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Mr. Wynand posted:The Economist Who Just Won a Nobel Prize Thinks Owning a Home Is a Terrible Investment No, you'll just get the exact same thing shown in the article comments: "Nuh-UH! [RE industry talking points 1-30]!"
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Oct 16, 2013 19:47
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rhazes posted:I don't understand why anyone would do this The answer is always, always, "because people are goddamn loving idiots with money"
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Oct 16, 2013 19:54
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Lexicon posted:The answer is always, always, "because people are goddamn loving idiots with money" A friend of a friend from high school was in awe that our friend saved ~50k for an apartment down payment in Vancouver, because he's never had more than 10k or knows anyone who has managed to save anything into 5 figures, and asked my friends if we knew anyone/had ourselves. Completely blew my mind that he was impressed. I saved up 30k with an average wage of $11/hr back in my early 20s from low-paying university internships (that said, my family has always supported me heavily.) We're approaching 30 now. I guess this sort of thing does appeal to the financially illiterate, who don't understand anything to do with money except that stocks are risky, mutual funds are safe (lol) and that the housing is an amazing investment!
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Oct 16, 2013 20:08
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rhazes posted:A friend of a friend from high school was in awe that our friend saved ~50k for an apartment down payment in Vancouver, because he's never had more than 10k or knows anyone who has managed to save anything into 5 figures, and asked my friends if we knew anyone/had ourselves. Completely blew my mind that he was impressed. I saved up 30k with an average wage of $11/hr back in my early 20s from low-paying university internships (that said, my family has always supported me heavily.) We're approaching 30 now. I guess this sort of thing does appeal to the financially illiterate, who don't understand anything to do with money except that stocks are risky, mutual funds are safe (lol) and that the housing is an amazing investment! Speaking of bad mutual funds and bad financial literacy, Garth Turner had a pretty good post lately: http://www.greaterfool.ca/2013/10/14/what-to-really-worry-about/
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Oct 16, 2013 20:26
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LemonDrizzle posted:The entire justification is "people can't afford houses", with an implicit subtext of "...and house prices cannot ever be allowed to fall so that they come back into line with incomes". So instead of a correction in the market, we get a new and bigger bubble that will burst the instant interest rates rise from their current rock bottom levels. Well if you put it into the Canadian context, the government has allowed housing to become about 20% of GDP. (I am assuming that England's housing bubble has accomplished something similar.) If they take moves to put that to a more historical norm, the damage to the economy and social fabric would be immediate and severe. The only card they can play is to keep the bubble going, and hope that something comes along that can absorb that drop. It's magical thinking of course, and even if something comes along (like a new industry) it will probably just be the next bubble. (Ironically, the bubble makes the "something else" more unlikely as investment will all just flow into the bubble.) Politically however they are better off making a later bubble pop worse than forcing the current bubble to pop, since someone else will suffer for it.
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Oct 16, 2013 20:28
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If short-sighted idiot voters weren't an issue, what's the best thing government could do right now? Anything super drastic would hurt a lot of people and 'the economy' but clearly this whole bubble is just a ridiculous hot potato people just hope the next generation will have to deal with. Would there be a way to just slowly deflate prices to a reasonable norm and then keep the market there?
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Oct 16, 2013 20:38
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Baronjutter posted:If short-sighted idiot voters weren't an issue, what's the best thing government could do right now? Anything super drastic would hurt a lot of people and 'the economy' but clearly this whole bubble is just a ridiculous hot potato people just hope the next generation will have to deal with. Would there be a way to just slowly deflate prices to a reasonable norm and then keep the market there? -Cut off the banks' access to sweet sweet CMHC gravy, and force them to actually insure their own portfolios. -Cancel the Homebuyers' Plan, and make sure anybody who used it has repaid their RRSPs. -Create a punitive tax on unoccupied real estate in urban areas where the vacancy rate is below a certain percentage (say 2%). -Return the conditional capital gains exemption on selling multi-family dwellings, so that people who own old apartment buildings can sell them to redevelopers without getting anus-loved by the taxman. -A national housing strategy with funding and support for purpose-built rental and cooperative housing, as well as new funding for targeted social housing.
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Oct 16, 2013 20:43
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Baronjutter posted:If short-sighted idiot voters weren't an issue, what's the best thing government could do right now? Anything super drastic would hurt a lot of people and 'the economy' but clearly this whole bubble is just a ridiculous hot potato people just hope the next generation will have to deal with. Would there be a way to just slowly deflate prices to a reasonable norm and then keep the market there? Pretty much the best option would be detangle from the mess by forcing banks to do more aggressive risk assessments when it comes to risky loans and also removing moral hazard from the system by avoiding the whole US-esque government backing private sector mortgage loans/insurance. Another big more challenging thing would be to remove subsidies for homeownership and instead focus on encouraging renting/adequate rental supply. For  from a conservative thinktank about home ownership being a good thing:http://www.heritage.org/research/reports/2010/08/the-presidents-worrisome-narrative-to-discourage-homeownership etalian fucked around with this message at 21:07 on Oct 16, 2013 |
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Oct 16, 2013 20:48
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Can you imagine what would happen if Concord Pacific had to pay a tax on all of their unoccupied land? edit: you would be practically making land
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Oct 16, 2013 21:30
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Fine-able Offense posted:-Cut off the banks' access to sweet sweet CMHC gravy, and force them to actually insure their own portfolios. I don't see how this wouldn't effectively pop the bubble. Once mortgages are actually "difficult" (i.e. not irresponsibly easy) to get, buyers dry the gently caress up and the the best possible scenario would be that everyone just sort of decides to leave their property on the market for ever without dropping their asking price. Of course as soon as a handful of people can no longer afford their mortgage payments because the economy sucks poo poo or because their interest rate went up or both they will have no choice but to cut their price, and then it's a race to the bottom. You could adjust CMHC restrictions and other pseudo-subsidies gradually to control this process so you have exactly the "right" amount of buyers in the market at any given time, which should in theory give the government direct access to the acceleration pedal. I'm pretty sure that is in fact what they are actually doing now. My question would be what they consider the "right" amount - try to keep it at current levels and play chicken with people's debt load, or slowly bring it down, and by how much? At the end of the day no matter how slowly you bring it down you are bringing it down. Just as many people are going to be hosed, it's just spreading out over a longer time period. This is certainly preferable to a sudden "shock" that can cause weird panics all over the place, but you're still going to eat more or less the same recession, just spread out over a longer time. The only way you can avoid a recession or recession-like scenario that is driven by a drop in spending (be it sudden or gradual) would be by directly bolstering spending. Of course that is also the way to get out of the current completely unrelated recession and is obviously not actually on the table, because debt overhang nightmares or laffo curves or whatever the gently caress the neoliberal economic narrative du jour is.
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Oct 16, 2013 21:33
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Mr. Wynand posted:I don't see how this wouldn't effectively pop the bubble. Once mortgages are actually "difficult" (i.e. not irresponsibly easy) to get, buyers dry the gently caress up and the the best possible scenario would be that everyone just sort of decides to leave their property on the market for ever without dropping their asking price. Of course as soon as a handful of people can no longer afford their mortgage payments because the economy sucks poo poo or because their interest rate went up or both they will have no choice but to cut their price, and then it's a race to the bottom. If an economic transaction depends on a ready supply of "free" money, it's not an economic transaction that is sustainable, full stop. Take your medicine now, or take it later when it's too late, there's not really a choice in the matter. The best you can hope for is that all of that misallocated money stimulates more productive economic activity, and that a healthier rental sector + national housing strategy takes care of young people/the poor/people who need social housing.
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Oct 16, 2013 21:38
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Lexicon posted:Speaking of bad mutual funds and bad financial literacy, Garth Turner had a pretty good post lately: http://www.greaterfool.ca/2013/10/14/what-to-really-worry-about/ This is more appropriate to the Cdn. finance thread, but those comments. Oh my. Bunch of conspiracy theorists and self righteous assholes who presided over the dismantling of the safety net their parents fought so hard for (unions and the like), now making GBS threads on the up-and-coming generation for having a way harder time than them with horrible tax cuts so they can eke out a little bit more money. Shameful. Even the people who were generally correct in those comments wrote it in such a way that make me deeply suspicious. A lot of people condoning their houses going up 20% as investments. *sigh* I don't want the bubble to pop, but flat prices for what, 10-15 years, while inflation and simple economic growth catch up would be nice.
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Oct 16, 2013 21:39
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Mr. Wynand posted:neoliberal This is an aside, but why does this word pop up over and over again, but only ever on the internet? I've never heard a human speak it live, either in person or TV/radio. It's a weird pejorative that mostly tends to detract from what may generally be a cogent argument by the writer, IMO. Anyway, back to your regularly scheduled bubble talk...
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Oct 16, 2013 22:02
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Lexicon posted:This is an aside, but why does this word pop up over and over again, but only ever on the internet? I've never heard a human speak it live, either in person or TV/radio. It's not my favorite term because it does have quite a few different meanings to different people. It's not really a pejorative either though IMO. It's supposed to refer to the current "mainstream" economic dogma - e.g. control social spending, more tax cuts, more free trade, less protectionism etc. It is distinct from the older "liberalism" because it really does take a much harder line on spending and introduces some new ideas like austerity and worrying about debt overhang. It is without a doubt what has actually been driving economic policy in the entirety of the "western" world and most of the rest of the world as well for the past few decades (post-Reagan/Thatcher, give or take). Weather you not you think that it should be a moniker uttered with disdain depends on how well you think it actually works.
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Oct 16, 2013 22:18
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Fine-able Offense posted:-Cut off the banks' access to sweet sweet CMHC gravy, and force them to actually insure their own portfolios. In the scheme of things any sort of sane housing policy would focus on rental affordability not appreciation instead of the current model which is already at the American casino phase.
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Oct 16, 2013 22:22
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rhazes posted:I don't want the bubble to pop, but flat prices for what, 10-15 years, while inflation and simple economic growth catch up would be nice.
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Oct 16, 2013 22:26
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I've been eyeing up this sweet 160+ parcel in the Cariboo an hour from the nearest town. It's getting hard for me to decide if I am more interested in spending the rest of my life in the rat race of city life, renting till I drop dead at 60, or moving to the middle of bumblefuck nowhere with no jobs and no people within a days travel. At least rural parcels are starting to become affordable and less tied to lower mainland market prices, I think is the takeaway from this.
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Oct 16, 2013 22:29
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LemonDrizzle posted:AFAICT, this is the only way out of a bubble that doesn't break current mortgage holders and the banks that have lent to them. Unfortunately, maintaining stable prices over an extended period of time would probably be impossible even if you could persuade successive governments to stick to the task. Yeah, minor fluctuations are inevitable, and a 5% drop might just cause a panic and the bubble to pop, even if the government or BoC somehow gives assurances that there is no bubble (because admitting there is one is bad, bad news, even though it's widely known.)
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Oct 16, 2013 22:32
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Would it be at all possible to take all the insane profits the banks make off mortgages and use that money to soften the blow of a drastic price correction after sane housing/mortgage policies are implemented? Yes your house just lost 40% of it's value and you were depending on it for retirement, but surprise, social services and pensions just got boosted so you'll be ok. Basically put all the savings from a housing correction into a strengthened safety net. Also use the crash to break and nationalize the banks and other key sectors of the economy and implement national/provincial housing strategies to see massive rental housing construction that would make the soviet union blush and ensure everyone has basic guaranteed housing 
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Oct 16, 2013 22:33
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Baronjutter posted:Basically put all the savings from a housing correction into a strengthened safety net. There are no "savings". Today you have a widget worth $120. Due to a burgeoning speculative mania and various government incentives - soon it will be worth $200 - hooray! But then the widget goes out of fashion as an investment vehicle, and the incentives are withdrawn - and it's worth $100. Nothing is "saved" in the transition from $200 -> $100. The only entity who potentially saves money is the guy looking to buy a widget once it's priced at $100.
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Oct 16, 2013 22:58
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I saw this today: 
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Oct 17, 2013 05:22
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Haha saved as vancouver.jpg
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Oct 17, 2013 05:44
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Throatwarbler posted:Haha saved as vancouver.jpg What a steal for studio size living space: 
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Oct 17, 2013 05:47
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I'm not going to lie, the first thing I thought of was that they named it after Pam from The Office.
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Oct 17, 2013 05:59
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The state of the bubble is a bit of a mystery to me right now. Are there any blogs taking full stock of the whole picture? I can only find stuff on Vancouver and Toronto.
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Oct 17, 2013 05:59
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Kafka Esq. posted:The state of the bubble is a bit of a mystery to me right now. Are there any blogs taking full stock of the whole picture? I can only find stuff on Vancouver and Toronto. The Royal Bank of Canada releases reports every few months which have comprehensive stats for all the main markets.
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Oct 17, 2013 14:36
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etalian posted:What a steal for studio size living space: TAC is just up the street from The Beasley (I saw them both as I was walking to my barber shop the other day, and nearly barfed on the sidewalk a few times). Important because MAC (a lovely marketing company) is part of the same group. Majuju fucked around with this message at 15:26 on Oct 17, 2013 |
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Oct 17, 2013 15:24
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etalian posted:The Royal Bank of Canada releases reports every few months which have comprehensive stats for all the main markets. It's a little hard to take any bank's word on the situation very seriously though, at least for me. They have a direct, vested interest in downplaying the downside and over-emphasizing the upside.
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Oct 17, 2013 15:39
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Fine-able Offense posted:When somebody says "about 3-5%", it is pretty dumb to immediately run out and cite the best-case edge scenario (a well-built new condo) and then pick the highest number in the range (5% instead of 3%) and then say "wow, that's too high!!1!". He's already factored in strata fees though -- you're saying that after owning for 10 years a reasonably likely outcome is that he's going to spend half the value of his property in repairs/maintenance on top of that?
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Oct 18, 2013 04:30
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Today in municipal governments that think they're awesome at buying and selling real estate: http://www.theprovince.com/news/vancouver/Langley+council+told+land+deal+over+assessment+councillor/9049702/story.html TLDR, lovely fundamentalist christian university rips of Langley Town Council to the tune of 1.2 million. Love thy neighbour motherfuckers!
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Oct 18, 2013 07:23
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Kafka Esq. posted:The state of the bubble is a bit of a mystery to me right now. Are there any blogs taking full stock of the whole picture? I can only find stuff on Vancouver and Toronto. ReMax/lepage has region by region broken down by bedroom and zoning. The local real estate broker association usually keeps a copy of it. They also keep local trade reports on velocity of stock, price midpoints and notable outliers on hand that are available for public request. I know they do it for ON/QC/AB/SK/MB.... On a side note, Shillers' commentary on the home bubble was to refi- at current rates, given the sustainability of the current twisted yield curve over a 15 year asset cycle. On a second side note, the net short summary reports as well as general dealer house knowledge is that the short Canada trade has concluded. The topic has resolved itself mainly due to a delfation in speculative money residing in ReOC and residential new builds that was fueled on yen-cross and euro-cross speculation in AUD and CAD assets, chiefly real estate. With China and EU both going negative carry, hot money has started rotating back overseas. REITS got hit and have fallen from their high's due to bond yields, home loans and refi's will be stated in the bank earnings starting next week. Labour employment is flat on a seasonally adjusted basis so the general conclusion is that if a glut was forming due to asset speculation the majority of those new builds, if we use the annual turnover rate in Toronto as the largest estimate of speculation would imply that the slowdown has reduced the stock of new 'bubble' assets to within the lower band of housing demand. In short... I'm a bit confused as to why people are still saying a bubble is occurring in 'Canadian' housing. ie. the world beyond Bloor to Dundas in Toronto. Trade is finished, show's over, slowdown in home lending likely started around August when rates bent north as evidenced in the US east-coast loan margins reported by WFC & C this week. Canadian refi's and mortgage origination's got hit double hard due to the currency differentials and slowdown in manufacturing sector in the last 3 GDP prints where Ontario core manufacturing & building was hit very hard vs. expectations and seasonal averaging. The new trade is all about personal consumer credit limits (evidence is the record personal leverage being carried by Canadians, rising personal default rates and record charges being reported by AMEX -> flowing to RY/mastercard) and if student loan bubble is starting to implode given the historically high Canadian and American student loan rubber banding.
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Oct 18, 2013 09:35
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The majority of Toronto condos still haven't hit the market. That's why there's still a bubble.
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Oct 18, 2013 16:20
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^^^: "I'm a bit confused" is right...blah_blah posted:He's already factored in strata fees though -- you're saying that after owning for 10 years a reasonably likely outcome is that he's going to spend half the value of his property in repairs/maintenance on top of that? It is a ball park. However what Fineable is actually saying* is that no, your buddy can expect to not actually pay that, since it is unlikely that he is living in a properly maintained building. * apologies if I mischaracterized your point
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Oct 18, 2013 16:27
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Cultural Imperial posted:The majority of Toronto condos still haven't hit the market. That's why there's still a bubble. Also they're still building them like crazy everywhere in the city.
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Oct 18, 2013 16:29
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Hal_2005 posted:In short... I'm a bit confused as to why people are still saying a bubble is occurring in 'Canadian' housing. ie. the world beyond Bloor to Dundas in Toronto. Most of us in this thread don't see it as a controversial point. Historically off the charts price:income ratios, price:rent ratios, comparison with USA housing (average home price North and South of the border used to be broadly equal. Now ours is double theirs. The equilibrium price is not necessarily equality, but double seems frankly difficult to justify). The Economist and other non-Canadian publications (hell, even NPR) have noticed these trends and remarked on them. Maybe bubble is the wrong word - implies an impending collapse which I don't necessarily foresee... but 'overvaluation' or 'massive overvaluation' seems apt to me at the very least. Could you elaborate a bit on where you're coming from?
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Oct 18, 2013 16:35
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Majuju posted:TAC is just up the street from The Beasley (I saw them both as I was walking to my barber shop the other day, and nearly barfed on the sidewalk a few times). I guess the Beasley plaque  is how he was a advocate for New Urbanism/affordable urban housing for everyone?His then name then gets invoked by another real estate bandit company that's helping to make Vancouver the opposite of his vision.
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Oct 18, 2013 16:38
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ocrumsprug posted:It is a ball park. However what Fineable is actually saying* is that no, your buddy can expect to not actually pay that, since it is unlikely that he is living in a properly maintained building. Yeah, that's about it. The point is that only a tiny portion of strata fees go towards building a reserve fund, and that you need to be saving up for special assessments. Most strata fees just barely pay for the gardener and cleaning lady and poo poo like that.
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Oct 18, 2013 16:44
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Fine-able Offense posted:Yeah, that's about it. The point is that only a tiny portion of strata fees go towards building a reserve fund, and that you need to be saving up for special assessments. Most strata fees just barely pay for the gardener and cleaning lady and poo poo like that. Which is why you only even think of buying into a place with a strata that has all its poo poo together and has roof, cladding, hvac, and all the other big costs budgeted for and planned out in the monthly fees that everyone pays rather then "oops we need a new roof, I guess everyone currently living here at this moment better pony up 15k" But people are short sighted and stupid. They'll pick a badly run condo over a good one because "the strata fee was like $150 cheaper!" and then if anyone raises the idea of saving up for a new roof over the next 15 years everyone who has no plan on being there in 15 years (ie most people) vote no. Then in 15 years the building is a loving disaster and anyone who bought in is hosed. Which is why I strongly believe stratas should be regulated more heavily and be forced to plan like this. So many new condos are set up with the most bare-bones stratas because people actually will choose one condo over the other over a $50 difference in the strata fees (which is also why no one builds pools or any amenities that require serious upkeep). If every strata had to, at a minimum, prove to some sort of auditor that they have a mandated contingency fund and planning for all scheduled major work then that would not only level the playing field it would save a lot of stupid people from future financial nightmares. But of course developers don't want that because it's another hidden cost of owning a condo coming out of hiding. Initial buyers don't want that because who the gently caress cares about a new roof in 20 years that won't be my problem. Baronjutter fucked around with this message at 17:00 on Oct 18, 2013 |
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Oct 18, 2013 16:53
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How is the strata/maintenance burden issue handled in more mature parts of the world? I assume that in places like Paris, NYC, etc, there's a pretty sane model in place for amortizing these costs across many generations of building/unit owners, and not just "leave the guy in 20 years time holding the bag".
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Oct 18, 2013 17:03
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Lexicon posted:This is an aside, but why does this word pop up over and over again, but only ever on the internet? I've never heard a human speak it live, either in person or TV/radio. I've only been a member of these boards for a short time, and I've already seen the word neoliberal here more times than I've seen it anywhere else in the past year. It normally only comes up if I come across something written by Chomsky, or someone who is talking about free trade and protest movements. I'm not yet sure why it is so common here compared to other forums where I discuss politics.
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Oct 18, 2013 17:17
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