Tools

The moister moaning has been munificent over the past months since the stress test came along. Maybe 20% of buyers have been punted. And rightly so. People without enough money shouldn’t buying houses.

But what about the wrinklies? They’re the crusty folks Mills love to hate – the ones who bought years ago and now sit on towering piles of windfall equity. However, the stress test may be taking a toll here, too. When house-rich, cash-poor people head into retirement with chopped income they face a choice: sell the house and disrupt life, or borrow against it to buy kibble and edibles.

The trouble? With lousy cash flow they can’t pass the stress test. Nor will the banks hand them HELOCs, now that lending requirements have been stiffened. So what happens?

Yup, reverse mortgages. They’ve exploded since the stress test arrived. Just shy of $4 billion is now owed, and the total’s grown by more than 26% in just 12 months. Staggering. Especially when you consider this money is being borrowed at the rate of  5.86% – or twice the cost of a conventional mortgage.

To refresh your memory, a reverse mortgage allows people in their fifties and beyond to borrow a whack of money against their home equity. The cash comes in a lump sum or through regular payments. There are no repayments involved, no tax on the income and the money is only returned to the lender when you sell or croak. That makes it a seductive vehicle for those who don’t want to move and lack the dough to live on. No wonder such growth is happening.

But there’s a downside. A big one. Reverse mortgages cost a lot, and the high interest rate means the outstanding balance grows every month. Fast. After a few years you can owe a lot more than you borrowed, wiping out equity and robbing your estate (and those sad, Millennial inheritors). So as a retirement plan this costs a bundle, compared with selling the property, investing and living off the income stream while retaining capital.

So why would anyone do it?

Let me share an email from a long-time mortgage broker, answering exactly that question:

The stress test has had the biggest impact to Canadians approaching retirement.  In the case of retirees, the test could be deemed discriminatory in the sense that the increased qualifying criteria impacts a retiree the most when their income decreases when transitioning from pre-retirement to retirement.

Traditional banks are not kind to seniors with abbreviated incomes.  Line of credits are no longer an option since the qualification for them have become harder.  Reduced income scenarios coupled with the stress test for a line of credit (amortized calculation) product make it impossible to access for seniors.

As seniors live longer and want to maintain the same living arrangements due to familiarity of neighbourhoods and homes, the reverse mortgage acts as the only option without a payment obligation.  We cannot be surprised with the growth of the product as wealth planners are now using this product as a tool to manage their golden years.

Well, mortgage dude, this wealth planner’s not buying it. A reverse mortgage is expensive, costly to set up, subject to rising rates, equity-sucking and at the very bottom of the tool chest, down there with the corroded AAA batteries and dead stink bugs. There are far better options.

And consider this strategy, from the same broker:

We recently saw a client with a $3,000,000+ home utilize the product to advance $1.1 million and used the proceeds to purchase thee condominiums (to eventually pass down to  each of his three children at some point) and they are all cash flow positive and he gets to write off the interest against the rental income.  The product has become a wealth planning tool.

This undiversified senior was talked into buying three more properties with leverage at twice the rate of a conventional mortgage to secure a trickle of income, fully-taxable, plus deductible interest. Will his three kids want used condos in a few years in a taxable deemed disposition? How is ending up with four properties instead of one an example of de-risking? Does an old retired guy really want to be an amateur landlord, fishing iguanas out of the toilet and scraping mold off the grow-op room floor? Would it not be better having a cash flow-producing portfolio of lowly-taxed dividends and cap gains? Isn’t it better for ‘wealth planning’ to have a balanced approach instead of putting all the eggs in one (real estate) basket plus shoveling on debt?

This is why mortgage brokers are not financial advisors. And sorry about that $4 billion in inheritance, kids. Bummer.

 

116 comments ↓

#1 Flop... on 10.17.19 at 3:02 pm

Not sure what the human value is.

No number thrown out would ever come close.

The war on drugs must be getting up there.

The war on the buffet is also likely to be expensive…

M45BC

“Timeline of the Most Expensive Wars in U.S. History.

The U.S. is the biggest military power in the world, with an annual budget of $649B. The War in Afghanistan in total has cost the country over $910B. The conflict is now over 18 years old, making it by far the longest in American history. It’s so old, some soldiers preparing to fight in it were not even born when it started. Time Magazine calls it “America’s Forever War,” which got us thinking about how its price tag compares to other wars in American history.

World War II is by far the most expensive in American history, totaling 4.69T, more than every other war combined.

The War in Afghanistan is only the third most expensive, however it is by far the longest at 18 years and counting.

The total cumulative cost of the Civil War for both the North and the South is surprisingly small.

Warfare is getting more expensive over time thanks to pricier weapons and far-off conflict zones.

We plotted each war on a timeline from the American Revolution until today, illustrating how long each conflict lasted, where in the world it took place, and how much each one cost. You can read the details about how the Congressional Research Service calculated the costs of war in the full report. Our figures from USA Today are adjusted for inflation in 2019 to represent a true apples-to-apples comparison. The visualization reveals several key trends and takeaways about the true cost of warfare. Warfare has cost the American people over $8.6T, to say nothing of the lives lost. That’s the equivalent of over one-third of the entire U.S. national debt ($22.8T), or about twice the size of the GDP of Japan ($4.6T).

Top 10 Most Expensive Major Wars in U.S. History

1. World War II: $4.69T
2. Iraq War: $1.01T
3. War in Afghanistan: $910.47B
4. Vietnam War: $843.63B
5. Korean War: $398.81B
6. World War I: $381.8B
7. Persian Gulf War: $116.6B
8. Civil War: Union: $68.17B
9. Civil War: Confederacy: $22.99B
10. Spanish American War: $10.33B

https://howmuch.net/articles/most-expensive-wars-us-history

#2 Mike on 10.17.19 at 3:22 pm

My 80 year old father looked at this idea. If your goal is to die broke and your last cheque bounce, these will get you there.

When I explained how they work, my father quickly decided to sell the house, invest and move into a retirement home.

#3 NotLegalAdvice on 10.17.19 at 3:31 pm

Maybe 20% of buyers have been punted. And rightly so. People without enough money shouldn’t buying houses.

_________________________________

Why hasn’t the 20 % of buyers being punted from the market negatively impacted real estate prices in the last several months?

Do we buy now and sell post election? Seems like all the leaders are toying with “affordable housing”, but are going to just inflate this balloon further!

#4 Mr Fundamental on 10.17.19 at 3:45 pm

“Would it not be better having a cash flow-producing portfolio of lowly-taxed dividends and cap gains?”

Absolutely!

But Garth, wait a second… Aren’t stocks more risky, because they might go down in value at some point! I can always sell my condos — they are REAL assets. ;)

Gimme a break. I’ll take the basket of stocks over the real estate anytime. Thanks for the post.

#5 Mean Gene on 10.17.19 at 4:07 pm

Don’t mean to nitpick Mr T. you have a funny spelling error. “That makes tit a seductive vehicle for those who don’t want to move..”

#6 slam on 10.17.19 at 4:09 pm

If you have a reverse mortgage and the property value drops, and you die, does the debt die with you?

#7 AGuyInVancouver on 10.17.19 at 4:09 pm

“..or sell the house and disrupt life..”
_ _ _
Oh, the poor old dears. Imagine the horror of having a big pile of cash and your pick of condos in your neighbourhood or a nice retirement cottage. I’m sure young families with two kids crammed into a one bedroom apartment feel the pain the wrinklies are going through.

#8 Kelly on 10.17.19 at 4:09 pm

Thanks for a very timely blog Garth.

#9 Woman 1, Man 0 on 10.17.19 at 4:13 pm

That broker who conned the senior into 3 more mortgages using the equity from a reverse mortgage is a manipulative crook. Who benefits as the equity in the main asset is drained? The bank and the broker. I hope he enjoyed the fat bonus he got from screwing the elderly. #parasite.

#10 Sebee on 10.17.19 at 4:20 pm

CANADA = DEBT JUNKIES!

Thanks for sharing updates on Canadian debt segments Garth. Still can’t find anything on private lending growth. It’s also been an area of significant growth, but no one seems to be releasing info since the stress test came in.

Honestly Garth, how? How does this staggering level of debt gets unwound? It has to be done somehow, sometime, right?

#11 604sam on 10.17.19 at 4:28 pm

Third??

#12 Alistair McLaughlin on 10.17.19 at 4:30 pm

We recently saw a client with a $3,000,000+ home utilize the product to advance $1.1 million and used the proceeds to purchase three condominiums (to eventually pass down to each of his three children at some point).

He traded the tax-free equity in his home for taxable equity in three investment condos. Since the mortgage broker is boasting that they are cash-flow positive, it’s almost a certainty that the owner is claiming the 4% CCA for investment properties, every penny of which will be recaptured and fully taxable upon his death. (And not at the 50% capital gains inclusion rate either, but at the full marginal tax rate of the estate.) Nice job there mortgage broker. You just helped your client pay an exorbitant interest rate for the privilege of leaving his beneficiaries with a big tax bill on what otherwise would have been tax-free. You really earned your commission on that one.

#13 Sebee on 10.17.19 at 4:32 pm

You know, we have all these communism, socialism, commercialism, consumerism, I’d like to propose a new word…

Bankism (noun)

an economic practise used in western countries (i.e. Canada) based on permitting significant debt – fully secured by government, with minimal to no risk to banks, to create a society in which all property is actually bank owned and each person works to pay the debt owed to bank(s) of their choice according to their maximum abilities to service the debt for the entire duration of their lives, and potentially beyond into their after-life.

#14 Sebee on 10.17.19 at 4:35 pm

BTW…yes it does.

“That makes tit a seductive vehicle”

I don’t like to correct anyone on spelling, as I offend frequently myself, But this one is just too special not to point out.

#15 Mean Gene on 10.17.19 at 4:35 pm

Realturds® and Mortgage Brokers are not licensed or educated to provide sound financial advice.

#16 Doug t on 10.17.19 at 4:47 pm

Dumb (client) meet Dumber ( mortgage broke)

#17 MF on 10.17.19 at 5:04 pm

0 Captain Uppa on 10.17.19 at 10:57 am

Not jealous. He has passed on, so it doesn’t matter since life is more precious than anything.

To be honest. I am bullish on gta real estate. I however understand that it’s the worst thing that could happen to our economy and that the market is 110% manipulated trash.

MF

#18 Ponzius Pilatus on 10.17.19 at 5:04 pm

Picture:
How many idiots does it take to install an AC.

#19 Jager on 10.17.19 at 5:08 pm

You decide gentle reader…

-The truth about the fate of Falun Gong members labeled as dissidents in China?
-The truth about concentration camps for 3 million Uighurs in China?
-The truth about the “Confucious Institute” ingrained in college campuses across Canada and the US?
-The truth about U.S. (tech) billionaires colluding with the CCP?
-The truth about the reverse Opium War?
-The truth about 5G (e.g. Huawei) as smart phones become obsolete?
-The truth about how the West is indirectly funding China’s enormous “One Belt One Road” initiative?
-The truth about why the 2nd anmendment exists in the U.S. Constitution?

A must watch video:
Kyle Bass interviews Ret. U.S. General Robert Spalding

https://youtu.be/kl5279dWqGs

#20 Linda on 10.17.19 at 5:11 pm

Let me get this straight. The bank cop (OSFI) implemented the stress test to cool the overheated housing market & not incidentally prevent bank balance sheets from carrying too many potential debt defaulters due to people buying what they couldn’t afford. Said stress test not under government control (supposedly) although much political hot air being blown claiming the test will be reduced/removed leading up to the election.

So despite the reduction of mortgage growth from younger buyers due to the stress test, much growth of reverse mortgages which are highly profitable to the bank. Methinks that not permitting seniors to access $ unless they reverse mortgage their property is just a tad self serving. If a youthful moister can be given a loan for outrageous amounts of money on the grounds their currently pitiful incomes will eventually increase, seems to me that the same would hold true for seniors. After all, many promises are being made to increase CPP & OAS for the elderly so banks ‘know’ the seniors pitiful income will increase ‘eventually’:)

#21 yvr_lurker on 10.17.19 at 5:14 pm

The decision of this dude with the 3M house makes no sense to me. If one was on the West side in Vancouver, sell your paid off 3M house, get the $$$, and if you want downsize to a 850K decent 2 bedroom condo in the same area. All the &%^&^ yard maintenance and upkeep is reduced dramatically. If you want a place for family reunions with extended family, buy in addition a decent 2000 sq foot place ifor around 650K n Sechelt or Davis Bay, which you can rent out for half the year while you live in the city condo. After all of this you will be around 1.35–1.4M ahead of the game that you can invest generating around 65K a year to live on (if you have no other savings and minimal CPP) and ultimately give it all your kids… This plan is close to what I would like to do…

#22 Andrewski on 10.17.19 at 5:21 pm

Great post Garth. Yet again we see that financial illiteracy rears it’s ugly head. Add to that, I’ll presume that the man with the $3,000,000 home value did not consult with an accountant or tax lawyer. That mortgage broker is a pathetic piece of shite!

#23 Sam on 10.17.19 at 5:24 pm

truly crazy world we live in. Canada is becoming a freak show and the USA IS a freak show. Trump is off the deep end

what has happened?

#24 Blacksheep on 10.17.19 at 5:32 pm

Noname # 66,

“Not too worried about what might happen as a potential 2nd order side effect with a completely untested (ludicrous) theory that might as well be called Magic Money Tree.

Any country that embarks upon MMT as monetary policy will see the price of gold (relative to that currency) soar immediately. No need to wait to see if inflation will be contained.

You should ask any of the countries in the last 100 years that thought they could start the printing presses but “control the inflation” how well that went…
———————————————–
Thank you for making my point.

The language your using describes:

“what might happen”

“Any country that embarks upon”

“that thought they could start”

You seem to be warning on the potential consequences of MMT, should it be implemented, but I think your about 50 years to late and that’s the dirty little secret few are talking about…until just recently. Our system already operates in MMT stealth mode.

My rational:

Why hasn’t the price of gold (your yardstick) gone ballistic in US / $’s? Look at sovereign global debt levels in the past ten years, gold should be well into the multi thousands per ounce, yet it can barley get out of its own way?

Yes, as a reformed gold bug I realize there is price manipulation, but not on a scale that could keep price inflation that low, for this long a time frame, when many large sovereigns (+EU) have been creating large volumes of money/debt to keep their perspective economies from crashing, post GFC.

Just imagine how western tax payers would react, if they were told by the system:

“Oh, we really don’t NEED your tax revenue, we just have to remove (aka destroy) $’s from the open market to control inflation (especially wage) and by taking it from the masses, it gives you the little people, the illusion of value base on demand.”

#25 Sail away on 10.17.19 at 5:33 pm

Wow, painful story. That’s the problem when people think they need to be active.

Much better to be the crocodile snapping up the scurrying monkeys. Let someone else do the work. I’ve gotten so passive, I can barely … stay awake through the day…

#26 I’m stupid on 10.17.19 at 5:45 pm

Garth you missed something. Ouch

https://www.google.ca/amp/s/www.theglobeandmail.com/amp/globe-investor/retirement/retire-housing/foreclosures-can-happen-with-reverse-mortgages/article34067548/

#27 Smartalox on 10.17.19 at 5:49 pm

Reverse mortgages are also a great way to take your ‘one time gift’ money that a wealthy relative or business associate may have given to you, and turn it into a place to stash your drugs, as WELL as claim a clean source of income. Especially if you think that you will be out of the country (or dead) by the time the bills come due.

#28 Doug in London on 10.17.19 at 5:58 pm

After a slower period of sales brought on by the stress test, house sales h e picked up again in those expensive markets in Toronto and Vancouver. NOW is the time for any seniors to cash in that winning lottery ticket before something else slows down the grossly overinflated markets.

#29 The Great Gazoo on 10.17.19 at 5:58 pm

Amazing that broker was actually proud to share the story about convincing his client to leverage the family home to buy 3 condo’s.

Kinda like that letter Trump sent to Turkey the other day – he was so proud to share it with Pelsoi et al – looked like something a 12 or 13 year old bully might write . Some are so clueless they don’t even know when they should just keep it to themselves.

#30 Smartalox on 10.17.19 at 6:00 pm

Can anybody tell me:

– Do Reverse mortgages have fixed, or variable interest rates?
– Can you port a Reverse mortgage from one reverse lender to another?

Thanks!

#31 Drill Baby Drill on 10.17.19 at 6:02 pm

More very senior presidential staff are jumping ship. I think Trump will actually be gone or quit very soon.

#32 Deplorable Dude on 10.17.19 at 6:15 pm

The Neocon warmongers must be spitting nails.

Trump’s genius in leaving Turkey exposed alone to all its enemies (Kurds/Syria/Russia)….not to mention crippling sanctions…Turkey realises it has no option and capitulates.

Trump has done in 2 weeks what past leaders have been trying for a decade to do.

Meanwhile all the Dem’s can do (along with 129 traitorous Republicans) is vote to stop the pullout from a war they never authorised in the first place

Wonder if ABC news will show images of a peaceful Kentucky shooting range now…..see if they can pass it off as Syria again.

#33 Lead Paint on 10.17.19 at 6:16 pm

Flop, sounds like you visited your former homeland recently, reports of your return are thrilling locals.

https://www-m.cnn.com/2019/10/16/australia/tasmanian-tiger-intl-hnk-scli/

#34 the ryguy on 10.17.19 at 6:32 pm

Whats with all the Trump bashing today? Yeesh. Guy negotiated a ceasefire in a decades old conflict..without firing a shot. Wasn’t everyone so scared of WW3 when Trump took office? Now you’re upset? Liberals are the most miserable people on the planet. Take your prius, grab a free trade soy latte and chill out.

#35 Spaccone on 10.17.19 at 6:35 pm

My thinking has always been….hmmm 1 or 2 piles of bricks that you’re taking a gamble on, in a place that’s a frozen over hellhole half the year…or hundreds of the best companies in the world. Decisions-decisions…

#36 akashic record on 10.17.19 at 6:35 pm

Canadian politicians have been reverse mortgaging the country as if they were elected to become owners, instead of public servants.

#37 Brian1 on 10.17.19 at 6:40 pm

Condos are solving the problem for mellennials.

#38 Flop... on 10.17.19 at 6:43 pm

Lead paint.
Flop, sounds like you visited your former homeland recently, reports of your return are thrilling locals.

https://www-m.cnn.com/2019/10/16/australia/tasmanian-tiger-intl-hnk-scli/

////////////////

Hey Leady, yeah Noname brought it to my attention yesterday.

I checked the local rag last night and it didn’t get a mention.

I didn’t recognize the top two photos but the black and white one is engrained in my memory as a boy.

There was black and white footage of that one too.

Not the square jaw.

Some people see a dog, others see a cat.

Maybe The Tasmanian Tiger is what this blog needs as a compromise.

Half dog, Half cat.

I’m still totally wild…

M45BC

#39 john m on 10.17.19 at 6:48 pm

I could not agree more Garth…but the people selling reverse mortgages do have one of the funniest commercials “where the kids are trying to talk their parents into selling and the parents say they will move i with them”…i laugh everytime i see it :-)

#40 Millennial Realist on 10.17.19 at 6:58 pm

Paleo Boomers become irrelevant in:

5 Days and Counting………..

#41 Dave on 10.17.19 at 7:08 pm

All my developer friends in Vancouver say that the election will bring in a surge of sales. It’s been extremely slow but the cycle will go straight up from here. Just need conservatives back in power.

#42 Leftover on 10.17.19 at 7:15 pm

Had a neighbour with a reverse mortgage along with deferring her property tax for about 20 years (we live in BC).

When she died her house was worth over $1 million, but her heirs, all of whom were greedily awaiting her demise, were left with about $200k to split 4 ways.

Not what they expected and they were not amused.

#43 45north on 10.17.19 at 7:16 pm

Flop: cost of wars

Wars do have a cost but they’re not toaster-ovens. There are intangible benefits that ripple throughout history. Human rights. Take the civil war for example. If it had not been fought, slavery would still exist. You could argue that it would not exist in Britain and its colonies. Here’s a video that supports that argument:

https://www.youtube.com/watch?v=TiSekII0sjw

but I would argue that if slavery was in force in the United States, it would have spread to Canada and the rest of the world with the expansion of the United States.

The other example is the Second World War. If it had not been fought, genocide would still exist.

But in other wars, it’s not so clear.

#44 conan on 10.17.19 at 7:20 pm

Here in Westboro, a part of Ottawa Centre, the problem is over intensification. Lots with old homes are purchased and then knocked down. A swanky 4 plex goes up in its place. Rent = 2500 a unit.

Cost to build is 1. 7 million, Elevator included.
Income before expenses 120k
With interest rates currently in the dumpster these are proving hard to stop.

#45 Reality is stark on 10.17.19 at 7:23 pm

It’s hard not to feel sorry for someone with a 3 million dollar home fully paid for.
The options they face are truly heartbreaking.
The only solace is to know that our socialist government would like to tax that wealth away before the senior can spend it himself.
My money is on the socialists.

#46 Phylis on 10.17.19 at 7:25 pm

$4B from the winfall pockets of moisters? Now that’s something worth whining about.

#47 NoOneOfConsequence on 10.17.19 at 7:29 pm

Ha! So…where do I get a nice ETF containing reverse mortgage corps paying handsome dividends?

#48 crowdedelevatorfartz on 10.17.19 at 7:34 pm

@#1 Flop
“Top 10 Most Expensive Major Wars in U.S. History’
++++

You missed the most expensive and bloody one…
Divorce wars

#49 Nonplused on 10.17.19 at 7:34 pm

Well, you can kind of see why the banks don’t want to lend to people with little or no income. Being in debt when you are retired seems like a bad idea to me.

But the needs of today are always more important than the needs of tomorrow, so people are easily lured into debt. And into voting for socialist policies. Which is also voting for debt.

#50 crowdedelevatorfartz on 10.17.19 at 7:36 pm

@#42 leftover
“When she died her house was worth over $1 million, but her heirs, all of whom were greedily awaiting her demise, were left with about $200k to split 4 ways.”
+++++

Perfect.
They didnt work for it so why should they “get” anything.
She should have willed everything to the local animal shelter.

#51 O Cannabis! on 10.17.19 at 7:41 pm

Garth….Doood!!

Today’s the most awesome chillaxin’ day ever, bro!

One year of Mary Jane for everbuddy :) :) :)

I’m ready for year 2 – yeehawwwwww!

Anybody got some chips?

#52 Linda on 10.17.19 at 7:42 pm

#7 ‘Guy’ – different perspective here. The ‘wrinklies’ often lived a different lifestyle from the young & mobile of today. Tended to stay in place, raise their family & work for the same employer for 25+ years. Knew their neighbours, many of whom they grew up with & whose children played with their children.

So before you blow off their concerns, think: place they know, people they know, businesses/medical professionals/services they know. Now throw in the possibility of their mental acuity not being what it used to be, either due to illness or drug regimes. Leaving what they know, the people they know, for new surroundings. Maybe losing access to the medical services they require. Easy to say ‘move somewhere else’ but what if that new place doesn’t have the amenities the current location does?

As you yourself age, you may notice that changes in your routine have more physical impact than you expect. Transplant shock doesn’t only pertain to plants. Ever travel? Ever notice that it takes a couple of days for your internal system to ‘adjust’ to the new location?

As for the crowded digs of the young family you cite, I can assure you many of the ‘wrinklies’ endured crowded conditions at some point in their lives. Nor does being old equate to home ownership. Google homeless shelters aged population. The results might surprise you.

#53 yvrmc on 10.17.19 at 7:51 pm

Just 5 more days until Millennial Realist can finally shut up. We get it you are finallllllllllly a larger number . Bravo junior you have finally achieved personal greatness…. now its your turn to work your way into old age . Hope you make it .

#54 akashic record on 10.17.19 at 7:56 pm

Toronto Mayor Tory could change his name to Mayor Farlefty, to properly reflect his political identity.

#55 oh bouy on 10.17.19 at 8:17 pm

@#54 akashic record on 10.17.19 at 7:56 pm
Toronto Mayor Tory could change his name to Mayor Farlefty, to properly reflect his political identity.
__________________________________

lol, Tory has always been a conservative.

#56 socrates on 10.17.19 at 8:19 pm

Most people, most countries for that matter are at historical levels of debt. The bigger problem is that there is no plan, none. Interest rates are at historical lows, no more tools in the shed should the economy need more stimulation. If you’re interested in how this debt plague ends, have a listen to Martin Armstrong. Quite the reality check.

#57 crowdedelevatorfartz on 10.17.19 at 8:20 pm

@#51 O Cannabis
“Anybody got some chips?”
++++

Sorry Dude.
Saving them for the Halloween Horror show
aka
Night of Disappointment for Millenials next Monday.
Should be a very entertaining show.
A comfy seat, potato chips, cold beers and Trudeau trying to put a positive spin on a dreadful campaign election.

It doesnt get any better….

Oh wait, I almost forgot,
It does.
The wailing from Mewling Surrealist about the unfairness of it all……music……pure classical music…..

#58 crowdedelevatorfartz on 10.17.19 at 8:26 pm

hey Flop!

Does it rain like this in Taz?

#59 acdel on 10.17.19 at 8:40 pm

#34 the ryguy

Yeah, I do not get it myself. The guy (unlike his predecessors) has not started any wars. Doing what he said he would; the economy is in much better shape; he certainly is not perfect but were his predecessors?

Great blog tonight Garth; hopefully it will educate those stuck in that situation to better options; man, that so called broker should be thrown in jail; totally unethical!

#60 yvr_lurker on 10.17.19 at 8:41 pm

#50

Perfect.
They didnt work for it so why should they “get” anything.
She should have willed everything to the local animal shelter.

——————————-

Must admit that I don’t have that attitude at all. Having started with a big zero I know first-hand how challenging it is to compete in a large city to save $$ and get ahead when there is zero family help and loads of student debt to pay off. This was my path. I am teaching my 15 year old kid to work hard and find his own internal motivation to succeed in school, having a part time job etc… I don’t plan on having any conversation with him about his “inheritance” until I am on my deathbed, as I don’t want to do anything that will dampen his drive to do something productive. However, rest assured that I will not be leaving anything to the animal shelter or to other such groups (as much as I like animals). It is family first, 100%. My wife says I think like a first-generation immigrant who just came off the boat not too long ago. I always laugh and tell her I’m an economic immigrant. Leaving something sizable behind will be important for the next generation, and not to squander it all away.

#61 Flop... on 10.17.19 at 8:41 pm

Forget who you are going to vote for.

If you had to have one drink with a federal leader, which one would you choose?

I’d choose Jag.

Pro…seems like a decent dude.

Con…He would most likely have me pay for the round…

M45BC

#62 Scheer for PM on 10.17.19 at 8:45 pm

DELETED

#63 akashic record on 10.17.19 at 8:49 pm

Major white privileged, masquerading blackfaced for fun runs to lead a country, endorsed by first black US president.

Free humor for the grotesque loving masses.

#64 Flop... on 10.17.19 at 8:53 pm

crowdedelevatorfartz on 10.17.19 at 8:26 pm
hey Flop!

Does it rain like this in Taz?

////////////////

Hey Crowdie, I looked on Wikipedia once a while back and it stated that where I’m from only gets roughly 33% of the rain we get here if I remember correctly

To your point of the storms here the last couple of days, there are times that it doesn’t rain for a couple of months and then the sky opens up and the city gets flash floods.

I got stuck in a good one in Phoenix, Arizona once that reminded me of back home.

Also, with your other post, I didn’t mention divorce wars just in case Mrs Flop was looking over my shoulder…

M45BC

#65 NoName on 10.17.19 at 8:54 pm

#61 Flop… on 10.17.19 at 8:41 pm
Forget who you are going to vote for.

If you had to have one drink with a federal leader, which one would you choose?

I’d choose Jag.

Pro…seems like a decent dude.

Con…He would most likely have me pay for the round…

M45BC

Funny that 2for1.

#66 akashic record on 10.17.19 at 8:55 pm

#55 oh bouy on 10.17.19 at 8:17 pm

@#54 akashic record on 10.17.19 at 7:56 pm
Toronto Mayor Tory could change his name to Mayor Farlefty, to properly reflect his political identity.
__________________________________

lol, Tory has always been a conservative.

Somewhere in the far past. Maybe… hard to recall the evidence.

#67 crowdedelevatorfartz on 10.17.19 at 8:58 pm

@#61 Flop
“If you had to have one drink with a federal leader, which one would you choose?”
+++++

Well since I already drank beers with Trudeau at a Granville st Pub 15+ years ago I’ll have to settle for “Bring me another beer Scheer”.

#68 Lead Paint on 10.17.19 at 9:18 pm

61 Flop… on 10.17.19 at 8:41 pm

Only MadMax has a vision for Canada, not that I’m saying I agree with it, but at least an interesting discussion could be had. The rest sell positions their pollsters advise them to take, you might as well go for a beer by yourself and listen to their campaign ads. They are opportunists selling phoney patriotism, puppies, ponies, and free money for all. They rely on gullible people and disdain for their opponents to propel them to power.

Perhaps some day a real leader with a vision for this country will rise, but I think most prefer comfortable lies to reality. Ethical leaders run the other way.

#69 DON on 10.17.19 at 9:22 pm

#18 Ponzius Pilatus on 10.17.19 at 5:04 pm

Picture:
How many idiots does it take to install an AC.
8888888888

In the next picture…the AC falls on the over extended fool and sends them both to the ground meanwhile that action catapults the trusting fools head first into the payment.

@Seebee love that Bankism term, you should send it to the dictionary folks.

@NotsoLegalAdvice

What happened the last time a country indebted itself and ran head first into the end of an economic cycle. Asked those old folks if they recall want they experienced in the 80s. 80’s out west started the downsizing, mill closures, recession, job losses, divorce, high house prices compared to incomes, speculation, Japanese said to be buying up Vancouver prior to the Japanese downturn, interest rates shot up. And since human nature is involved, history rythmes…different conditions, catalyst, factors but the common theme is too much debt when things turn south.

#70 DON on 10.17.19 at 9:43 pm

#24 Blacksheep on 10.17.19 at 5:32

*********
Makes you wonder…

Cheers,

#71 Dutchy on 10.17.19 at 9:44 pm

I will soon (6 months) be an 80 year old “Wrinkly” but do not consider myself senile yet.

As I understand it, there is (or was???) a major difference between a reverse mortgage and a HELOC.

I was authorized up to 60% but kept my balance below 10% of assessed value and was paying bank posted prime interest rate-1/4% payable monthly on the outstanding balance. (while transitioning)
Interest paid was less then 3% over the last few years.

So yes definitely, never, never sign up for a reverse mortgage.

My plan always was to have my last check bounce but with the outrageous value of my home just sold that goal will be difficult to achieve.

Would like to see some more comments about tax planning. Prioritize income from LIF, RRIF, RRSP (wifes), Dividend income or Margin accounts first ??

P.S.
Most important things in life are health, family and your integrity. (Not your net worth)

#72 Slow Canada on 10.17.19 at 9:45 pm

Garth, you’re awesome, man.

#73 DON on 10.17.19 at 10:06 pm

#64 Flop… on 10.17.19 at 8:53 pm

crowdedelevatorfartz on 10.17.19 at 8:26 pm
hey Flop!

Does it rain like this in Taz?

********************

On the west coast of the Island we refer to Vancouver rain as Vancouver Island Mist.

#74 DON on 10.17.19 at 10:10 pm

#60 yvr_lurker on 10.17.19 at 8:41 pm

Nicely put, couldn’t agree more. I’m doing the same.

#75 Sail Away on 10.17.19 at 10:52 pm

#61 Flop… on 10.17.19 at 8:41 pm

If you had to have one drink with a federal leader, which one would you choose?

———————————-

I’d choose a Caesar. Hopefully served by Millenial Realist.

#76 NoName on 10.17.19 at 11:10 pm

I dont know who i did got entangled in MMT, especialee when i do my best keep all post simple. But know that we on a topic of printing and hard stuff, i have to admit sorry farz i prefer bourbon over single malt with few exception ofcourse. to my knowledge Japan is only one that i know, that can do MMT sucsesfuly to some degre, 98% of gov debt owned by with in country.

This is what MMT does to fat men.

https://www.youtube.com/watch?v=PvrF94qyKCA

and this is what QE does to fat men.

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

Next time i bust a move ill make sure wifi is recordin…

#77 IHCTD9 on 10.17.19 at 11:11 pm

#60 yvr_lurker on 10.17.19 at 8:41 pm

Must admit that I don’t have that attitude at all. Having started with a big zero I know first-hand how challenging it is to compete in a large city to save $$ and get ahead when there is zero family help and loads of student debt to pay off. This was my path. I am teaching my 15 year old kid to work hard and find his own internal motivation to succeed in school, having a part time job etc… I don’t plan on having any conversation with him about his “inheritance” until I am on my deathbed, as I don’t want to do anything that will dampen his drive to do something productive. However, rest assured that I will not be leaving anything to the animal shelter or to other such groups (as much as I like animals). It is family first, 100%.
———

Your kid should do well, I think the same and practise a “hands off” style of parenting. My teenaged kids learn by watching. Their normal in life is what Mom and Dad DO, not what they say. Words can reinforce actions, but don’t mean much standing on their own.

I don’t badger them about their marks in school, what they plan on doing for a living, or how to handle their money. They already have a pretty good idea what a good idea looks like. If they want my opinion, all they have to do is ask (and they do occasionally).

Kids will be getting 100% of whatever’s left of the pile when Ms. IH and I check out, and you know what? I already know they’ll be great with it.

IMHO, if the parents are both solid and successful, all they need to do is keep living the life that got them there. Little verbal direction will be required to raise kids that make good decisions. Osmosis will install the fundamentals that will fill in the blanks later on in life.

It’s the same process where by the abusive alcoholic parents produce kids who fail their classes, lose their jobs, and end up in jail – all without a single verbal encouragement to do so. Their kids also learned (and were damaged) through osmosis. Doing the opposite of the above, produces the opposite kind of kids.

#78 april on 10.17.19 at 11:17 pm

#28 – According to the data 60 houses sold in West Van and what would you expect from realtors…. all of a sudden all the media outlets, Global and the like, carrying real estate spin that Greater Vancouver sales are up by, 24%? [not sure I’ve got the % right] Check for yourselves by going to the mls website which shows the data.
Listen to Ross Kay Oct Tues 15.

#79 NoName on 10.17.19 at 11:22 pm

Addendum to my previous post, little bit of old school rap.

https://www.youtube.com/watch?v=xy4FXhkm6Nw

#80 akashic record on 10.17.19 at 11:47 pm

#68 Lead Paint on 10.17.19 at 9:18 pm
61 Flop… on 10.17.19 at 8:41 pm
Only MadMax has a vision for Canada, not that I’m saying I agree with it, but at least an interesting discussion could be had. The rest sell positions their pollsters advise them to take

Visions are declared mad by those who never had any.

#81 NoName on 10.18.19 at 12:13 am

intersting read

https://nypost.com/2019/10/17/stop-thinking-so-hard-you-might-die-earlier-study/?utm_source=NYPTwitter&utm_medium=SocialFlow&utm_campaign=SocialFlow

if not for genes acording to this i should 100…

#82 Smoking Man on 10.18.19 at 1:20 am

If ever in my life , screw the ego. God please make my prediction of a T2 majority wrong.

I’m a Canadian. Prould of it..

I will stop looking up at the sky in a drunken rage, screaming at you calling you a MF’er

Deal on God?

#83 Smoking Man on 10.18.19 at 1:58 am

When you finally figured it out.
It’s to late….

Then Booze has a significant importance in your life.

Dr Smoking Man
PhD Herdonomics.

#84 the Jaguar on 10.18.19 at 3:13 am

The business about lending requirements being ‘stiffened’ is interesting. It infers that lending principles are applied equally across the board. They are not. And if you think the banks will allow themselves to be cut out of the the action when they want to increase their market share think again. They are highly creative when it comes to rationalizing their practices to entities such as OSFI. Poor old banks. Just trying to scratch out a living. Always remember they are ancient warriors, and won’t allow anything or anyone to get in the way of their business plans. If you think otherwise you are dreaming in technicolor.

#85 SimplyPut7 on 10.18.19 at 3:41 am

The condo investors will soon learn all debt is meant to be paid back – there’s no free lunch.

The rent collected off of newer condo units does not cover all of the landlord’s expenses. The landlords with older units that do have positive monthly cash flow, spend part of that money on renovations to update the units to attract tenants willing to pay market rent for older units in exchange for new appliances and flooring changed from carpet to hardwood.

I’m starting to hear murmurs from some investors about what are they going to do with their units that will be completed late next year.

Shouldn’t they have thought about that in 2016 when they were begging to buy these units from developers?

#86 under the radar on 10.18.19 at 4:38 am

What the old man did was not smart. He could have have created an alter ego trust which would remove the house from probate on death and then passed the proceeds to his kids not only tax free but without probate fees and the time it takes . By the way an alter ego trust allows you to stuff it with all capital property including financial investments .

#87 toolztoy on 10.18.19 at 5:47 am

Garth,

I am a Mortgage Broker. I totally get your point. These guys in the photo should have been wearing hard hats and high viz jackets.

#88 Sail Away on 10.18.19 at 7:06 am

#83 Smoking Man on 10.18.19 at 1:58 am

When you finally figured it out.
It’s to late….

Then Booze has a significant importance in your life.

Dr Smoking Man
PhD Herdonomics.

——————————

Mr. Leahy? Is that you?

#89 Cottingham a bargain on 10.18.19 at 7:07 am

#85 simplyput7.

Condo investors who bought back in 2016 have made out like bandits.

If they are thinking about what they are going to do with their condos as you say I would liken the thoughts to a winner of a lottery contemplating what to do with the grand prize.

The bubble heads on this blog only wish that they had bought a dozen of these ‘ terrible ‘ condo investments three years ago.

That depends entirely on the location, as many condo investors have made ziltch, while carrying large monthlies and owning illiquid units. Your house-humping is embarrassing, even for a realtor. – Garth

#90 maxx on 10.18.19 at 7:35 am

@ #53

They might – if they learn how to cook.

#91 crowdedelevatorfartz on 10.18.19 at 8:01 am

@#89
Perhaps Cottingham is a bargain because no one actually knows……where it is?

#92 crowdedelevatorfartz on 10.18.19 at 8:06 am

Renting Condo’s
I’m waiting for the big Revenue Canada crack down on rentals ( long and short term).
Seems they’re auditing tons of people for “gas receipts” these days…
Perhaps Trudeau’s way of getting people into electric vehicles….?

#93 Mona on 10.18.19 at 8:29 am

In life, lessons are hard learned.

The Millennial crowd seems to harbour considerable anger towards the boomers for their ridiculously high cost of housing in Canada.

That anger is profoundly misplaced. Absolutely so.

Here’s why.

The cost of housing (and pretty much everything else for that matter) is fundamentally decided by supply and DEMAND.

News flash…the boomers are not demanding houses.

The Millennials are the ones driving the prices up as they fight with each other (bidding wars, bully offers etc.) over the “right” to be owned by a home.

It’s sad but the fact is that the Millennials financial learning curve is very very steep. In my experience they currently lack the basic fundamental understanding of finance and money management.

Hence, to them, debt is a good and normal thing, interest rates will never rise, and houses will always go up in value.

As I already said, life’s lessons are hard learned. The lessons that the millennials are going to learn will indeed be hard. Hard and very damaging.

The challenge for the rest of us, is to NOT find ourselves being collateral damage to their steep learning curve.

How do those with financial savvy, who have saved and invested, protect themselves when the default of so many millennial mortgagees goes down?

CMHC (our government) backs many of these mortgages.

Will the savers, retirees, and investors be expected to pay for the (obvious and serious) mistakes that the millennials have made through punitive taxation or other money grabs?

Seriously, what will happen when potentially millions of people default on government backed debt? How do we protect ourselves from THEIR mistakes?

This subject needs to be explored Mr. Turner. It’s critical actually that this discussion takes place.

Please?

#94 Dharma Bum on 10.18.19 at 9:07 am

My BIL took me out on the town for my 60th.
For some reason he wanted to head down to Queen Street West.
Whoa.
It was like entering a time warp. Every person in sight was either a Mil, Hipster, or Moister.
The air was wafting with the sweet smell of weed smoke.
We really stuck out like sore thumbs.
Like a couple of dinos, ambling down the street.
Another thing i noticed was that every joint, vape room, bar, and restaurant was full Full, FULL!
This broke, indebted, jealous, bitter, entitled, disgruntled, boomer-hating cohort may not be able to afford real estate, but they sure seem to have the scratch to be able to consume overpriced alcohol and gobs of ridiculously priced mediocre food in funky gastropubs like there’s no tomorrow.
Oh, wait….there IS no tomorrow.

#95 Cottingham a bargain on 10.18.19 at 9:12 am

#89 Cottingham a bargain
#85 simplyput7.

Condo investors who bought back in 2016 have made out like bandits.

If they are thinking about what they are going to do with their condos as you say I would liken the thoughts to a winner of a lottery contemplating what to do with the grand prize.

The bubble heads on this blog only wish that they had bought a dozen of these ‘ terrible ‘ condo investments three years ago.

That depends entirely on the location, as many condo investors have made ziltch, while carrying large monthlies and owning illiquid units. Your house-humping is embarrassing, even for a realtor. – Garth
—————-

Clarification – not a realtor but definitely a “ house humper” as I have ‘ humped’ many and continue to do so.

Also to clarify, referring to condo purchases anywhere in GTA in 2016 have seen big price increases .. period.

#96 Cottingham a bargain on 10.18.19 at 9:17 am

#91 crowdedelevatorfartz on 10.18.19 at 8:01 am
@#89
Perhaps Cottingham is a bargain because no one actually knows……where it is?
———-

My handle is based on a very old post of Garth’s, perhaps 5 years ago estimate where he argued that a tiny semi near yorkville that sold for what he believed at the time was , for lack of a better word ,an absurd amount ,was irrational .

I argued that it was a bargain. You can decide for yourself who turned out to be right .

#97 James on 10.18.19 at 9:19 am

#82 Smoking Man on 10.18.19 at 1:20 am

If ever in my life , screw the ego. God please make my prediction of a T2 majority wrong.

I’m a Canadian. Prould of it..
I will stop looking up at the sky in a drunken rage, screaming at you calling you a MF’er
Deal on God?
_____________________________________________
Exactly what part of Canada are you from anyway Old Man. Must be from an isolated part where they don’t show you how to communicate effectively in one of our two official languages. Also the part where you spend way too much time huffing gasoline and drinking compass fluid.
BTW. God has already predestined your place after life. I hear its very warm there.
passer un bon moment en enfer mon ami

#98 Cottingham a bargain on 10.18.19 at 9:23 am

Crowded elevator-

The semi near yorkville was on a street called Cottingham

#99 James on 10.18.19 at 9:27 am

#94 Dharma Bum on 10.18.19 at 9:07 am

My BIL took me out on the town for my 60th.
For some reason he wanted to head down to Queen Street West.
Whoa.
It was like entering a time warp. Every person in sight was either a Mil, Hipster, or Moister.
The air was wafting with the sweet smell of weed smoke.
We really stuck out like sore thumbs.
Like a couple of dinos, ambling down the street.
Another thing i noticed was that every joint, vape room, bar, and restaurant was full Full, FULL!
This broke, indebted, jealous, bitter, entitled, disgruntled, boomer-hating cohort may not be able to afford real estate, but they sure seem to have the scratch to be able to consume overpriced alcohol and gobs of ridiculously priced mediocre food in funky gastropubs like there’s no tomorrow.
Oh, wait….there IS no tomorrow.
___________________________________________
I hope there is a tomorrow as my wife and I are going out for dinner tonight over on Queen West. Actually at the corner of Queen and Spadina great little place called Alo.

#100 DM in C on 10.18.19 at 9:50 am

Mine will do this, guaranteed. 60+ years of poor financial decisions, plus the fact they want to be able to smoke in their house means they can’t move nor can they sell as is.

We the kids are not banking on ANY inheritance. They can keep it. Just don’t ask US for money when you piss yours away.

#101 the Jaguar on 10.18.19 at 10:13 am

#93 Mona:
“Seriously, what will happen when potentially millions of people default on government backed debt? How do we protect ourselves from THEIR mistakes?”

Likely they will find numerous underwriting errors or omissions in what was presented at the time they provided the insured approval along with a significant sprinkling of good ole fraud. So they could deny the claim and leave the financial institution ‘hanging’. They can also sue for deficiencies. People who think they can thumb their nose and walk away from their obligations may find the lights switched on with sudden rapidity. Real estate calamity isn’t new, and it ain’t the first rodeo in which CMHC or the banks have ridden ‘shotgun’. Contingency plans are always in place in the event things go off the rail.

#102 MF on 10.18.19 at 10:30 am

#95 Cottingham a bargain on 10.18.19 at

You are right.

Don’t worry the big bad government will step to save the worthless garbage you invest in with lower interest rates while they claim to “stimulate” the economy.

Here’s a sobering thought: without artificially low rates you would probably be broke.

I’m bullish on RE, but let’s be honest RE investors aren’t real investors at all.

MF

#103 Remembrancer on 10.18.19 at 11:06 am

#43 45north on 10.17.19 at 7:16 pm
Fact check on American exceptionalism plug…

British Slavery Abolition Act of 1833, abolished slavery in most of the British Empire, including Canada, some 28 years before start of American Civil War…

Not to take away from the sheer horror of industrialized murder in WWII, but just as important to the victims, post-WWII genocides include in Cambodia, in Rwanda, in Ethiopia and others that if listed would be sure to trigger somebody but tough luck…

A good summary that looks relatively unbiased is here:
https://en.wikipedia.org/wiki/Genocides_in_history

#104 Russ on 10.18.19 at 11:22 am

toolztoy on 10.18.19 at 5:47 am

Garth,

I am a Mortgage Broker. I totally get your point. These guys in the photo should have been wearing hard hats and high viz jackets.
=========================

Hey Toolz,

Overdone PPE and silly safety regs is a North American thing.

Hardhats are for when there are overhead hazards present. The A/C is secured… looks like the lad is doing some wiring.
And High-viz clothing is best when there is mobile equipment operating in the vicinity.

The PPE deficiency that I see is middle guy should have better sun protection & substantial footwear.

I hope they did a field level risk assessment to ensure the proper order of bodies mounting and exiting the “platform”.

Always glad to help.
Cheers, R

#105 SimplyPut7 on 10.18.19 at 11:29 am

#89 Cottingham a bargain on 10.18.19 at 7:07 am
#95 Cottingham a bargain on 10.18.19 at 9:12 am

The increase in price for resale condos isn’t as big as it used to be:

* The condo owners I know in downtown Toronto area have a peak price in mind (e.g. sometime early 2018 as 2019 prices have been a bit soft) they are like the detached owners circa March 2017 waiting for the price to be higher before selling.

* The condo investors I know are scared of CRA coming after them. They don’t want to sell because after realtor fees and taxes, the little profit they did make was not worth all the hassle compared to investing in the stock markets. From the time they gave the developers their down payment when they first bought the condo, to the years later after the condo was built and rented out (and they had to pay the difference monthly between rent and condo carrying costs) they would have made more money in the stock market.

* The condo investors that will soon have to find a way to pay the large balance outstanding on their finished condo, are not really interested about being landlords, the ones who are up to the challenge are fighting for the few young professionals and post-secondary students that are left that are willing to move into a new but smaller unit, pay $2,000+ rent and risk dealing with novice condo investors who just want to get out of the real estate market and sell the units they are living in.

Even the newspapers are admitting rent increases are slowing. Most people in Toronto are poor and can’t afford $2,000 or more for rent, and a lot of people who own townhouses and detached houses with extra rooms or finished basements nicer than some older apartments on the market, are gladly accepting tenants that can no longer afford to stay in the apartment they were in after being renovicted.

https://www.thestar.com/news/gta/2019/10/18/are-rents-hitting-a-ceiling-at-2500-in-toronto.html

I don’t think we will hear about the condo investors’ cash flow problems until late 2020 when the first glut of condos is finished and finding tenants that can afford the rent the landlords want become harder to find as number of places available for rent increases. For those who can afford to move, the new and updated apartments and houses for rent are very nice, HGTV would be proud.

#106 jess on 10.18.19 at 12:14 pm

mob rule

mattis and lincoln
Mattis :during Al Smith dinner speech
476,795 views
•Oct 18, 2019

https://www.youtube.com/watch?v=g_sG7N7pJ6g
https://www.constitution.org/lincoln/lyceum.htm

=============

OneWest subsidiary agrees to $89M settlement for reverse mortgage violations

Harvard: Number of cost-burdened senior households hits all-time high

Affordable housing options for seniors are becoming harder to find
https://www.housingwire.com/articles/harvard-number-of-cost-burdened-senior-households-hits-all-time-high/

Housing market flashing recession signal

Gap between home prices and income point to a recession by the 2020 election

#107 leebow on 10.18.19 at 12:42 pm

#105 SimplyPut7

Great observations, summary and analysis.

I was thinking about it for some time, and came up with similar conclusions.

1. The “investors” will be in the market only as long as they have positive return expectations.
2. Meaning, there is a price level where the decisive majority of investors will aim to liquidate and stay on the sidelines.
3. Govt set the expectations, or anchoring points with CMHC insurance and now the equity participation program to the 800-1000 range for some average detached house in desirable areas.
4. Downtown semis can be found in that range, Hamilton new construction is in that range. Everything in between is within the range as well.
5. Whether there is another 100K to make or not is irrelevant for a new investment. The transaction fees and opportunity cost make new RE investment questionable at this time. Smarter investors who put more value on the opportunity cost and liquidity should be already out.
6. The only reason to hold existing RE is to squeeze that marginal increase potential, or hope for a new incentive from the gov’t. Neither is a good reason. I doubt anybody sane is expecting to double the money within a practical time horizon. Unfortunately, for many people RE is the only investment tool they know and trust. That adds inertia.
7. There will be price improvements (eg St Catharines vs Hamilton, pre-construction vs completed). Otherwise, the prices will probably stall.
8. As you observed, there will be a substantial increase in supply of condos. That may lead to a change of direction. Not sure what could trigger change in supply/demand for detached. But condo supply must influence detached as well. They are substitutes.

Bubbles do not collapse on fundamentals. They collapse on change in expectations.

#108 Dutchy on 10.18.19 at 12:43 pm

#86 under the radar on 10.18.19 at 4:38 am

Alter Ego Trusts and also Joint Partner Trusts will cost you to set up. And will have retained income taxed at the highest marginal rate and annual tax returns will have to be filed (additional accounting fees)

The old man.

#109 Cottingham a bargain on 10.18.19 at 1:20 pm

102. MF on 10.18.19 at 10:30 am
#95 Cottingham a bargain on 10.18.19 at

You are right.

Don’t worry the big bad government will step to save the worthless garbage you invest in with lower interest rates while they claim to “stimulate” the economy.

Here’s a sobering thought: without artificially low rates you would probably be broke.

I’m bullish on RE, but let’s be honest RE investors aren’t real investors at all.

MF
———

You too are correct on points 1 emphatically and point 3 to some degree but wrong on point 2 in that without artificially low interest rates I would not be investing in real estate and would not be broke.

I have no particular affinity to RE but to ignore the incredibly accommodative environment we are in ,here in Canada ( think your point 1) has been the fools errand on this blog for many years.

The trend in RE is your friend . So far past 20 + years , trend has not been broken nor barely shaken.

#110 Cottingham a bargain on 10.18.19 at 1:27 pm

#105 simplyput7

You are probably correct in that price increases have been slowing and not as big as they used to be. I myself have been shocked at the asking prices of some of the new launches thinking of how absurd the price per square roots are.

FYI I don’t own any and prefer to invest in multi unit dwellings with dirt under them for parking metal and rubber.

Still , I think you have made out well if purchase date coincides with 2016 ish or earlier . Small deposit=big leverage

#111 Phylis on 10.18.19 at 1:30 pm

#104 Russ. When the ladder is lying flat, are working at heights rules still applicable? I guessing appropriate fall protection is missing.

#112 Damifino on 10.18.19 at 1:41 pm

#94 Dharma Bum

Every person in sight was either a Mil, Hipster, or Moister. The air was wafting with the sweet smell of weed smoke. We really stuck out like sore thumbs. Like a couple of dinos, ambling down the street. Another thing i noticed was that every joint, vape room, bar, and restaurant was full Full, FULL!
———————————-

Sounds much like my observations on daily strolls along 4th Avenue in Kitsilano and uptown Granville Street.

‘Tomorrow’ is not an issue here.

Not for them, and I suppose not for me either.

#113 Blacksheep on 10.18.19 at 1:42 pm

NoName # 76,

Apologizes.

Was responding to Past the peaks from Oct/16 # 66 and can’t even use alcohol as an excuse, but my brother is dyslexic, so I will go with that…

#114 IHCTD9 on 10.18.19 at 1:54 pm

Here is an informative article for those interested in getting a sneak peek at the beginning of the end of 3rd wave feminism as we currently know it:

https://www.cbc.ca/radio/asithappens/i-m-not-going-to-reconsider-toronto-s-top-librarian-refuses-to-bar-speaker-critical-of-transgender-rights-1.5324431

Murphy absolutely does have a valid argument, but you’ll note that she is having her opinion characterized as hate speech, the venue (TPL) hosting her is being boycotted, the MSM is ripping her a new one, Politicians are shaming her, and she got banned from Twitter.

Men and right wingers in general may find these tactics familiar no?

This is the first time that two favoured Western “progressive” activist groups have trampled on each others perceived “rights” and had to drop the gloves.

This is also the first time the 3rd wavers have got a taste of the same “shaming” tactics they themselves created.

I totally see Murphy’s point, but having a valid beef saved no-one-ever in the West. She and her supporters are doomed, she may even end up betrayed by her own. Feminism is already a house well divided.

Welcome to the club Meg.

#115 Roial1 on 10.18.19 at 2:02 pm

#71 Dutchy on 10.17.19 at 9:44 pm

Most important things in life are health, family and your integrity. (Not your net worth)

Totally agree.

How come we gotta get so old before we see this truth.

Al 76

#116 SimplyPut7 on 10.18.19 at 2:28 pm

#107 leebow on 10.18.19 at 12:42 pm

3. The equity program isn’t going so well, I believe only 10k people across Canada have signed up so far, too many unknowns, when you sell is it 10% of equity net of realtor fees or gross of fees? Do you need the government permission to get a HELOC on the property? etc.

I hope we get a minority Conservative government where no one can do anything, that way they will be forced to let the housing cycle end on it’s own and then look for new ways to increase the housing supply for detached homes, townhouses and affordable condos where the true cost of owning a condo vs a townhouse with a backyard is understood by buyers.

4. The outskirts of the GTA would probably have higher home price values if transit costs improved and there were more express buses and trains going to those areas. Transit costs can easily be an extra $400 or more per person per month if someone works downtown Toronto, there’s also the time lost in traveling which is closer to 4 hours a day for some of the outer regions of the GTA.

8. There’s a lot of condos on the way but there are a lot of detached homes and townhouses coming to market as well, many were bought by speculators. I was passing some newer developments in the GTA and didn’t realize we were still building so many. Rents for brand new detached houses go for just under $2400 and just under $2200 for row townhouses. I was surprised to see the rent so low given that one bed condos in Toronto near subway lines rent for $1900 and up now.