Canada Housing/Debt: Trust me, I'm a landlord.

The Something Awful Forums > Discussion > Debate & Discussion > Canada Housing/Debt: Trust me, I'm a landlord.

«‹›1518 »

namaste friends: Sep 18, 2004; by Smythe

I just can't loving wait to dance on these peoples' bankruptcies and fico scores when the crash hits. dumb fucks

# ? Feb 1, 2014 07:14

Adbot: ADBOT LOVES YOU

# ? May 11, 2024 15:19

tagesschau: Sep 1, 2006; Guten Abend, meine Damen und Herren.

Saltin posted:

The Fed changing the rules for 1mil+ mortgages has really lit the 750-950k market on fire in ok neighbourhoods in the city. Not that the change was a bad thing - no lie I watched a young couple move their futon into a million plus place in Playter Estates (Toronto) before they changed the rules. A loving futon from the back of a U haul.

I think it's pretty safe to say that there aren't any houses actually worth (i.e., when we're not in a huge credit-fueled bubble) $1 million in Playter Estates unless they're built on several normal-sized lots that have been combined into one parcel.

jet sanchEz posted:

I live in this neighbourhood and I think that the buyer got a pretty good deal provided they actually intend to live in the house. I don't see much room to make money by flipping it but I could be wrong, a house two blocks over that is just as big was listed the other day for 1.35 million and it needs a lot of work as well.

For $1.35 million, I could buy a home on the Atlantic Ocean and have NFL players and PGA Tour members as neighbors. (And the lot would be three or four times as big.) And it's not going to crater in value in real-dollar terms by the time I want to sell it.

In general, it's not some magical neighborhood character that's making the houses expensive in a given area. Your dilapidated house in a dingy area of the city isn't on the market for a zillion dollars because it's really worth a zillion dollars and real estate is a great investment that always goes up; it's on the market for a zillion dollars because the bank is more than happy to write me a mortgage that's four times the size it should be.

# ? Feb 1, 2014 07:18

Pixelboy: Sep 13, 2005; Now, I know what you're thinking...

Cultural Imperial posted:

I just can't loving wait to dance on these peoples' bankruptcies and fico scores when the crash hits. dumb fucks

Aside from the fact, you know, the entire economy will be a smoking wreck.

# ? Feb 1, 2014 07:22

JawKnee: Mar 24, 2007; You'll take the ride to leave this town along that yellow line

Pixelboy posted:

Aside from the fact, you know, the entire economy will be a smoking wreck.

what does he care, he's living in ~*SeAtTlE*~

# ? Feb 1, 2014 07:38

tagesschau: Sep 1, 2006; Guten Abend, meine Damen und Herren.

Pixelboy posted:

Aside from the fact, you know, the entire economy will be a smoking wreck.

The damage was done as the bubble inflated; it's just a question of how quickly it's allowed to damage the rest of the economy.

# ? Feb 1, 2014 07:40

namaste friends: Sep 18, 2004; by Smythe

Pixelboy posted:

Aside from the fact, you know, the entire economy will be a smoking wreck.

https://twitter.com/LJKawa/status/429367908276240384/photo/1

How is this my loving problem? And what is the minority of people who didn't spend debt like it was raining cash supposed to do about it?

# ? Feb 1, 2014 07:41

Pixelboy: Sep 13, 2005; Now, I know what you're thinking...

JawKnee posted:

what does he care, he's living in ~*SeAtTlE*~

So am I.

# ? Feb 1, 2014 07:42

Pixelboy: Sep 13, 2005; Now, I know what you're thinking...

Cultural Imperial posted:

https://twitter.com/LJKawa/status/429367908276240384/photo/1

How is this my loving problem? And what is the minority of people who didn't spend debt like it was raining cash supposed to do about it?

If (when) this whip-saws and you think it won't be a shitshow for everyone, you're in for a surprise.

# ? Feb 1, 2014 07:43

namaste friends: Sep 18, 2004; by Smythe

hahaha holy poo poo

http://www.torontorealtyblog.com/archives/the-friday-rant-dont-believe-everything-you-read/10566

quote:

�Don�t believe everything you read,� said one commenter on Wednesday�s blog about 201 Carlaw Avenue.

I agree.

Don�t believe everything I say, and don�t believe everything he says. Do your own research, gather facts, educate yourself, and make an informed purchase decision.

Not that I want to fuel the fire, but I believe a follow-up post to Wednesday�s blog is in order. If ever a blog post could serve as a cautionary tale, I think buyers can learn a lot from this experience�

AbeL

Since I clicked �submit� on my blog post on Wednesday morning, several residents of 201 Carlaw Avenue have emailed me personally to complain, a couple people called my brokerage, and one person filed a complaint with RECO Ethics.

If I had it to do over again, I wouldn�t change a thing.

An agent from another brokerage called me yesterday, and he started in on me with �you�re irresponsible,� he called me �reckless,� and hinted that there could be legal repercussions.

I didn�t want to argue the validity of the information I presented, or the logistics of how legal action works in the real world - outside of what we see in movies and on television. But I did ask him a question:

�Did you ever ask yourself WHY I wrote that blog?�

He really couldn�t say.

I told him, �I�m not a monster. I�m not a mean person. I don�t have an ex-girlfriend in the building, and I�m not out to get anybody. You don�t even know me, or anything about me, or how I run my business.�

Nobody ever really stopped to ask WHY I wrote what I wrote. Instead, residents of the building were quick to dispute the facts I laid out, with false information of their own (we�ll get to that), and defend their homes in a knee-jerk reaction, without asking WHY.

Why?

I�ll tell you why, and excuse the rant�

I love real estate, but often I hate the industry in which we work, and the lack of regulations that govern us. Our business is over-saturated with 40,000 agents, many of whom only care about their next paycheque, and couldn�t possibly care less about their own clients. There are no barriers to entry, and the talent pool is being watered down with every unemployed person who says, �I think I�ll go into real estate!�

The City of Toronto constantly issues approvals for condominium towers that are too tall, complexes that are too dense, areas that have no infrastructure to support them, all in the name of their precious development charges, and additional property tax base.

The Province of Ontario hasn�t revised the Condominium Act in nearly two decades, allowing builders to run the province, specifically in downtown Toronto. Today�s Toronto developers build terrible products, with no real guidelines or structure, and no repercussions for their actions, and the consumer ends up on the losing end.

The pre-construction condominium industry is corrupt, crooked, and the chips are stacked against the consumer, who is wide-eyed, and clueless, because they often don�t do their own research, or they don�t have accurate representation from their Realtor.

I started Toronto Realty Blog in 2007 with one mission: to be the most honest, outspoken, transparent Realtor in Toronto, and for lack of a better phrase, �to tell it like it is.� I will write about a number of topics that ruffle feathers, whether it�s a practice I don�t like in the industry, or a building that has issues.

I want to provide a forum � for FREE, where I can educate buyers and sellers, and provide them with information on every conceivable topic in real estate, as well as keep them informed and up to date.

THAT is why I wrote Wednesday�s blog post.

And there is a lot be learned from the problems at 201 Carlaw Avenue, whether you�re looking at this building, or others.

The facts I laid out in Wednesday�s blog are indisputable, but that didn�t stop the residents from trying to dispute them, and I don�t blame them. As one commenter pointed out � you can�t just call your mortgage broker, or CMHC, and ask them, �Is 201 Carlaw Avenue insurable?� A mortgage insurer will not give you this information unless you are submitting a deal to them, to be approved.

I stake my reputation on the fact that you cannot obtain mortgage insurance in this building for a mortgage of greater than 80% LTV, as of today. Maybe you could have in November, and maybe you can next week, but as of today, you cannot, and if your mortgage broker tells you differently, it�s because he or she didn�t speak to a senior manager at all three mortgage insurers, after presenting a financially qualified applicant, with an Agreement of Purchase & Sale signed by a buyer and a seller.

But I�m going to move on from that�

The concept of �but I know somebody who bought in this building last month� really bothers me, because in my opinion, it means that this buyer had an agent and a lawyer that didn�t do his or her job.

I heard the case of a unit at Printing Factory that sold in the past three months, where the original buyer walked away after reviewing the Status Certificate, and another agent, who had a very interested buyer, subsequently jumped in and submitted an unconditional offer. I believe that this agent was reckless, irresponsible, and screwed his or her buyer client, who is now in a world of financial trouble, since that buyer can�t close the deal if he or she doesn�t have 20% down.

The residents of Printing Factory want to paint me as the bad guy because I aired their dirty laundry, and let their secret out of the bag, but it�s interesting to note that when one resident of the building called a colleague of mine on Wednesday (and you know who you are, because you posted on this blog), she said in reference to the above situation, �We were sooooo glad when that unit sold!�

THIS is what bothers me about the business of real estate. We have Realtors out there that will sacrifice their own buyer-clients all in search of a paycheque.

Residents of the building can say, �Well David, that�s up to the buyer to decide! You have such a hate-on for this building and you�re ruining it for us!� But that�s an emotional response. I think if any responsible, experienced Realtor made an offer on a condominium on behalf of a buyer, that agent would include a condition on the lawyer�s review of a Status Certificate. On this, there is no debate.

I have worked for Bosley Real Estate for ten years, and in those ten years I have learned that we truly are a different breed here. That�s not to say that Sage, Chestnut Park, Royal Lepage - or other companies aren�t the same, but what I mean is that with 40,000 Realtors working in the GTA, and only 200 at Bosley, we hold ourselves to higher standards.

Toronto is full of new agents, with no experience, who work for crummy brokerages, with no training � who run around the city making mistakes, all in search of a paycheque.

Bosley runs a 6-week training program for new agents. Our management team consists of the former Presidents of CREA, OREA, RECO, and TREB. I discussed Wednesday�s blog post with one agent who is on the RECO Ethics Committee (and one former chair as well), one agent who is a Director at Large for TREB, and agent one who was previously TREB President.

What I do, and how I do it, is different from the bulk of Realtors. Not all, but most. And I work for a company that hand-picks agents who will lead by example, and not misrepresent the industry.

I consider myself a consumer advocate, and my blog is a forum for learning and discussing.

I want to put everything out in the open! I want to empower the public! I want buyers to have information and knowledge that can assist them in their purchase, and help them avoid mistakes. I want to discuss some of the unethical practices that exist in our business, whether it�s the concept of �under-pricing� listings for multiple offers, or �double-ending� a listing via multiple representation.

That is why Toronto Realty Blog exists. It�s not to ruin the lives of people to live at 201 Carlaw Avenue, but rather to bring to light issues that affect Toronto real estate, and open it for discussion.

So, why don�t we do something positive with this situation at 201 Carlaw Avenue? Let�s use this, or �a property like it,� as a cautionary tale, and see what we can learn from this. As I see it, there are three important issues for buyers to understand:

1) The importance of the Status Certificate.

We Realtors are to blame for the monster we have created in today�s Toronto market, with multiple offers, pre-home inspections, offer nights, and a flurry that often precedes the delivery of an offer on real estate.

And with a condominium purchase, you are completely blind, with your arms and legs cut off. You have no idea what�s really going on in the building, and that�s why every offer MUST be conditional on a review of the Status Certificate.

If a Realtor made an unconditional offer on a building like Carlaw, then that�s irresponsible.

And if a lawyer reviewed the Status for a building like Carlaw, and didn�t advise his or her client to walk away, then that lawyer isn�t worth his or her salt.

This brings up another issue: don�t use your friend�s friend�s dad from Ajax to review your condo purchase in Toronto. Sure, you can save $1,000 on the fee, but imagine if you went ahead and bought in a building where you can�t get financing, or a building with a massive financial albatross hanging over its head?

Realtors need to explain the importance of the Status Certificate review to their clients before they ever step inside a condo with that buyer, otherwise that buyer might make an emotional attachment at the wrong time.

2) TARION

You know � you just know that when units at 201 Carlaw Avenue were being sold in pre-construction 5-6 years ago, some young 20-something agent, with 6-months in the business, had a buddy from his days as a Queen�s Golden Gael, who walked him into the sales centre and didn�t explain TARION.

Part of the reason why there are issues at 201 Carlaw Avenue are because TARION didn�t provide a warranty, and that is something that should have been addressed before purchase.

But lil� Johnny B. Good, in search of his 4-5% commission for selling in pre-construction, with little to no knowledge of real estate, probably didn�t take the necessary time and effort to explore the potential ramifications of buying in a building with no TARION warranty, and thus never explained it to his client.

See why it�s important to have an agent who actually has experience?

3) Board Decisions

I�m not here to tell the board at 201 Carlaw Ave what they should have done. It�s true � I have no knowledge of what went on in those meetings.

But I am here to tell you that a board of directors, a condominium corporation, a property manager � or all three, can affect your largest investment.

I rant and rave about the goings-on in my building at 112 George Street all the time. The concierge is a total dick, the rules and regulations that the board just put into place do nothing to help the residents, and everything to hinder them in their day-to-day lives, and the board of directors is a �clique� who hasn�t had a new member since the building came into existence.

The decision of whether or not to: a) levy a special assessment, or b) take out a $2M loan, was something that the residents of 201 Carlaw Avenue likely did NOT take lightly, and there is always input from the lawyers, the property manager, and the board of directors on a decision like this. But don�t forget about proxy votes for absentee owners, which the board usually takes on.

It is imperative that condo-owners attend every single meeting that the condominium corporation holds, and reads every single notice they receive in the mailbox. Once you start stuffing those notices in a drawer, you�re the creator of your own misfortune.

-

I practice what I preach.

And without quoting my personal sales statistics, or resting on my laurels, I will say that people read Toronto Realty Blog on a regular basis, and come to me to transact in real estate. And of course, some people hate what I write, and would never use my services in a million years. But that is the difference between myself and most agents: I�m not afraid to take a stand.

Most agents want to satisfy ALL segments of the buyer/seller pool. I just want to work with like-minded folks, who respect my opinions, and like what I have to say.

I didn�t say anything about 201 Carlaw Avenue that is untrue, malicious, or unfair. I essentially reported the news, and I�m in no way surprised that the residents took issue with me bringing their condominium�s finances to light.

But that�s my job. It is my job to investigate issues affecting buyers and sellers, and it�s my own personal mandate to inform the buying public.

A colleague of mine told me yesterday, �When the movie �Lone Ranger� came out in 2013, Walt Disney spent about $250 Million on producing the film, and it was expected to make $500 Million gross. But as soon as it came out, film critics started panning the film, and saying �Save your money, don�t see this movie � it�s awful,� and that cost the studio hundreds of millions of dollars.�

My colleague was essentially telling me that my comments and opinions on a particular condominium in Toronto are tantamount to a film critic, or a food critic, offering an opinion.

When a financial analyst issues a �sell� rating for the stock of Google Inc., the company and its shareholders don�t line up and threaten legal action against that analyst.

What I write on my blog is opinion, and nothing more, so feel free to treat it as such.

And above all: don�t believe everything you read�

# ? Feb 1, 2014 07:47

namaste friends: Sep 18, 2004; by Smythe

Pixelboy posted:

If (when) this whip-saws and you think it won't be a shitshow for everyone, you're in for a surprise.

If everyone were to lose an average of 50% of their net worth, including myself, I know that I would still be at the top of that poo poo pile and don't give two fucks.

You might call this mean spirited and malicious, but jesus christ, after reading the article I just linked above, can you really say this is that bad?

# ? Feb 1, 2014 07:50

tagesschau: Sep 1, 2006; Guten Abend, meine Damen und Herren.

Pixelboy posted:

If (when) this whip-saws and you think it won't be a shitshow for everyone, you're in for a surprise.

It's not going to be great for the economy if, by some miracle (?), it doesn't implode and people are still stuck for decades paying for the decision to buy a house for 50% more than it was worth, because they're not going to have any disposable income to speak of.

# ? Feb 1, 2014 07:53

AVeryLargeRadish: Aug 19, 2011; I LITERALLY DON'T KNOW HOW TO NOT BE A WEIRD SEXUAL CREEP ABOUT PREPUBESCENT ANIME GIRLS, READ ALL ABOUT IT HERE!!!

Ehh, the sooner things collapse the sooner they can recover. The damage is largely already done, it's just a waiting game to see when and how hard things fall.

# ? Feb 1, 2014 09:16

MiddleOne: Feb 17, 2011

Since the bubble will keep increasing household debt non-stop until it inevitably topples it falling sooner rather then later would be better.

# ? Feb 1, 2014 13:20

etalian: Mar 20, 2006

AVeryLargeRadish posted:

Ehh, the sooner things collapse the sooner they can recover. The damage is largely already done, it's just a waiting game to see when and how hard things fall.

Yup there's no such thing as a bubble that can go on forever despite all the optimism from the people like realtors.

The only bright side is Canadian banks are much better capitalized than in the US meltdown but still it's going to be devastating for the economy due to things such HELOC spending getting yanked out of the system.

Also remember in terms of home affordability and also debt loading Canadians have exceeded the peak of the US housing bubble.

# ? Feb 1, 2014 18:04

cowofwar: Jul 30, 2002; by Athanatos

etalian posted:

Yup there's no such thing as a bubble that can go on forever despite all the optimism from the people like realtors.

The only bright side is Canadian banks are much better capitalized than in the US meltdown but still it's going to be devastating for the economy due to things such HELOC spending getting yanked out of the system.

Also remember in terms of home affordability and also debt loading Canadians have exceeded the peak of the US housing bubble.

It will be devastating because a large portion of our economy is in the housing sector. Finance jobs, labor jobs, service jobs. We have a lot more people employed in that sector than the US per capita.

# ? Feb 1, 2014 20:37

LemonDrizzle: Mar 28, 2012; neoliberal shithead

cowofwar posted:

It will be devastating because a large portion of our economy is in the housing sector. Finance jobs, labor jobs, service jobs. We have a lot more people employed in that sector than the US per capita.

By my estimate, you're less hosed than Ireland or Spain but in a worse position than the US when those countries were heading into their respective housing crashes.

# ? Feb 1, 2014 20:41

etalian: Mar 20, 2006

LemonDrizzle posted:

By my estimate, you're less hosed than Ireland or Spain but in a worse position than the US when those countries were heading into their respective housing crashes.

In many ways it's a smaller economic version of the US such as getting a similar obsession with energy exports while things such as manufacturing and heavy industry downsize.

# ? Feb 1, 2014 21:16

Baronjutter: Dec 31, 2007; "Tiny Trains"

Why are so many huge long-term construction projects still starting up? I understand realtors and banks and poo poo pushing for optimism but wouldn't a developer who is a rational informed actor like all our job-creating overlords be smart enough to maybe not start up yet another slim-margin condo tower that totally depends on grossly inflated condo prices? I don't know if they're just falling for the bull trap or what ever, but in Victoria there's a ton of construction projects ongoing and more coming down the pipes. We took a brief breather after 2008 but now all these developers are issuing statements saying they've carefully watched the market and believe this is it, this is the correction and it's back to building $300k 800sqft condos.

Are they just trying to make money before things go south and think they have time to market, build, and sell all these units, or do they honestly believe their own propaganda?

# ? Feb 1, 2014 21:42

Helsing: Aug 23, 2003; DON'T POST IN THE ELECTION THREAD UNLESS YOU JOE BIDEN

So this thread will be one year old toward the end of this month. What are the chances that one of you guys - Cultural Imperial or someone else who has contributed regularly to the thread - would consider starting a new thread with an updated op covering developments over 2013 and perhaps attracting some new posters who might currently be intimidated by the size of the current thread?

There's lot of interesting information being discussed here and it seems like it might be worth pushing it toward a slightly larger audience.

# ? Feb 1, 2014 21:44

more friedman units: Jul 7, 2010; The next six months will be critical.

Baronjutter posted:

Why are so many huge long-term construction projects still starting up? I understand realtors and banks and poo poo pushing for optimism but wouldn't a developer who is a rational informed actor like all our job-creating overlords be smart enough to maybe not start up yet another slim-margin condo tower that totally depends on grossly inflated condo prices? I don't know if they're just falling for the bull trap or what ever, but in Victoria there's a ton of construction projects ongoing and more coming down the pipes. We took a brief breather after 2008 but now all these developers are issuing statements saying they've carefully watched the market and believe this is it, this is the correction and it's back to building $300k 800sqft condos.

Are they just trying to make money before things go south and think they have time to market, build, and sell all these units, or do they honestly believe their own propaganda?

I think real estate developers absolutely DO start to believe their own nonsense. Even if they don't, their other options are more painful in the short-term even though they'd be wiser in the long-term. They'd have to start wrapping up existing projects, downsizing staff, looking for markets that aren't overbuilt in areas they may not be familiar with, etc. There's a lot more money and less immediate pain in pretending everything is fine.

# ? Feb 1, 2014 22:00

Kalenn Istarion: Nov 2, 2012; Maybe Senpai will finally notice me now that I've dropped :fivebux: on this snazzy av

Honestly, the condos aren't getting built because of razor thin margins. They're getting built because the margins are far better for developers than anything else they can do with their time. They're usually structured so that the dev breaks even with only a 70% sales rate or so, sometimes less. And the trend towards ludicrously small units in Toronto only helps them. The people most likely to get screwed in the new deva is the initial buyer, particularly those who bought on spec rather than an intention to live there. The first condos to go into the dumpster will be the new over-priced ones, while the older ones with reasonable sizes and less spec owners will hold up reasonably well, I think.

# ? Feb 1, 2014 22:25

etalian: Mar 20, 2006

Helsing posted:

So this thread will be one year old toward the end of this month. What are the chances that one of you guys - Cultural Imperial or someone else who has contributed regularly to the thread - would consider starting a new thread with an updated op covering developments over 2013 and perhaps attracting some new posters who might currently be intimidated by the size of the current thread?

There's lot of interesting information being discussed here and it seems like it might be worth pushing it toward a slightly larger audience.

Sure!

If you have any ideas on what to put in the OP, let me know. I'm gonna stick in my favorite twitter pages.

# ? Feb 1, 2014 23:29

cowofwar: Jul 30, 2002; by Athanatos

Condo towers are in development for a long time so they can lose money by not finishing the project even if the market is turning against them.

But that said, developers use investor money to build the towers. As long as the investors continue to give them money to build they will build. Once built and sold the developers and investors get their return and the developers are off the hook in a year.

# ? Feb 1, 2014 23:35

Helsing: Aug 23, 2003; DON'T POST IN THE ELECTION THREAD UNLESS YOU JOE BIDEN

Cultural Imperial posted:

Sure!

If you have any ideas on what to put in the OP, let me know. I'm gonna stick in my favorite twitter pages.

It might be helpful to include some kind of explanation of why it appears that real estate prices in Canada are above what market fundamentals would justify. The current op mentions the ratio between rent-to-house-price-ratio which is worth mentioning but it might also make sense to mention that(correct me if I'm wrong) the local price of real estate should generally reflect local incomes, something which no longer holds true in much of Canada.

It'd also be good to have the op link to articles like this one that explain how a slow down (let alone a real drop) in the housing market could have such dire effects on the rest of the economy.

This is all stuff that has been brought up in this thread but it might be good to have it all amalgamated into a new op.

# ? Feb 1, 2014 23:49

Lexicon: Jul 29, 2003; I had a beer with Stephen Harper once and now I like him.

Canadian Housing Bubble Thread II: It's 2014 and Winter is Coming

# ? Feb 2, 2014 00:16

etalian: Mar 20, 2006

Helsing posted:

It might be helpful to include some kind of explanation of why it appears that real estate prices in Canada are above what market fundamentals would justify. The current op mentions the ratio between rent-to-house-price-ratio which is worth mentioning but it might also make sense to mention that(correct me if I'm wrong) the local price of real estate should generally reflect local incomes, something which no longer holds true in much of Canada.

It'd also be good to have the op link to articles like this one that explain how a slow down (let alone a real drop) in the housing market could have such dire effects on the rest of the economy.

This is all stuff that has been brought up in this thread but it might be good to have it all amalgamated into a new op.

The local prices aren't in line with income due to easy credit and people thinking it's wise to get a barely affordable mortgage.

# ? Feb 2, 2014 01:29

PC LOAD LETTER: May 23, 2005; WTF?!

Baronjutter posted:

Why are so many huge long-term construction projects still starting up?

Don't know the details on your area but in general big construction projects get planned and paid for years in advance. Once money has changed hands, before work has even started, the slow motion train wreck has usually left the station and is unstoppable.

# ? Feb 2, 2014 01:47

Helsing: Aug 23, 2003; DON'T POST IN THE ELECTION THREAD UNLESS YOU JOE BIDEN

etalian posted:

The local prices aren't in line with income due to easy credit and people thinking it's wise to get a barely affordable mortgage.

I'm familiar with that part of the issue, I'm just saying it might be helpful in a future OP to briefly explain that part of the reason that Canadian homes are thought to be over valued is that the price of real estate in major cities so far outstrips the average income in those cities.

Obviously a big part of the explanation for "how can that be" has to do with historically low interest rates. I'm just saying that it might be helpful to give people a sort of a bit of a heads up in regards to what the model is behind the claim "real estate prices are in bubble territory".

# ? Feb 2, 2014 02:18

etalian: Mar 20, 2006

Helsing posted:

Obviously a big part of the explanation for "how can that be" has to do with historically low interest rates. I'm just saying that it might be helpful to give people a sort of a bit of a heads up in regards to what the model is behind the claim "real estate prices are in bubble territory".

Due to easy credit and unaffordable housing cost Canadians exceeded the worst of the US bubble in terms of debt loading

Also by multiple metrics such as price to income ratio and also simple media value the real estate market has multiple bubble characteristics:

# ? Feb 2, 2014 02:31

Helsing: Aug 23, 2003; DON'T POST IN THE ELECTION THREAD UNLESS YOU JOE BIDEN

That information is good and worth including in any new OP but what I'm saying is that there should also be an explanation of why people here think homes are currently over valued in Canada. I.e. it'd be useful to explain what the indicators are that suggest that the price of real estate has moved away from what the market fundamentals would support. To people who aren't are familiar with the dynamics of the real estate market that could be really useful information.

The current op does mention Canadian housing prices vs. rental prices, which is one important indicator, but I'd also suggest mentioning the price-to-income ratio, i.e. the divergance between average incomes and average home prices, a gap that has only been papered over via excessive debts borrowed at low interest rates.

# ? Feb 2, 2014 02:50

etalian: Mar 20, 2006

Helsing posted:

That information is good and worth including in any new OP but what I'm saying is that there should also be an explanation of why people here think homes are currently over valued in Canada. I.e. it'd be useful to explain what the indicators are that suggest that the price of real estate has moved away from what the market fundamentals would support. To people who aren't are familiar with the dynamics of the real estate market that could be really useful information.

The current op does mention Canadian housing prices vs. rental prices, which is one important indicator, but I'd also suggest mentioning the price-to-income ratio, i.e. the divergance between average incomes and average home prices, a gap that has only been papered over via excessive debts borrowed at low interest rates.

This is my favorite graph for a more global perspective:

# ? Feb 2, 2014 02:57

Pixelboy: Sep 13, 2005; Now, I know what you're thinking...

Listed my last two Vancouver properties today. Greater fool theory, indeed.

# ? Feb 2, 2014 03:15

Blade_of_tyshalle: Jul 12, 2009; If you think that, along the way, you're not going to fail... you're blind.

There's no one I've ever met, no matter how successful they are, who hasn't said they had their failures along the way.

etalian posted:

This is my favorite graph for a more global perspective:

If there was ever a reason to move to Japan, that's it right there. Undervalued property prices!

Gonna buy me an onsen and be set for life.

# ? Feb 2, 2014 05:24

Helsing: Aug 23, 2003; DON'T POST IN THE ELECTION THREAD UNLESS YOU JOE BIDEN

Why is Japanese real estate so undervalued? Is that a hang over from their lost decade? Given that in the late 1980s they had a ridiculously overvalued real estate market I'm pretty shocked by that graph. Who knows, perhaps we're getting a glimpse of Canada's ~~post apocalyptic~~ post bubble future? Bring on that grinding deflationary spiral!

# ? Feb 2, 2014 05:42

Rime: Nov 2, 2011; by Games Forum

I'd imagine the crushing economic death spiral which has lead to extremely high unemployment for youth, coupled with the near complete lack of immigration to take up the slack, makes housing a relatively unprofitable venture in Japan.

# ? Feb 2, 2014 05:56

ocrumsprug: Sep 23, 2010; by LITERALLY AN ADMIN

Helsing posted:

Why is Japanese real estate so undervalued? Is that a hang over from their lost decade? Given that in the late 1980s they had a ridiculously overvalued real estate market I'm pretty shocked by that graph. Who knows, perhaps we're getting a glimpse of Canada's ~~post apocalyptic~~ post bubble future? Bring on that grinding deflationary spiral!

There are deflationary issues that stemmed from the 90's affecting it, but it is probably not the big point.

Japan has a gigantic old person demographic bubble which I would guess is why that graph shows what it does. One of the booming businesses in Japan at the moment is assisted care facilities for the elderly. There are less and less young people to buy those vacated homes.

Canada has a similar demographic problem coming, but to no where near the same degree. We have immigration as well which will likely provide some housing demand.

# ? Feb 2, 2014 06:17

Ardennes: May 12, 2002

ocrumsprug posted:

There are deflationary issues that stemmed from the 90's affecting it, but it is probably not the big point.

Japan has a gigantic old person demographic bubble which I would guess is why that graph shows what it does. One of the booming businesses in Japan at the moment is assisted care facilities for the elderly. There are less and less young people to buy those vacated homes.

Canada has a similar demographic problem coming, but to no where near the same degree. We have immigration as well which will likely provide some housing demand.

It won't provide in the immediate manner it will take though, long-term Canada will recover but it is going to take a while.

I am kind of surprised there isn't the broader dimension to be discussed, how does Canada recover from the crisis or will the crisis actually make things even worse. Let's say for the sake of enlargement, that a crisis happens...not only will there be foreclosures but the Canadian government is most likely going to take a big hit on insurance. In the case of that, I could easily see Cameron relying on austerity which will hit consumer demand even further.

In addition, Canada is reliant on resource exports, and could very well see a double crunch of domestic demand being hit by a collapse of its housing market and foreign demand decreases from the possible 2014 emerging market crisis.

# ? Feb 2, 2014 06:42

Helsing: Aug 23, 2003; DON'T POST IN THE ELECTION THREAD UNLESS YOU JOE BIDEN

Ardennes posted:

It won't provide in the immediate manner it will take though, long-term Canada will recover but it is going to take a while.

I am kind of surprised there isn't the broader dimension to be discussed, how does Canada recover from the crisis or will the crisis actually make things even worse. Let's say for the sake of enlargement, that a crisis happens...not only will there be foreclosures but the Canadian government is most likely going to take a big hit on insurance. In the case of that, I could easily see Cameron relying on austerity which will hit consumer demand even further.

In addition, Canada is reliant on resource exports, and could very well see a double crunch of domestic demand being hit by a collapse of its housing market and foreign demand decreases from the possible 2014 emerging market crisis.

Its Harper, not Cameron, and unlike the real David Cameron our Stephen Harper has been more than willing to use economic stimulus when things go south. However you're completely correct that our economy is entirely reliant on a mixture of debt financed consumer spending that is being powered by the housing bubble and China's insatiable hunger for our raw resources. If we have a housing crash (or even a "soft landing") and a slowdown in China happening simultaneously things will get very nasty for us.

Timing will matter a lot though. If the Conservatives are able to win another majority in 2015 then they might use a recession as an excuse to further slash the federal government, much like David Cameron did in the UK. If the crash comes before the election, or if another party wins the election, or if the Tories only win a minority (and somehow aren't booted out by the combined force of the opposition) then its very hard to say what the government's reaction will be. Another big question mark here is just how much exposure the bank's have to a housing bust.

# ? Feb 2, 2014 06:57

Adbot: ADBOT LOVES YOU

# ? May 11, 2024 15:19

etalian: Mar 20, 2006

Helsing posted:

Why is Japanese real estate so undervalued? Is that a hang over from their lost decade? Given that in the late 1980s they had a ridiculously overvalued real estate market I'm pretty shocked by that graph. Who knows, perhaps we're getting a glimpse of Canada's ~~post apocalyptic~~ post bubble future? Bring on that grinding deflationary spiral!

Yup, it's basically the fallout from the 1980s asset bubble in which the whole economy becomes prey to deflationary influences and also misguided fiscal policy.

Also another side note in the whole discussion is that US not China is the primary market for Canadian energy exports, so it's closely connected the US economy performance over the next few years.

# ? Feb 2, 2014 06:58

The Something Awful Forums > Discussion > Debate & Discussion > Canada Housing/Debt: Trust me, I'm a landlord.

«‹›1518 »