It’s that time of the week again…
Friday free-for-all time!
This is our standard issue end of the week news round up and open topic discussion thread for the weekend, here are a few recent links to kick off the chat:
–RBC downplays crash threat
–An imbalance?
–Thoughts from Ireland
–Economists show concern
–Sunshine coast stats
–
So what are you seeing out there? Post your news links, thoughts and anecdotes here and have an excellent weekend!
@32prev: “Ian Young at the SCMP has a very interesting article today citing research about taxable income and costs of housing for households in Vancouver’s bizarre housing market:”
As the article itself notes and as I have already pointed out, the income data is from the National Household Survey, not income tax returns.
Conservative Party’s taste for indebted households strains economic future
Canada stands out (from 2006 to 2013), with the largest increase in the household-debt-to-income ratio of all the G7 countries, at about 30 percentage points – double the next-largest increase, in Italy, and 50 percentage points higher than the U.S., where household debt ratio fell.
This paints a grim picture for Canada. We aren’t using the appropriate policy tool, fiscal policy, as much as many other G7 countries are in order to help the economy – despite the fact that the previous Liberal government left Canada in good shape on this front and interest rates are historically low.
Sell now or be priced IN forever!
This is gonna get ugly….
so, it would appear the so called emerging mkts implosion is not ringfenced (like all the experts said it would be) and/or the funny money fueled US mkt bubble just burst. hot asian money leads to things like parabolic ramps in shanghai stock market index followed by an equally impressive (and not surprising) collapse. any smug, stubborn, greedy seller that has been reluctant to lower asking price to a more appropriate level just got door slammed in face. better start praying for more green shoots come spring time. my condolences to those who went all in to buy unaffordable dream home with no money down. stephen poloz is not coming to the rescue. neither is your bank.
So hey last week I submitted a question (RE-related) to the Globe and Mail for their upcoming Federal debate. Just got the email asking me to voice it on-air, but it sounds like they don’t have my submission and I’m a bit spotty about what exactly I said…
Anyone want to give suggestions for what to ask? Here’s where I’m currently at:
“My question was if candidates believe homeownership *should* be the primary way in which Canadians store their wealth and save for retirement. What would they say to someone graduating high school today about the prospect of buying a home for $2 million a decade from now, as their policies all seemed designed to forever increase the price of housing, benefiting one group while hurting another.”
Lemme know what you think.
Dollar weakens on receding U.S. rate hike hopes, euro gains
http://www.reuters.com/article/2015/08/20/us-markets-forex-idUSKCN0QP02O20150820
More over-leveraged real estate fools from BC…
This week I mashed up some charts on current Canadian household debt with the ratio of bank credit to GDP in 17 developed countries (including Canada) since 1870… and some perspectives on the $10/barrel oil scenario:
http://www.chpc.biz/history-readings/ten-dollar-oil
It may not get to $10, but in 4Q 2001 & 1Q 2002 oil was indeed below $20/barrel.
Commodity deflation means hoarding cash, increasing savings, reducing spending… at corporate and household levels. Employment earnings are vulnerable and that is perhaps more significant to Canadian real estate prices than the fear of interest rate hikes.
@8:
To raise more money, they could cash in on the B.C. real estate bonanza by selling their $1-million home, in which they have $393,000 equity, or a rental property appraised at $2.2 million, in which they have $1.33 million equity…
Their rental property breaks even but could generate cash flow after the mortgage is paid off.
So they have a rental property which currently breaks even with a $870K mortgage, but which would sell for $2.2 million.
Their RE exposure is almost twice their net worth.
We have met the enemy and he is us.
@Bo Xilai – Yes they are fools alright…fools with over $10K/month take home pay and $1.8M net worth. Sell either their home or rental building and they got more liquid wealth than any bear on this blog.
Yes, they are fools alright…biggest fools out there….
Gosh, I wish I can be an total idiot like this couple.
@12: That is well-formulated. You could trim the second paragraph maybe a bit by condensing it into past buyers vs. future buyers. I like what you have. Only comment I have is that maybe by referencing high school students and a time a decade from now, you let them off the hook for the urgency of the crisis today. Another tack you could take:
“What would you say to a young person today about their ability to purchase a home and raise a family in it in the near future?””
Yeah but I’m trying to figure out how to phrase it so that can’t just answer with something like “By increasing RRSP withdrawals, we’ll make it more affordable!” or “We’ll bring in 50 year mortgages to make it more affordable!”
I really want them to say if prices *should* be going up or not. I want them to admit that you can’t make something more affordable without driving the price DOWN.
It’s not an easy thing to ask, especially considering I doubt I’ll get a followup question.
And the idea of the “10 years from now” hypothetical is that there’s no way you can argue that increasing RRSP withdrawals or whatever will make $5 million SFH affordable to anyone without mom and dad paying for most of it. It’s an extreme that’s designed for them to realize the absurdity of the whole thing.
Fuck, maybe I should just ask “Hey, what do you think a house *should* be worth. $10 million sure is great for boomers that currently own… do you see any downside to this?”
Ohhhhh…the pain! please! P l e a s e make it stop!!!
I can’t watch my preferds and ETFs anymore. IT HURTS!!!
(on a side note: Bruce Jenner… ick! ewwww he creeps me out)
F@****@CK! If only I hadn’t sold my house like GT said and put it all into
equities!!! PLEASE! make it stop!!!!!
@6 Mike S – I’d ask about the CMHC and if they see it changing or potentially being privatized during their tenure.
@19:
CMHC’s existing obligations (e.g. mortgage guarantees) cannot be privatized, nor is any private sector actor going to take over mortgage insurance going forward without government backing like Genworth enjoys.
Asking about CMHC privatization would just give Harper the opportunity to spout BS about removing taxpayer risk, as his government as already done.
So much for Canadian Stock market investors. TSX down 40% from the highs when viewed from a reserve currency such as the USD.
Boomers are going to feel this one.
And some blogs out there want you to sell your house and invest with them. Unbelievable.
High-powered overseas Chinese business group gathers in Vancouver
About 1,700 business leaders from around the world are attending a major convention that organizers hope will help promote the city
@12 @15 @16 MikeS
Good on you for pursuing this! Agree, it’s hard to pose a question that won’t elicit nauseating drivel for an answer. What about:
It is a fact that many government policies, whether fiscal (e.g. capital gains tax exemption on principal residence) or monetary (e.g. all-time low interest rates), have an effect on housing prices. It is a fact that housing prices are going up in Canada faster than are incomes. Should housing prices in Canada be higher or lower than they are today? What would your government’s policies be to make that happen?
@Oracle: I was just about to question investment condos loss when viewed from a US perspective. A Van condo is necessarily priced in CAD, but most stock investors own a lot of US assets. At least it’s very easy to own US assets, but you can’t have half your Van condo in US.
The sad thing from a canadian worker’s point of view is that his wage has been cut 20+ percent yoy in USD. For someone young, that’s a lot of money.