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Cultural Imperial posted:Haha there were a bunch of tweets about how you can't borrow 500k at less than 3% to invest in equities in Canada. On the other hand, a house is not a problem. That's because stocks are for gamblers and volatile and risky and houses aren't, duh. Cultural Imperial posted:You need to stop hanging around these people. If you hold your bond investments to term, and the bond is attractive relative to other investments that meet the term and risk constraints of the fund you're managing, including any potential diversification benefits, then it makes sense to buy regardless of low absolute levels. Bonds in the market with similar risk profiles will be trading at the same or similar yield in the market today regardless of the coupon rate. Arguably there is a point where it makes sense to sit on cash and wait for the bond crash when rates pop but calling timing is a mug's game and pension funds generally have rules about needing to be fully or mostly invested. At best the funds will move their allocations over time. In a large fund like CPP for example this might be something like shifting global bond allocation from 20% to 15%, but it's generally impractical and undesireable to say not own bonds at all. To shrike's point, you face more duration (interest rate sensitivity) risk with a long bond, so for an investor without the same matching needs as a pension fund it might make sense to move to shorter notes that won't decrease in price as much when rates eventually go back up.
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# ? Jul 9, 2014 21:41 |
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# ? May 27, 2024 04:00 |
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Lexicon posted:That's a fantastic 'dog ate my homework' sort of excuse Ironically, if it had have been a REALTOR(TM) they would have just replied, "Yes, I did that." Since there is no regulation saying they cannot. They would never have been asked in the first place anyways.
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# ? Jul 9, 2014 23:25 |
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Persona non grata posted:Hey, I have a friend who's a lazy low-info leftist, and obviously I know lots about finance and economics, but could you help me explain to him the obvious solution to the Canadian Housing Bubble that I'm missing? Also, if some of the experts in this thread could post their predictions for how the bubble will come apart I would appreciate it. I know with absolute certainty there won't be a soft landing, only and idiot would think that, but I'd like to compare notes on the inevitable future. Although to be fair when the bubble is big enough even the appearance of a soft landing can cause a crisis through positive feedback. The more financially savvy and more liquid investors will cash out when they smell the downturn, with more following suit until the over-leveraged masses catch on at which point it will implode as peoples' positions get squeezed.
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# ? Jul 10, 2014 00:00 |
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I really think interest rates are the wrong way to approach the remediation of this bubble. The problems related to mortgage availability are independent of interest rates. People don't care how high their interest rates are. They don't even care how much of their paycheck goes towards paying off the interest on their mortgage. You're never going to find a solution to preventing idiots with overbearing nesting instincts from overspending on a home. If a bank is willing to give them an 80% LTV mortgage, they'll take it. These Canadians are loving Dumb. That leaves us with the Speculator or 'Investor'. These are the motherfuckers the government can do something about. I've already hinted that I don't think it's the Bank of Canada's problem that we have a housing bubble. Certainly they do not want to see a housing bubble but it's really the fault of Jim Flaherty, Canada's Best Finance Minister Ever (PBUH). Things I'd like to see done are: 1) Get rid of the capital gains tax exemption on primary residences. 2) Ban all mortgages with amortization periods of more than 25 year. In practice I doubt you can actually enforce a ban, so tell the CMHC to stop insuring these mortgages. 3) For the purposes of making information readily available, sue the MLS to make their databases available to everyone under the threat of Nationalization. 4) For the purposes of making information readily available, require everyone obtaining a mortgage to declare their residency. I already have to do this with my securities, why don't home owners have to? 5) Reduce the the maximum HELOC value to 10% of the overall value of your home. 6) Ban HELOCs from anyone taking out CMHC insurance. If you CMHC insurance, it means you can barely afford your home. You shouldn't be taking out a loving HELOC for god's sake. e: does anyone know how these shady secondary mortgage lenders who issue 1 year period mortgages under 2% are allowed to operate? Ban them too. e2: one more thing, fine mortgage brokers for every mortgage they issue to someone who can't provide proof of their annual family income. namaste friends fucked around with this message at 02:10 on Jul 10, 2014 |
# ? Jul 10, 2014 02:03 |
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Kalenn Istarion posted:
Cool thanks for that explanation! I had no idea who actually held bonds to the end of term.
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# ? Jul 10, 2014 02:14 |
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There was a good article that was in the WSJ the other day (don't have a link handy as I read the hardcopy) which said that institutional funds are in a bit of a bind. Everyone's aware that fixed income looks pricey. The problem is that with zirp across the major economies, practically all the asset classes are frothy. This is very abnormal because in normal cycles, you see various asset types move in the opposite direction from others depending on whether the economy is doing well our not. If you're a pension fund with dollars to spare, what would you do in the current macro environment? You can't just go 100% cash equivalents.
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# ? Jul 10, 2014 02:24 |
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shrike82 posted:If you're a pension fund with dollars to spare, what would you do in the current macro environment? You can't just go 100% cash equivalents. The answer up to today is equities and it has been for quite a while - hence the record index values. It's not that equities are fantastic, they are just the least ugly option currently. Frothy? Absolutely.
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# ? Jul 10, 2014 14:21 |
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Cultural Imperial posted:Things I'd like to see done are: Interesting ideas. Some thoughts: 1) I like the underlying intention, but it would have substantial unintended consequences I think. For one thing, a household would find it difficult to ever move - you'd be crystallizing a gain by selling, and realizing a massive tax bill potentially, even though you just want to move three streets over to a place with a larger garage. This would totally freeze up the housing market, and further calcify an already rather illiquid market. Of course, maybe there's some tax structure that would make sense such as tying the tax-free portion to some index based on prevailing average costs or something. Also, it would be good if there were a scheme whereby individuals had lifetime capital gains amounts that would be consumed with capital gains regardless of how you made them (housing, stocks, etc). 2) Aren't these gone already? 3) Yeah, it's absurd that this isn't the case. There's a total information asymmetry between the public and government, and the drat real estate boards - and the latter is holding all the cards. It's bullshit. 4) Yup. Uncontroversial. 5) Maybe some low-ish percentage of equity instead? 20% of current equity? 6) Total agree. One question on CMHC coverage - does it persist for the lifetime of the mortgage, or only until you're over the 20% equity hump?
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# ? Jul 10, 2014 15:11 |
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Lexicon posted:Interesting ideas. Some thoughts: Eh. I already have to pay these taxes whenever I want to move my money around (I'm not against paying them either). I feel that the housing market really shouldn't be liquid at all. As everyone states, a house should be something you want to live in, not an investment vehicle. I fully acknowledge the peril of screwing around with tax policy and that second and third order effects are often incalculable. I like your idea of the lifetime capital gains. In any case, let's remember I'm proposing capital gains tax exemption. Anyone selling a house at a loss should be realizing a nice write-off. CG taxes haven't really affected the volatility of the equities markets. quote:2) Aren't these gone already? I'm pretty sure the ban is only on CMHC insured mortgages. A cursory google tells me there's quite a few brokers offering 30 year mortgages but I'm not sure if their websites are up to date. I guess the wider implication here is, Joe poo poo-for-brains Oliver needs to reign in this loving wild west of mortgage brokerages if they want to make some real structural changes to Canada's economy. It feels insane to say that. Who would have thought that a shithead mortgage broker would have such a great impact on the wellbeing of Canada's economy? But then Amway destroyed Albania's economy sooo.... quote:5) Maybe some low-ish percentage of equity instead? 20% of current equity? Again, this falls back to a question of social policy. Are we saying that housing should be an investment vehicle or some nebulous instrument for building communities? I completely understand the importance of using debt to grow the economy but most Canadians aren't taking out HELOCs to start businesses are they? I'm pretty sure most of them are buying cars (and other frivolous things) with that poo poo. quote:n on CMHC coverage - does it persist for the lifetime of the mortgage, or only until you're over the 20% equity hump? Good question. I wish that guy who was obviously some kind of housing finance insider who posted back around page 50 stuck around.
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# ? Jul 10, 2014 16:11 |
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quote:Eh. I already have to pay these taxes whenever I want to move my money around (I'm not against paying them either). I feel that the housing market really shouldn't be liquid at all. As everyone states, a house should be something you want to live in, not an investment vehicle. On the other hand, we've seen that when workers are held hostage by their houses, it paralyzes the labor market.
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# ? Jul 10, 2014 16:20 |
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on the left posted:On the other hand, we've seen that when workers are held hostage by their houses, it paralyzes the labor market. It is pretty silly to draw too many similarities between housing and equities markets. If I am going to call a REALTOR(TM) a retard for speaking about housing as an investment vehicle, I am going to similarly find fault with a "but but but, I pay capital gains on my equities" rational. ocrumsprug fucked around with this message at 16:50 on Jul 10, 2014 |
# ? Jul 10, 2014 16:47 |
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on the left posted:On the other hand, we've seen that when workers are held hostage by their houses, it paralyzes the labor market. I love this subject because my whole life for the past 15 years has been tailored around building up a skill set that commands a salary greater than the piddly bullshit the Vancouver job market has to offer. I sold my house 10 years ago for around 400k because I felt that I couldn't really afford it. I found out some time after I'd bought it that it was an ex-grow op and the guy I'd actually bought it from was a well known biker. This knowledge didn't really affect my decision as I'd had close ties with law enforcement. I am pretty sure that if I'd known it'd be worth twice as much today, I'd have thought twice about selling it. On the other hand I'd still be making a Vancouver salary and would still be barely able to afford it. I'm not sure how differently I would have thought about my decision to sell if I had to pay capital gains tax on the 100k profit I'd made. I mean, immediately after selling I'd have all this cash on hand which I would have to pay off the CG tax. I had no other significant debts at the time. I think I agree with your assertion that liquidity would be further constrained by a CG tax on primary residences only because we know Canadians are so deeply in discretionary debt. If we were all a little smarter with spending debt, I don't think labour force mobility would be a problem.
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# ? Jul 10, 2014 16:50 |
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on the left posted:On the other hand, we've seen that when workers are held hostage by their houses, it paralyzes the labor market. Yeah, that's one big concern I had. Worker mobility is a great thing - for economic and experiential reasons. It breaks my heart when I read about people in the prime of their early-20s buying loving condos.
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# ? Jul 10, 2014 16:50 |
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Lexicon posted:Yeah, that's one big concern I had. Worker mobility is a great thing - for economic and experiential reasons. It breaks my heart when I read about people in the prime of their early-20s buying loving condos. There's a lotttt of people out there who really aren't driven by this need to reach the acme of their career or climb the corporate ladder, they just want to settle down and grow some roots, raise a family. Work isn't their passion, it doesn't define them, it's just a thing they need to do to support their families. Most people I've known that move around due to work absolutely hate it. They just want a stable job with growth potential in the same city and a house they can live in till they retire or need something different. Mobility has gone way up but I don't know if it's a good thing. Maybe it's a good thing for "the economy" but I don't know if it's a good thing for workers or their actual happiness. It's less "there's so many more opportunities now than there used to be!" and more "you now have to constantly uproot your self chasing after any semblance of job security". A lot of corporate jobs have turned into almost military jobs where you constantly are being moved from one poo poo-hole to the next.
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# ? Jul 10, 2014 17:25 |
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^^ Very fair. I'm probably projecting a bit too much.
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# ? Jul 10, 2014 17:29 |
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I'd be fine with capital gains tax if the costs related to selling a house weren't so out of control. Land transfer tax, REALTOR tax, lawyer fees, etc.
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# ? Jul 10, 2014 17:38 |
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Apparently there's huge incentives in the military to buy rather than rent. You get all your "soft costs" paid for if you buy so it actually makes sense to just keep buying a new house then selling it every 3-4 years and our tax dollars cover all the fees and expenses. Meanwhile apparently the hand-outs for renting are far lower to the point that renting makes absolutely no sense if you're in the military. \/ You would not believe the other hand-outs they get. My friend had to move away to some poo poo town in Ontario. He got some ridiculous amount of money to move, way more than he needed. Ended up pocketing about $500 afterwards. So he's fully moved in and had cash to spare. Then he realizes the hand-outs haven't stopped. He's entitled to a 2nd trip because it's assumed it will take you 2 trips to move for some reason. So a couple weeks later he flies back to Victoria for free, is given a hotel for free, and is given about $300 a day for food/expenses and money for a rental car which he doesn't need. I can't remember all the specifics but a lot of the money he didn't need to submit for, they basically just gave him a pile of cash without any strings attached. So he just partied and hung out with out and bought everyone dinners and drinks for a weekend then flew back. Our struggling under-funded military. Those stupid american planes make a lot more sense now. Baronjutter fucked around with this message at 18:22 on Jul 10, 2014 |
# ? Jul 10, 2014 18:17 |
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Baronjutter posted:Apparently there's huge incentives in the military to buy rather than rent. You get all your "soft costs" paid for if you buy so it actually makes sense to just keep buying a new house then selling it every 3-4 years and our tax dollars cover all the fees and expenses. Meanwhile apparently the hand-outs for renting are far lower to the point that renting makes absolutely no sense if you're in the military. Paying off some loving soldier's realtor fees when they sell. gently caress. That. poo poo.
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# ? Jul 10, 2014 18:18 |
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Cultural Imperial posted:Things I'd like to see done are: #1 is political suicide. Too many Canadians have their retirement plan depending on #1. #2 sure #3 hahahaha... and I'd like ponies #4 you... already do? Nobody will give you a mortgage without knowing who you are, where you live, and how you're paying for it. #5 sure #6 sure
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# ? Jul 10, 2014 18:51 |
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Cultural Imperial posted:Paying off some loving soldier's realtor fees when they sell. gently caress. That. poo poo. Did you love the story where Lt. Gen. Andrew Leslie moved a few blocks two years after he retired and claimed $72,000? I believe that it was just a huge coincidence that his daughter was hired by the real estate firm representing him the same month as the house closed and that Justin Trudeau could not have found a better defense advisor.
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# ? Jul 10, 2014 19:13 |
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Ikantski posted:Did you love the story where Lt. Gen. Andrew Leslie moved a few blocks two years after he retired and claimed $72,000? I believe that it was just a huge coincidence that his daughter was hired by the real estate firm representing him the same month as the house closed and that Justin Trudeau could not have found a better defense advisor. loving hell
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# ? Jul 10, 2014 19:16 |
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Ikantski posted:Did you love the story where Lt. Gen. Andrew Leslie moved a few blocks two years after he retired and claimed $72,000? I believe that it was just a huge coincidence that his daughter was hired by the real estate firm representing him the same month as the house closed and that Justin Trudeau could not have found a better defense advisor. Sometimes it's hard to shake the impression that large parts of the federal government exist purely to funnel tax revenue into the pockets of privileged senior staff and parliamentarians.
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# ? Jul 10, 2014 19:45 |
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Lexicon posted:Sometimes it's hard to shake the impression that large parts of the federal government exist purely to funnel tax revenue into the pockets of privileged senior staff and parliamentarians. A proud Canadian tradition since Confederation.
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# ? Jul 10, 2014 19:54 |
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https://www.youtube.com/watch?v=jaiz_1IiK5c
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# ? Jul 10, 2014 20:28 |
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Posted without comment: http://www.cbc.ca/news/business/samsung-smart-home-system-to-be-built-into-toronto-condo-1.2703113
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# ? Jul 10, 2014 20:52 |
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Can't wait to trust a strata council 20 years from now to keep the system and security up to date. Who are we kidding, poo poo like this is installed to quick sell a condo and then be abandoned by the strata a year later for probably quite valid cost and security issues.
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# ? Jul 10, 2014 21:02 |
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http://www.theglobeandmail.com/news/british-columbia/vancouver-targets-housing-speculation/article19559458/quote:
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# ? Jul 11, 2014 03:33 |
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I'm sure that'll be very successful and we'll collectively marvel at the wisdom in launching it in years to come
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# ? Jul 11, 2014 03:40 |
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Lexicon posted:I'm sure that'll be very successful and we'll collectively marvel at the wisdom in launching it in years to come You will not criticize Mayor Moonbeam's initiatives like that. Take it back infidel.
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# ? Jul 11, 2014 03:48 |
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Couldn't the government do something like a huge tax on owning property, and each day you are present in Canada you get a tax credit valid towards that surcharge, capping out at 100% of taxes gone if you are present 183 days? You can use border control records to manage this pretty easily.
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# ? Jul 11, 2014 04:15 |
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on the left posted:Couldn't the government do something like a huge tax on owning property, and each day you are present in Canada you get a tax credit valid towards that surcharge, capping out at 100% of taxes gone if you are present 183 days? You can use border control records to manage this pretty easily. Wait until you have to fill out a T1135.
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# ? Jul 11, 2014 04:18 |
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Cultural Imperial posted:“That is frustrating. You want to have life in your neighbourhood. If nobody is there, it’s not ideal. How we deal with that as a government should be a priority,” he said in an interview. How the gently caress is it problematic for the city to research whether or not the massive amounts of money being spent on infrastructure upgrades in order to facilitate the gigantic buildings going up are actually being used? This should be the number one statistic on approving developer permits.
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# ? Jul 11, 2014 05:24 |
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Crosspost from bad with money thread, and takes place in the US, but just as schadenfreude: people paying to live in high end homes as transient 'house managers'. It's just as stupid as it sounds. gently caress realtors, but props to them for finding a way to squeeze equity from an otherwise vacant showhome while making its transitory tenants your bitches. When do you suppose we'll be seeing them popping up in YVR? TL;DR: family of two mcdonalds managers and three unemployed grown-rear end children come into money, somehow lose it all because something something recession, now rent showhomes until they are sold to maintain the illusion that they're not some poor-rear end that have no business owning $10,000 rugs. Guest2553 fucked around with this message at 06:01 on Jul 11, 2014 |
# ? Jul 11, 2014 05:58 |
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Guest2553 posted:Crosspost from bad with money thread, and takes place in the US, but just as schadenfreude: people paying to live in high end homes as transient 'house managers'. It's just as stupid as it sounds. I'd be surprised to see this in Vancouver. People here are so conceited this sort of ruse would be vulgar and beneath their social standing.
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# ? Jul 11, 2014 15:06 |
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http://www.cbc.ca/news/business/canada-lost-9-400-jobs-in-june-jobless-rate-ticks-up-to-7-1-1.2703844quote:Canada's economy shed 9,400 jobs in June, enough to inch the unemployment rate up slightly to 7.1 per cent. lmao
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# ? Jul 11, 2014 15:07 |
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# ? Jul 11, 2014 15:15 |
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http://www.macleans.ca/economy/realestateeconomy/why-canada-isnt-immune-to-a-u-s-style-housing-crash/quote:Investors should stay away from the Canadian housing market, warns a new report from Chicago-based investment firm Morningstar. A house price correction is “inevitable” within the next five years and could send house prices falling as much as 30 per cent.
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# ? Jul 11, 2014 15:19 |
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^^ The annoying thing is, that could've been written verbatim in 2010, 2011, 2012, and 2013 (and probably was) and been true. We might have another few years of this before anything changes.
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# ? Jul 11, 2014 15:29 |
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Lexicon posted:^^ The annoying thing is, that could've been written verbatim in 2010, 2011, 2012, and 2013 (and probably was) and been true.
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# ? Jul 11, 2014 15:43 |
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# ? May 27, 2024 04:00 |
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Could we conceivably have 100% mortgages before that happens? It seemed unlikely a few years ago, but I'm kind of thinking anything's possible now.
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# ? Jul 11, 2014 15:54 |