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Places like Germany got it right by aiming for slightly deflationary home/rent prices. Having a housing boom in addition to the bubble meltdown risk, sucks since it's hiking a basic cost of living expense.
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# ? Oct 19, 2014 05:14 |
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# ? Jun 8, 2024 07:51 |
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If milk and bread increased in price the way the price of shelter has increased we'd call it disastrous inflation.
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# ? Oct 19, 2014 05:17 |
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Man, remember when the price of food went nuts in 2008-9 and the economist was calling it the end of cheap food? And then food got cheap again
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# ? Oct 19, 2014 05:24 |
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Cultural Imperial posted:Man, remember when the price of food went nuts in 2008-9 and the economist was calling it the end of cheap food? Did everyone take out mortgages so they could own their own cow?
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# ? Oct 19, 2014 05:27 |
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Cultural Imperial posted:Man, remember when the price of food went nuts in 2008-9 and the economist was calling it the end of cheap food? The price of food is going up since China is getting wealthier and also switching over to western style meat meat at every meal.
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# ? Oct 19, 2014 08:12 |
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quote:
http://www.realestate.com.au/property-house-nsw-chatswood-117959479 I would blow Dane Cook fucked around with this message at 11:14 on Oct 19, 2014 |
# ? Oct 19, 2014 11:11 |
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etalian posted:Places like Germany got it right by aiming for slightly deflationary home/rent prices. What possible motivation could a person have for buying a house, verses renting one, when prices are deflationary? That sounds like a horrible housing market.
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# ? Oct 19, 2014 16:49 |
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Jerkwin posted:What possible motivation could a person have for buying a house, verses renting one, when prices are deflationary? That sounds like a horrible housing market. All of the reasons people buy houses in the first place? Like space and yards.
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# ? Oct 19, 2014 16:50 |
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Renting would make more sense. Why buy a house on Monday when it'll be cheaper on Tuesday?
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# ? Oct 19, 2014 16:53 |
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Jerkwin posted:Renting would make more sense. Why buy a house on Monday when it'll be cheaper on Tuesday? There are lifestyle reasons to prefer owning such as more space and also not having to worry about leases/landlords like in a apartment. It's big part of german economic policy since it helps avoid credit bubbles and also creates a more flexible labor supply: http://www.forbes.com/sites/eamonnf...supposed-to-do/ quote:As Locke, a retired historian, points out, the Goerlitz authorities’ attitude is a striking illustration of how differently the German economy works. Rather than keep their noses out of the economy, German officials glory in influencing market outcomes. While the Goerlitz authorities are probably exceptional in the degree to which they micromanage house prices, a fundamental principle of German economics is to keep housing costs stable and affordable. Toronto vs Berlin Toronto vs Munich etalian fucked around with this message at 17:03 on Oct 19, 2014 |
# ? Oct 19, 2014 16:59 |
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I can see a static price, but I don't understand why anyone would want their assets to depreciate. Deflation hurts anyone with any kind of debt. I'm glad it works for the German market, making housing affordable for everyone is an admirable achievement. I suppose the German model would keep speculators out of the market. Still, for most people, their house is their most valuable asset. It seems reasonable that most people would want that asset to appreciate in value.
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# ? Oct 19, 2014 17:08 |
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Jerkwin posted:I can see a static price, but I don't understand why anyone would want their assets to depreciate. Deflation hurts anyone with any kind of debt. I'm glad it works for the German market, making housing affordable for everyone is an admirable achievement. I suppose the German model would keep speculators out of the market. For obvious reason the whole flat/slight deflationary housing market price means most germans rent instead. This a interesting article on the history of german housing policy: http://qz.com/167887/germany-has-one-of-the-worlds-lowest-homeownership-rates/ After world war II the government basically provide big subsidies to make sure a big supply of high quality rental properties got build since around 20% of the total housing stock got destroyed in WWII. TL DR things Germany got right -had public financing even for private company new rental construction projects -kept the finance sector under lock and key thus avoiding nasty credit bubbles -Implemented lots of pro-renter laws such rent caps, as a result renters became a big voting bloc instead of banks, speculative investors and real estate agents.
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# ? Oct 19, 2014 17:18 |
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It's my understanding, based on family that I have in Berlin, that long-term tenants in Germany also have more rights with regards to making improvements to rental properties, and otherwise being reasonably free of landlord interference. Compare this with Calgary, where residents of one of the buildings affected by the blackout were told not to buy perishable food until agents of the landlord had "inspected their fridge." The inspections will be starting tomorrow, I believe they said. I don't believe in any bullshit about "pride of ownership" but I do believe in being able to tell anyone who wants in to my apartment to gently caress themselves.
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# ? Oct 19, 2014 17:23 |
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PT6A posted:It's my understanding, based on family that I have in Berlin, that long-term tenants in Germany also have more rights with regards to making improvements to rental properties, and otherwise being reasonably free of landlord interference. Perhaps you should stop being one of the poors and join the ranks of proud homeowners. If you don't actually own the property where you live, how can you expect to have any rights?
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# ? Oct 19, 2014 17:29 |
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RBC posted:Perhaps you should stop being one of the poors and join the ranks of proud homeowners. If you don't actually own the property where you live, how can you expect to have any rights? I already own, and I'm quite happy about it. I'm merely mentioning how lovely renters can be/are being treated.
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# ? Oct 19, 2014 17:43 |
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PT6A posted:It's my understanding, based on family that I have in Berlin, that long-term tenants in Germany also have more rights with regards to making improvements to rental properties, and otherwise being reasonably free of landlord interference. Yes a good part of the success for the german rental biased model was also the large number of renter friendly regulations such as rent control. For example rent increase are capped at a max of 15% over a three year period, for comparison in the overpriced bay area it's common to see a 15-25% for each 1 year new lease renewal.
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# ? Oct 19, 2014 17:54 |
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Jerkwin posted:Renting would make more sense. Why buy a house on Monday when it'll be cheaper on Tuesday? I'm not saying deflation is a good thing, just that people would continue to buy houses for the same reasons they currently do, with the exception of the flippers. I'm not sure depreciation is a large impediment, people already by cars. Also, over the last few pages we have seen several articles with people talking about home ownership being a cultural or social imperative to advance in life. I don't think the housing market would be 'horrible', but that certainly isn't an endorsement of deflation. In the 80s when mortgages were in the 10% range and appreciation wasn't, people still bought houses.
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# ? Oct 19, 2014 18:09 |
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MickeyFinn posted:I'm not saying deflation is a good thing, just that people would continue to buy houses for the same reasons they currently do, with the exception of the flippers. I'm not sure depreciation is a large impediment, people already by cars. Also, over the last few pages we have seen several articles with people talking about home ownership being a cultural or social imperative to advance in life. I don't think the housing market would be 'horrible', but that certainly isn't an endorsement of deflation. Remember when they stopped buying houses in the 80s You know, the problem with housing is that it's a really easy way to jack up economic production, just like resource stripping. And not only is it easy to lower the barrier to construction, you can easily subisdize the market without raising the ire of any of your trading partners. namaste friends fucked around with this message at 18:44 on Oct 19, 2014 |
# ? Oct 19, 2014 18:41 |
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Another note is german cities also get grant money from the central government for more housing development but since it's tied to population the system also provides a incentive to avoid suburban sprawl. From the german model for the question "Why buy a house?" is answered by most people don't since only 40% own a home given all the subtle incentives to rent instead.
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# ? Oct 19, 2014 18:42 |
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etalian posted:There are lifestyle reasons to prefer owning such as more space and also not having to worry about leases/landlords like in a apartment. That forbes article is unsurprisingly awful, German politics are doing squat for housing affordability. The EU Lombard rate is 0.5% and they rammed through a law that forces all homeowners to upgrade every building out of pocket to energy efficient standards, a trillion dollar contractor subsidy and another notch in the Green Party axe. We don't have a bubble because there is zero demand outside of Munich and a handful of small picturesque university cities like Heidelberg. The reasons for that are debatable, a large part of it it probably cultural: renting is not a stigma around here and buying property a thing you only do when you have a family and financial stability. quote:It is hard to quarrel with the results. On figures cited in 2012 by the British housing consultant Colin Wiles, one-bedroom apartments in Berlin were then selling for as little as $55,000, and four-bedroom detached houses in the Rhineland for just $80,000. Broadly equivalent properties in New York City and Silicon Valley were selling for as much as ten times higher. Yeah good job Colin Wales, comparing NYC to Berlin (Detroit with federal buildings/subsidies) and the equivalent of rural New Hampshire. sauer kraut fucked around with this message at 18:47 on Oct 19, 2014 |
# ? Oct 19, 2014 18:42 |
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https://twitter.com/ac_eco/status/523898547075559425 canada's conservative banking industry is the envy of the entire world
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# ? Oct 19, 2014 19:13 |
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http://www.vancouversun.com/opinion/columnists/Pete+McMartn+Unaffordable+Housing+please+move/10302173/story.htmlquote:Housing in Metro Vancouver is prohibitively expensive. There. Said that. This article is so great because it's telling us there's nothing we can do about housing affordability and that it's immoral to suggest that anything can be done about it. The real victims here are the developers who aren't allowing to build more poo poo because of neighbourhood opposition.
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# ? Oct 19, 2014 19:18 |
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On the note of housing being deflatory and how that's bad because houses are people's biggest asset, they're also the only physical asset most people have that they consider to be an investment. Cars depreciate, electronic depreciate... And as far as I'm concerned, a house, a building exposed to the elements and constant use, should also depreciate. If people started to think of their home as a place to live in, and not as a retirement savings vehicle, we wouldn't be in this mess.
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# ? Oct 19, 2014 20:35 |
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FrozenVent posted:On the note of housing being deflatory and how that's bad because houses are people's biggest asset, they're also the only physical asset most people have that they consider to be an investment. Cars depreciate, electronic depreciate...
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# ? Oct 19, 2014 20:58 |
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LemonDrizzle posted:I don't agree with this at all. For a start, a house derives much of its value from the land it sits on and its location relative to other places, neither of which have any inherent reason to depreciate. Second, a well built house that is maintained properly won't exhibit appreciable physical deterioration for decades if not centuries so again, it's hard to see why it would depreciate appreciably over a timescale of years. Third, most of the things that make a house desirable (location and land value aside) are its size, layout, number of rooms, and appearance - only the last is liable to get worse over time, and again, that can be avoided with good maintenance. So why exactly should a house depreciate? It's not as though housebuilding technology advances particularly quickly and in any event, it's not especially hard to retrofit things like superior insulation or wiring onto older buildings if needs be. Robert Shiller looked at historical records for US housing and found that real estate value adjusted for inflation goes negative over time http://www.businessinsider.com/robert-shiller-home-investment-a-fad-2013-2 Mainly because things like material and labor costs for new housing are greatly reduced vs. the past.
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# ? Oct 19, 2014 21:15 |
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How are maintenance costs not depreciation? Also you're from the UK, where houses are built from brick and built to last. The North American approach is ... different. Houses built 100 years ago back when old-growth hardwood was still cheap can last if maintained. For houses built since then, it's a miracle if they're not falling apart after 40 years, even if they're properly maintained (not that most people bother).
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# ? Oct 19, 2014 21:22 |
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etalian posted:Robert Shiller looked at historical records for US housing and found that real estate value adjusted for inflation goes negative over time "...Shiller's assessment that real U.S. home price appreciation from 1890 to 1990 was just about 0 percent." In other words, you can expect a house to hold its real terms value in the long run but nothing more.
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# ? Oct 19, 2014 21:23 |
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http://www.theglobeandmail.com/news/british-columbia/vancouver-residents-speak-out-against-homeless-shelter/article21158747/quote:Mayor Gregor Robertson says the city opened a homeless shelter in a downtown Vancouver neighbourhood before it had time to consult local residents because it needed to quickly create spaces for winter. But residents in the area say they’re going to fight what they see as a plan that transplants the Downtown Eastside to their neighbourhood. but seriously, exterminate all vancouverites
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# ? Oct 20, 2014 08:03 |
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Cultural Imperial posted:http://www.theglobeandmail.com/news/british-columbia/vancouver-residents-speak-out-against-homeless-shelter/article21158747/ I live near there. There are already several rehabilitation centers nearby. I'm kind of baffled anyone would be angered or surprised by this. TheOtherContraGuy fucked around with this message at 10:59 on Oct 20, 2014 |
# ? Oct 20, 2014 10:20 |
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LemonDrizzle posted:I don't agree with this at all. For a start, a house derives much of its value from the land it sits on and its location relative to other places, neither of which have any inherent reason to depreciate. Second, a well built house that is maintained properly won't exhibit appreciable physical deterioration for decades if not centuries so again, it's hard to see why it would depreciate appreciably over a timescale of years. Third, most of the things that make a house desirable (location and land value aside) are its size, layout, number of rooms, and appearance - only the last is liable to get worse over time, and again, that can be avoided with good maintenance. So why exactly should a house depreciate? It's not as though housebuilding technology advances particularly quickly and in any event, it's not especially hard to retrofit things like superior insulation or wiring onto older buildings if needs be. That's not the point. What he's saying is that your primary residence isn't an asset/investment. And he's correct. Your primary residence isn't making you money. And once you factor in all of the costs of homeownership (property taxes, maintenance, taxes at the time of purchase, condo fees if they exist) your house ends up being a liability. Your house is simply a place to live, and nothing more. And a lot of people are over-extending themselves with massive mortgages because they're under a mistaken belief that their primary residence is an investment. Lead out in cuffs posted:Also you're from the UK, where houses are built from brick and built to last. The North American approach is ... different. Houses built 100 years ago back when old-growth hardwood was still cheap can last if maintained. For houses built since then, it's a miracle if they're not falling apart after 40 years, even if they're properly maintained (not that most people bother). Our new house that was built in 2009? Plumbing that's made out of plastic, cheap drywall that's constantly getting nicked/damaged, windows sealant that's already peeling off. It sucks. melon cat fucked around with this message at 15:32 on Oct 20, 2014 |
# ? Oct 20, 2014 15:26 |
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If you want a really strange housing market look at japan. No one wants to buy a "used" house. All houses are designed to last for one generation, and they don't really care about its architecture or "resale value" since it's assumed the next buyer will most likely demo it and build their own. Because of this all, houses are never looked at as an investment, it's more like a car where you drive it till it dies and then throw it away. Land is simply a parking spot for a house. Also Japanese zoning is really cool. Instead of huge 10 page zoning bylaws for every single zone type, they just have a few basic almost simcity style zones and within those anything goes so long as the basic rules for each zone are followed. The zones just set some very general rules on maximum FSR and types of uses and the zones are done at a national level, not city. Also even the most basic single family residential zone still allows retail, and most medium density city zones allow basically anything without paperwork. Since there isn't this obsession with "MY RESALE VALUES!" people don't care if the old house on the corner is demolished and the new owners build a corner store in the bottom of their house, a doctor's office on the 2nd floor, and their personal residence on the top, or that their neighbour has converted their big garage into a little ball jointed doll clothing workshop employing a half dozen people. Mixed use is the order of the day, streets are narrow and pedestrian focused, and there's no HOI's. It keeps cities and towns quite affordable and most importantly very adaptable and flexible. Also parking is never mandated, but to own a car you have to prove you have a parking spot. If you live in a city and don't need a car you just don't build a garage or parking spot on your lot.
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# ? Oct 20, 2014 16:08 |
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melon cat posted:That's not the point. What he's saying is that your primary residence isn't an asset/investment. And he's correct. Your primary residence isn't making you money.
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# ? Oct 20, 2014 16:19 |
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LemonDrizzle posted:This isn't really true - if you own the house you live in, you receive imputed rent. Which is kinda offset by the interest the average person pays on their mortgage. It's a rare housing market in which you can come out ahead on your mortgage. Hell, if somebody could get me historical housing prices, interest rates and average rents going back as far as we have them, I'd take a stab at an infographic showing that.
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# ? Oct 20, 2014 16:49 |
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The last couple of days I have caught an ad on the radio in Vancouver on the way into work, but haven't been able to find out anything about it on the internet. Basically there is PRIME(TM) dockable waterfront land for sale, and if you come down to their event you will be able to purchase it directly from the bank. Water and sewage have already been built, so no need for a costly septic field (on waterfront land, gross.) Presumably this is a development that initially started, and was subsequently foreclosed on. However, I cannot recall radio ads of this nature showing up on the radio. How long until it occurs to everyone that a bank directly selling waterfront property isn't a sign of a healthy market? If anyone was paying closer attention to the ad, and has information or a link about it, please share.
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# ? Oct 20, 2014 17:25 |
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ocrumsprug posted:The last couple of days I have caught an ad on the radio in Vancouver on the way into work, but haven't been able to find out anything about it on the internet. Basically there is PRIME(TM) dockable waterfront land for sale, and if you come down to their event you will be able to purchase it directly from the bank. Water and sewage have already been built, so no need for a costly septic field (on waterfront land, gross.) Its some development down in Washington. All over the am stations here.
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# ? Oct 20, 2014 17:37 |
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LemonDrizzle posted:This isn't really true - if you own the house you live in, you receive imputed rent.
.. you'll still think that I'll eke out a profit once I sell (which I probably won't do for an incredibly long time because I need to live somewhere)? Let's do some math using at this math using RBC's Mortgage Payment Calculator. Let's assume I have a 3% fixed rate for 5 years (lol@rates staying at 3%), amortized over 25 years, on a $500,000 mortgage: That's $183,102.32 in interest over the life of the mortgage. That's just interest. It doesn't even include CMHC fees if you're a high-ratio borrower. Or maintenance costs. Or any of the other expenses I listed above. And all of those non-mortgage costs all assume that I'd pay for them in cash, which most people won't (so they'll borrow). If you think that you're going to come out ahead in buying a house as a primary residence in the today's inflated real estate market you're grossly misinformed, or you're living in the same dream world that many over-leveraged Canadians are. It doesn't matter what flowery theories about "imputed rent" you think exist because quite frankly it doesn't seem to factor in the actual complexity of home ownership in the 21st Century. Look at these numbers. They don't look good. melon cat fucked around with this message at 18:24 on Oct 20, 2014 |
# ? Oct 20, 2014 18:19 |
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Just be like every other Torontonian buying houses here in Barrie and cut out those pesky maintenance fees by being an absentee landlord, raise rent enough to cover the property taxes/heating, then sell off the house for more than you paid for it when the repairs reach the point where the property is one rainstorm away from being condemned!
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# ? Oct 20, 2014 18:25 |
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Dude. Calm down. A property purchase is an accounting exercise. On the expense side you have the things you mentioned. On the income side you have rents if you have tenants, and imputed rents if you live there (because owner-occupiers typically don't charge themselves rent, and allow themselves to live rent free). Either way, it's a benefit that flows from the asset - even if far too high a price was paid to get the asset in the first place. It's not flowery theories - this is literally the accounting terminology. It also doesn't invalidate in any way your thesis that buying is a bad idea.
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# ? Oct 20, 2014 18:32 |
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Lexicon posted:Dude. Calm down. A property purchase is an accounting exercise. On the expense side you have the things you mentioned. On the income side you have rents if you have tenants, and imputed rents if you live there (because owner-occupiers typically don't charge themselves rent, and allow themselves to live rent free). Either way, it's a benefit that flows from the asset - even if far too high a price was paid to get the asset in the first place. Would you mind trying to refute any of his points? How do you make up for 200k in interest payments? How do you make up for the maintenance? Where is the profit? Aka where is the "I put 20bucks in => I took 25 bucks out => Inflation was only worth 1$ => Hence this investment made me 4$" kind of reasoning. edit: Also this is for a ridiculously low 3% rate.
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# ? Oct 20, 2014 18:39 |
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# ? Jun 8, 2024 07:51 |
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Coylter posted:Would you mind trying to refute any of his points? I'm not refuting points because I don't disagree with them. Check the history - I'm among the biggest Canadian housing skeptics there is in this thread. I was objecting to the apparent offence taken at the reality that homeowners receive imputed rent. This is true completely irrespectively of housing bubbles or cap rates or the CMHC or whatever.
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# ? Oct 20, 2014 18:51 |