Rate hikes threaten the middle-class dream

In Canada ‘middle class’ currently seems to mean ‘deep in debt’ and rate hikes are a looming threat on the middle class :

For one view of Canada’s rate hike, consider the case of David and Neera. He can’t get a raise, is worried about retirement and they borrowed money a couple years ago to fix the roof. Interest costs will jump now, with vacations and kids’ clothes already out of reach.

Justin Trudeau’s entire economic agenda is aimed at David and Neera — we know, because he invented them. Their story anchored the Liberal government’s debut budget, tying together the impact of all the prime minister’s measures. Now they’re a cautionary tale.

“Canadian families are also taking on more debt to make ends meet,” the 2016 budget said. “For David and Neera, this debt is a constant source of worry.”

Read the full article over that the Financial Post.

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bullwhip29
bullwhip29
3 years ago
bullwhip29
bullwhip29
3 years ago

Teen who crashed Mercedes at 250 km/h in Vancouver avoids jail time
http://vancouversun.com/news/local-news/teen-who-crashed-mercedes-at-250-kmh-in-vancouver-avoids-jail-time

>>> why do authorities even pretend that they are making any attempt whatsoever to crack down on this nonsense? for every one who winds up in this predicament, there are countless others who run free and wild in their lamborghinis, ferraris and maseratis all over gr vanc on any given night…

Best place on meth
Best place on meth
3 years ago

By the way, that article from BIV “Vancouver one-bedroom rent hits another record high in July: PadMapper” is complete crap.

They are using Airbnb listings, furnished luxury apartments and other short term listings meant for out-of-towners to pad the numbers.

They may as well include nightly rates at the Fairmont.

I wonder if they are trying to manipulate people into buying investment properties with these fables of $2000+ to rent a 1 bedroom.

franko
franko
3 years ago

John Horgan has hired Glen Clark’s daughter to serve as his director of liaison and coordination at a salary of $100k. Would be interesting to know what her qualifications are and who she was able to beat out for the job.

Best place on meth
Best place on meth
3 years ago
Reply to  franko

Horgan has also hired Layne Clark, daughter of former premier Glen Clark, to serve as his director of liaison and coordination, with a $100,000 salary.

https://ca.linkedin.com/in/layne-clark-79a35749

history
history
3 years ago

Payback is a bitch. Layne is gonna lay pipe into the system that screwed her Father, count on it.

Dave
3 years ago
Reply to  history

I’d like to see that. I think Clark got screwed over by the media and his own party.

paulb
paulb
3 years ago

New
171
Price Change
57
Sold
158
TI:9831

http://www.clivestevepaul.com

patriotz
3 years ago

New housing minister Selina Robinson to tackle B.C.’s runaway home prices

Coquitlam MLA Selina Robinson has been named B.C.’s new Minister of Municipal Affairs and Housing.

Robinson, re-elected in Coquitlam-Maillairdville and formerly critic for mental health and addictions, is seen as a strong advocate for housing affordability and a rising star in Premier John Horgan’s party.

On the campaign trail, Robinson said imposing a speculation tax to slow runaway home prices in Metro Vancouver and Victoria, and building 114,000 new rental units, were at the top of the party’s to-do list.

history
history
3 years ago
Reply to  patriotz

She was sitted right next to Horgan, at the Cabinet photo op. She’s on a short leash… i’ll let your imagination take care of the rest.

history
history
3 years ago
Reply to  patriotz

ahh, where was Selina in the Cabinet photo? next to Horgan, real tight.

Owen
Owen
3 years ago

I’m curious: where does everybody think money for a down payment should be invested right now? Obviously it should mostly be in a HISA, GIC, or short-term bonds. But is it worth taking a portion to hedge real estate prices, maybe with a REIT or MIC? Or would you bet that the bubble pops and, if so, how do you make money off of that? Buy US bonds?

best place on earth
best place on earth
3 years ago
Reply to  Owen

pretty bears like their cash in the pillow.

history
history
3 years ago

sitting pretty bears generally live their life Outside the debt service economy. It’s not always easy, and you are often scorned because pigger debt people hate you. Employment isnt scarce, wages are flat. This serves the sitting pretty bears okay. Employers love you because your Whole Situation is screwable

bestplaceonearth
bestplaceonearth
3 years ago
Reply to  history

on the surface, you are ok. but, if you are not envy of the haves, yo would not be pissing off here every single day.
on the screwable topic, you have been screwed for a long time.

history
history
3 years ago

and i will screw my gf in my van 30 ft from your home ATM. She might need to be gagged, dont want to draw the attention of the bylaw volunteer ‘policing’ , or minimum wage private security

Oracle
Oracle
3 years ago
Reply to  Owen

Bubble won’t pop. Too many people flooding the city right now. 60,000 suites in Surrey…all looking to buy detached.

Best case scenario: Prices go down 25% due to instability…before they start rising again.

Oracle
Oracle
3 years ago
Reply to  Oracle

Prices in valley now up 100% in 24 months. No way they let it crash back to what it was 2 years ago.

Silence of NDP speaks volumes.

Doomcouver
Doomcouver
3 years ago
Reply to  Owen

Any assets priced in CAD would likely take damage in the massive house-price fueled recession we’re due for. How you want to hedge for that is up to the individual investor. Many of them seem to be hoarding cash waiting for the bottom to fall out of the stock market though.

history
history
3 years ago
Reply to  Doomcouver

my favorite recco is to purchase shares in authentic Korean restaurants. Unleash the Kraken, and BBQ the protein

patriotz
3 years ago
Reply to  Owen

” maybe with a REIT ”

REIT’s are not sensitive to the household RE market because that’s not what they own. They own multi unit rentals and commercial properties, On the other hand they are vulnerable to higher interest rates.

If it’s really a down payment I’d just stick to guaranteed savings.

Best place on meth
Best place on meth
3 years ago
Reply to  Owen

Canadian marijuana stocks.

history
history
3 years ago

Warren B. would caution you on investing in any industry that is heavily regulated. Taking your down payment dough and punting these stocks isnt a good idea.

So what isnt heavily regulated? this is the question you should ask yourself

bullwhip29
bullwhip29
3 years ago
Reply to  Owen

Anbang wealth management products

Shut It Down Already
Shut It Down Already
3 years ago
Reply to  Owen

Short Brookfield Real Estate Services.

bullwhip29
bullwhip29
3 years ago

CRA tax shift collides with municipal rental incentives
https://www.biv.com/article/2017/7/cra-tax-shift-collides-municipal-rental-incentives/

A push by Metro Vancouver municipalities to increase rental density in single-family neighbourhoods could soon collide with tougher enforcement of the capital gains tax exemption on principal residences, tax and real estate experts say.

Shut It Down Already
Shut It Down Already
3 years ago
Reply to  bullwhip29

“The principal residence exemption is one of the biggest tax loopholes in the history of the Canadian Income Tax Act. It has likely resulted in billions of dollars in lost tax revenues. Ordinary taxpayers played fast and loose with the reporting of taxable gains on the sale of their residences,” he said.

Sounds to me like a polite way of saying that many Canadians have been cheating the system.

patriotz
3 years ago
Reply to  bullwhip29

I don’t think it will produce much of a disincentive to rent out part of one’s residence and here’s why.

First, if you convert part of your residence to a rental unit, or buy a property so configured, the adjusted cost base of the unit is calculated from the current market value of the property, not what the homeowner paid way back when.

Second, the capital gain if there is one (and I think that’s a big if these days), is payable only when the property is sold. On the other hand the cash flow from renting out a unit happens right now. People will choose to take the money now and not worry about capital gains later.

And remember there’s no net rental income for anyone with a good sized mortgage.

bullwhip29
bullwhip29
3 years ago
Reply to  patriotz

the elephant in the room is the potentially massive capital gains tax hit triggered by an eventual sale for long term owners who have been renting out their basement suites for years not the possible tax implications for newly acquired properties going forward. the whole exercise could veer off in many different directions when one considers whether or not rental unit/income factored into mortgage qualification (as so many have to do), whether or not rental income was declared, whether certain renos/repair/alterations were done by owner/util co/contractor etc, whether these costs were deducted thereby leaving a nice papertrail for CRA and so on and so forth… certainly in the midst of all this (assuming CRA is even remotely sincere about this course of action) many people will get tripped up and/or get their stories mixed up should anyone come asking for… Read more »

patriotz
3 years ago
Reply to  bullwhip29

But they are already renting out suites and have already taken on the capital gains liability, and they can’t get out of it. The article was talking about the effect on those considering converting to rentals going forward.

history
history
3 years ago
Reply to  patriotz

your home as an ATM, and generally a disincentive to rent, meets a new reality where generating rental income makes more sense. But like a lot of things in life, hard to implement.

The property speculation class has marginalized the capable renter. He has moved on to a different form of living

bullwhip29
bullwhip29
3 years ago
Reply to  patriotz

most dont even realize the potential cap gains liability you mention and likely plan to keep silent should they ever sell. agree, the past can’t be undone now

Oracle
Oracle
3 years ago
Reply to  bullwhip29

Been looking at a lot of mega homes with 2-3 suites being sold in the last 6 months in surrey.

Absolutely no one is declaring anything. CRA doesn’t care either.

history
history
3 years ago
Reply to  Oracle

The Federal Minister of Defense wil have something to say the next few months which will explain the Surrey-Abottsford housing bull trap

bullwhip29
bullwhip29
3 years ago
Reply to  Oracle

sure, that’s been the running story since the beginning of time and one of the reasons things wound up as is. if the CRA actually followed through on a fraction of what they say then things will get interesting.

Shut It Down Already
Shut It Down Already
3 years ago
Reply to  patriotz

The problem is that people don’t get their property appraised at the time they convert to a rental.

history
history
3 years ago

let them back track a few weeks since their last refi. The piggies do it ofen….

in fact, take the appraised value from October 2016, just before the big Cry Festival

Appraisals are marked to balance sheet every week, i dont see a problem. The bigger issue is actually finding a tenant to pay Piggers debt servicing

Best place on meth
Best place on meth
3 years ago
Reply to  bullwhip29

Capital gains tax exemption has always been a scam against working stiffs.

Those of us who make our income from labour have to pay more tax to make up for these prima donnas who made a killing sitting on their asses.

Just like we have to pay more tax to make up for the immigrants who cheat on their tax returns and don’t declare offshore income.

SpacedOut
SpacedOut
3 years ago

Horseshit. So I run a company and take my income as a dividend and I’ve sat on my ass and made killing? Weak meth. Hope you’re not charging full price for that crap.

Best place on meth
Best place on meth
3 years ago
Reply to  SpacedOut

The topic is capital gains exemption from the sale of a principle residence.

Are you with me?

But since you mention it, the dividend tax rate is also horseshit, another loophole that wealthy people convinced our elected representatives to put into law to benefit them.

All income should be taxed at the same rate, or not taxed at all.

Shut It Down Already
Shut It Down Already
3 years ago

Dividends are paid from after-tax profits, dummy.

Oracle
Oracle
3 years ago

Bang on!

Soda
Soda
3 years ago

Realestate speculators are pumping propaganda to dump more overpriced assets . The needed rate hike will no threaten middle class dreams. It is the speculation has threaten the dreams.

Long term and non-ending low interest policies have inflated hard asset prices creating speculators that have gamed the realestate and not letting go. Some of them are holding houses that they want to flip and hence the propaganda game.

history
history
3 years ago
Reply to  Soda

you’re right, the Speculation Class is what it is. We dont have a middleclass in the traditional sense.

The speculation class possess Lines of Credit, Heloc lifestyle, a regime of air flights per year for leisure…They HOG (home owners grant), own more than one house, most here get the picture.

Doomcouver
Doomcouver
3 years ago
Reply to  history

Yes speculators both foreign and domestic are running rampant through our real estate market. The domestic ones are going to whine the hardest because they had to use a ridiculous amount of leverage to buy homes. How many HELOC’s were used to finance 2nd and 3rd homes bought to speculate on. I would bet if we had that data it would be a shocking number.

Oracle
Oracle
3 years ago
Reply to  Doomcouver

But each place that was bought is up $300,000 in 2 years or less.

They are way ahead. And they have gov on their side.

Combat roach
Combat roach
3 years ago
Reply to  Soda

Looks like we are slowly running out of greater fools when it comes to “speculations” of all kinds.

YVR
YVR
3 years ago

“RATE HIKES THREATEN THE MIDDLE-CLASS DREAM”

Actually the low rates in the first place along with the lack of rate hikes has threatened the middle class dream.

It is like saying cutting the junky off heroin threatens his health. There is going to pain by cutting off the heroin but the alternative is worse.

Shut It Down Already
Shut It Down Already
3 years ago
Reply to  YVR

We have safe injection sites. How do they fit your analogy?

SpacedOut
SpacedOut
3 years ago

Those are the banks. Shoot. No. That doesn’t work. They’re the dealers.

history
history
3 years ago
Reply to  SpacedOut

the analogy is pretty good, you guys from China dont like it because he didnt say Fentanyl

specialfx3000
specialfx3000
3 years ago

The middle class deep in debt needs to realise it’s time to wake up… it’s not real… it’s just a wet-dream.

Oracle
Oracle
3 years ago
Reply to  specialfx3000

You guys just don’t get it!!?

Debt is a zero sum game. If you go into debt, someone else has just made that money.

“Middle class in debt”….Hahaha. An impossible notion.

The majority in this boom have made out like lottery winners and they want to keep it that way.

Shut It Down Already
Shut It Down Already
3 years ago
Reply to  Oracle

“Debt is a zero sum game. If you go into debt, someone else has just made that money.”

False.

(Interest)

Oracle
Oracle
3 years ago

So 2 groups make money when 1 goes into debt.