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I am turning 25 this year, and this thread has me terrified and depressed 
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May 26, 2014 22:46
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What are you sad about? Not owning a house or the effects of the entirely government subsidized bubble bursting will have?
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May 26, 2014 22:48
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The Duggler posted:I am turning 25 this year, and this thread has me terrified and depressed You shouldn't feel badly. Not having a massive debt load is going to be an enormous opportunity for you when the bubble bursts.
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May 26, 2014 22:52
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Cheer up. If you are 25 you have plenty of time to be crushed by the housing market and then eventually purchase after the dust settles. If I were to buy after the correction is finished, I will likely die of a heart attack mowing a lawn for the first time in 35 years.
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May 26, 2014 22:55
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Baronjutter posted:What are you sad about? Not owning a house or the effects of the entirely government subsidized bubble bursting will have? Both. I'd like to own a house someday, albeit not in a horrible bubble(I currently live in Toronto, but I'd like to live in BC (kill me)). I am not entirely sure what the extent of the damage will be when the housing bubble bursts, but I imagine it might put young renters like me in a much better position which is nice. My poor grandma though
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May 26, 2014 22:57
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PT6A posted:I think you're being a little harsh, there. First of all, people buying a home probably don't want to immediately do renovations. Moving is bad enough; following it up with the hellishness of trying to renovate large parts of your new dwelling sounds like torture. Secondly, poor decor/design will not properly emphasize the features of the house that will appeal to buyers, and as most people aren't interior designers, they probably won't be able to accurately picture what it *could* be after they renovate it and decorate it just so. What I've most learned from watching the show is that buying a home in Canada is the equivalent to sticking your leg in a bear-trap to check if its active. Every single episode something is catastrophically wrong from Asbestos to illegal and ungrounded wiring to missing or rotten support beams so the bathroom is supported by tile glue and gumption. If its intended to make someone want to buy a Canadian home it has a very strong adverse effect especially when you see "home value at 1.1 million" and "someone didn't cast your foundation properly" in a 10 minute span.
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May 27, 2014 02:28
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It's like the show selects houses with issues to make it more interesting. Why would they do that? Don't reality show producers have any journalistic integrity left?
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May 27, 2014 05:00
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Barudak posted:What I've most learned from watching the show is that buying a home in Canada is the equivalent to sticking your leg in a bear-trap to check if its active. Every single episode something is catastrophically wrong from Asbestos to illegal and ungrounded wiring to missing or rotten support beams so the bathroom is supported by tile glue and gumption. If its intended to make someone want to buy a Canadian home it has a very strong adverse effect especially when you see "home value at 1.1 million" and "someone didn't cast your foundation properly" in a 10 minute span. To be fair, "home value at 1.1 million" and "someone didn't cast your foundation properly" are completely compatible in the Vancouver housing market. Seriously, try browsing the property assessment database -- the land is 50-99% of the property value. There are many, many properties going for $1.1 million and more where the (perfectly liveable, structurally sound) house is valued around $20K. This happened to the landlady at our last place. When we moved out, there was water coming up through the floor of the basement suite whenever it rained hard, but she still sold it for $1.3 million.
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May 27, 2014 05:13
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Just poking my head in to ask if anyone still feels or has a "short" position on the Canadian banks or housing economy at this stage, or if anyone has changed their stance on the sustainability of the Canadian economy vs. EU or US economic "recovery" since I last poked in on the discussion (about 5 months ago). Not trolling, I am honestly curious if the decrease in TD/RBC loan loss provisions and strength in the CAD vs AUD and GBP has changed anyone's fundamental biases in arguing the Canadian housing sector is overvalued vs. US or UK asset inflation.
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May 27, 2014 05:33
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Well exactly, in a bubble it's not houses that become expensive, it's the land. There's no a lumber or drywall bubble, obviously prices for building materials can go up and down, but in terms of bubbles it's all the land. Normally a slow and steady rise in land value triggers a gentle and natural increase in density as land in the core becomes more and more valuable because it's the loving core, it has proximity to everything and people value it because it's prime land. Obviously it's an investment, but the land is highly valued because people really want to live or work or build there, not because they "just know" it's going to double in 10 years. That's basically the definition of a bubble though, the price goes up not because the land is in demand, but because a REALTOR says there's gold buried under that 2br tear-down.
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May 27, 2014 05:36
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Hal_2005 posted:Just poking my head in to ask if anyone still feels or has a "short" position on the Canadian banks or housing economy at this stage, or if anyone has changed their stance on the sustainability of the Canadian economy vs. EU or US economic "recovery" since I last poked in on the discussion (about 5 months ago). I discussed unloading all my bank securities with my gf who works in finance. She told me to stop loving with my portfolio and just let my poor advisor do his job. Search for kalenn istarion's excellent post on shorting in the Canadian finance thread in bfc. Tldr, don't.
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May 27, 2014 05:56
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Cultural Imperial posted:I discussed unloading all my bank securities with my gf who works in finance. She told me to stop loving with my portfolio and just let my poor advisor do his job. Yes, that is a smart move. Turnover rates on Directed accounts will kill you, as will yield duration risk on the dividends. Bear flattening of the yield curve, which is happening with the "belly trade" in US 10'years does not really effect Canadian banks unless they have heavy US bond trading or investment banking derived profits. Only 2 banks really do in Canada where it would materially effect their 5 year earnings outlooks for a yield oriented value investor. On that note I have a follow up question for the thread, what is the key criterion many in the thread who feel a bubble is/was in place; was it the nominal price vs. your perception references? direct interactions with market scarcity in your local property market? main branch loan rates ? or was it market momentum/news reports that led you to feel Canada was in a bubble ?
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May 27, 2014 06:22
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Hal_2005 posted:On that note I have a follow up question for the thread, what is the key criterion many in the thread who feel a bubble is/was in place; was it the nominal price vs. your perception references? direct interactions with market scarcity in your local property market? main branch loan rates ? or was it market momentum/news reports that led you to feel Canada was in a bubble ? It's definitely not scarcity in Vancouver. There is a shitload of supply compared to say, Seattle. For me personally it's median house price to family income ratio.
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May 27, 2014 06:39
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Hal_2005 posted:On that note I have a follow up question for the thread, what is the key criterion many in the thread who feel a bubble is/was in place; was it the nominal price vs. your perception references? direct interactions with market scarcity in your local property market? main branch loan rates ? or was it market momentum/news reports that led you to feel Canada was in a bubble ? When real estate prices in the middle of nowhere, in ghost towns even, jumped from the value of the on-site improvements (house, etc) to Vancouver-style "land value only" market listings in just under a decade. Acreage, especially, went through the roof seemingly overnight irrespective of whether it was even accessible by road. While other provinces have a similar issue with residential property prices, the issue of gross overvaluation across all property types regardless of location is most prevalent in BC (what would sell for $100/acre in Ontario sells for $4000/acre in BC) and I believe this province is likely going to be responsible for popping the bubble. LOiC's post hits the nail on the head regarding how overvalued the vast, vast majority of BC currently is. Watching MLS and Landquest like a hawk since 2008 leads me to firmly believe we are balanced precariously on the precipice, and have been since mid-late 2012 when rural prices started declining slightly as owners attempted to cash out and found no willing buyers. A complete lack of liquidity in these remote markets is, I believe, likely to have a slow cascade effect on the province at large as the situation develops.
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May 27, 2014 06:41
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Rime posted:When real estate prices in the middle of nowhere, in ghost towns even, jumped from the value of the on-site improvements (house, etc) to Vancouver-style "land value only" market listings in just under a decade. Acreage, especially, went through the roof seemingly overnight irrespective of whether it was even accessible by road. While other provinces have a similar issue with residential property prices, the issue of gross overvaluation across all property types regardless of location is most prevalent in BC (what would sell for $100/acre in Ontario sells for $4000/acre in BC) and I believe this province is likely going to be responsible for popping the bubble. LOiC's post hits the nail on the head regarding how overvalued the vast, vast majority of BC currently is. So I've been watching Kelowna with morbid curiosity for a couple years and while the market there looks like hell, I would say that it's still not crashing.
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May 27, 2014 06:54
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apt gangbang posted:I can't think of anywhere in Canada a townhome, or even a semi-detached home, would be worth more than $600,000 without lax lending standards. I can. Toronto and Vancouver are full f them. There's probably hundreds of town houses in downtown Van that list for over $2 million. Barudak posted:What I've most learned from watching the show is that buying a home in Canada is the equivalent to sticking your leg in a bear-trap to check if its active. Every single episode something is catastrophically wrong from Asbestos to illegal and ungrounded wiring to missing or rotten support beams so the bathroom is supported by tile glue and gumption. If its intended to make someone want to buy a Canadian home it has a very strong adverse effect especially when you see "home value at 1.1 million" and "someone didn't cast your foundation properly" in a 10 minute span. You know that they only show things which are interesting to watch on most reality TV shows right? The majority of home purchases go smoothly and have no issues. Like most things today, the bad stuff is sensationalized for entertainment purposes.
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May 27, 2014 11:43
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Kalenn Istarion posted:I can. Toronto and Vancouver are full f them. There's probably hundreds of town houses in downtown Van that list for over $2 million. Again, lax lending standards. Same reason we've got $100,000 condos going for four times that in Toronto.
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May 27, 2014 13:10
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Also generally in these conditions it's not the developers that are making bank, it's the land owner. Those 300k condos are 300k not because construction prices have shot way up or the developer is just putting a 300% markup, it's because he still has to pay for the over-inflated land. It's the person who sells the land to the developer and owned the land before the bubble that is making bank. Buy a chunk of land for 2 million, get it re-zoned for a tower and now the land is worth 4 million. Developer buys for 4 million, you just made 2 million, personally. Developer then builds a project, sells a ton of 300k+ condos and in the end turns maybe 500k personal profit if he did really well (which is not a sure thing). In a bubble the big money is in owning and selling land, not building poo poo. BUT developers like it, because even if their margins are the same during a bubble, you make more money selling 50 300k condos than 50 150k conds. And you have a huge stupid market of people buying "investment condos". It also means the "cost of entry" for getting into development is much higher which gets rid of a lot of the smaller competition.
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May 27, 2014 16:00
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tagesschau posted:Again, lax lending standards. Same reason we've got $100,000 condos going for four times that in Toronto. This is silly and wrong. Lax lending standards does not modify lending value of the asset by 4x. If mortgage rates doubled from current levels, payments would go up by <50% on a 20% down mortgage, meaning someone could afford a third less house on the same mortgage payment. If rates tripled, to 9.9%, payments would go up around 85%. This is going to hurt, but it's not going to erase 75% of high end property values. Downtown townhouses are expensive because they're desirable and a limited good. Not to mention that believe it or not, banks look at other loan factors such as: - loan to value - your income - your other assets - whether your could make your payments in a worse market
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May 27, 2014 16:54
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peter banana posted:so do people in BC pay $500+/month in maintenance fees for their condo? That's de rigeur here in Toronto, if so why the gently caress aren't these repair fees coming out of that money? I thought that's what it was for? It's a pretty common problem in condos in general for the strata fee to not reflect reality especially when you reach the 15 to 25 year window when big replacements are needed for the exterior of the building. Also things like bad construction quality such as demonstrated in the recent boom means there's a good chance you will get some surprise big assessments to fix exterior problems. For example the gimmickly glass walls used in modern condos are really expensive to replace and also have a smaller lifespan than the smaller windows.
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May 27, 2014 17:00
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Also the rooftop / mid-tower swimming facilities that are commonly seen. It's gonna hurt when those start to age.
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May 27, 2014 17:23
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Kalenn Istarion posted:This is silly and wrong. Not at all. Kalenn Istarion posted:Lax lending standards does not modify lending value of the asset by 4x. That was a bit of an exaggeration, but given that incomes in Toronto are grown that much in real terms in the past 15 years, there's nothing fueling the rise in prices other than the fact that money is too cheap and the banks will lend you a lot of it. Kalenn Istarion posted:If mortgage rates doubled from current levels, payments would go up by <50% on a 20% down mortgage, meaning someone could afford a third less house on the same mortgage payment. If rates tripled, to 9.9%, payments would go up around 85%. This is going to hurt, but it's not going to erase 75% of high end property values. You're assuming that everyone who has a mortgage can afford it now. Canadians are currently more indebted than the Americans were at the peak of the U.S. housing bubble. Kalenn Istarion posted:Downtown townhouses are expensive because they're desirable and a limited good. They are not nearly as limited as you think. Most housing in Toronto is single-family homes, and since incomes haven't increased that much in real terms (and demand means nothing without money to back it up), the only way demand has increased is because you can borrow more of the money you need to buy a house. And it looks like most Canadians would indeed rather pay you Tuesday for a hamburger today. Kalenn Istarion posted:Not to mention that believe it or not, banks look at other loan factors such as: And if CMHC is backstopping these loans, any loss on them is covered by taxpayers and not shareholders, so why are they going to bother doing proper risk mitigation?
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May 27, 2014 18:22
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Rime posted:Also the rooftop / mid-tower swimming facilities that are commonly seen. It's gonna hurt when those start to age. Yeah it's important to note that condo architecture is loaded with lots of expensive gimmicks to wow buyers like the leaky glass wall windows or the dreaded rooftop pools.
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May 27, 2014 18:44
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tagesschau posted:Not at all. I can't split quite on the app, so here goes: A) presume you mean aren't? Comparing real incomes to nominal house prices is wrong. I won't disagree that part of the growth is fuelled by cheap credit, but it isn't close to even half. B) no I'm not. But rather than assuming, I do know that the percentage of people in mortgages that are at the limit of what they can afford is relatively small. According to an article here only 9% of borrowers were under 10% equity. The article also notes that default rates are pretty low even in rising interest rate environments. code:C) again comparing real incomes to nominal house prices, which is wrong. That aside, what I said was that downtown townhouses are a limited good, and with specific reference to my comment re $2 million units, not single family homes in general. This is one of the more obvious examples of the phenomenon that as population increases and gets more dense, the peaks of income will be higher, this creating the need and ability to pay for 'overpriced' townhouses and condos. This isn't something that's going to go away, even if we see a sustained and deep downturn in housing. D) unlikely that any loss would hit Canadian taxpayers directly. This is a fallacy propagated by bad math and a lack of understanding about how the mortgage insurance works. The article linked above speaks to the reserves of CMHC relative to their covered loans. While an incautious reader would say "oh no only $26B for $500B of covered loans", you need to remember that the insurance coverage is only to the extent that value isn't recovered through foreclosure versus the insured value of the mortgage. Taking those 9% of <10% down payment mortgages and ignoring for a minute that they're statistically more likely to be smaller mortgages, that would mean they're worth about $45bn. For the government pool to go upside down, even if they all went into default, would require the covered properties to sell for around 35% of their current value, which even the most pessimistic in this thread would probably agree is unlikely in aggregate. Using CMHC's own arrears data, only about 1% of the covered value is even at default risk, well less than the current pool. If you want to say taxpayers are on the hook, keep in mind that taxpayers have also benefited to the tune of ~$2bn a year in insurance premiums as profits, and were CMHC sold, as has been proposed recently, much of that value would accrue to the government / citizens directly rather than abstractly. Using the data point noting that 67% of Canadian mortgages are insured is also not going to really impact the analysis as many of those covered are >20% down mortgages which were originally not covered but which banks have securitized under the relevant CMHC program. For this insurance to hit, the asset pool in aggregate would need to lose 20% of its value, not just any individual mortgage, and it's still offset by any foreclosure recoveries. If you're going to be mad about government exposure to CMHC, you should get mad about Farm Credit Corp as well, who is more directly exposed to loans to family farmers and is also back stopped by GOC. (There's nothing to be mad about here either because they rake in money hand over fist, but it's a point of comparison).
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May 27, 2014 19:41
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I was having a discussion on architecture the other day and touched on this point. They were saying "If they want to make renting more attractive they need to start making apartments look as fancy as condos.". Their main points were that condos have way more amenities and the architecture is usually far more glassy. While a new condo might make extensive use of glass curtain walls, even a brand new modern purpose-built apartment has far less glass and more solid walls. Like has been mentioned above, this is obvious when you think about it. The developer selling the condo just needs to wow the first buyers and then they walk away. The apartment owner is planning for the entire life-cycle of the building. It is very well understood in the construction industry what methods and designs produce pretty time-bombs and which produce robust long-lasting building. Condos will almost always be the former. Also the forms tend to be different too. Purpose built rental buildings tend to be more boxy and squat while condos will be these ridiculous tall thin elegant things. Once again, it's efficiency. Density is very efficient but height isn't. The least cost effective thing you can build is a tall skinny building.
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May 27, 2014 19:44
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If someone claims that Arthur Erickson or lovely glass sheathing is in any way visually stunning, let alone deserving of being called "architecture", I usually ignore their opinions on everything else.
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May 27, 2014 19:52
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Kalenn Istarion posted:Comparing real incomes to nominal house prices is wrong. You would have a point if I were doing that. Adjusted for wages, adjusted for inflation, adjusted for pretty much any economic fundamental, there's no credible claim that these absurdly high prices, even in the area bordered by Dufferin, Bloor, the Don, and the lake, are the new normal. There are not enough rich people, and any rich people who throw too much money into their home, thinking it's an investment, will come out less rich than they started. Kalenn Istarion posted:I do know that the percentage of people in mortgages that are at the limit of what they can afford is relatively small. Mayne that's true if you calculate affordability based on your monthly mortgage payment, but that's an obviously bad idea. Indebtedness has gone up, and until really recently, you didn't have to pay back anything but the interest on your HELOC. Kalenn Istarion posted:unlikely that any loss would hit Canadian taxpayers directly. This is a fallacy propagated by bad math and a lack of understanding about how the mortgage insurance works. Not really. If the bank would suffer a loss on a CMHC loan, it gets made whole. This is textbook moral hazard.
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May 27, 2014 20:37
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tagesschau posted:Mayne that's true if you calculate affordability based on your monthly mortgage payment, but that's an obviously bad idea. Indebtedness has gone up, and until really recently, you didn't have to pay back anything but the interest on your HELOC. It also doesn't factor in what Rabidoux was talking about recently, the phenomenon of people who own property (usually boomers with detatched SFHs) pulling out equity in the form of HELOCs and then either using it to buy an "investment" condo, or lending it to their kids for their own down payment. This is the dictionary loving definition of procyclical demand, and also the reason that the forthcoming collapse in real estate valuations will likely overshoot price/rent on the downside before recovering. An analysis of price/rent in Vancouver shows you just how far a fall that will be. Edit: Any attempt to defend current housing valuations in Canada should require a cogent explanation of why price/rent ratios are as skewed as they are, or  . Price/rent is the only sane valuation of what property is "really" worth, and it remains completely out of whack in Canada.
Franks Happy Place fucked around with this message at 20:48 on May 27, 2014 |
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May 27, 2014 20:45
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That stuff about amenities is bullshit. I bet you most vancouverites don't care about swimming pools or saunas. It's hard enough to find an apartment with in suite laundry for gods sake.
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May 27, 2014 20:49
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Cultural Imperial posted:That stuff about amenities is bullshit. I bet you most vancouverites don't care about swimming pools or saunas. It's hard enough to find an apartment with in suite laundry for gods sake. Good Lord, in suite laundry nothing, I would have killed for in *building* laundry. gently caress walking to the laundromat and gently caress having to get $25 in loonies to clean my clothes.
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May 27, 2014 20:51
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Antioch posted:Good Lord, in suite laundry nothing, I would have killed for in *building* laundry. gently caress walking to the laundromat and gently caress having to get $25 in loonies to clean my clothes. I will have known I've made it in life when I finally get in-suite laundry. That said, this thread has turned me off forever from buying a condo holy crap.
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May 27, 2014 20:55
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Most new rentals that come across my desk have in-suite stacking laundry or at least a laundry room per floor. I think it's slowly becoming the norm for new-built rentals, it's just 20 years behind condos in that respect. I also see a ton of old "higher end" rental buildings from the 60's and 70's with loving pools. From talking with managers, they are almost never used and they are being filled-in and turned into general purpose spaces or gyms as fast as owners can afford the renos. Pools and water features I see far less in condos too, the only recent 2 I can think of both ended up with leaking and flooding while the developer was still on the hook. loving stop it with the water idiots, or at least stop putting huge bodies of water above your parkade or units. And yeah, holy poo poo, talking to my friend in NY the situation there with laundry loving sucks. I can't imagine spending a weekend shlepping blocks away to a gross laundromat and then having to sit there and guard your poo poo while their awful machines badly wash and dry your clothing. My building has $2 coin op and it sucks so I just drive to my folks place 5 min away to do it in their really nice machines. Baronjutter fucked around with this message at 20:58 on May 27, 2014 |
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May 27, 2014 20:56
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Did you guys read that article I linked about leaky condo crisis part two? Better fill those pools in faster.
namaste friends fucked around with this message at 21:01 on May 27, 2014 |
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May 27, 2014 20:59
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When I was living in the west end on Harwood St it used to cost me 8-10 bucks a week to use the loving coin op laundry machines. Thank God I was renovicted.
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May 27, 2014 21:01
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My current place (condos retrofitted into a nice heritage building) has in-suite laundry, which is one of the ten thousand reasons I don't want to move despite making less money now than I did when I signed the lease.
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May 27, 2014 21:04
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Realistically the only affordable way to live in this city anymore is to buy a fullsize cargo van and build a micro apartment inside of it. Pays for itself within 8 months. 
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May 27, 2014 21:06
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Rime posted:Realistically the only affordable way to live in this city anymore is to buy a fullsize cargo van and build a micro apartment inside of it. Pays for itself within 8 months. I'll move to the country before I poo poo in a bucket next to my bed, thank you very much.
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May 27, 2014 21:09
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Rime posted:Realistically the only affordable way to live in this city anymore is to buy a fullsize cargo van and build a micro apartment inside of it. Pays for itself within 8 months. There are guys literally all around between main, Yukon, bordered by Broadway and 1 St doing just this. There one dude parked right in front of 33 acres I walk by all the time. The sliding door of his econoline doesn't even close completely. Presumably for the natural air conditioning.
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May 27, 2014 21:40
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Franks Happy Place posted:It also doesn't factor in what Rabidoux was talking about recently, the phenomenon of people who own property (usually boomers with detatched SFHs) pulling out equity in the form of HELOCs and then either using it to buy an "investment" condo, or lending it to their kids for their own down payment. This is the dictionary loving definition of procyclical demand, and also the reason that the forthcoming collapse in real estate valuations will likely overshoot price/rent on the downside before recovering. Perhaps my comments were misconstrued a bit. The Vancouver market is broken, just not 4x broken. The comments about taxpayers eating the loss is wrong as well as there's a giant reserve of premiums to go through before the government would even need to consider topping up. Cultural Imperial posted:There are guys literally all around between main, Yukon, bordered by Broadway and 1 St doing just this. There one dude parked right in front of 33 acres I walk by all the time. The sliding door of his econoline doesn't even close completely. Presumably for the natural air conditioning. And to let out the poo poo bucket smell
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May 27, 2014 21:51
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Kalenn Istarion posted:Perhaps my comments were misconstrued a bit. The Vancouver market is broken, just not 4x broken. West Vancouver prices are at about 75 times rental rates. Ideally they should be under 15 to 20 times. So... yeah.
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May 27, 2014 21:53
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