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^ This is why I said it's mostly a fashion statement for people too cheap (or who live in an inappropriate climate) for a real parka. When designed for functionality it's frickin' awesome.
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Jan 8, 2015 20:59
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Rime posted:^ This is why I said it's mostly a fashion statement for people too cheap (or who live in an inappropriate climate) for a real parka. I feel weird agreeing with Rime about something but this exactly. All the people walking around with faux fur rims on their hoods just make me laugh. I picture the fur frozen solid while my wife and I can still kiss without our lips freezing together when we're out skiing. I think, but am not sure, that the idea originally came from he Inuit.
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Jan 8, 2015 22:46
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I just stumbled on the thread and skimmed the first few pages, but couldn't find the answer, but does anyone know why the Canadian housing market is able to reach 160% household debt /income as shown in the graph in the OP? It seems incredibly high and not even possible... Furcifer fucked around with this message at 03:48 on Jan 9, 2015 |
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Jan 9, 2015 03:41
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That graph is legitimately worrying but not as alarming as the OP makes it sound. They say it shows that Canada's "exceeded the worst of the US bubble in terms of debt loading," which isn't particularly meaningful since the 2008 crisis didn't have much to do with excessive household debt. Well, not at the macro level anyway- the problem was a certain segment of the market that had unaffordable debts, and a lot of TBTF financial institutions who were heavily exposed to that market. Looking at aggregate debt levels is misleading. Anyway, what's so unbelievable about someone with $100k income having $160k in debts? If I'm correctly interpreting that stat.
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Jan 9, 2015 04:05
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That's debt to disposable income. edit: http://www.statcan.gc.ca/pub/13-605-x/2012005/article/11748-eng.htm
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Jan 9, 2015 04:10
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Includes credit cards and cars but not mortgages?
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Jan 9, 2015 04:35
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If disposable income is a small percentage of total income that graph makes sense I guess. But if I were a lender and the lendee had 1.6x more debt than liquidity, I'd be worried to lend them capital. I'm just curious what the theoretical max debt/disposable income ratio is, and how that # is calculated
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Jan 9, 2015 13:30
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That's not unusual, you're banking on the lendee paying back the debt over a period of time, not all at once. On a micro level it's not really an issue. But when your whole population is taking on that much debt, it's a problem. It indicates a population that is not planning for the future and is over leveraged.
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Jan 9, 2015 16:26
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RBC posted:That's not unusual, you're banking on the lendee paying back the debt over a period of time, not all at once. On a micro level it's not really an issue. Also, if your population is highly leveraged they have to drastically cut spending during even a small downturn (or uptick in rates), so I would imaging that very high debt levels make the business cycle more dramatic.
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Jan 9, 2015 17:42
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That graph also doesn't show incomes, which really haven't kept up with the debt load at all.
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Jan 9, 2015 19:32
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rrrrrrrrrrrt posted:That graph also doesn't show incomes, which really haven't kept up with the debt load at all. With that line of thinking it doesn't show (household) debts either? It's a ratio of the two. A point to note is interest rates are at historic lows. This means your average joe who looks at what it costs to service a debt on a dollar per month basis compared to the benefits of spending that money on a new TV or deluxe furniture set has a very different viewpoint from someone in the 80's, where the interest rates were double digits (and started with a 2). If you wanted to lower household debt the most effective way to do it would be to raise interest rates by a point or two, with the corresponding problems that would generate for the economy. These kinds of things don't develop in a vacuum.
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Jan 9, 2015 19:43
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Baudin posted:With that line of thinking it doesn't show (household) debts either? It's a ratio of the two. There were a few articles in this thread saying that a lot of those Canadians that are in debt couldn't afford a 1-2% increase in interest which would mean a pretty drastic shock to the economy. At least that's what I got out of it. Maybe I'm misunderstanding your point though.
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Jan 9, 2015 22:57
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Terebus posted:There were a few articles in this thread saying that a lot of those Canadians that are in debt couldn't afford a 1-2% increase in interest which would mean a pretty drastic shock to the economy. At least that's what I got out of it. Maybe I'm misunderstanding your point though. That's actually my point. Generally people look at what it costs to service their debt based on current interest rates and don't bother checking to see how bad it could get at 1% to 2% higher rates. Bankers generally discourage this line of thinking as well (since they assume people are dumb) which infuriates me. e: that's where my point was leading with the "problems that would generate for the economy" comment before I had to get back to work.
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Jan 10, 2015 00:09
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HookShot posted:Global warming means we're not getting pissed rain on all the time anymore, it's been pretty dry for a few years. Yeah I don't know why people (even those who live here) are still saying this, it really doesn't rain that excessively anymore. When it does rain it's most often just brief showers, or super light misty rain. Pretty rare to get the all day, non-step heavy rain for multiple days at a time that I used to remember. 
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Jan 10, 2015 01:23
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Baudin posted:That's actually my point. Generally people look at what it costs to service their debt based on current interest rates and don't bother checking to see how bad it could get at 1% to 2% higher rates. Bankers generally discourage this line of thinking as well (since they assume people are dumb) which infuriates me. That's what I thought, I just misread your post.
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Jan 10, 2015 01:27
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Guy DeBorgore posted:That graph is legitimately worrying but not as alarming as the OP makes it sound. They say it shows that Canada's "exceeded the worst of the US bubble in terms of debt loading," which isn't particularly meaningful since the 2008 crisis didn't have much to do with excessive household debt. Well, not at the macro level anyway- the problem was a certain segment of the market that had unaffordable debts, and a lot of TBTF financial institutions who were heavily exposed to that market. Looking at aggregate debt levels is misleading. Not exactly when you have people so heavily loaded up with debt it makes a credit bubble crash really ugly since you have people suddenly being unable able to pay off every sort of credit from HELOCs, mortgages or even credit card debt. Also high debt-income ratio means people aren't making enough after tax earnings and end up taking all types of credit makes ends meet/establish a good liquid rainy day fund.
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Jan 10, 2015 02:25
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The Butcher posted:Yeah I don't know why people (even those who live here) are still saying this, it really doesn't rain that excessively anymore. Yeah, exactly. We moved back here in 2011 and since then my husband has been like "uh yeah I don't understand why you guys complain about the rain all the time it's not that bad?" and he comes from Australia of all places. In October we had like three good days of really solid rain and I remember that being a normal thing when I was a kid, not the exception.
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Jan 10, 2015 02:30
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It still rains way too much here dudes, wtf Housing assessments up up up on Vancouver's north shore, stop being anxious and enjoy your increasing wealth! unless you're one of those poors who can only afford a $500,000 condo quote:After a couple of years of flatlining assessments, home values on the North Shore are edging up again. http://www.nsnews.com/news/north-shore-home-assessments-up-in-most-areas-1.1725743
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Jan 10, 2015 08:42
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Reverse Centaur posted:It still rains way too much here dudes, wtf  It's means for 1 million dollar assessment you get a $3677 per year property tax bill.
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Jan 10, 2015 17:37
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Baudin posted:That's actually my point. Generally people look at what it costs to service their debt based on current interest rates and don't bother checking to see how bad it could get at 1% to 2% higher rates. In practical terms each 1% rise costs you $1000/year extra in interest charges for every 100k of debt. When mortgages get into the 500k range a 2% rise is an additional 10k a year in interest. Since dumb people buy based on monthly carrying cost and not purchase price, this is a clusterfuck of serious proportions waiting to happen. Smarter people (which do exist despite popular opinion) tend to look at various scenarios. I can tell you one thing though, smart or dumb, no one who's bought in the last 10 years has ever considered 10%+, which has happened quite recently in an historic context. etalian posted:
Which is peanuts, but the truth is higher density in cities tends to support significantly lower property taxes than the suburbs, which is the way it should be.
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Jan 10, 2015 19:29
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Saltin posted:In practical terms each 1% rise costs you $1000/year extra in interest charges for every 100k of debt. When mortgages get into the 500k range a 2% rise is an additional 10k a year in interest. Since dumb people buy based on monthly carrying cost and not purchase price, this is a clusterfuck of serious proportions waiting to happen. Smarter people (which do exist despite popular opinion) tend to look at various scenarios. I can tell you one thing though, smart or dumb, no one who's bought in the last 10 years has ever considered 10%+, which has happened quite recently in an historic context. So are canadian mortgages more the ARM or fixed type mortgage?
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Jan 10, 2015 19:41
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Saltin posted:I can tell you one thing though, smart or dumb, no one who's bought in the last 10 years has ever considered 10%+, which has happened quite recently in an historic context. I looked at a 20% scenario, mostly to see how badly we'd be hosed over. We're aggressively paying down our mortgage to limit our interest rate risk.
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Jan 10, 2015 22:12
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etalian posted:So are canadian mortgages more the ARM or fixed type mortgage? Mortgages are calculated based on a long total repayment scenario of say 25 years but every 5 years or so its renegotiated. This is where a lot of people are about to lose their shirts as A) if the bank decides your house is worth 30k less they will hold out their hand and say pay up or no renewal And B) if interest rates are higher at the time of renewal enjoy your bigger monthly payment
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Jan 10, 2015 22:22
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etalian posted:So are canadian mortgages more the ARM or fixed type mortgage? Stats show about 20% are what we call variable, which swing with bank prime. The remaining 80% are fixed rate. The big whammy with Canadian mortgages is they are generally "renewed" every 5 years at the prevailing rates. You can get a 10 year term but they aren't common and the rates are much higher. There's no " locked in for 25 @ 3%" like in the US. It means we're much more sensitive to interest rate swings.
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Jan 10, 2015 22:42
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EvilJoven posted:Mortgages are calculated based on a long total repayment scenario of say 25 years but every 5 years or so its renegotiated. This is where a lot of people are about to lose their shirts as So basically a ARM like arrangement? I noticed from all the Canadian mortgage calculators there were fixed loans but they were high rate/only 10 years max. One more reason why I weep for people who run out to buy a fullproof investment property in the more bubble like metro areas like Vancouver.
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Jan 10, 2015 22:43
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I honestly don't see us returning to a true "high rate" environment (ie. Anything above 9-10%) anytime in the near to medium term (within 15 years or so). The high interest rate environments of the past had a great deal to do with inflation and inflation expectations more than anything else. Previously central banks tried to target full employment rather than interest rates, leading to rampant inflation in the 80s. Nowadays inflation is likely to be at that 2% mark or lower. I'm on my phone or I'd do it myself but I'd be interested to see if anyone has a real mortgage rate chart going back a few decades. I have a feeling that real rates are rarely more than 6%, though I could be completely wrong.
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Jan 10, 2015 23:19
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Jan 10, 2015 23:27
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Those aren't real rates. They're nominal rates. Inflation in the late 70s and 80s was out of control.
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Jan 10, 2015 23:31
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So mortgages in Canada are more like renting. You have to convince the bank every 5 years that the loan is still good.
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Jan 10, 2015 23:57
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etalian posted:
Property tax in Vancouver is significantly lower than in Toronto, but oddly enough Toronto is lower than many other municipalities in Ontario.  Those are nominal rates. Net of inflation the real rate is much lower. That doesn't help your monthly payments but it also doesn't account for the fact that wage growth would historically be at least as big a part of what gets you out of your mortgage as the payment structure. If you're in that environment where mortgage rates were 16% you'd probably see 10% per year wage growth on average so your mortgage is only half the real obligation after ~7 years.
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Jan 11, 2015 03:31
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http://www.vancouvercondos.com/
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Jan 11, 2015 05:40
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Is 1000 sq ft a lot? I've been living in the same ~400 sq ft apartment for so long I don't even know.
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Jan 11, 2015 06:07
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MickeyFinn posted:Is 1000 sq ft a lot? I've been living in the same ~400 sq ft apartment for so long I don't even know. well most standard size 4BD/2 bath houses are around 2000 sq ft.
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Jan 11, 2015 06:12
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Kalenn Istarion posted:That doesn't help your monthly payments but it also doesn't account for the fact that wage growth would historically be at least as big a part of what gets you out of your mortgage as the payment structure. Rime posted:QFT. Hard hourly wages have fallen through the floor when you compare them to inflation adjusted examples from the past: In 1973 the minimum wage in BC was $2.25/hr. Using the Bank of Canada inflation rate, that's worth roughly $12.32/hr in 2014. Ergo, between 1973 and 2011 (when they finally increased it), the minimum wage fell by over thirty loving percent. Even today, minimum wage workers are making $2/hr less than they would have in 1973.
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Jan 11, 2015 09:14
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Kalenn Istarion posted:Property tax in Vancouver is significantly lower than in Toronto, but oddly enough Toronto is lower than many other municipalities in Ontario. It's not a mystery, it's density. Density doesnt account for the vancouver/toronto difference, but the relatively quick rise in real estate "values" probably does - the municipality can't raise rates fast enough to keep up with valuations. If tax rates went up as quickly as that, people would be angry/ruined. This is one of the reasons Toronto implemented their own land transfer tax. Saltin fucked around with this message at 14:16 on Jan 11, 2015 |
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Jan 11, 2015 14:13
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...people think of $30,000 as middle class?
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Jan 11, 2015 14:23
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PC LOAD LETTER posted:Historical wage growth (ie. pre 1980's or 1990's post WII era) can't be counted on to save people from their debts in modern day developed countries like Canada or the US. Wages have been trending stagnant or negative for a long time now and there is no reason to believe that trend is going to reverse any time soon. It certainly hasn't in the US despite the recession and 'recovery'. From a ways back earlier in the thread: Maybe, but you can't assume we'll see high rates without also seeing higher inflation. Based on the Boc's rate setting policy the relationship is explicit - they change the benchmark rate in response to changing inflation estimates. So if we have the 'doomsday' scenario of 10%+ interest rates it's pretty reasonable to assume we'd see much higher inflation to go along with it.
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Jan 11, 2015 14:35
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ChairMaster posted:...people think of $30,000 as middle class? Well isn't the median income (of people with jobs) about 40k? But yeah, I'm sure there've been polls posted in this thread showing how like three quarters of Canadians think they're middle class.
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Jan 11, 2015 20:00
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ChairMaster posted:...people think of $30,000 as middle class? Like I said, there's that quote (I think I expanded on it better in one a few months later) there's a sort of mental roadblock in North America where people simply do not (or refuse to) understand the concept of purchasing power relative to inflation. $30k is absolutely still viewed as being in "the good life" by people, especially those over the age of 40, despite being barely above (realistically) the poverty line for a single individual these days. I don't know if it's because minimum wage jobs account for such a huge percentage of income earners, or boomers just being fiscally retarded, or what. 
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Jan 11, 2015 20:06
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Lead out in cuffs posted:But yeah, I'm sure there've been polls posted in this thread showing how like three quarters of Canadians think they're middle class. I'm not crapping on less-affluent people, by the way. But there comes a time where you need to realize just how much, or how little, cash and assets you really have. Because if you have delusions about how wealthy you are, you're definitely going to be making bad financial decisions ("Just got a 30 cent raise! Time to finance that BMW I've always wanted!") melon cat fucked around with this message at 20:26 on Jan 11, 2015 |
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Jan 11, 2015 20:07
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