Friday Free-for-all!

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!

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patriotz
Member

@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.

patriotz
Member

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.

Mortgageslave
Member
Mortgageslave

Sell now or be priced IN forever!

This is gonna get ugly….

Bull! Bull! Bull!
Guest
Bull! Bull! Bull!
Alpha_Bear Says: May 16th, 2008 at 3:13 pm 47 “I think I’ll have drinks and dinner on a patio and then go back to my condo…” I’ll have dinner and drinks on my deck with a view, snuggle with my GF, watch the stars come out, and then go inside my delightful rented house to watch prices go down, down, down! All the time, I’m glad that I’m short the real estate market, and that my investments (funded by the sale of my last house) are increasing in value at the same time as my housing costs have been cut by two-thirds. Sell now, or be priced in forever. Brittanny Says: March 14th, 2009 at 9:06 am 56 “Sell now or be priced in forever.” jesse Says: March 16th, 2010 at 9:45 pm 8 “Sell now or be priced in… Read more »
bullwhip29
Guest
bullwhip29

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.

MikeS
Member
MikeS

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.

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

Dollar weakens on receding U.S. rate hike hopes, euro gains

http://www.reuters.com/article/2015/08/20/us-markets-forex-idUSKCN0QP02O20150820

Bo Xilai
Member
Bo Xilai
Brian Ripley
Guest
Brian Ripley

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.

patriotz
Member

@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.

space889
Guest
space889

@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.

MikeS
Member
MikeS
Alright, found my original submission: “The price of housing has doubled in recent years and appears on track to double again within the next few. Government policy has incentivized the ownership of housing through tax credits, CMHC insurance, and record-low Canadian interest rates. This has led to housing becoming the sole asset for many Canadian households — many of whom will depend on it to finance their retirements. People who bought property twenty years ago have benefited from this immensely; those who bought ten years ago less so, and those that buy today now face the prospect of million dollar homes paid for with mortgages costing them many thousands of dollars per month. What would you say to someone graduating high school today about their ability to purchase a home and raise a family in it in 2025?” Any suggestions… Read more »
Royce McCutcheon
Member
Royce McCutcheon
@6: I like your approach to it. Your odds of getting it to air are more likely than “which of you chuckleheads wants to be brave enough to try to explain to me how current Canadian real estate pricing isn’t incredibly destructive to young Canadians?” I think you have two questions in your current form though. One about the prioritizing of home ownership and one about young people. I think it’s better to focus on the young people, personally. Question: “Real estate prices continue to climb quickly in some large Canadian markets at rates that far exceed the rate of growth in salaries. With the vast majority of established Canadians living in homes they own, it’s clear there are a lot of people who don’t want to see prices decline. But what do you suggest young families who feel alienated… Read more »
Royce McCutcheon
Member
Royce McCutcheon

@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?””

MikeS
Member
MikeS

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.

MikeS
Member
MikeS

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?”

The_Shit_Garth_Says
Guest
The_Shit_Garth_Says

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!!!!!

Royce McCutcheon
Member
Royce McCutcheon
@16: Maybe that’s the question then? “House prices continue to soar in some of Canada’s most populated areas. While this is helping the bottom line for more established Canadian, it is beginning to exclude younger Canadians from communities they grew up in. What would you tell a young person if they were to ask whether continually rising real estate prices should be a major focus of government policy?” Or, more simply: “Should continually rising real estate prices be a major focus of government policy?” Or: “With record levels of household debt and an unprecedented proportion of our GDP and employment reliant on real estate and associated industries, should continually rising real estate prices be a major focus of government policy? And do you see any down sides with this approach long-term, such as a ‘brain drain’ of young professionals who… Read more »
ILoveCharts
Guest
ILoveCharts

@6 Mike S – I’d ask about the CMHC and if they see it changing or potentially being privatized during their tenure.

patriotz
Member

@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.

Oracle
Guest
Oracle

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.

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

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

http://www.vancouversun.com/business/High+powered+overseas+Chinese+business+group+gathers+Vancouver/11304785/story.html

realist
Member
realist

@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?

crikey
Guest
crikey
@MikeS #15 Keep it as short as possible. Any extra wordage is a chance for politicians do to what they do best, latch onto a side topic to run the clock out on. Keep it as simply worded as possible. You want ALL the people watching to fully understand exactly what you’re asking, even if they’re doing the dishes or otherwise partially distracted. Try to pre-empt promises of the kind that we always get —- you know, the ones where a politician promises a tiny savings amount for first time homebuyers in a way that we here all realize only will encourage prices to go higher (and thus make the problem better, not worse). How about something like: “Canada’s house prices have been rising for years at a rate much, much faster than Canadian salaries. Reputable economic experts far and… Read more »
elvince
Guest
elvince

@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.

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