Scum

T SHIRT modified

Poor Evan. “My wife and I are moving into a slightly larger rental. Beautiful river view, space to raise a family, and room to spread out a little and entertain,” he tells me. “It’s more expensive but well within our budget. We couldn’t be happier.”

So what’s the problem, Ev?

“And now it begins… the looks on people’s faces and the tone of their voices… very few understand why we’re continuing to ‘pay someone else’s mortgage’. The pressure from friends and family to own is ridiculous, tiring, and frustrating. I guess it just makes so much sense… why would anyone stop and crunch a few numbers when it’s just so much easier drinking the kool-aid every bank, neighbour, realtor and mortgage professional is serving up.

“The longer homes appreciate the lonelier and lonelier renting seems to become. We’re trying to be careful with our hard earned money and for that we’re low life scum who refuse to join the party. Just my two cents.”

Let’s face it. The advice Evan and an entire cohort of moist Millennials is receiving from their Jurassic parents is plain wrong. Anachronistic. Dated. Inappropriate. Worse, the dino Boomers are leading their spawn into an economic storm – the collision of falling prices and rising rates. Never before has borrowed money been so cheap, nor real estate so dear. So it’s probably the worst time since Leave it To Beaver to buy a house.

But even if we were not at peak house right now, with mortgages bouncing off the bottom, renters would still beat owners – something hipsters should know before they pour every dollar of savings, then all of their cash flow, into a concrete box. The facts are simple. Houses have increased about 5% a year for the last quarter-century. Stock markets have gone up about 9%.

Moreover, there’s no land transfer tax when you buy an ETF, no lawyer or insurance, no condo fees. When you sell, no 5% commission, no HST, no legals. Most importantly, there’s no gargantuan pile of steaming debt which is destined to reset at a higher cost every time it comes due. Renters can move on a few weeks’ notice without having to find a buyer, engage a realtor, live through open houses or shell out thousands in a mortgage break fee.

After all, if you ever need mobility, flexibility, freedom and options in your life, this is it – when you’re starting out, building a career, chasing jobs and proving yourself. Why would any twentysomething ever trade that for debt, illiquidity and property tax payments? How is it that Evan’s so-called friends and his family are giving them the gears for not owning? Do they hate him?

Of course not. It’s all about money. Relics think renters throw their money away on lease payments and forget that owners shovel more of it into down payments, mortgage interest and maintenance costs. Why the double standard? “Because houses always go up.” The last five or six years of falling mortgage costs and house lust have certainly fueled that perception. But facts are facts. Renters who invest in financial assets do better than dudes with condos.

Over the past decade, the TSX has outpaced Toronto condos in actual price appreciation. That’s despite the market meltdown in 2008-9, and doesn’t even factor in the silly overhead (monthly fees and land taxes) that condos generate.

‘But,’ you Mom cries.  ‘Condo gains are tax-free!’ Maybe. If you live there long enough that the CRA doesn’t nail you for flipping. But don’t forget that renter-investors now have $40,000 worth of tax-free room inside TFSAs, plus lots more with tax-deferred retirement plans. There have never been so many ways to stop being taxed.

And what about leverage? You can buy a $300,000 condo with a credit-card down payment, which seriously amplifies the return on your initial investment. But this also amplifies potential losses and exaggerates risk. In a housing correction which shaves 15% off condo values, the kid with a 5% down payment is smoked and can’t even afford to sell – because that would mean coming up with a big cheque on closing day. Condo prison.

It’s worth remembering that only twice in the past 125 years have house prices in the US gone up faster than inflation. Once was after WW2 and the other preceded the real estate crisis seven years ago. Over the sweep of history, financial assets have outperformed real ones decade after decade.

And what about risk?

If you’re young with $25,000 saved, do you really want to gamble it all on a $350,000 condo, while taking on more than three hundred thousand in debt? Especially when it means your monthly payment will be at least 50% higher than a renter would pay to stay in the same unit? Are you on drugs?

Renters can build equity as fast, with less risk (no leverage) and lower cost (no fees or property tax) with an investment portfolio. They can buy a few REITs and end up with exposure to hundreds of well-managed rental and commercial properties, instead of throwing all their cash at one condo unit in one building in one hood. That’s diversification – which is a basic tenet of successful wealth building.

So where did we come up with this meme that you have to buy real estate? How come poor Evan’s a social outcast? Feeling like scum? Why the pressure?

Because dino parents think it’s 1986 again. And they give love a bad name.

180 comments ↓

#1 TurnerNation on 06.23.15 at 4:54 pm

Bull’s back.

#2 Victoria Real Estate Update on 06.23.15 at 4:55 pm

Realtors often write comments accusing me of lying with stats and posting doomsday predictions.

There is, of course, no truth in any of it. My haters have not been able to produce a quote to substantiate their claims. They can look at all of my past comments, but they won’t find anything of that sort.

As is the case with all of my charts, this one is accurate and based on verifiable data. The (simple) calculations are explained below it.

. . . . . . . Single Family Home Prices. . . . . . .
. . . . . . . . . . . . .Oak Bay. . . . . . . . . . . . .
. . . . . . . (Percent Below 2010 Peak). . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0%. . . * . . . . . . . . . . . . . . . . . . . . . . . .
-1%. . . . . . . . . . . . . . . . . . . . . . . . . . . .
-2%. . . . . . . . . . . . . . . . . . . . . . . . . . . .
-3%. . . . . . . . . . . . . . . . . . . . . . . . . . . .
-4%. . . . . . . . . . . . . . . . . . . . . . . . . . . .
-5%. . . . . . . . . . . . . . . . . . . . . . . . . . . .
-6%. . . . . . . . . . . . . . . . . . . . . . . . . . . .
-7%. . . . . . . .*. . . . . . . . . . . . . . . . . . .
-8%. . . . . . . . . . . . . . . . . . . . . . . . . . . .
-9%. . . . . . . . . . . . . . . . . . . . . . . . . . . .
-10%. . . . . . . . . . . . . . . . . . . . . . . . . . .
-11%. . . . . . . . . . . . *. . . . .* . . . . . . . .
-12%. . . . . . . . . . . . . . . . . . . . . . . . . . .
-13%. . . . . . . . . . . . . . . . . . . . . . . . . . .
-14%. . . . . . . . . . . . . . . . . . . . . . . . . . .
-15%. . . . . . . . . . . . . . . . . . . . . . . *. . .
————————————————————————
. . . . .March. . Dec. . .Dec. . .Dec. . .Dec. . .
. . . . . 2010. . .10. . . .11. . . .12. . . .13. . .

(source: Victoria’s RE board)

Calculations:
* for a 3-month median price chart, we use 3 months of median price data for each price point
* March 2010’s price point includes January, February and March median prices
* January 2010: $824.750 (18 sales), February: 835.000 (19), March: 842.000 (26)
Total sales (3 months): 63
Sales-weighted average calculation:
January: (824.750 x 18) divided by 63 = 235.643
February: (835.000 x 19) divided by 63 = 251.825
March: (842.000 x 26) divided by 63 = 347.492
Total: $834.960 (this is the 3-month median price for March 2010)

Similarly, December 2013’s 3-month median price = $707.708

Price difference: $834.960 – $707.708 = $127.252
Percent price decline: $127.252 divided by $834.960 = 15.24%

Fact: Single family home prices in Oak Bay fell by 15.24% from March 2010 to December 2013, based on 3-month median price data.

#3 Victoria Real Estate Update on 06.23.15 at 4:57 pm

Oak Bay’s 15% SFH price decline took place while emergency interest rates were in effect. Just imagine how much prices could fall as rates rise (that begins soon).

Or, imagine how much prices in Oak Bay could have fallen if 5-year mortgage rates had been rising since 2010 instead of falling (second chart).

Rising rates in the US will affect bond yields and take Canadian fixed-term mortgage rates along for the ride, as Garth explained yesterday. It is estimated that rates will rise approximately 1% per year.

5-year mortgage rates in Canada will begin to rise long before the BoC begins to hike its rate.

Prices across Greater Victoria will fall as rates rise. Falling prices will be a natural reaction to the increasing cost of borrowing money over the next number of years.

Victoria’s housing bubble is comparable in size to some of the biggest of the 2006 US housing bubble.

All housing bubbles deflate. There have been 48 national housing bubbles throughout the world over the past 40 years (second chart). In each case house prices fell until the bubble deflated. Note that it isn’t uncommon for prices to overcorrect.

Canada’s housing bubble is much larger than the 2006 US housing bubble. More on that in another post.

#4 bdy sktrn on 06.23.15 at 5:02 pm

#1 TurnerNation on 06.23.15 at 4:54 pm
Bull’s back.
———————–
def an upside break but is it just a Hellenic hallucination?

#5 LP on 06.23.15 at 5:03 pm

To the question, “Why do you rent and not buy?”

Reply, “Why do you need to know?”

Or to the question, “Do you rent or did you buy?”

Reply, “Why do you need to know?”

Parents, friends, co-workers, neighbours, (and census takers – who knew?) none of them are entitled to know your personal business.

#6 None on 06.23.15 at 5:04 pm

because of crap like this:

http://business.financialpost.com/personal-finance/young-money/eternal-truth-of-personal-finance-no-4-dont-be-a-renter

#7 Victoria Real Estate Update on 06.23.15 at 5:10 pm

Looking at the big picture, Victoria’s housing market has dramatically underperformed since mid-2008 compared to many other Canadian markets.

. . . . . . . . . . House Prices. . . . . . . . . . .
Percent Increase/Decrease Since June 2008
. . . . . . (Victoria = * Hamilton = x). . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
+35%. . . . . . . . . . . . . . . . . . . . . . x . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
+30%. . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
+25% . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
+20%. . . . . . . . . . . . . .x . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
+15%. . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
+10%. . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
+ 5%. . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
..0%. . . .x* . . . . . . . . . *. . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . .*. .
– 5% . . . . . . . . . . . . . . . . . . . . . . . . . .
———————————————————————–
. . . . . . June. . . . . . . .August. . . . . May. .
. . . . . . 2008. . . . . . . .2012. . . . . . 2015. .

(source: Teranet’s index)

In 2009, emergency interest rates were brought in. In terms of housing market stimulus, there is nothing even remotely as powerful.

With all of that price-boosting power behind Canada’s housing market, prices should have skyrocketed in every major market since 2008-09.

Prices in Hamilton certainly did. But that shouldn‘t be surprising. With all of that powerful stimulus pushing from below since 2009, should we have expected anything less than a 35% price gain in 7 years? No, not at all. Under these extreme and unusual circumstances, 35% doesn’t sound extraordinary at all. In fact, it seems quite ordinary.

Victoria’s housing market has reacted negatively to the unusual circumstances of emergency interest rates since 2009. We must conclude that its – 2.6% price decline over 7 years is extremely disappointing. Victoria’s housing market simply failed to take advantage of this once-in-a-century-opportunity.

Imagine how low prices in Victoria would be today if rates hadn’t been suddenly slashed in 2009 from near-normal to emergency levels. We could easily be looking at a 35% price decline.

With mortgage rates set to rise soon, prices in Victoria will continue downward to depths that few could have imagined.

Emergency rates have simply delayed the inevitable.

Going forward, the big picture for Victoria real estate will be much lower prices as rates rise.

#8 bdy sktrn on 06.23.15 at 5:15 pm

“All housing bubbles deflate”
————
Other than chernobyl and fukushime where can i buy some land at the 1920’s bubble prices?

They ALL re-inflate eventually. Every one. Hence the saying… (self censored!)

the #1 rule of personal finance : Spend less than you earn.
Follow rule #1 and you can buy a house. Pretty simple.

#9 james on 06.23.15 at 5:16 pm

You’ve hit on part of the reason for the mania – namely, leverage.

Housing allows people with no money to get 95-100% leverage (courtesy of down payment loans, etc). Try that with your brokerage.

The average Canadian has almost nothing saved, so the only way they can hope to build an investment is to buy a house.

As you say, leverage cuts both ways. In a boom, it looks great. In a bust, things turn south pretty quickly.

“if you ever need mobility, flexibility, freedom and options in your life, this is it”

Also a good point. I’m late 30’s, and a home owner. I miss the ability to simply pull up and relocate. Geneva, NYC, Medellin and Santiago are looking interesting, but to move there I have to sell my house.

#10 bdy sktrn on 06.23.15 at 5:17 pm

#6 None on 06.23.15 at 5:04 pm
because of crap like this:
———————————–
The No.1 eternal truth of personal finance: Live below your means

is this crap too?

#11 bdy sktrn on 06.23.15 at 5:20 pm

ok, who comments before even reading the blog?!?!!!

fess up!

————————-
(I ALWAYS go back and read it soon after)

#12 Slim Sal on 06.23.15 at 5:21 pm

“So it’s probably the worst time since Leave it To Beaver to buy a house.”

Ward and June Cleaver are multimillionaires today for having bought the dumpy little tear down on Vancouver’s distant working class suburbs now called ‘The Westside’ . They made out like bandits in fact.

Dow Theory suggests that you should not put all your eggs in one basket….or avoid risk assets.

“Because houses always go up.”

Is a historic fact since although houses do not always go up every year or every month…they always go up over time. But don’t confuse condominiums in this….a condo is a depreciating asset with no residual value….only land holds permanent value.

“Over the past decade, the TSX has outpaced Toronto condos in actual price appreciation.”

True….but stock pickers are substantially wealthier for choosing to buy high quality individual equities than passive investors. If it were not the case that stock picking is a superior investment strategy…then it would be the norm that we would all be worth exactly the same amount after similar times in the market.

The fact is that you will never get rich accepting 5% returns. There is no free lunch in investing…the stock market is not a social workers office or a place to guarantee wealth distribution… wealth is only accumulated through risk, theft, crime and inheritance….or time in the civil service.

#13 West Coast on 06.23.15 at 5:31 pm

My answer ‘To do you rent or own?’ is: I own a nice apartment in a European city which I can’t sell at the moment and I rent a beautiful apartment in Vancouver which I could never afford to buy. Plus my landlord subsidizes me to the tune of over $1,000 a month.
That usually shuts them up.

#14 cramar on 06.23.15 at 5:37 pm

All true Garth, but you did not mention the reason most people in the boomer generation bought their homes. It was NOT for speculation, or even a long-term investment. It was to OWN their own shelter! Home ownership was the reason. It never remotely entered into my mind anything about investment potential over time. It was solely to own your own dwelling. I think this is fundamental with humans—wanting to own your own shelter. Just as fundamental as wanting to get married and starting a family. Sadly home ownership for the sake of home ownership seems lost today.

If it costs 20%-50% more than renting, to me it is worth it. If it costs double that of renting, that is another matter.

If someone wants to own their own home, and can afford it, that is great. But when the primary motivation is asset appreciation, the motivation is wrong. Especially with massive leveraging of debt to do so. The risk is extreme with peak housing prices.

#15 Bangkok Bob on 06.23.15 at 5:39 pm

You think we have a property mania?

http://www.straitstimes.com/news/asia/australianew-zealand/story/parking-lot-sydney-sold-123900-20150623

#16 Apocalypse2015 on 06.23.15 at 5:42 pm

The apocalypse is much, much closer than I had thought.

http://www.thestar.com/entertainment/2015/06/23/chad-kroeger-surgery-forces-nickelback-to-cancel-north-american-tour.html

So little to hope for now :(

(See, I DO have a sense of humour after all!)

#17 the Jaguar on 06.23.15 at 5:47 pm

Never mind the financial side. How about the peace of mind? Being a condo owner means that small worry in the back of your mind that you will get hit with a special assessment due to building envelope issues, leaking pipes, or god knows what other calamity. Maybe one of the windows in your glass box pops out and kills an innocent passerby on the street. You can plug a lot of dollars into houses, too. Furnace goes, hot water tank, flood in, flood out, hail storm pummels your roof and raises your insurance premiums, etc. The fun never stops. There is a lot of peace of mind that comes with the freedom from property ownership.

#18 Vic on 06.23.15 at 5:48 pm

Have noticed this attitude as well. You are thought of as lower class if you rent. Have had long discussions with friends demonstrating why renting makes more financial sense, and they agree. They then say something along the lines of “only those kinds of people rent, where as proper middle class people own”. This attitude seems often overlooked in discussions of renting vs owning.

#19 Mark on 06.23.15 at 5:51 pm

“True….but stock pickers are substantially wealthier for choosing to buy high quality individual equities than passive investors.”

Rarely. Most “stock pickers” underperform the market because they get caught up in their own biases, become chronically under-diversified, and fail to manage their transactional expenses including taxation.

“There is no free lunch in investing…”

There are plenty of ‘free lunches’. Diversification. Asset allocation. Rebalancing.

then it would be the norm that we would all be worth exactly the same amount after similar times in the market.

Typically the stock pickers are, on average, worth less over the long term than those who take a passive approach with asset allocation, rebalancing, and low costs.

On occasion there are some slam dunk assets to either own or avoid. But most can do fairly well simply by taking a passive approach which outperforms most who take a more active approach.

#20 JSS on 06.23.15 at 5:56 pm

Pipeline company TransCanada cuts 185 jobs

http://ca.reuters.com/article/businessNews/idCAKBN0P32A220150623

#21 Randy Randerson on 06.23.15 at 5:57 pm

Mortgage is basically renting money from the bank. Whether someone rents or buy with a mortgage, he is throwing money away in both cases. As a rentier, I like it when he throws money at the bank instead of an amateur landlord, because it fattens up my HXT holdings.

#22 Doug in London on 06.23.15 at 6:05 pm

Yes, Evan SHOULD buy real estate, but in the form of REITs rather than a house. When (emphasis on when, and not if) interest rates come back to more normal values he, and those who think he is scum will find out who really is scum. Hey, not only is tomorrow St. Jean Baptiste Day (don’t forget to wear some blue), but in a week I will get my monthly distribution from CAP REIT, the real estate I own.

#23 Mark on 06.23.15 at 6:08 pm

““Over the past decade, the TSX has outpaced Toronto condos in actual price appreciation.””

To be fair in making a comparison between the stock market and the housing market, the imputed or actual net rent should also be taken into consideration.

What’s the actual dividend of the TSX averaged? 2% over the interval? Actual net rental yields have been higher.

#24 Freedom First on 06.23.15 at 6:13 pm

Nice to be able to come here for my daily dose of financial sanity. And have a laugh at the same time.

Yes. To be financially and physically healthy and stable takes discipline. But that is only half of the challenge. Look around. We are living in a physically unhealthy and obese world that is full of debt ridden financial illiterates.

I work from home, have no boss or co-workers, and limit my face to face interactions to people who are balanced and fun. Includes Business and Pleasure. I always place my Freedom First.

#25 PM on 06.23.15 at 6:18 pm

What about rent prices? They increase with or above inflation too. Surely investing in a house to hedge against long term housing costs is a smart move at some price point.

Post US-crash that point happened. Those that bought in 2009-2010 are laughing. Will that happen here?

#26 PM on 06.23.15 at 6:22 pm

There is a lot of peace of mind that comes with the freedom from property ownership.

You’re only telling one side of the story. There’s peace of mind from ownership that you can’t be kicked out because the owner wants to move in, sell or renovate. As well that you’re free to modify the place to your tastes (paint, finishing etc).

Financial benefits go one way. Touch-feelies like ‘peace of mind’ go both ways.

#27 Mark on 06.23.15 at 6:25 pm

New Ross Kay interview on Howestreet.com:

http://talkdigitalnetwork.com/2015/06/canadian-real-estate-bubble-nearly-40/

Interesting discussion of Australia’s measures in the RE market with respect to “foreigners” and a comparison to Canada.

#28 Butch on 06.23.15 at 6:30 pm

Interest rates bouncing of bottom? Didn’t we head that last year right before they fell another quarter point?

It’s different this time? Isn’t that what everyone keeps saying?

#29 New guy on 06.23.15 at 6:33 pm

DELETED

#30 If you're so smart, why aren't you (house) rich? on 06.23.15 at 6:33 pm

It’s sad… I agree with Garth…

BUT

It seems that real-estate goes up (magic number), 8 out of 10 times. (e.g. 8 of the last 10 years).

Add in leverage – that 5% real-estate gain on e.g. 50K (25% down) on 250K home = gain of 12.5K.
12.5/50 = 25% gain on real-estate vs 7% on balanced portfolio.

Gamble yes. And even 2 out of 10 times, you get creamed. But hey, that’s why we have the government to protect jobs and pump stimulus and create low interest rates.

In short, I feel the stupid people are making house prices go up (not Foreigners)… and I say it is sad because if stupid people are getting (house) rich and we are not, maybe I’m the stupid one. (That means Garth too)

#31 Smoking Man on 06.23.15 at 6:34 pm

Ha, Herdonomics 101

Be saying it for years, this madness driven by peer pressure.

Now Evan, if you want respect, and don’t want to be considered a low life scum bag..

Buy a House or live in shame…..lol

#32 Rainclouds on 06.23.15 at 6:37 pm

some dude running about my 9TH floor a tad frantic. I ask what’s up?

Any common balconies up her? Yup other side Bro. Why?

Water Leak! …………..

WTF? hasn’t rained in a month! Building in Yaletown. built 2008. Probably nothing, OR …… blue tarps for 2 yrs.

Me not care, RENTING!

#33 North Burnaby on 06.23.15 at 6:44 pm

For those pre-sale condo naysayers, the secret to making money investing in pre-sale condos is to get in the very early stage of the sale phases.

#34 the Jaguar on 06.23.15 at 6:50 pm

#26. pm:
You make a very good point. I cannot disagree having been in both circumstances. I guess it depends on your short and long terms goals and what level of freedom you want. I will say that at least when renting you can make a more immediate and less costly exit when things get unpleasant. Example: the annoying neighbor who runs a band saw in his garage all summer long or something similar. You can’t exit that scenario as cost effectively as one can when renting. If he complies with bylaws you are stuck. Paint your walls till the cows come home, but you still have to endure the jerk neighbor with little control except a costly exit. No insult intended to those who like their garage construction projects, but it can be annoying to sit in the backyard hoping for peace and quiet.

#35 april on 06.23.15 at 6:59 pm

Why on earth do people care what others think about their decision to rent. You really want to buy so then you can blame it on the pressure from others.

#36 Musty Basement Dweller on 06.23.15 at 7:09 pm

“The longer homes appreciate the lonelier and lonelier renting seems to become. ..(Ev, blog subject)

Ev it is amazing how many people have bought in to the false perception that there is so much appreciation out there in the housing world in cities in Canada. Are prices really appreciating that much?

I’ve found that in many property types and areas, even in Vancouver, that perception, generated by relentless real estate agent cartels, is total BS.

Do some solid research on your own, for typical houses you would be interested in if you are an average buyer..and I believe you will be surprised.

#37 Indie Chick on 06.23.15 at 7:11 pm

Yup. I know the feeling well. My bf and I rent an awesome house in Toronto and I am scorned for it constantly. My Mom is too ashamed to visit! So sad. It’s difficult to go against the tide but staying humble is more rewarding than faking it. At least in my debt- free world, I know all is well.

#38 Andrewski on 06.23.15 at 7:17 pm

My 88 years young Dad always drilled in to my head to always, live below your means! No shame in renting where you live, just a shame where family guilts there own that being a renter is somehow wrong! Living below our means, means we can afford 1 month touring through Europe this September, yay.

#39 ed on 06.23.15 at 7:23 pm

RE #6 None

Look at the comment section “”Whazzup” is the shrill’s shrill.

#40 retired Boomer - WI on 06.23.15 at 7:25 pm

Garth old boy-

Love HAS a bad name in many quarters. Where have you been? Stats show almost HALF of marriages fail, at least in the US, and the No. #1 cause money problems.

That may well be over leverage on a house, credit card debt, car debt, or you might just have selected the spouse from hell. Who knows?

I think those married who are on the same page with their money do better over time than those who are not.

Kids can turn out to be a blessing, or a curse, and we as parents have only so much control over that.

I firmly believe children are the BEST excuse for birth control, but that is only MY opinion!

#41 raisemyrent on 06.23.15 at 7:27 pm

as soon as people start talking about peace of mind, shelter, etc, they’re into emotion la-la-land, and there is no point arguing with them. go back up emotions with cash and debt and have a fun life. you know who you are (or not).

#8 bdy sktrn on 06.23.15 at 5:15 pm
“All housing bubbles deflate”
————
Other than chernobyl and fukushime where can i buy some land at the 1920’s bubble prices?

They ALL re-inflate eventually. Every one. Hence the saying… (self censored!)

the #1 rule of personal finance : Spend less than you earn.
Follow rule #1 and you can buy a house. Pretty simple.
****
they do teach that land does not depreciate in finance. how that turned into real estate always goes up beats me. real estate usually does not mean land here. that it does not depreciate means that it keeps its time value of money as years go by. if all of that to you means real estate goes up, you’re simply wrong.

#12 Slim Sal on 06.23.15 at 5:21 pm

historic fact that real estate goes up? sounds like a generalisation, not a fact. schiller having won the nobel prize for saying it actually doesn’t? fact.

#42 jess on 06.23.15 at 7:36 pm

Your blog title today fits this story to the t

“Amanda Thomas” and “Jeff Stewart,” her male counterpart, are the latest advancement in charity telemarketing.

But they aren’t real people.

They are computer-generated pitchmen designed to seem lifelike on the phone without the messiness of actual humans talking.
http://www.tampabay.com/news/these-telemarketers-never-stray-from-the-script/2152303

Corporations for Character, a telemarketing firm in Murray, Utah, started developing the software now known as the “Echo System” in 2005. Chief executive Forrest S. Baker III said he was looking for a way to increase efficiency because so little money raised by telemarketers actually goes to charity.
========

Part 1: Dirty secrets of the worst charities
Jun 06, 2013
Credit: Douglas R. Clifford / Tampa Bay Times

America’s 50 worst charities rake in nearly $1 billion for corporate fundraisers

By Kris Hundley and Kendall Taggart, Times/CIR special report

Thursday, June 6, 2013 1:30pm

yearlong investigation by the Tampa Bay Times and The Center for Investigative Reporting has listed the of 50 worst charities
granting wishes for whom?

Among the findings:

• The 50 worst charities in America devote less than 4 percent of donations raised to direct cash aid. Some charities give even less. Over a decade, one diabetes charity raised nearly $14 million and gave about $10,000 to patients. Six spent nothing at all on direct cash aid.

• Even as they plead for financial support, operators at many of the 50 worst charities have lied to donors about where their money goes, taken multiple salaries, secretly paid themselves consulting fees or arranged fundraising contracts with friends. One cancer charity paid a company owned by the president’s son nearly $18 million over eight years to solicit funds. A medical charity paid its biggest research grant to its president’s own for-profit company…
http://www.tampabay.com/topics/specials/worst-charities1.page

#43 retired Boomer - WI on 06.23.15 at 7:40 pm

Yes, there IS a time to purchase a home. Yes, you D”O need money at least 20% down payment, and think on a 15 year term not 30.

Yes, things DO change. Interest rates will rise closer to normal -so they say. Plan on a payment at a 5% rare not current rates. Yes, prices DO go down, as well as UP. Since many under 30 might never have seen this, just trust the old goat here.

If you can’t meet the above criteria with your spouse (not shorter term rental please) you probably should rent.

#44 Victoria Real Estate Update on 06.23.15 at 7:40 pm

# bdy sktrn

“They (housing bubbles) ALL re-inflate eventually”

Again in typical realtor fashion you say something without any proof.

What do you think about Japan, for example? House prices peaked there around 25 years ago and there has been no recovery, despite emergency level interest rates for decades.

Millions of American families continue to face the harsh economic consequences of buying at the wrong time.

There is no safety in buying near the peak of any housing bubble. Especially one as big as Canada’s which has taken 15 years to inflate.

#45 JustMe on 06.23.15 at 7:45 pm

http://www.theprovince.com/news/vancouver/Will+Vancouver+real+estate+bubble+burst/11160850/story.html

American investors betting on a Vancouver property values crash are likely to lose because Vancouver is a special market thriving on international demand.

It’s different here.

#46 saskatoon on 06.23.15 at 7:48 pm

this one’s for evan:

https://www.youtube.com/watch?v=KrZHPOeOxQQ

#47 Mark on 06.23.15 at 7:50 pm

“Ev it is amazing how many people have bought in to the false perception that there is so much appreciation out there in the housing world in cities in Canada. Are prices really appreciating that much?”

They have in the past decade, until recently. The question buyers need to ask themselves is can the same repeat itself for the next decade? How can a bull market in interest rate sensitive assets possibly continue if interest rates are no longer falling with any level of significance and may even start to rise?

As Ross Kay points out in that interview link I posted, at least in the 1990s RE bear market, there was still a demographic tailwind to be had in the Canadian economy, as well as the obvious interest rate tailwind which brought us to where we are today. At the very least, those factors are not going to be in the RE market’s favour in the future.

#48 devore on 06.23.15 at 7:56 pm

And what about leverage? You can buy a $300,000 condo with a credit-card down payment, which seriously amplifies the return on your initial investment. But this also amplifies potential losses and exaggerates risk.

And that would be great, if you never had to pour massive amounts of money into equity repayment, and debt service costs were low to zero. But that’s not the case. Amortizing debt has to be repaid. There’s that pesky debt service cost, leverage is not free. By the time you’re done paying off the mortgage, interest charges add on equivalent of the purchase price, and property taxes another couple dozen percent.

#49 crowdedelevatorfartz on 06.23.15 at 7:56 pm

@#34 The jaguar
“the annoying neighbor who runs a band saw in his garage all summer long or something similar. …”
++++++++++++++++++++++++++++++++++
I have a friend who works shift work and sleeps during the days.
EVERY Sat the neighbors would fire up the lawnmowers, whippersnippers, hedge trimmers, etc at 9am….
he went to his neighbors and politely asked if they could wait til at least noon before ruining his sleep…. FU was the general consensus.
So the next sunday night at 1am……he cut his lawn before he went to work…….
The following Sat……. no noise til noon.

#50 Frank Sential on 06.23.15 at 7:59 pm

I rent a house here with my family in Ajax for $1,300 a month utilities included. There is a okay backyard and is in a decent location.

The house would cost $2,300 a month if you add mortgage payments, property taxes, insurance, utilities, plus H.S.T. etc.

This does not include repairs and maintenance. I am taking that $1,000 a month and putting it in my RRSP and reinvesting the annual RRSP tax refund of $360 a month.

This $1,360 a month I invested for the last 6 years is now worth $112,774.

We had already originally $50,000 in RRSP’s which is now an additional $165,111.

We also have a non-registered $100,000 that we saved and invested at that time that is not tied up in a house which is worth $131,000.

Our TFSA’s are fully topped and are worth $92,000. We have no rush or itch to buy a house. Our TFSA’s will be topped up at the $11,000 yearly.

We have no debt at all. At this rate, we will have have $1,350,000 in 15 years and $5,000,000 in 35 years.

#51 Mike T. on 06.23.15 at 8:00 pm

‘There is a lot of peace of mind that comes with the freedom from property ownership.’

hope you like your neighbours

check out this fun story about Kelowna’s very own mushroom beach

lots of ‘peace of mind’ in this neighbourhood

http://www.castanet.net/news/Letters/142769/Mushroom-Beach

#52 Llewelyn on 06.23.15 at 8:04 pm

Every player in the Canadian housing industry would like to get paid as soon as possible or receive a guaranteed cash flow. This is why a derivative market based on guaranteed mortgages became so popular. All risk is transferred to the purchaser of the homes.

The situation for rental properties and REITS is significantly different since cash flow is based on leases that generally do not exceed one year and are not guaranteed. As a result dividends paid by REITS must reflect that additional risk exists. Sixty years ago the Federal government guaranteed fair returns realized on the investment in affordable rental properties. No such program exists today.

Federal governments, in Canada and the USA, have promoted home ownership because mortgage backed securities have become linked to the sale of bonds necessary to increase money supply and to stimulate economic growth. The sad thing is that all the players using home ownership to generate revenue have expressed only a passing interest in the long-term debt obligations being assumed by home owners.

It has been assumed that home ownership represents a good result for all. The problem is that the homeowners have become the only players with skin in the game. Now that this equity transfer model exists I hope that more effort will be devoted to providing this source of wealth with the means to honour their debt obligations.

#53 Nicolas on 06.23.15 at 8:15 pm

Renter in Montreal. Pretty much alone in my group of friends. Have a desirable job so I’m not labeled as a loser, but I clearly am the weird cousin people don’t really understand. I lived through the California bubble in 2006-2007. Same feeling. Believe me, when real estate starts disappointing, this renters/homeowners thing evaporates faster than imaginary equity.

#54 Interstellar Old Yeller on 06.23.15 at 8:18 pm

Finally! A letter from someone smart!

Evan: you need some new friends. Congrats on the nice, new rental.

#55 Scumop on 06.23.15 at 8:20 pm

#26 PM – have to agree we got a house so we are independent of landlord whims/rules, can (and have) modified it, and filled it with animals.

There was no financial/investment consideration. We are just slaves to the 4-leggers.

One day we will vacuum out all the hair, sell, and go rent because that is what will make sense to do when the animals die of old age. Lower cost and still can get a fast internet connection, so whats not to like about renting if you can?

Maybe we’ll still have a cat.

#56 Chaddywack on 06.23.15 at 8:21 pm

My gf is a doctor and I work for a quasi-gov’t department. We’re one of the only grandfathered rentals in our building.

Our landlord is awesome. If there’s a problem he fixes it right away and we get to live the west side Vancouver lifestyle at a fraction of the cost all while saving and investing away!

I get a feeling a lot of people in our building don’t like us being here after all “we’re just renters” :)

#57 JustMe on 06.23.15 at 8:23 pm

http://www.ibtimes.com/five-signs-japans-long-dead-real-estate-market-has-finally-come-back-life-1546719

Japan’s real estate prices have been falling for nearly 25 years.

average property prices are still 71 percent below their peak in 1991

#58 sideline sitter on 06.23.15 at 8:34 pm

PM #25

Rent increases? Sure, it happens… what about increases in Hydro, Property Taxes, water, garbage fees, and repair costs?

My rent increased 1.8% this year… chump change

#59 omg the original on 06.23.15 at 8:38 pm

HEADLINES IN THE US SCREAMING AVERAGE HOUSING PRICES BACK TO NEAR PRE CRASH LEVELS.

So more proof that Canadian housing is not so unreasonably priced, RIGHT?

After all the US is getting back to the LOFTY levels of 2006 after a big correction. Canada just played catch-up for the past few years and now we and the US are VALUED just about right. Sounds compelling, eh.

Just a few points on this idea.

1) Comparable US cities to Canada’s most bloated markets (TO, YVR) are 30 to 50% less. (And no, NYC is not comparable to TO and SF Bay area is not comparable to YVR.) Let’s not even talk about comparable to Canada’s MINI BUBBLE cities such as S’toon and Cowtown – well let talk about it – in some cases comparables US cities are 1/3 to 1/2 the cost of our MINI BUBs.

2) The Case Shiller index still shows US values to be at the long-run high end. So US prices still seem OVERVALUED if you are looking at a house as a long-term investment.

3) Americans and American regulators are going to be GUN SHY of another housing bubble. House prices returning to their bubble level and frothiness in the market will be noticed by regulators. Whereas pre crash it was easy money due to SHADY mortgages today its easy money due to ARTIFICIALLY low interest rates. An over ROBUST housing market, just adds more fire to the FED to move rates HIGHER.

Average U.S. peices are still 17% below peak levels. — Garth

#60 Cici on 06.23.15 at 8:52 pm

“Because dino parents think it’s 1986 again. And they give love a bad name.”

So witty Garth ;-)

#61 Obvious Truth on 06.23.15 at 8:54 pm

Evan. I’ve said this many times. You just can’t talk to people about this kind of stuff.

Math and investing gets people’s back up. They feel you are putting them down. Like you think you are so smart. Schoolyard basics.

So as a member of the herd they make fun of you. Right or wrong.

These are largely people who’s biggest question is, ‘how much can I get on a line of credit?’

You’re wasting your breath. Just play stupid. Tell them how great they are doing.

And Go do fun stuff with your wife.

I used to watch top gear a lot years ago. Try to tell that guy he’s wrong. Waste of time.

#62 Dwilly on 06.23.15 at 8:57 pm

So if you do the math on this (and I have), using fair assumptions (like a 6% after tax return on investments, perhaps 3% annual upkeep on an owned property, 2% annual increases on a rented one, and so on, you come to the conclusion that this is all based on price:rent ratio, and that it’s not cut and dry.

Less than 10 p:r and it’s pretty hard to see why you shouldn’t buy.
More than 20 p:r and it’s hard to argue against renting
But in between, it’s really not a slam dunk and could go either way if your assumptions change eve a little. Your investments return 5% rather than 6, for example. Or your rent increases 2.5% instead on 2%. Those small and completely plausible changes make anything in the 10-20 range just a guess.

For me, my suburban GTA house would market around 500 today I think. And to rent an equivalent property in the same area would be about 2000/mo at least, likely a bit more (and yes, I have looked). That’s a p:r just barely over 20, so not a clear slam dunk here.

#63 Nemesis on 06.23.15 at 8:58 pm

“Because dino parents think it’s 1986 again.” – HonGT

#F**k,ThatWasAVeryGoodYear… #10…

#Ferris:

https://youtu.be/UadgsrNyDCE

#Maverick:

https://youtu.be/KPxDoFbsvWA

#Chris:

https://youtu.be/Z3Wih7Q0DVs

#Ripley:

https://youtu.be/bTCaVjQ8nU4

#Seth:

https://youtu.be/bdB02IufaW0

#Frank:

https://youtu.be/z2G1Ht59cpM

#Gordie:

https://youtu.be/tX74H9IuYdM

#ProfessorTerguson:

https://youtu.be/0uqjznmTp80

#Andie:

https://youtu.be/nxHTPahkN6M

#Crocodile:

https://youtu.be/uYIe9o2jMSE

#64 Cici on 06.23.15 at 9:01 pm

#8 body sktrn

the #1 rule of personal finance : Spend less than you earn.Follow rule #1 and you can buy a house.

___________________________________________

Yup, part of the problem is that a large majority of recent buyers do not spend less than they earn, but have bought houses.,,making those of us with savings reticent to pile them into the dubiously frothy unknown.

#65 Obvious Truth on 06.23.15 at 9:03 pm

It’s like a don’t own a mortgage DOAM support group tonight.

Go doamers!

#66 X on 06.23.15 at 9:03 pm

I have to wonder when someone warns me of throwing rent money away, when they lease their BMW or Mercedes, just so that they can tell their friends they have one.

#67 The American on 06.23.15 at 9:09 pm

At #59: omg the original, you failed several obvious points that distinctly differentiate the American market from the Canadian market. These points are as follows:

1) U.S. prices are not across the board where the were at peak. The U.S. is still anywhere from 15%-18% below peak prices.
2) U.S. jobs reports are far outpacing Canada for the past 18 running months
3) Canadian and the petrol currency are suffering, and layoffs particular to the energy segments within Canada are clearly happening (as well as manufacturing, IT, etc.)
4) The U.S. no longer has a glut of inventory and days on market outstanding as it did pre-peak. Canada, however, has a VERY CLEAR glut of inventory in cities, especially Vancouver and Toronto. This is evidenced by the http://www.realtor.ca website itself in cities that are far smaller than their American “like-cities,” yet the Canadian cities have nearly 3-4 times the inventory. Of course, this does not even include developer hold back
5) Being in Toronto over the past several days, I can assert with absolute confidence the city is in a preposterous bubble of great proportions, having already lived through the U.S. bubble. It is very sad to see.

Next up, just some personal observations and experiences as an American in Toronto.

#68 Arshes76 on 06.23.15 at 9:18 pm

Sisters friend just bought a condo, moved in the last month or so. Got a $12,000 assessment this week. He’s not even in his 30’s yet.

#69 Squirrel meat on 06.23.15 at 9:18 pm

Didn’t need to be reminded of Bon Jovi

Most are just doing this

https://www.youtube.com/watch?v=lDK9QqIzhwk

#70 filthy lowlife renter on 06.23.15 at 9:27 pm

#22 I live in a Cap Reit building and it made me consider buying their stock. The management is professional and problems are addressed quickly. I don’t miss owning a condo but the appreciation from my last one was nice.

Two guys I know own low end condos in Surrey and can’t dump them for love or money. A retired friend bought one for 250k fifteen years ago and it just went onto the market for 780k so please understand where the babyboomer thinking comes from. The sad part is the house that he sold 15 years ago to get the 250k is now going for over 1.5 million. You can’t win them all.

#71 Squirrel meat on 06.23.15 at 9:30 pm

#63 Nemesis on 06.23.15 at 8:58 pm

“Because dino parents think it’s 1986 again.” – HonGT

Fun links!

’86 a great year indeed

Blue Velvet.. soo good. The candy-colored clown they call the Sandman.

https://www.youtube.com/watch?v=GPIz9pD3Zm8

#72 Todd on 06.23.15 at 9:31 pm

Met up with my cousin that I hadn’t seen in years. The topic of housing came up and when I said we were renting his response was, “Oh so I guess that means you’re basically homeless.”

#73 New guy on 06.23.15 at 9:32 pm

DELETED

#74 Andrew Woburn on 06.23.15 at 9:45 pm

#78 JP Morgan Quote on 06.21.15 at 9:22 pm
“Gold Is Money, Everything Else Is Credit” is attributed to JP Morgan himself while testifying in front of Congress back in 1912 shortly before his death.
==================

When JP said that, gold really was money. The US was on the gold standard and federal currency was essentially a certificate redeemable in gold. The Treasury issued gold coins as legal tender.

His comment recognized that, in the hierarchy of types of money then in use, gold was the “high-powered” money at the top of the pyramid. When you got gold, you had been unconditionally paid in full. When you got bank notes or bank deposits, you were receiving a promise to pay gold and accepting some risk you might not get it.

The people who are all dewy-eyed about the gold standard don’t know much history. One of its really weak points was that people, especially foreigners, might show up to the Treasury and demand gold right now. Either you gave it to them or you weren’t really on the gold standard. The Bank of England nearly ran out of gold in a financial panic in 1837 and had to be saved by a quick 2 million livres of gold borrowed from France.

The wondrously named Salmon P. Chase was Secretary of the Treasury as the US was sliding into the Civil War. He persuaded New York bankers to lend the government $50 million, an incredible sum in those days. When the paperwork was done, he informed the bankers that he wanted the full amount paid in gold. Now.

They had no choice, they were on the gold standard. He carted off practically all the gold in the US banking system to a fort for safekeeping. The US had to go off the gold standard because the banks could no longer deliver. Nevertheless the slippery Salmon probably won the war for the Union. The US was not yet a manufacturing power so the North needed lots of gold to buy war supplies from Europeans who wouldn’t take paper dollars. The South had to barter cotton for guns, sort of hanging by a thread.

Imagine the US on the gold standard today. Imagine
China had accumulated USD $4 trillion in reserves. Imagine what happens next.

The most gold the US government has ever owned is about 20,000 tonnes worth around $800 billion today. If we believe official accounts, the US now holds reserves amounting to $350 billion, sort of a rounding error in the US budget. All the gold ever mined amounts to 180,000 tonnes or less than $7 trillion. That’s still a real number, but it’s struggling to keep up these days.

#75 Linda on 06.23.15 at 10:00 pm

When people think renter they tend to categorize them as people who can’t afford a home of their own. Let us be honest – the vast majority of renters are usually people who have little in the way of financial assets & are either young people starting out or older people who either can’t or won’t set money aside for their future.

Yes, lots of blog dogs stating they are saving money like crazy, building financial assets etc. while resisting the herd mentality to buy. Out of how many renters as a whole? Would that even be 1% of the renter population?

When I look back to when my husband & I were renting, we were not saving tons of money or building up portfolios. Yes, we were young & starting out, but we didn’t really start to save or build financial assets until after we purchased a house. I don’t know whether this is true for other home buyers or not – certainly the very high house prices today would make it close to impossible to set aside any substantial sum unless you were earning mega-dollars & even then it might be difficult. But for whatever reason, when we were renting we never seemed to have that much money left over at the end of the month, though we had no debt either.

#76 Nemesis on 06.23.15 at 10:01 pm

#Does88Count?… #JustForFun… #AndEducation…

[WSJ] – Hotel Chelsea, Storied Haunt of Dylan and Burroughs, Becomes Wall Street Money Pit

…”New York’s Hotel Chelsea, the bohemian enclave that has hosted Bob Dylan, Arthur Miller and William S. Burroughs over the years, is becoming a money pit for Wall Street.

The redevelopment of the iconic property on Manhattan’s West 23rd Street is running at least a year behind schedule, is over budget and has been the source of disagreements between its owners over how to position the hotel and how much to spend on upgrades.

The owners include William Ackman, founder and chief executive of Pershing Square Capital Management LP, Leucadia National Corp. Chairman Joseph Steinberg and real-estate investment firm Wheelock Street Capital, which joined forces in 2013 to take control of the property, according to people familiar with the matter.”…

http://www.wsj.com/articles/hotel-chelsea-upgrade-hits-a-snag-1435077980

[NoteToGT: You might well imagine how deep the hurt… being MIA in that piece’s first para… Never mind – & don’t be too impressed… after all, I had to settle for the SidVicious’Suite’… if the pattern distribution was any indication. BloodyShame about the housekeeping, lovely ironwork in the stairwells, though.]

#77 Centurion on 06.23.15 at 10:07 pm

Great entry today. Also, what a coincidence that something like this was posted today, since on my Facebook a friend and her boyfriend just purchased a new house today. She wrote that she’s now “officially a home owner.”

Of course, they took a picture of themselves smiling; a second picture showed the kitchen’s white granite counters and backsplash. Oh, and the comments? Lots of “Congrats” as well as one saying “you really are a big girl now.”

Unfortunately, they will be in for a rude awakening the future.

#78 Bottoms_Up on 06.23.15 at 10:10 pm

Garth this post is a bit of a generalization. Certainly renting can make sense in markets such as Vancouver and Toronto. But what about markets where rent is high? For example, a decent townhouse in the suburbs of Ottawa will rent for $1500 but can be bought for under $300k. Ten years in this place and you’re in it for 180k in rent. So again the choice really comes down to the individual and all the circumstances in their life.

#79 The American on 06.23.15 at 10:18 pm

As for my experience in Toronto over the past several days, I will share the following. My dear friend who lives in Toronto has shown me what feels like nearly every square inch of the city, barring Leslieville. Seriously, I believe you’d be hard-pressed to ask if I’ve not seen a specific neighborhood in the city.

As a whole, I’ve enjoyed Toronto VERY much, especially when force-ranked against Vancouver. Toronto clearly has much more going for it as an economic engine is concerned, arts appreciation, and street energy. Additionally, I might add that the people appeared more inviting, talkative, open, and welcoming as a whole. Food? Well, Canadians always rave about Vancouver, but Toronto has it beat without a question. In Toronto, I can find *real* food of all likings at nearly every price point, and it is all quite delicious. Those are only my general observations. There is certainly be more to share should anyone care to know more.

Some of my expereinces:
– Bette Midler at Rogers Arena
– Attending Nelly Furtado New York Times Talk Interview at the Laminato Festival
– Attending the Contemporary Colors show, brain child of David Byrne (interesting to say the very least)
– Strolling through the Italian festival through Little Italy, while walking what felt like 50 kilometers to find our way to eat some FANTASTIC BBQ at Electric Mud BBQ (kids, I’m from Oklahoma and Texas, and this was off the chart fantastic)
– Street scene kicking off the week before Pride. Serious energy. Free form boobs hanging out. Expected.
– Some intimate shopping in the Distillery Historic Distric (let me tell you, I am a clothes whore… GotStyle is a fantastic place with fresh casual styles and great prices, too!) Sales clerk was TOP NOTCH, knowledgable, friendly, complimentary, and knew the game. She was smart. I have her card, and I plan on using it in the future when I want a specific brand the store merchandises.
– The Waterfront… ummmmmm, meh. Put some money into it, already. Okay? It could be so much more, and it’s prime for the picking.
– Staging for Music Awards
– Rosedale (basically every uptown area in North America, but very nice still)
– Yorkville and it’s optimistic future vision of pedestrian shopping and eating
– And of course, a picture taken underneath Rob Ford’s office
– Staging for PanAm games

I could go on and on. But now for the experiences and personal interactions, and not in chronological order:
1) The Bay downtown… Bought some new sneakers (you call them runners). Was asked for my ID. Seattle was on my license. Mind you, the new Nordstrom store is being built in the other end of Eaton Place. Sales rep says, “Seattle?” I said, “Yes.” She responds, “Ohhhhh. Nordstrom?” I said, “No. I don’t work for them. But I patron them often. Level Four shopper here. Great service and mission statement.” She responds again in a concerned tone and pursed lips, “Hmmmmm. Nordstrom’s.” I then said to her, “You should consider working for them. They’re a fantastic company to work for, pay well above market, respect their employees, and recognize benefits. Also, you’re hot, and they’d love to have someone like you on their front line!” She says with a smile, “I plan on applying.”

2) Enjoying a drink or six on Church. Two guys in their mid 20s begin talking with us. One asks my dear friend if he “rented or owned?” while the other searched for ways to show me how much he knew I was American. To hear of this on both our accounts is absolutely concerning and frankly, very douchy. It’s also indicative of a culture in a greatly overheated market, entrenched in ultra-fresh, newly found money on the balance sheet. I asked the two what they did for a living, after having been asked about my profession. Their response? Kid A says he is a residential real estate agent. Kid B says he is a commercial real estate agent. Kid A begging to move to L.A. Kid B coked out of his mind and basically trying to get some. Both were trying way too hard. Dear friend command for us all to break away NOW. He then explains to me this is the mindset of many. I *truly* now understand what he’s been expressing to me for many, many months. Rent vs. own. Is this what society has become and is this how people gauge attractiveness in one another?

3) Cab driver from airport literally thanked me for tipping him an “American tip.” WTF? I left him like $10 as a tip. Standard in my neck of the woods. Anything less would raise eyebrows.

4) While at Contempary Colors at Rogers Arena. Friend sitting next to woman wearing trendy glasses who also notices my glasses. She asks over him to me, “I love your glasses! Are your glasses Theo?” I respond, “Why, yes, they are. How did you know?” She says she has a good eye. Then she explains while in France how she tried to buy a pair of frames of a sales person’s body, but the sales person took offense as the frames were not for sale. She then claimed to the French woman that she was an American as opposed to being a Canadian, apparently thinking this would somehow make it better or expected for the rude behavior. Anyway, my friend leans over to her and whispers to her that I too am an American. Her response? “Well, it’s payback for all you Americans putting Canadian flags on your luggage when you travel.” Just a little newsflash for everyone… Americans do not use Canadian flags while traveling, nor have they ever done this. Urban legend. Maybe like six, tops. My take on this? It’s bad enough she was so rude to another person while traveling in a foreign country. It’s worse she couldn’t own being Canadian in her poor behavior. I didn’t take offense, but instead felt sorry for her. Again, trying way too hard.

5) Electric Mud BBQ… Server was awesome. Friendly and witty. She had recently visited Seattle and The Gorge. We exchanged pleasantries. Good time.

6) Sushi after Bette Midler at Ki Modern Japanese Bar. Way too much drink and hilarity to discuss here. Server was a real trooper to wait on our table. She was super friendly, inquisitive, professional, and a conversationalist. Food was great too.

Prices more on some items. Prices lower on others. No point really, but the energy was so similar to what I remember of nearly a decade ago with everyone trying to outdo one another, one up their neighbor, or act as if they had a pot to piss in while drowning in the mortgage. All good times and fun and games, until it isn’t anymore. My dear friend? He’s no dummy. The punchline is he rents. And he can always lie if he wanted to take a shallow and sad person home for the night, without being tied to an asset that will plummet in value.

#80 Ret on 06.23.15 at 10:24 pm

#27 Mark on 06.23.15 at 6:25 pm Re: Ross Kay link
Thanks for the link.
I really got concerned about his comments on “investor” influence in an area as I live in a student housing area around McMaster where 40-65% of the homes are owned by investors.

If there was a RE decline, investors are well positioned to cut and run, leaving local residents who are non-investors, trapped in their houses and unable to move as their equity evaporates.

As more investors cash out and head to the exits, prices dramatically fall for those who are left behind in the neighbourhood.

These student areas are so used to investors showing up to pay inflated prices that home owners around here see the party as never ending. Those investors will leave just as quickly when they sense declining values and this area could slip into rapid decline very quickly. (Time to get out now IMHO.)

Also liked the ross Kay’s “10, $100,000 houses” piece on resale houses.

#81 Washed Up Lawyer on 06.23.15 at 10:26 pm

I can hardly wait to see the dogs unleashed on this:

http://www.theglobeandmail.com/report-on-business/economy/housing/chinese-envoy-says-lack-of-oversight-behind-vancouvers-house-price-crisis/article25085285/

Here in Alberta, we don’t cotton to regulation. Or at least we did not prior to the May 5 election.

#82 devore on 06.23.15 at 10:27 pm

#12 Slim Sal

Ward and June Cleaver are multimillionaires today for having bought the dumpy little tear down on Vancouver’s distant working class suburbs now called ‘The Westside’ . They made out like bandits in fact.

So did people who bought winning lottery tickets.

#83 Granite_counters on 06.23.15 at 10:28 pm

IMO I can not understand how people do not see Renting as a LUXURY! You can set a more fixed budget and enjoy the benefits of having a home. If you do well investing outside of owning a home, you can rent your whole life in nice places with no worry of a leaky roof. NO BRAINER

#84 devore on 06.23.15 at 10:35 pm

#34 the Jaguar

Paint your walls till the cows come home, but you still have to endure the jerk neighbor with little control except a costly exit.

Not sure where this nonsense came from. You can paint your walls all you like, renter or owner. When you move out, just paint them back something neutral. You think when you’re selling your house, full of hot pink and flourescent lime greens walls, that isn’t shaving 10s of thousands of $$$ from the perceived value? There’s an entire big money industry sprung up around dressing up houses for sale.

#85 Linda on 06.23.15 at 10:38 pm

Further to the renter vs. owner issue – came across a StatsCan survey dated 2013 which had some rather interesting data. As per the survey results, 26.2% of the homeowners surveyed paid more than 30% of their household income for shelter costs. However, 40.1% of the renters surveyed paid more than 30% of their income on shelter costs. Given the average paid by owners on mortgages vs. renters paying rent it seems to be fairly clear that the homeowners had a higher average household income to draw on. The owners mortgages were averaging over $1,500 per month vs. the renters rental costs of less than $950 per month on average – yet more renters than owners were spending more than 30% of their household income on shelter.

#86 Steve French on 06.23.15 at 10:42 pm

Well GT what’s your response to the The Chinese government’s top envoy in Vancouver ?

#87 GTA Observer on 06.23.15 at 10:42 pm

#75 Let us be honest – the vast majority of renters are usually people who have little in the way of financial assets & are either young people starting out or older people who either can’t or won’t set money aside for their future.

Maybe, but we’re getting to know a small but growing minority of older people who cashed out, rent, and see no reason to buy at this point. The proceeds get nicely invested and often allow for early retirement, and there’s flexibility to travel. If other people want to look down on that, so be it.

#88 DON on 06.23.15 at 10:45 pm

From CBC BC

Will the Vancouver real estate bubble burst?

Financial analysts (who are the financial analyst read below) say American investors betting on a Vancouver property values crash are likely to lose their shirts

By Sam Cooper, The Province June 23, 2015 6:06 PM

19

Province reporter Sam Cooper explains how hedge funds view the Vancouver real-estate market and where money managers are placing their bets.

Large Wall Street investors who made billions when the U.S. housing market collapsed in 2008 now are betting that real estate values in Vancouver will crash.

But local real estate professionals (these are the financial analysts??) believe the American investors are likely to lose their shirts betting against Vancouver property, which they described as a special market thriving on international demand.

The U.S. hedge fund investors, known as short-sellers, are betting against what they believe is a housing bubble in Vancouver, Toronto, Calgary and other Canadian cities.

They believe Canadians hold too much mortgage debt, and that Canadian banks, mortgage insurers and “subprime” private lenders will lose money on unpaid loans when property prices fall.

Short-sellers use complex financial arrangements to make rapid profits when publicly traded stocks fall in value. In this case they are betting against businesses connected to property and household debt.

They are also betting against the Canadian dollar, because they believe it will decline significantly in a housing bust.

(the article goes on with nausea)

*******************************
The fact they are still debating the bubble means one is on the way, already here, or about to burst.

#89 Bottoms_Up on 06.23.15 at 10:51 pm

#14 Cramar
———————-
Good post I agree completely. There are definite intangibles with owning. Similarly, it is always cheaper to take public transit, but many of us choose to buy cars. Why? Convenience, pride of ownership etc. Not that far of a stretch from the rent vs buy debate.

#90 Jamie Dimon on 06.23.15 at 10:59 pm

I always thought a good defense was a good offense so when my 20 something friends brag to me about the “sick” house they bought I spit some greater fool facts at the them and finish it up with “but I’m sure you knew all this” they look at me like a dog being taught a magic trick.
Rental scum and proud of it.

#91 Andrew Woburn on 06.23.15 at 11:03 pm

You’re a lowlife if you rent a house but nobody seems to care if you own or lease your car. Well that makes sense. Owning or leasing your car is just a financial decision.

Oh, wait!

#92 BOBO on 06.23.15 at 11:11 pm

Problem is

– renters don’t save the extra cash flow they gain compared to owning, they simply buy more stuff with that cash.

– money invested in the stock market for the average joe is not leveraged but virtually all mortgages homes are leveraged by default- therefore gains are much higher.

-average joe buys some RRSPs from the NLATB in mutual funds (high mers)

– average joe totally financially uneducated – no hope

#93 Another Vancity Renter on 06.23.15 at 11:15 pm

#32 Rainclouds on 06.23.15 at 6:37 pm
“some dude running about my 9TH floor a tad frantic. I ask what’s up?
Any common balconies up her? Yup other side Bro. Why?
Water Leak! …………..
WTF? hasn’t rained in a month! Building in Yaletown. built 2008. Probably nothing, OR …… blue tarps for 2 yrs.
Me not care, RENTING!”

Same situation here in Mt. Pleasant, 2006 concrete building with its 2nd water leak in a month.

I find that most people of decent intelligence accept that renting vs. owning is a personal decision based on what gives you more peace of mind, the security of “owning” your own place or the flexibility and relative lack of responsibility of renting. If someone tries to preach to you that you’re a fool for “throwing away money” on rent, then they are the fool for seeing things in black and white.

People tend to equate owning with security, but that requires them to disregard all sorts of risk…market risk, leaky pipe risk, earthquake risk, etc.

#94 PharmBoi on 06.23.15 at 11:33 pm

When children are growing up, one can actually get an idea for the child’s future success just with a simple test. If the child is asking for a cookie for example, tell the child that if he or she waits for 10 minutes, 2 cookies will be given. The possible outcomes are:

1) The child wants instant gratification
2) The child wants the 2 cookies
3) “If I wait 20 minutes will I get three cookies?”

So many of my peers have the skill sets needed to verse themselves in basic finance, and by all definitions are bright successful people, yet refuse to learn about managing money. They are essentially behaving as the first outcome above with their house lust.

I can actually sense some underlying envy when I’m given the buy now or be priced out forever talk. Renting as another poster said is a luxury. I can have nice things, take my lady out for dinner, and fund vacations without a worry while the continually growing portfolio does its thing.

#95 WiseGuy on 06.23.15 at 11:37 pm

I totally understand where he is coming from. We rent, yet, our neighbours come up to us all the time to tell us about different houses that are up for sale. My friends all own houses and look down at us, but we’re staying the course and are very comfortable renting, not having to worry about upkeep and so forth.
My neighbour is trying to sell his house now, 50 minutes outside of Toronto and approached us to buy it. I told him that I’m not interested right now and he tells me that anyone that makes $100,000K/year can get a $500,000 mortgage and I’m thinking….yeah, but that doesn’t mean it’s right.

#96 Jocko on 06.23.15 at 11:38 pm

I’m a renter in Toronto. I’m young and single with a good career. I rent because I want to stay mobile and can move on short notice. You never know when you’re going to get the once in a lifetime job offer in Wawa or Kapuskasing or Medicine Hat.

#97 PM on 06.23.15 at 11:41 pm

Not sure where this nonsense came from. You can paint your walls all you like, renter or owner. When you move out, just paint them back something neutral. You think when you’re selling your house, full of hot pink and flourescent lime greens walls, that isn’t shaving 10s of thousands of $$$ from the perceived value? There’s an entire big money industry sprung up around dressing up houses for sale.

Question, how do you do the quote?

It varies province to province but it’s not always as simple as ‘paint it back’. You often need approval on the type of paint used, you can’t just layer anything on to someone else’s walls. Obviously things like wallpaper (if in vogue) are out. Then there are other small improvements that may be not allowed/require permission: changing light fixtures, updating cabinet hardware, upgrading appliances etc. The freedom to do something like that is a benefit.

Take out house and put in vehicle and we’re talking about Car2Go or car coops. There are huge financial/flexibility benefits to them but there are some benefits to owning your own car too. Depending on the cost of ownership, rental and lifestyle one makes more sense than the other.

Anyone that says an absolute such as ‘renting is way better’ or ‘buying is the smart thing to do’ is a moron. Or they’re trying to validate their own choice or maybe a bit of both.

#98 Nemesis on 06.23.15 at 11:41 pm

“Food? Well, Canadians always rave about Vancouver, but Toronto has it beat without a question.” – ThePeripatetic EverEntertaining “ElYanqi”

#Perhaps… #ButClearly… #You’veNeverSavoured… #TheImperialEnvoy’s… #FavouriteKitchens…

“Vancouver nabbed 12th because of our “seriously authentic Asian food,” according to Condé Nast Traveler.”

http://www.vancitybuzz.com/2015/04/vancouver-world-best-food-cities/

#99 crowdedelevatorfartz on 06.23.15 at 11:44 pm

@#79 The American
My God.
The vapid, shallow observations of a narcisist “partying” in the center of the universe(or so Torontonians will tell you).
Yawn.
I was working for a fer hours in Nanaimo today, saw a pod of Orcas on the way back home.
And a forest fire.
I know.
How colonial.
But this is BC and it’s what keeps us amused.

#100 crowdedelevatorfartz on 06.23.15 at 11:45 pm

@#86 Steve Francais

Link?

#101 vansnivel on 06.23.15 at 11:48 pm

From the Chinese consulate in vancouver, as one of several measures to help curb vancouver’s crazy market. Of course the chinese consulate is right about about our real estate market being unregulated.

But i figured Garth would love this quote from the consulate, are the chinese racist? ;-)

“greater oversight of real estate developers from the city and a tax or fee for overseas investors who want to buy luxury properties in the West Coast city.”

http://www.theglobeandmail.com/report-on-business/economy/housing/chinese-envoy-says-lack-of-oversight-behind-vancouvers-house-price-crisis/article25085285/

#102 NoName on 06.23.15 at 11:49 pm

#17 the Jaguar

‘There is a lot of peace of mind that comes with the freedom from property ownership.’

that was funny, water hater died on Saturday, good thing is that wh is rental, so I don’t have to pay for repair, and non stainless steel dish washer staped working on two days later…

But water hater repairman was interesting character…
http://capropertyfinder.com/wp-content/uploads/2012/04/Truck-john-web-300×150.jpg

#103 OffshoreObserver on 06.23.15 at 11:50 pm

#19 Mark on 06.23.15 at 5:51 pm
“True….but stock pickers are substantially wealthier for choosing to buy high quality individual equities than passive investors.”

Rarely. Most “stock pickers” underperform the market because they get caught up in their own biases, become chronically under-diversified, and fail to manage their transactional expenses including taxation.

To corroborate Mark, watch this: http://andrewhallam.com/2012/12/passive-investing-the-evidence-the-fund-management-industry-would-prefer-you-not-to-see-part-1-the-outperformance-myth/

#104 Dean on 06.23.15 at 11:52 pm

87 comments and not one Stig reference.
Am I the only car guy here?

#105 geomarkov on 06.24.15 at 12:12 am

#79 The American on 06.23.15 at 10:18 pm
As for my experience in Toronto over the past several days, I will share the following…..

“Some of my expereinces:
– Bette Midler at Rogers Arena…”

You just lost all credibility….like 4ever dude!

#106 Carpe Diem on 06.24.15 at 12:21 am

I got the same comments from everyone. Minus family members. It didn’t take much for them to understand my calculations.

For parents of my kids’ friends, it takes them hanging out on the acreage, open fire, or kids sliding down the hill to understand why I rent. Add a few comments that my landlord spent more on windows last year than my rent paid, homes these days aren’t built with wood and brick but glue and plastic. A few notes on new neighborhoods are the result of blasted rock that can expose families to Radon and all of a sudden, most of those folks shut the f%#$ up.

Other keep yapping and I had the fact that on average my rent is free due to investments gains and I’m a real-estate owner via REITs.

They keep yapping, I mention how nice their cars are and then switch the subject about how cars are expenses and not investments. Mine are modest vehicles but paid for.

Good thing my wife is a likable person.

If someone tries to talk me down about renting … I have the defense to put those people back into their place.

One being people are idiots borrowing so much and not investing enough. That usually shuts idiots off.

#107 Gandalf on 06.24.15 at 12:39 am

I sold my house in 2008…maybe a bit early but added to my other investments has been a winner!

Current rent = $33,000/yr

Canadian Dividend Income = $120k/yr (increasing at 10%/yr)

No brainer…no stress, not a worry in the world! Repairs and maintenance are a phone call away!

Good luck to all the house buying bozo’s out there! lol

#108 Mister Obvious on 06.24.15 at 12:40 am

#87 GTA Observer

That’s my story and my sentiment exactly! Thanks.

#109 BS on 06.24.15 at 12:59 am

I think this is fundamental with humans—wanting to own your own shelter. Just as fundamental as wanting to get married and starting a family.

You are born with the attraction to the opposite sex and the desire to procreate. Owning real estate is about marketing by those with a vested interested and about the naive who think it is the only way to accumulate wealth. You can get the same shelter and meet the same needs by renting.

If it costs 20%-50% more than renting, to me it is worth it. If it costs double that of renting, that is another matter.

It is the other way around. If it cost 20% to 50% more to rent it may be worth it. Renting provides flexibility owning cannot. There are almost no benefits to owning unless it is cheaper. Believe me, I have done both.

#110 cornstars on 06.24.15 at 1:01 am

So let me ask you this Garth, has Harper ever thanked you for this BLOG!

#111 Turtle on 06.24.15 at 1:36 am

Evan, remember this: “You are who you think you are”.

Ignore the noise.
Stay strong.
Think about having kids.
You will never regret it.

The most important:
There is only one chance to find a right woman.
You succeded.

#112 MoistMillennials on 06.24.15 at 1:40 am

Any thoughts on this startup? ‘Mogo’ – preloaded credit cards as sheeps clothing to push loans. Canadians love this debt … debtors love their Canadians.

https://www.mogo.ca/

#113 past peek on 06.24.15 at 1:41 am

Well, the Chinese envoy statement was the cherry on the cake, she clearly stated that this mega bubble is 99% local politicians failures of not controlling such an obvious run up in prices. She is trying to avert the racism backlash created by the realtors claiming that Asian rich are buying up all Vancouver… well, maybe there are 5% foreign buyers but that is happening in Monaco as well and nobody complain. Please ms. Yelled raise the rates asap to see who was right…

#114 Tamsen on 06.24.15 at 2:05 am

“Washed Up Lawyer on 06.23.15 at 10:26 pm

I can hardly wait to see the dogs unleashed on this:

http://www.theglobeandmail.com/report-on-business/economy/housing/chinese-envoy-says-lack-of-oversight-behind-vancouvers-house-price-crisis/article25085285/

Even the Chinese admit to their role contributing to Vancouver’s stratospheric prices …

#115 Slim Sal on 06.24.15 at 2:38 am

#19 Mark

“On occasion there are some slam dunk assets to either own or avoid. But most can do fairly well simply by taking a passive approach which outperforms most who take a more active approach.”

Mark…you’re kidding right? Please explain how people get rich in the stock market opposed to passive investors compounding at 5% p/a? Those aren’t plumbers or Costco workers yachts down in the harbour.

I’ve often left lists of examples of stocks I’ve bought that doubled, tripled and more on this site for everyone to see and prove a point. Stock picking isn’t voodoo…but it’s work.

I turned a thousand dollars rent money, trading on a university hall phone, ( long before cell phones) into a million between 21 and 32. Then I retired to trade my own acct beside the pool at 43.

#82 Dev….Anyone who bought a house before 1970 in the City of Vancouver has become a millionaire from a single transaction. The entire city didn’t all win the lottery. I’ve bought and sold dozens of homes in my lifetime and made money on all of them as the inflation train roared by. The current house I own on Vancouver West Side has more than tripled in value to minor millions over the past five years alone.

#116 Sosuke Aizen on 06.24.15 at 2:43 am

If investment returns are 5% per year* while rent increases 50%** over the next ten years, renting will not be the slam dunk you make it out to be. But for now, renting is cheaper than owning. If you need mobility, you must rent; owning is not a viable option. If you don’t need mobility, and you want home improvements, you must own. To be a happy renter, you have to be satisfied with your home as it is.

* Even SPY, the S&P 500 index ETF, had ZERO return from 2000 to 2011 (dividends included). The TD Dow Jones Average Index Series E mutual fund has a 15-year return of only 4% per year. The TD US Index Currency Neutral Series E mutual fund has a 15-year return of only 3% per year; even its 10-year return is only 6% per year. My point is, long-term future returns may not exceed 5% per year after tax, and the double-digit returns of the past six years are an aberration, not the norm.

** In the late ’90s, it was inconceivable that home prices would double in less than ten years, but they did. Today, it is inconceivable that rent will increase by 50% in ten years, but all it takes is an increase of 4% per year (compounding).

#117 Buy? Curious? on 06.24.15 at 3:14 am

I agree with Garth but for different reasons. I think Canadians should go on a Home Buyers Strike for at least 3 years, maybe 5. Why? The first wave of Boomers are trying to cash out. If enough people can hold out, all that Boomer wisdom will come back to haunt them for the few years they’ve got left.

#118 Vangrrl on 06.24.15 at 4:10 am

Best last line ever!!!
Haaaa – Now I have the damn song in my head ;)

#119 Harry Wilson on 06.24.15 at 4:15 am

I have been foolishly ‘paying someone else’s mortgage’ since 2009. I rent half of the building; the other half houses my landlady’s business. With her 10% down payment, an average mortgage interest rate of 4.00%, and my cheap rent, I will have her entire mortgage paid off by late 2064.

At that point, my rent will be applied to the backlog of property tax. Since the yearly tax bill will keep coming, it will take me until the beginning of 2082 to get caught up.

If I then start to cover just my part of the utilities since 2009, let’s say $100 per month (she currently pays 100% of the electricity, gas, and water bills), I will have those paid off by 2091. Assuming that the house has needed no major repairs in that 82 year span, all that’s left is the last nine years of property tax.

At this point, my landlady will be 124 years old. She will slowly raise one finger, point at me and laugh at my having paid all of the expenses of her house, then quietly expire.

Of course I will be 136 by that time, so there’s only a 50/50 chance that I’ll still be around.

—————————-

Seriously, though, am I wrong in seeing renting as a win/win situation? On the one hand, I can live cheaply with no nasty surprises to the budget; other than 40 hours per week I’m the only one in the building; and I don’t have the ball-and-chain of a deed. On the other hand, my landlady has the security of having someone around when she’s not there; she gets weeds pulled in the summer and snow shovelled in the winter (I like to keep her happy); and once a month I hand her a small stack of 50s.

The ‘zero-sum’ mentality is a little too pervasive. Just because a deal is good for one party does not mean it’s bad for the other party. Most business arrangements are good for both parties.

If I go to the restaurant for a plate of beef noodle, I don’t worry about who’s coming out ahead on the deal, or whether people will think I’m ‘throwing my money away’ subsidizing someone else’s kitchen. It’s an arrangement that’s good for both parties: my tummy’s full, and the proprietor has earned enough to buy his kid a whoopee cushion. Everybody’s happy. Especially the kid. Win/win.

#120 Nagraj on 06.24.15 at 5:23 am

How to deal effectively with anti-renter discrimination: if some Leave-It-To-Beaver Canadian pro-ownership SOCIAL NORMER (this country is just crawling with them) is gittin annoying, just say, “Can you TANGO?”
They’ll say, “Huh?”
Then you say, “I said CAN YOU TANGO? You deaf or sumpin?”
A bit confused, they’ll say, “Ah, no. I don’t – tango. That’s a kinda dance, eh?”
Then you say, “No? No?! No?!!! How disgusting!!! You make me sick! FO! Now! FO and DIE!!!” If this is happnin at, say, a BBQ threaten them with a BBQ implement.

Truth to tell, one shouldn’t be socializing at all with anyone who even looks like a non-Tangoer. Better to be safe than sorry.

Tangoers don’t own because they need money for tango lessons to master the many kinds of tango. As a rule they’re young, slim, agile, naturally elegant in comportment and dress, single, and extremely attractive, sexy. Why socialize with anyone else? (Hard-woikin home owners, especially with kids, are duds.)

#121 maxx on 06.24.15 at 7:21 am

#6 None on 06.23.15 at 5:04 pm

“because of crap like this:

http://business.financialpost.com/personal-finance/young-money/eternal-truth-of-personal-finance-no-4-dont-be-a-renter

That worked well 15-30 years ago when real estate cost so much less, even with the higher rates then.

Today….not so much. We are in a period of re market top, interest rate risk going forward and relentless tax, fee and maintenance costs far outpacing inflation.

At any rate, work morphs constantly, quickly and unexpectedly.

Life has become far too mobile for this ancient perspective.

#122 Investorz on 06.24.15 at 7:56 am

Garth will love this one on BNN today:

“Chinese envoy says lack of oversight behind Vancouver’s house-price crisis”

In a wide-ranging interview over tea at the Chinese consulate in Vancouver, Consul-General Liu Fei said local residents are blaming wealthy Chinese buyers for the city’s increasingly costly real estate but that the real blame lies with officials who monitor buyers, sellers and real estate developers.

Source: http://www.bnn.ca/News/2015/6/24/Chinese-envoy-says-lack-of-oversight-behind-Vancouvers-house-price-crisis.aspx

#123 SWL1976 on 06.24.15 at 8:06 am

#119 Harry Wilson

The ‘zero-sum’ mentality is a little too pervasive. Just because a deal is good for one party does not mean it’s bad for the other party. Most business arrangements are good for both parties.

Thanks for taking the time to clear that up

Like Garth’s sound advice; avoid extremes.

Unless like in my case you are researching conspiracies, then go all the way

#124 gladiator on 06.24.15 at 8:29 am

I usually avoid people obsessed with things.
Now is a good moment to sift them: I rent and whoever avoids me because of that (there are some) do not deserve my attention and friendship.
I feel sooo much better with friends who appreciate me for who I am, than for what I possess.

#125 Well Said Harry Wilson (#119) on 06.24.15 at 8:49 am

You are right. Balance is key in most of what we do in life. Yes, if I have to buy any goods or services, I will probably pay more than if I could procure the goods myself or perform those services, if I knew how.

What a lot of people seem to miss is that the amount of money that I have to pay for something includes what the other party calls “profit”. And while I want to keep my costs down, such things as eating, getting my taxes done, or getting the brakes on my car fixed are not really optional expenses.

Yours is one of the smarter comments I have read on this blog.

#126 maxx on 06.24.15 at 8:53 am

#20 JSS on 06.23.15 at 5:56 pm

“Pipeline company TransCanada cuts 185 jobs

http://ca.reuters.com/article/businessNews/idCAKBN0P32A220150623

….and we’re nowhere near the end of cuts in O & G.

#127 Vlad on 06.24.15 at 9:08 am

I’ve been trying to come up with a tangible cost comparison between renting and owning. The method that makes the most sense to me is to determine what the sunk monthly costs are for both options and compare those.

Renting sunk costs are easy — that’s the monthly rent.

For ownership, the calculation is more complicated. First you need to come up with the accurate initial cost, which includes: house price, land transfer taxes, transaction legal fees and title insurance. Then, assuming a certain downpayment rate, as well as a conventional fixed 5 year mortgage interest rate, one can calculate monthly mortgage interest charges (excluding principal repayment), monthly lost opportunity cost (which is monthly yield on the downpayment), monthly maintenance (if a condo), prorated monthly property taxes, as well as prorated unit maintenance costs. The sum of all these represents monthly sunk costs assassinated with ownership and can easily be compared to rent.

This calculation ignores property appreciation/depreciation as no one knows what the future holds, as well as other benefits associated with both options (for example pride of ownership for owners or ability to easily move for jobs for renters).

What do you think, is this comparison valid?

#128 TurnerNation on 06.24.15 at 9:08 am

Canadians are lucrative tax farm cash cows.
Duopolies. All independent cell phone providers taken over by Telus/Rogers.
Banks: ING taken over and years ago the big 4 attempted merger into 2.

Enjoy your Tim H./SBUX coffee today.

Our glorious leader keeps us game warning us of an unprecedented and clear threat from overseas. Works every time.

#129 brett on 06.24.15 at 9:26 am

Being a renter has been difficult for the past 30 months. We have had to plan long vacations several 2-3 month vacations. Now we have the work of planning for another one in September.

We believe these are ‘free’ vacations. Decided to travel and rent for a while after downsizing our home. Between good market returns, lower cost of renting, and soft real estate market in Calgary we figure that we are streets ahead.

Yup, renting is tough.

#130 -=jwk=- on 06.24.15 at 9:44 am

All housing bubbles deflate”
————
Other than chernobyl and fukushime where can i buy some land at the 1920’s bubble prices?

They ALL re-inflate eventually. Every one. Hence the saying… (self censored!)
———————–

Anywhere in the USA. Actually pretty much anywhere except canada and australia.

House prices in USA are LESS than they were in 1920, adjusted for inflation of course. I expect in a few years it will catch up, thhen level off.

Closing on a brand new, 1700sf (ie small) 3/2 in a gated community (pool, gym, bbal, baseball, volleyball, private parks, etc) on the lake, loaded with all the options today at 1pm. $205,000. Lease is already signed for july 1, $2100/month.

——————
the #1 rule of personal finance : Spend less than you earn.
Follow rule #1 and you can buy a house. Pretty simple.
—————–
Not true in Van or Toronto. You would have to save more than 100% of your income, ie not only not spend anything but also have mystery money in order to buy there…

We rent in TO and use the income from the USA properties to pay the rent. Arbitrage. Look it up…

#131 nubbers on 06.24.15 at 10:11 am

On the plus side Evan, at least your wife is on side. Do you need anything more?

In a few years, all those people who think you are scum now, will instead hate you for looking like a genius, but at least you won’t be sharing their pain.

As others have said, stay strong and use the time to find new friends.

#132 Grantmi on 06.24.15 at 10:19 am

Ok.. I’m confused. Is the vancouver housing market being driven by the Chinese investor or not?????

http://bit.ly/1JiJ28U

The Canadian housing analyst noted short-selling bets against big Canadian banks have doubled in New York markets in the past several months. And the risk of a sharp housing correction connected to Canadians’ high household debt has risen since December, the Bank of Canada recently reported.

While short sellers point to Vancouver as the most extreme housing bubble in Canada, the analyst noted that some investors believe a massive flow of investment from Mainland China makes the market impervious to corrections.

Others speculate that if China’s economy slows dramatically, Vancouver housing will bust.

“Toronto sees some offshore money from China, but definitely Vancouver is in its own world,” the analyst said.

“Some of the guys that have timed this bet think that when China blows up Vancouver will blow up too, but I’m not sure that will happen.”

No. Driven by horny, delusional, risk-loving locals. — Garth

#133 SunShowers on 06.24.15 at 10:25 am

“Let’s face it. The advice Evan and an entire cohort of moist Millennials is receiving from their Jurassic parents is plain wrong. Anachronistic. Dated. Inappropriate.”

Yep, all you have to do is look at the other tidbits advice boomer parents gave their kids.

“In order to get a good job and live comfortably, you have to go to college and get a degree!”

Now we have untold numbers of B.Sc. graduates serving up lattes.

#134 maxx on 06.24.15 at 10:34 am

#42 jess on 06.23.15 at 7:36 pm

“Your blog title today fits this story to the t…”

You can hardly escape a store these days without organized charity getting in your face. Repeatedly read reports about the pathetic net returns to the needy, so I no longer contribute to organized charity. Ever.

I volunteer at a local church and give on the street. I donate to second-hand and charity shops.

No faceless, scumbag middlemen get to dine with wine on my dime. I choose where and how to contribute. No exceptions. Administration costs my a$$.

This ugliness is followed quite closely by the slimy practice of balance sheet dressage.

#135 Godth on 06.24.15 at 11:05 am

#123 SWL1976 on 06.24.15 at 8:06 am

THE FATE OF EMPIRES
and
SEARCH FOR SURVIVAL
http://www.rexresearch.com/glubb/glubb-empire.pdf

China Syndrome
http://www.counterpunch.org/2015/06/23/china-syndrome-2/

To view how it plays out in the day to day on the ground you may as well read Shakespeare (or is that SpearShaker?). The context that the drama for power and control plays out may change in details but the basic behaviours do not.

https://www.youtube.com/watch?v=A4UMyTnlaMY

#136 MF on 06.24.15 at 11:12 am

#115 Slim Sal on 06.24.15 at 2:38 am

Every source I have read so far indicates passive investing is superior to trading. That is why I am using the index/rebalance approach recommended on here….at least for a few years.

I am intrigued by the other approaches though. Did you have any strategies that you followed? Use any educational aids?

PS For a millennial such as myself I think housing is a money pit at this point.

MF

#137 TurnerNation on 06.24.15 at 11:13 am

CPD getting closer to a sweet spot. Patience.

#138 waiting on the westcoast on 06.24.15 at 11:27 am

Those US consumers keep chugging along…. GDP revisions to first quarter bringing it to -0.2% from -0.7%…

Like I have said, my businesses are growing in the double digits for three years running. I am not seeing a slow down yet. And we saw a big drop in businesses for 6 months prior to the GFC…

http://www.bloomberg.com/news/articles/2015-06-24/consumers-help-u-s-gdp-contract-less-than-previously-estimated

#139 Ben on 06.24.15 at 11:32 am

Dear Evan

Have you ever noticed that the well off are in the MINORITY? The so called 1%?

Fact is, financially speaking, most folks are average, just getting, or living paycheck to paycheck.

There’s a reason why people with true financial security are in the minority.

The people who have earned real wealth (i.e. not an inheritance or lottery winnings) did NOT do so by FOLLOWING THE HERD.

Evan, you will not likely find financial freedom by following the herd either. At best you might end up average just like the rest of the herd.

Not following the herd might seem to take brass balls at first but it’s worth it in the long run.

As you embark upon your path to financial freedom, spend some time learning about investing.

Learn how to avoid (not evade) taxes and structure your affairs accordingly.

Start by making a simple little spreadsheet showing how compounding your investments and savings affects your net worth over a period of years and decades.

Learn about diversification.

Save money, perhaps by renting early on, so that your capital (savings) can be put to work and your debts minimized.

Live within, or better yet, BELOW your means (gasp!).

The first step on the path to financial freedom is THINKING FOR YOURSELF.

Financial literacy is your friend and the learning never stops.

Or you can just give in, listen to the advice of the 99% average Joes and do what they say. Then you can be just like them.

#140 Mister Obvious on 06.24.15 at 11:33 am

Vancouver. It’s different here. So says the Post.

#141 AB Boxster on 06.24.15 at 11:35 am

The Chinese Envoy makes the most intelligent comments I have heard so far on this topic:

It really does not matter what the influences (domestic , foreign) contribute to the affordability of housing in Vancouver. The issue is that the citizens of the country in these markets cannot afford to live in their own neighborhoods.

In China, they would just enact policies to address the problem.
Why?
Because, the magical guiding hand of free enterprise and unfettered markets, does not always result in the best solution.

“What a shock!”

In Canada, we pretend that the free enterprise capitalist system will always end up with the best result, especially if we benefit directly.

Because in Canada, we do not see this as a problem.

The bigger concern is how we can maintain our ‘god given’ right to the equity in our house.
Which is why governments will do anything to keep the bubble going.

Here are some examples of competetion in Canada:

Wesjet decides to charge a $25 fee for any checked bag.
In the spirit of capitalism and free competition, Air Canada decides: Yeah us too!

All retail gas stations raise the price of gasoline, in lockstep, at the same time, and by the same amount, on the same day.

Yep, free enterprise and competition, working as expected.

Time for a benevolent dictatorship.

#142 Edward on 06.24.15 at 11:41 am

Wealthy Boomers shun homeownership – in USA.

http://www.cnbc.com/id/102784560

#143 Nagraj on 06.24.15 at 12:00 pm

seriously – homeowners unwilling to placidly entertain discussion about owning vs renting are what? How about nervous? Afraid, insecure. It’s smarter NOT to get into the discussion with them.

We do have a housing affordability crisis in Canada which will come into full bloom as rates rise. If you’ve bought an overpriced house with money you don’t have, and contemplate the prospect of loss of home equity while the monthly goes up – you have to conclude, among other things, that the Canadian system of housing its people is broken.

Reciting the cost benefit of renting vs owning, especially looking forward, implies the new home owner has got the character of the country all wrong. The new home owner MUST believe that house prices only go up and that rates will never rise, his other option is to lose faith in himself, his future, and Canada.

So the owner comes up with “You’re throwing money away renting.” Don’t expect him to say, “You’re right, I’ve been swindled big time.”

#144 Ogopogo on 06.24.15 at 12:20 pm

#14 cramar on 06.23.15 at 5:37 pm
I think this is fundamental with humans—wanting to own your own shelter.

Spoken like a true 20th-century dino. Next thing someone will be touting “pride of ownership”… Wait, another brontosaurus did that a few comments down.

I pity you brick lickers, though I guess it’s thanks to you cultists that my portfolio continues to yield sweet, sweet divvies. Good luck dumping your beloved money pit on a greater fool once the bubble pop is felt across the nation.

#145 45north on 06.24.15 at 12:39 pm

JustMe: from your link:
Cohodes — who is familiar with Vancouver and has befriended well-known locals, like celebrity chef Hidekazu Tojo — says Vancouver real estate has reached peak insanity, and any number of factors could trigger a collapse.

key words are “peak insanity”

#146 Ben on 06.24.15 at 12:46 pm

Nicholas – I’m in Montreal too and also renting. Some of the pricing on housing here is hilarious. So much stock building up.

TBH because the culture of rising prices is *so* strong only a small rate rise will jolt them into reality. Let’s hope the US kicks up rates soon then let the party begin :-)

#147 Bottoms_Up on 06.24.15 at 1:00 pm

#144 Ogopogo on 06.24.15 at 12:20 pm
—————————————————
I disagree (as you know).

I rented for 12 years. Things I disliked most, and don’t have to worry about as a home ‘mortgage-renter’.

1) Yearly inspections
2) Fire alarms caused by idiotic neighbours at 3am in January (such as being so high they lit a bonfire in their living room)
3) Neighbour above that rearranged furniture every night at midnight
4) Living next to a garbage chute
5) Hi…are you my new neighbour? I love that orange jumpsuit you’re wearing…
6) Having a ‘slumlord’…having to fight to get repairs done (never had to go to court though)
7) Grass getting cut in your backyard at random hours, without prior consent or warning
8) Having to lie about pet ownership (knowing full well the laws in Ontario indicate there can’t be discrimination due to pets)
9) Fighting over elevator use on moving days
10) Having to follow specific rules (no stereo noise past 10pm) etc.

And on the flip side, as a home owner, I do take pride in ownership….it is fun putting ‘sweat equity’ in the house — some people just like to tinker and make things better (this is either not compensated for in a rental, or not allowed…you are ultimately improving someone elses asset when you improve a rental). I love knowing that I can do whatever I want, whenever. I love having that responsibility. I love being able to choose which appliance to buy when one goes kaput (rather than being stuck with the cheapest one your landlord could find on kijiji). I love maintaining the lawn and garden, it is therapeutic. There is a definite sense of accomplishment and pride of ownership that can come from home improvement.

Now I agree that some of the items are specific more to living arrangements (apartment vs. house) but you get the general idea I suspect.

Renting vs. buying A HOME should not be purely based on a strict financial sense of what is cheaper. That makes no sense whatsoever, and people that believe this are unfortunately being very narrow-sighted in their approach to life. BUT in certain markets like Vancouver and Toronto the financial consideration may outweigh all the intangibles of ownership. And sure there are intangibles for renting, such as flexibility. These are personal decisions that only an individual can make after weighing all the options.

Again, if every choice is based purely on financial ramifications, why would you ever own/lease a car?

#148 Bottoms_Up on 06.24.15 at 1:02 pm

#136 MF on 06.24.15 at 11:12 am
——————————————
If housing is a ‘money pit’ to you, what are your numbers based on? Would be interested in seeing your analysis.

#149 Leo Trollstoy on 06.24.15 at 1:20 pm

#144 Ogopogo

Why so angry?

#150 4 AM Sunrise on 06.24.15 at 1:34 pm

#141 AB Boxster on 06.24.15 at 11:35 am

In Canada, we pretend that the free enterprise capitalist system will always end up with the best result, especially if we benefit directly.

In what free enterprise capitalist system does the non-invisible hand of my government enable me to leverage myself beyond my means?

#151 Paul on 06.24.15 at 1:45 pm

#144 Ogopogo on 06.24.15 at 12:20 pm

#14 cramar on 06.23.15 at 5:37 pm
I think this is fundamental with humans—wanting to own your own shelter.

Spoken like a true 20th-century dino. Next thing someone will be touting “pride of ownership”… Wait, another brontosaurus did that a few comments down.

I pity you brick lickers, though I guess it’s thanks to you cultists that my portfolio continues to yield sweet, sweet divvies. Good luck dumping your beloved money pit on a greater fool once the bubble pop is felt across the nation.
———————————————————-
What do you lick you LANDLORD??

#152 raisemyrent on 06.24.15 at 1:58 pm

#141 AB Boxster on 06.24.15 at 11:35 am

same unaffordable rhetoric bs. people can’t afford the houses not because the prices are high, but because they are using credit. this idyllic affordable housing crap from the golden era is just an idea. it’s always been loans. cheap credit made it worse. if you can’t afford your own neighbourhood you either took out an insane loan to live there (greater fool), are renting (which negates your comment), or moved away (also negates the comment, and now blame the heavens/externals).

#147 Bottoms_Up on 06.24.15 at 1:00 pm
sounds like you used to rent in a dump. nice list; most are specific to house vs condo/apartment btw.

also, home does not mean house. that’s realtor/developer propaganda.

home is where your dog sleeps, be it a condo, apartment, or house (paid off or on massive debt… slowly coming apart in either case).

#153 Mark on 06.24.15 at 2:01 pm

“monthly lost opportunity cost (which is monthly yield on the downpayment)”

This is a hard one to calculate. Realtors advocate using the rate of return on low-risk investments such as government bonds or GICs in the calculation, but obviously this is very favourable to Realtors who are interested in getting someone to make a buy decision.

More appropriate is to use a rate of return on investments with similar risk to the leveraged equity that a down-payment on a mortgaged house will represent.

Now just how risky is 20% down on a house? 5% down? That’s 5X and 20X leverage respectively. Certainly far riskier than just buying an un-levered portfolio of stocks with a long-term expected return of 10-12%. So at the very minimum, opportunity costs on a downpayment should be assumed at 10-12%/annum.

But its actually worse than that. You see, the worst case scenario for an unlevered investment in “the stock market” is typically a 50% loss at any given time. While a 20% down-payment on a house, in a 40% market correction, can not only cause a 100% loss, but actually leave a person in negative equity. Hence, you need to add some leverage to the stock investment to make it equally risky to the leveraged housing investment for the purpose of computing opportunity costs.

Hence, 20%-25% sounds like a far more realistic number in the computation of opportunity costs in using money for a housing down-payment versus investing it. Assuming equally risky investments.

Almost nobody does math this way, or thinks about opportunity costs of home equity in terms that are equivalent risk-wise, but failing to think thoroughly about this definitely can lead a lot of people to rationalize buying housing at prices which are in significant excess of its worth as an investment.

#154 bdy sktrn on 06.24.15 at 2:03 pm

#149 Leo Trollstoy on 06.24.15 at 1:20 pm
Why so angry?
——————————
renter rage? border bitters? tennant testiness?

maybe that’s a reason to own in itself!

got counter offered (after a week!) on a 10/12ac usa farmfield – 69k for the 10ac

same land area as 130 lots in east van about an hour drive from downtown, no ferries, easy options.

per sq foot about 1500x lower price than east van
or about 3000x less than west side

anybody need to park a boat/rv/horse etc?

#155 Mf on 06.24.15 at 2:21 pm

#148 Bottoms_Up on 06.24.15 at 1:02 pm

My question wasn’t addressed to you but it’s okay.

For a youngish person like me (32) housing is overvalued where I live (GTA) by every metric. Price:rent, price:income, risk level of excessive debt, lack of mobility etc.

Basically everything Garth has being saying since the inception of this blog. Disagree? Why are you here?

Would still like to here from slimsal though.

MF

#156 Matt Gamon on 06.24.15 at 2:30 pm

I don’t understand why would anybody think that investing in ETFs is safer than investing in real estate.
Stocks and bonds don’t always go up

Nobody said that’s safer. But if you fail to diversify, and have only one asset class, you augment risk. — Garth

#157 rosie "moving forward" in the knowledge that, "this won't end well" on 06.24.15 at 3:18 pm

#141 AB …
If Chinese money is flowing into Canada then the Chinese government can stop it any time they wish. The limit to the amount Chinese citizens can take out is $50000. If it is more then that then China is at fault. They certainly have the tools to do it. As for benevolent dictatorships, careful what you ask for.

http://www.rfa.org/english/news/china/documentary-01282014134457.html

#158 Edward on 06.24.15 at 3:20 pm

US & Canadian home prices diverge.

http://www.bnn.ca/Video/player.aspx?vid=642432

#159 fancy_pants on 06.24.15 at 3:28 pm

at least HAM is a only in our heads.
http://www.cbc.ca/news/business/cheap-loonie-has-cottage-market-booming-especially-among-foreigners-remax-says-1.3126064

#160 Investorz on 06.24.15 at 3:52 pm

Crescent Point layoffs next week.

I’m stunned that housing hasn’t dived. It seems to land way too nicely considering how much prices went up over the last 4 years. Maybe we’re in the denial.

Something like:
https://wealth.barclays.com/en_gb/home/research/research-centre/white-papers/Behavioural-Finance/Cycle-of-investor-emotions.html

#161 Slappy McTavish on 06.24.15 at 3:59 pm

American Hedge Funds shorting CDN real estate market specify ‘money laundering’ as a major reason behind the bubble.

http://news.nationalpost.com/news/canada/u-s-short-sellers-betting-on-canadian-housing-crash-an-accident-waiting-to-happen

Why can’t the Cdn media and HAM deniers say the word?

#162 Holy Crap Wheres The Tylenol on 06.24.15 at 4:06 pm

#147 Bottoms_Up on 06.24.15 at 1:00 pm

#144 Ogopogo on 06.24.15 at 12:20 pm
—————————————————
I disagree (as you know).

I rented for 12 years. Things I disliked most, and don’t have to worry about as a home ‘mortgage-renter’.

…………………….
____________________________________________
I totally agree with your Pro/Con list. Renting and owning are a very personal decisions based on your own wants and needs. Only rented once in my life after my discharge from the Air Force back in the seventies. I very quickly realized Uncle Sam was no longer putting a roof over my head at night. Came to the quick conclusion that holy shit I have to get a place quick. Rented an apartment in San Diego and hated it for all of the above reasons. The worst was I just couldn’t stand being told what I could do or not do in the place I was paying for. That crap lasted for about 14 months then got the hell out and bought my own little place. Renting was something I just never cottoned up to!

#163 MF on 06.24.15 at 4:27 pm

#144 Ogopogo on 06.24.15 at 12:20 pm

I like it!

#146 Ben on 06.24.15 at 12:46 pm

Ditto in Toronto. Condo construction everywhere. Laughable prices and smug RE agents everywhere.

Although I think it will take forever, let’s hope rates rise and fast.

MF

#164 devore on 06.24.15 at 5:10 pm

#85 Linda

That’s one of those obvious conclusions that shouldn’t have cost millions of dollars to find out, but has to because otherwise no one will believe it. “Home owners have on average more money than renters because they need lots of money and/or income to buy a house.” No duuh.

As you note, far more useful would be comparing owner and renter expenditures, adjusted for income, comparing apples to apples. Obviously, there is a very large section of renters who are unemployed/unemployable, or on some form of income assistance, who will never own a house, but keep getting included in these half-baked comparisons.

http://bcnpha.ca/research/rental-housing-index/

This link I posted yesterday shows that middle-class and higher households in BC have no problem paying rent.

#165 bill on 06.24.15 at 5:11 pm

#104 Dean on 06.23.15 at 11:52 pm
yeah!
‘how hard could it be?’

#166 Adrian on 06.24.15 at 5:13 pm

Sister in law just sold her home to “upgrade” to a larger home in a distant suburb of Markam. Crappy, entry level, mold infested bungalow, complete with original 60s kitchen, bathroom and flooring. Asking price was $600K, bidding was loser ended up getting it for $660K.

I ran some numbers. With a 10% downpayment, the mortgage was $2800 plus about $400 in taxes monthly. The same home rents for about $1700-1800 in the neighborhood.

Sure there was a nice run up in prices recently, but going forward this home will cost you double to own after you factor in maintenance.

Renting is the only sane choice. I don’t understand what’s wrong with people these days. Good luck to us all.

#167 devore on 06.24.15 at 5:13 pm

#92 BOBO

– money invested in the stock market for the average joe is not leveraged but virtually all mortgages homes are leveraged by default- therefore gains are much higher.

Leverage is not free or without risk. Look at an amortization table, and tell me how much a $1M house has cost you when you’re done with the mortgage.

#168 jess on 06.24.15 at 5:15 pm

maxx

here’s another regarding H1B visas

Southern California Edison, Cargill, Disney, Northeast Utilities, and Harley-Davidson etc

http://www.judiciary.senate.gov/imo/media/doc/Hira%20Testimony.pdf

https://beta.cironline.org/investigations/techsploitation/

#169 Adrian on 06.24.15 at 5:21 pm

Oh, and the house was bought by an old man (originally from Beijing, to fuel the current phobia) for his son and daughter in law.

Hopefully it’s not one of those surprise presents, like getting a pet you don’t want. Here kids, i got you a $4000/month ball and chain. Enjoy your home, cause that’s all you’ll be doing.

#170 devore on 06.24.15 at 5:22 pm

#97 PM

Meaning renting is different from owning. You have different benefits and drawbacks, different expenses, and need to take a different approach. A large part of having a good rental experience is doing the work up-front. While an owner can change anything about their house, a renter is more limited even if they’re willing.

That means you have to do some work to see what kind of person you’re doing business with, and what you’re getting. You’re about to hand them a significant part of your income on a regular basis, why do people put absolutely no effort into learning about their future rental and landlord, but will agonize for DAYS over the color of their tablet. Then they whine about how renting sucks and how landlords are greedy scum. Some are. You need to avoid them. It’s not hard.

#171 devore on 06.24.15 at 5:26 pm

#109 BS

It is the other way around. If it cost 20% to 50% more to rent it may be worth it. Renting provides flexibility owning cannot. There are almost no benefits to owning unless it is cheaper. Believe me, I have done both.

Outside of real estate, you’d be VERY hard pressed to find even a single instance of where something is cheaper to rent than to buy. That is because people who rent things out have to buy them first, meaning they need to make a profit.

#172 devore on 06.24.15 at 5:40 pm

#147 Bottoms_Up

Every. Single. One. Of the problems you listed applies equally well to owners. (I don’t know about annual inspections… been renting for 2 decades, never had any inspections.) That’s because condos are both owned and rented, and the same laws and condo rules apply equally to both renters and owners. All I can tell from your story is that you were being cheap and chose to not rent a nice place.

You were being inspected, because you live in a slum, and people have a habit of turning those into frat houses or growops. Ditto for fire alarms and all other neighbor problems.

Shady people move into owned properties as well. In fact, most grow ops run by biker gangs are in nice houses in nice neighborhoods, and no one knows until the cops show up.

The garbage chute was there from day 1. Did you not see it?

Elevator booked for moving? I guess owners don’t have to move, they just teleport all their stuff on moving day?

The point is, when you have no money, or refuse to spend money, you get crap. But your situation as a broke poor person will not improve by buying a house, because you cannot afford it. You can only improve your situation by making more money, which will allow you either rent or buy a nice place of your choosing, instead of living in a slum.

#173 devore on 06.24.15 at 5:47 pm

This entire blog can be summarized thus:

People have cause and effect screwed up. As 100,000,000 Americans are in the process of realizing, you don’t get rich by buying a house. It’s not “buy a house, become rich”, it’s “become rich, buy a house (if you want to)”.

When you are poor, you have settle for crappy options, such as living in a slum. When you have more money, your options expand. You can afford to live in a nicer place, even buy one for yourself. But your situation did not improve because you bought a house, it improved because you have more money.

I dare say marketing from the real estate industry is far better and has better returns on investment than advertising by the diamonds industry.

#174 Vic on 06.24.15 at 6:07 pm

“Canada’s truly magnificent housing bubble, incomparably more magnifi

#175 Raging Ranter on 06.24.15 at 6:28 pm

The American, I edited your post for length:

Spent the week in Toronto. It was nice.

The end.

#176 AB Boxster on 06.24.15 at 7:48 pm

#152 Raisemyrent

—————————-
In what world did anyone ever ‘not’ use credit to buy a home.

With the artificial low rates and massive rise in prices, it is impossible to ‘save’ for a house.
A 400K house rising at 5% per year increases by 20K.
A 100K salary rising at 5% per year increases by 5K.
Do the math.

Monthly payment affordability is the same as it was 30 years ago only due to artificial low rates.
Affordability based on home price to income ratios is a joke.

It doesn’t matter whether home prices have been driven up by domestic policies (low rates, easy CMHC insurance, no down payment) or HAM.

Affordability must be influenced by domestic policy.
Why should we rely on other governments to solve our internal issues.

Yet there has been ‘no’ intelligent domestic policy to address this issue.
Fine, stupid past government actions and unfettererd market has caused the problem.

The cure will likely be a mess.

I guess that passes for good social and public policy.

#177 Harry Wilson on 06.25.15 at 5:10 am

re #123 SWL1976 and #125 W.S.H.W. (too modest to spell it out):

Thanks; I feel the love! :)

#178 Raging Ranter on 06.25.15 at 8:28 am

@119 Harry Wilson, you nailed it with that one. I constantly hear the argument “If renting was such a good deal, how come landlords make money?” This has to be the dumbest argument against renting ever. People enter into a transaction of their own free will when they determine that the transaction is beneficial to themselves. No free market transaction would ever happen if both parties didn’t feel they were getting something out of it. It even has a name: Pareto-efficient transaction.

Saying that “If renting was such a good deal landlords wouldn’t be doing it” basically invalidates every free market transaction since the beginning of time. The brick lickers can’t see that this exactly the same as saying, “If buying a home was such a great deal nobody would ever sell it to you.” Likewise, when someone says renting is just paying someone’s mortgage, I like to tell them, “you paid the previous owners mortgage when you bought your house.” I don’t bother reminding them they took on 25 years of debt to so so. That would be mean. :)

#179 carl on 06.25.15 at 9:21 am

I own too much house. Way too big for me. I would be pleased as punch to unload it and rent, but there aren’t that many decent places to rent – maybe because the numbers don’t add up for the owner. I know Garth rents for what seems like a very low price vs house value, but I don’t know how many of those landlords are out there

#180 Getting old on 06.25.15 at 5:59 pm

http://business.financialpost.com/investing/chances-of-bank-of-canada-interest-rate-cut-sit-at-35-says-rbcs-eric-lascelles

Chances of Bank of Canada interest rate cut sit at 35%, says RBC’s Eric Lascelles

No cut coming. We knew that. — Garth