have an excellent weekend!

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Memories
Guest
Memories
patriotz
Member
From previous thread: “Seriously, if you think it is just that easy to make 6% per year with ETFs, I guarantee that there will be a lot more rich people via investing than we currently do, especially since you can borrow funds at 4% or 5% via HELOC.” The TSX 60 has averaged 8% per annum over the last 20 years. Over the same period the Canadian bond market has returned 5% per annum. The numbers going back 30 years are even better. The reason we don’t have more rich people via investing is that we simply don’t have many people investing intelligently to any significant extent. One big reason being (heard this already?) is that they don’t think they need any investment beyond their principal residence. Also you comment about borrowing via HELOC to invest is faulty, one reason… Read more »
Many Franks
Member

It’s just one little data point, but Inflation rate rises to 1.5% in January:

“These figures should bring some relief to the Bank of Canada, amid heightened concern about persistently underperforming inflation,” he said in a morning commentary. “Indeed, these … suggest that the BoC’s Q1 projections for inflation will likely be on the low side.”

Analysts say the higher-than-expected inflation reading will likely put an end to any talk that the Bank of Canada might trim interest rates later this year to stimulate the economy.

Son of Ponzi
Guest
Son of Ponzi

#2
Another investment advisor disguised as an RE bear?

natcho pal
Guest
natcho pal

@1- whoa! $100k drop in just one year! Imagine if interest rates hadn’t dropped and the cmhc hadn’t dumped millions into the mortgage market. Looking forward to seeing what happens next time!

Babcook
Guest
Babcook

My natural gas bill that I NEED for heating the house is up 20%.
Gas that i NEED to get to work is up 15%.
Milk, Bread, that I NEED is up who knows how much

but probably Joe Boxer underwear that I DON’T NEED 100 pairs is down 10% from last year.

there you have it.

Ohh not to forget the Tory 20% raise that i got last year as well.

Bull! Bull! Bull!
Guest
Bull! Bull! Bull!

@ #2

a thought experiment for you.

if i bought a house 20 years ago how much would the investment returned on average per year? does that mean you would buy a house now? if not, why not?

show your work.

Aggregator
Guest
Aggregator

@Babcook

You forgot your water bills too. But hey, at least flat screen TVs and backseat DVD player prices are going down. Chart

Quasi-Stagflation: higher taxes and inflation in the things you need and more deflation in the things you don't.

Always remember, Canada is not a third world country

space889
Member
space889

@patriotz – sigh….obviously you didn’t read the reserarch or you would know that the 8%/year depends on your starting point. Just the same as buying a house. Your argument about buying stocks because it returned 8%/yr for the last 20 years is no different than boomer telling their kids to buy houses because their own house that they bought 20 or 30 years have went up in price by 10x.

Yeah, I wanted to buy a house back in 90 but guess what? I was still in K-12 education back then. Does that mean I should buy a house now because houses have went up 10x in Vancouver over the last 30 years?

YVR
Guest
YVR

@7 “if i bought a house 20 years ago how much would the investment returned on average per year? does that mean you would buy a house now? if not, why not?”

Over the last 20 years credit has been made easier to get, mortgage rates have gone down, price to rents have inflated, home ownership is at all time highs and household debt levels are at all time highs. Over the next 20 years those things will go in reverse along with houses prices. It is impossible for the next 20 years to look like the last 20 years. Do you really not get that?

Don Lapre
Member
Don Lapre

@#7
Teranet Vancouver HPI Feb 1994=69.18, January 2014=176.94, 20 years,

CAGR of 4.81%.

I would not buy a house right now due to record high price/income, price/rent metrics, record household debt levels, record home ownership %, and finally because it is simply cheaper to rent.

When these metrics normalize (and if you have an example of any city in which this has never reverted I would love to hear it) I will consider buying.

Son of Ponzi
Guest
Son of Ponzi

#8
“Canada is not a Third World Country”, yet!

Joe Mainlander
Guest
Joe Mainlander

@#1 and #5.

Speaking of memories made me look up this clip from GreenhornRET. Oh, the humanity!.

https://www.youtube.com/watch?v=lAsjo1vesI4

Too bad the Hindenburg didn’t have the CMCH and the Feds to dowse the fire and pump in some more gas.

taylor192
Member

The Conservative 20% raise:

Statscan has 2 different tables for family income, average (after tax) and total:
http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/famil21a-eng.htm
http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/famil05a-eng.htm

Not surprisingly the difference is $21K for a 2 earner family with children. These numbers are for 2011. You’ll notice the Conservative example in 2012 used $100K, which would be $10K lower than the average family income before tax.

I get why people think the government is being misleading with a $20K increase… yet technically they were misleading before by under reporting income, now they are being accurate.

Bull! Bull! Bull!
Guest
Bull! Bull! Bull!

@YVR

>Do you really not get that?

i understand that past performance is not indicative of future gains. however, that warren buffet wannabe patritoz doesn’t seem to get it. maybe you should help him understand that.

TotalPokemon
Guest
TotalPokemon

lol, the majority of ‘Canadians’ at my office were watching the hockey game. They were canceling calls, rearranging meetings, to see it.

And if you did manage to catch them between periods they were only have listening to you, keeping one eye on the TV to see if the game was starting.

And you ppl blame Asians for being poor. Haha. Stop being so lazy and stop blaming other hard working people for your personal faults!!!

space889
Member
space889
Excluding the dotcom bubble period, the current PE ratio for the markets are over 20x which generally signaled market tops and poor performance ahead. So equity by most conventional valuation measures are also fully if not over-valued. Long bonds under 3% which is also very low in the last 50 years. Credit for equity/bond investment is also at an all time high as witnessed by various measures such as record high in NYSE margin debt, the huge carry trade using Jap Yen, trillions of excessive reserves at banks which gets pumped into prop desks, etc. Remind me again how this is different from buying an over-valued house today? Oh, because stock market hasn’t crashed in Cad/US so we aren’t in a bubble and it’s been returning x% higher than a house??? People used the same argument back in 2000 after… Read more »
vangrl
Member
vangrl

Question-

My friends mortgage is up, her balance is around $100,000 and her apartment is worth around $300,000.

She’s wanting to be in a position where she can pay it off as fast as possible and put as much towards it as she wants at any time.

Is it possible, rather than lock into another mortgage, to take out a home equity line of credit on the $100,000.
Or do you need to either have a mortgage on it, or own outright to qualify for a HELOC.

Babcook
Guest
Babcook

“And if you did manage to catch them between periods they were only have listening to you, keeping one eye on the TV to see if the game was starting.”

Well it was big stake. Loser of the game would have to keep the Bieber in their country.

Son of Ponzi
Guest
Son of Ponzi

If I want stock investment advise I ask my barber.
Please stick to the RE theme.

Babcook
Guest
Babcook
taylor192
Member

vangrl,

A LOC is against equity, not debt. She has $200K of equity she can take a HELOC against, and $100 of mortgage remaining, technically she could borrow $100K on the HELOC and pay off the remaining mortgage…

Yet HELOCs have higher rates than mortgages, so why would she want a higher rate? She is better off getting a mortgage with very flexible repayment terms. We have a mortgage with NBC that can be paid down 10% yearly and 100% mortgage payment increases. ING has a mortgage that offers 25% yearly lump sums and 25% mortgage payment increases.

UBC in crisis mode
Guest
UBC in crisis mode

Keep the variable rate, as it is so low. No need to payoff the mortgage sooner. Invest the money somewhere else.

tedeastside
Member
tedeastside

Sochi had a winter olympics, are realtors lobbying for best place on earth license plates like in Vancouver,

M-
Member

@ Vangrl #18: RBC has a mortgage product which allows payments to be doubled up, and annually a lump sum payment of up to 20%. And stick with a variable-rate; as much as I hate to admit it, interest rates are not likely to rise much anytime soon.

Also, note that when renewing a mortgage, you do not have to follow the same repayment schedule as was used previously– it could be set up over, say, a 5-year or 10-year amortization, rather than the 15 or 20 years that might remain on the original amortization schedule.

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