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Cultural Imperial posted:-said no one in detroit Houses, yes. But not the land underneath them. Nobody in Vancouver is buying a million dollar property with a three bedroom for the house. The houses on top, though, well you only have to leaf through those Vancouver property assessments to see that the car analogy is exactly true, and that 100 years is probably too long for the average North American house built since the 50s. 40-year old houses are valued at less than $50K, while the new houses going up on million-dollar lots are typically valued at a million or more themselves (but almost certainly won't still be valued that much in 2040 dollars once 2040 rolls around).
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Feb 3, 2014 03:05
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Anecdotal example of Lower Mainland homeowner mentality: - Father owns large house free and clear, no debt, is in late 60's. - Son owns two houses (#2 & #3), both mortgaged and rented to cover, lives with Father, is mid-40's. - Son decides to sell fathers house, use it to pay off mortgage on house #3, tear down house #3 (a gorgeous pre-war bungalow with cove ceilings and parquet inlay) and then take out NEW mortgage at higher rates in order to finance a McMansion which he and Father will move into. - Son evicts tenants at houses 2 & 3 so that Father & Son can live in house #2 while house #3 is being destroyed. The market cannot collapse and wipe out stupid fucks like this fast enough.
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Feb 3, 2014 03:32
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Lead out in cuffs posted:Houses, yes. But not the land underneath them. Nobody in Vancouver is buying a million dollar property with a three bedroom for the house. The land is basically like gold, though, in that it's not going to appreciate faster than inflation in the long term, no matter how much the
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Feb 3, 2014 05:48
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tagesschau posted:The land is basically like gold, though, in that it's not going to appreciate faster than inflation in the long term, no matter how much the It's pretty much Robert Shiller's argument how once all the factors are taken into account it's a bad "investment" since it doesn't beat inflation and also has additional risk such as being illiquid/impossible to diversify unlike other investments. According to Shiller it's pretty much driven by how over time due to better technology, lower labor and material costs the real price of new home is decreasing over time since he studied information going all the way back to 1890.
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Feb 3, 2014 05:55
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That's the biggest weakness in the 'home as investment' argument. If you want to invest in real estate, why would you do it in the least-diversified way possible? REITs would be a better choice. Owning a home is primarily consumption spending and should be treated that way.
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Feb 3, 2014 06:08
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Lead out in cuffs posted:Houses, yes. But not the land underneath them. Nobody in Vancouver is buying a million dollar property with a three bedroom for the house. The houses on top, though, well you only have to leaf through those Vancouver property assessments to see that the car analogy is exactly true, and that 100 years is probably too long for the average North American house built since the 50s. 40-year old houses are valued at less than $50K, while the new houses going up on million-dollar lots are typically valued at a million or more themselves (but almost certainly won't still be valued that much in 2040 dollars once 2040 rolls around). You know, my problem with this argument is, what cold hearted hayekian shithead is actually going out and buying empty plots of land right now, in such great volumes that it's driving up prices in the market? Even the dumbest capitalist knows that land in and of itself generates no revenue unless you have a dwelling or a shop or a farm sitting on top of it.
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Feb 3, 2014 06:32
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Rime posted:Anecdotal example of Lower Mainland homeowner mentality: good god what a loving shithead (the son is)
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Feb 3, 2014 06:34
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more friedman units posted:That's the biggest weakness in the 'home as investment' argument. If you want to invest in real estate, why would you do it in the least-diversified way possible? REITs would be a better choice. Owning a home is primarily consumption spending and should be treated that way. Also assuming you were wise enough to buy them cheap during 2009 meltdown you could get some nice fixed income since they tend to have higher yields than standard stocks.
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Feb 3, 2014 06:50
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Well the argument traditionally is that what you would spent on a rented home could be turned into equity. It doesn't make sense in the context of Canada at this point, but in other markets in other countries it still may. That said, taxes/maintenance/insurance/interest all cut into that bottom line. In the case of Vancouver the costs are now so ridiculous, there isn't any real way it could be done and you would be underwater even if prices slowly rose under inflation. Ardennes fucked around with this message at 07:00 on Feb 3, 2014 |
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Feb 3, 2014 06:58
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Ardennes posted:Well the argument traditionally is that what you would spent on a rented home could be turned into equity. It doesn't make sense in the context of Canada at this point, but in other markets in other countries it still may. Obviously, taxes/maintenance/insurance/interest all cut into that bottom line. In the case of Vancouver the costs are now so ridiculous, there isn't any real way it could be done and you would be underwater even if prices slowly rose under inflation. Even from a math perspective for a mortgage you aren't building equity for the first few years since it's mainly interest to the bank. Not to mention the other costs such as the agent fees and also down payment.
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Feb 3, 2014 07:01
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Well after reading this thread I'm pretty confident that my idea of living in my parents basement(who payed it off like two decades ago) after I graduate law school is the best choice for me right now. I'm hoping Saskatchewan won't get too buttfucked when the bubble bursts, but I'm not optimistic.
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Feb 3, 2014 07:25
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etalian posted:Even from a math perspective for a mortgage you aren't building equity for the first few years since it's mainly interest to the bank. The assumption is that it would be long hold, and start paying down the principal, also the down payment itself is an investment in the equity. Basically you would stay in one place and pay down the mortgage as the property slowly accrued value. Yeah, there are the agent fees too. It isn't impossible to make money out of your house, just very difficult outside of a bubble environment. However, there is another twist, you have to be confident you are going to stay in an area a while since selling a home can be quite risky in of itself and it isn't guaranteed there won't be a downturn. Anyway, most retirement planners will say you should only have a portion of your assets in real estate, usually just your primary resistance and the rest should be in a mix of equities and bonds.
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Feb 3, 2014 07:36
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So the 2 people I know that bought homes in the last few years saying there's no bubble, now's the time to buy, of course they're going to be staying in their house long enough to BUILD EQUITY are both selling. One after 3 years and the other barely after 1. One is "trading up" from their condo to a house (at a huge loss) and the other is moving for work. Gettin' on that property ladder! I've also sadly learned you absolutely can not talk about the economics of ownership around a person who's made the emotional decision to buy. If they're seriously still thinking, there's hope, but once their heart is into buying there is no talking to them and they only become incredibly defensive and crazy even at the most friendly questions like "have you included transaction costs in your budget?" Baronjutter fucked around with this message at 19:14 on Feb 3, 2014 |
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Feb 3, 2014 19:11
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Baronjutter posted:I've also sadly learned you absolutely can not talk about the economics of ownership around a person who's made the emotional decision to buy. If they're seriously still thinking, there's hope, but once their heart is into buying there is no talking to them and they only become incredibly defensive and crazy even at the most friendly questions like "have you included transaction costs in your budget?" Ain't that the truth. I've resolved myself to saying "Ok fair enough, that's great that you want to buy property. I understand this. But don't try and make yourself out to be some sort of financial genius for doing so - the economic case for buying, as with the economic case for buying a new car, is exceedingly shaky".
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Feb 3, 2014 19:17
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tagesschau posted:The land is basically like gold, though, in that it's not going to appreciate faster than inflation in the long term, no matter how much the This is exactly the image I had in mind. It's like a car with a solid gold bar embedded in the chassis. Cultural Imperial posted:You know, my problem with this argument is, what cold hearted hayekian shithead is actually going out and buying empty plots of land right now, in such great volumes that it's driving up prices in the market? Even the dumbest capitalist knows that land in and of itself generates no revenue unless you have a dwelling or a shop or a farm sitting on top of it. The kind who speculates on gold? Of course condos, unlike houses, have no land you can sell at the end of their life, so are a lot more like cars.
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Feb 3, 2014 19:32
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TD says that Canadian homes are over valued by 10%. Don't worry though folks, we're going to have price stability this year. Soft landing incoming.
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Feb 3, 2014 19:42
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Lexicon posted:Ain't that the truth. I've resolved myself to saying "Ok fair enough, that's great that you want to buy property. I understand this. But don't try and make yourself out to be some sort of financial genius for doing so - the economic case for buying, as with the economic case for buying a new car, is exceedingly shaky". Yeah the problem is they can't just say "Yeah I didn't really run any numbers and I'm doing this entirely for emotional reasons but I think we can afford it and it's important to us to own." They instead always act like they are doing the wisest financial move and it's a shrewd investment that they just happen to be able to live in. Like the person losing close to 100k "trading up" from their condo still says this is proof the property ladder is real because see look they were in a condo they bought for 300k and sold for 305k (PROFIT!!!!) of course totally ignoring their transaction costs and opportunity costs of both the condo and the new 500k house they can't really afford. In their view buying a condo for 300k and selling it a few years later for 305k means they "basically got paid 5,000 to live in a condo" and everything else is just "details and cost of doing business, everything has a cost of doing business it's unfair to single out houses hey you don't get ANY of your rent back when you move!"
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Feb 3, 2014 19:55
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Baronjutter posted:Yeah the problem is they can't just say "Yeah I didn't really run any numbers and I'm doing this entirely for emotional reasons but I think we can afford it and it's important to us to own." They instead always act like they are doing the wisest financial move and it's a shrewd investment that they just happen to be able to live in. Like the person losing close to 100k "trading up" from their condo still says this is proof the property ladder is real because see look they were in a condo they bought for 300k and sold for 305k (PROFIT!!!!) of course totally ignoring their transaction costs and opportunity costs of both the condo and the new 500k house they can't really afford. In their view buying a condo for 300k and selling it a few years later for 305k means they "basically got paid 5,000 to live in a condo" and everything else is just "details and cost of doing business, everything has a cost of doing business it's unfair to single out houses hey you don't get ANY of your rent back when you move!"  The average person is innumerate at the best of times. Add in the emotion of housing, and the cultural pressure - and it's game over.
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Feb 3, 2014 20:00
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ok no joke I just had someone tell me "You'll never come out ahead in the long run because renting is throwing your money away, you never get it back. Buying is like putting money in the bank and earning interest, but as long as you don't let your house rot or buy somewhere nasty you'll make way better interest than any savings account. Just like any investment they go up and down but it's foolish to throw money away on rent just because a house doesn't pay for its self in only a year." Like they can not understand why anyone would rent, it's THROWING MONEY AWAY while buying is basically not only free since you get all your money back, but you get PAID to live there. This was in reply to me stating how happy I am to be renting since after running the actual numbers I came out way ahead. I'd try to explain that buying only "comes out ahead" (assuming prices increasing at the current rate) only after about 15 years but I'm honestly sick of this poo poo and having to explain to every god drat idiot over 40 why we are renting. Like every extended family member or friend of the family that finds out we're "still" renting acts like someone died. They try to carefully ask if something happened to our finances, if someone lost a job or something. "Oh I thought you guys were saving up by living in the basement, your parents said you had about 60 grand saved up... what happened?" and we tell them yes, we still have that savings, but right now renting comes out ahead and the market is so unstable anyways we don't want to buy. Then it's lectures about how now is the perfect time to buy, that 60k could be *INVESTED* into a condo right now and we could be *BUILDING EQUITY* so we could one day buy a house. Now we're going to be trapped renting forever because we're not getting in on the property ladder soon enough. Oh you don't have enough for a house? Well just buy anyways some how and make up the difference with a basement suite, let a renter help pay your mortgage! It's absolutely insane, the anglo-sphere seriously has a mental illness related to housing.
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Feb 3, 2014 20:33
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I wonder how many of those people secretly conform as bears but are telling you to buy anyway out of some faint hope that your purchase will help prop up the value of their own home. At this point I am extremely suspicious of any rational university educated family member who tells me how great it is to buy.
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Feb 3, 2014 20:38
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And gently caress this gay re market for making me turn against family and friends
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Feb 3, 2014 20:39
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Baronjutter posted:Like every extended family member or friend of the family that finds out we're "still" renting acts like someone died. They try to carefully ask if something happened to our finances, if someone lost a job or something. "Oh I thought you guys were saving up by living in the basement, your parents said you had about 60 grand saved up... what happened?" and we tell them yes, we still have that savings, but right now renting comes out ahead and the market is so unstable anyways we don't want to buy. Well look at this way, there might be some deals in the future but yeah thats basically what bubbles do. In their mind, it is going only up, so you missed the boat and all that cash thats going to rain down. Yeah, it is pretty sad if your own family/friends would try to knowingly engineer some schadenfreude your way.
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Feb 3, 2014 20:40
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These are mostly all people 40+ who bought in the 80's or 90's and saw nothing but rapid increase in housing values, that's just reality, that's just normal to them and they can't imagine it being any other way. They view any talk of bubbles the same as chemtrails or reptoids, it's an insane fringe conspiracy theory. Like if I even hint in the slightest by saying "Well I'm not sure prices will always keep going up." they just look at me and say something like "oh haha you're one of THOSE people eh? You guys have been saying prices are coming down for the last 10 years, not going to happen!" Also a lot of them HAVE gotten filthy rich on their "investments", but they've turned around and "traded up". Like bought a house for 200k in the early 90's then sold it for a million a few years ago, then bought a 1.5 million house that's only a bit nicer than their previous but "Look at us! We invested 200k and now we're living in a 1.5 million dollar house!!" and they fully expect to sell it in 10 years for double and retire off that. They could be set for life if they actually invested the money they made off the bubble but instead they sink it all back in to housing. Baronjutter fucked around with this message at 20:53 on Feb 3, 2014 |
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Feb 3, 2014 20:49
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Someone who sold their house in 2008 for a cool million after fees, and dumped the lump of it into the DOW when it was at the lowest, would have tripled their investment over the past five years. 
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Feb 3, 2014 20:57
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Ctv dares to risk angering their development overlords. http://bc.ctvnews.ca/mobile/vancouver-housing-dilemma-is-it-better-to-rent-or-buy-1.1665270 Whoa Whoa Whoa, cbc as well??? http://www.cbc.ca/m/news/#!/content/1.2519201
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Feb 3, 2014 21:10
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"Renting is throwing your money away, or at least your paying my mortgage for me. Its a no brainer, why would the pool of people who can afford an $800 000 house be shrinking, if anything its growing, especially with the dollar being cheap again. Look, its not hard to get into the market you just have to be creative, go in with a couple, rent out the basement...why is this so hard to understand. You can save $300 000 like NewlyMoved...but then you live in Calgary, you need a cowboy hat and a truck...its -17 there right now hahaha" Vancouver, it's not a bubble, it's the weather!
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Feb 3, 2014 21:47
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E:Baronjutter posted:Its a no brainer, why would the pool of people who can afford an $800 000 house be shrinking, if anything its growing, especially with the dollar being cheap again. He's right about one thing in that analysis. Baronjutter posted:These are mostly all people 40+ who bought in the 80's or 90's and saw nothing but rapid increase in housing values, that's just reality, that's just normal to them and they can't imagine it being any other way. They view any talk of bubbles the same as chemtrails or reptoids, it's an insane fringe conspiracy theory. Like if I even hint in the slightest by saying "Well I'm not sure prices will always keep going up." they just look at me and say something like "oh haha you're one of THOSE people eh? You guys have been saying prices are coming down for the last 10 years, not going to happen!" When I have a conversation like that, I just politely ask them if they really expect Vancouver houses (not a mansion, just a regular house) to be worth $19 million in 20 years? Since they have been doubling every 4-5 years, that is where they should be if I am wrong. I haven't had a single person think that is very likely because they all know that even in 20 years that is going to be an obscene amount of money. The tragedy is that they didn't notice that it already became obscene about 7-8 years ago. ocrumsprug fucked around with this message at 22:07 on Feb 3, 2014 |
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Feb 3, 2014 21:57
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The insane rush to get on to the "property ladder" before they miss out is pretty much proof of a bubble. They are agreeing with you but too dumb to realize it.
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Feb 3, 2014 22:32
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Baronjutter posted:Vancouver, it's not a bubble, it's the weather! If the weather was so important, you probably would look for property outside of Canada rather than buy Vancouver real estate at ultra-inflated prices.
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Feb 3, 2014 22:53
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It's like -17 degrees in Whistler right now (if you're on the mountain), explain that, internet.
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Feb 3, 2014 23:28
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Rime posted:Someone who sold their house in 2008 for a cool million after fees, and dumped the lump of it into the DOW when it was at the lowest, would have tripled their investment over the past five years. That would have taken balls of steel. The downturn was the opportunity of a lifetime, but I remember it was pretty hard to get the money in and the truck backed up given all the uncertainty.
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Feb 3, 2014 23:28
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Saltin posted:That would have taken balls of steel. The downturn was the opportunity of a lifetime, but I remember it was pretty hard to get the money in and the truck backed up given all the uncertainty. Definitely. Let's not forget: "the end of capitalism" was routinely bandied about. Hell, I had $3k from a motorcycle sale that I declined to deposit at the bank for a few weeks - that's how uncertain I felt. On the plus side, I feel it has thoroughly strengthened my resolve for the next one. Equities collapse => holy gently caress everything is on sale!
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Feb 3, 2014 23:48
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Saltin posted:That would have taken balls of steel. The downturn was the opportunity of a lifetime, but I remember it was pretty hard to get the money in and the truck backed up given all the uncertainty. I now some folks who did this when Bank of America was flirting with nationalization during the height of the crisis. A big risk that your shares would dissolve entirely, but that back the truck up phrase was exactly the one they used and I think they saw RoI of 4-7 times their investment.
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Feb 3, 2014 23:53
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Ardennes posted:If the weather was so important, you probably would look for property outside of Canada rather than buy Vancouver real estate at ultra-inflated prices.  
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Feb 4, 2014 00:42
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Everything wrong with the CMHC in a single image: https://twitter.com/BenRabidoux/status/430455970464935936
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Feb 4, 2014 01:09
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Saltin posted:That would have taken balls of steel. The downturn was the opportunity of a lifetime, but I remember it was pretty hard to get the money in and the truck backed up given all the uncertainty. It would have been better to invest in dividend stocks and high yield REITs/ETFs since just about every sector was trashed by the recession in the USA/Eurozone. Lexicon posted:Everything wrong with the CMHC in a single image: https://twitter.com/BenRabidoux/status/430455970464935936 One a side note this is why the energy and real estate boon are horrible for Canada since it leads to misallocation of credit resources. So instead of businesses getting loans to make capital improvements or expand you have the banks focusing on the juicy real estate market loans. Also another sad quick shot of the Canadian economy seeing how real estate bubble loans are much greater than corporate or small business loans. The graph is interesting since you can see the slope of the real estate loans changed around 2005 which is apparently when the bubble madness started. etalian fucked around with this message at 01:29 on Feb 4, 2014 |
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Feb 4, 2014 01:22
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Lexicon posted:Everything wrong with the CMHC in a single image: https://twitter.com/BenRabidoux/status/430455970464935936 lol wtf
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Feb 4, 2014 04:03
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Cultural Imperial posted:lol wtf So how many billions in insurance money is the CMHC on the hook for?
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Feb 4, 2014 04:09
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Ardennes posted:So how many billions in insurance money is the CMHC on the hook for? Around $600 Billion dollars: http://www.cmhc-schl.gc.ca/en/corp/nero/jufa/jufa_033.cfm
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Feb 4, 2014 04:28
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http://www.canadianrealestatemagazine.ca/news/item/1860-crea-should-ban-use-of-photoshop-agents-arguequote:CREA should consider taking drastic measures to prevent sellers and agents using photoshop to dress up property images, according to industry players. It wastes time for both realtors and agents. Never mind the poor sods who're lining up for the opportunity to drop half a mill of borrowed money on a pile of rotten particle board, which, as it turns out, is often a photoshopped pile of rotten particle board. I'm still searching for the reason why society tolerates these parasitic monopolies as the gatekeeper to the biggest fiscal decision most people make.
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Feb 4, 2014 04:29
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