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Old 10-27-2015, 11:55 AM   #4126
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Originally Posted by 4444 View Post
a bond etf can be bought with <$100.

a house in vancouver >$1M

that, and that alone, is why home ownership as part of a portfolio is a flawed argument, unless you're rich as fuck
Well, it's RS and judging by the people in this thread who are capable of putting down several hundred thousand, or have detached homes, I would say there are quite a few who are "rich as fuck" or at least can service the mortgage.
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Old 10-27-2015, 12:50 PM   #4127
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To his point, home ownership doesn't mean you have a diversified portfolio. Lots of people nowadays have their property tied to a heck of a lot more than 50% of their net worth. That's not necessarily wrong, as its paid off in the last few years. You just put yourself at risk.
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Old 10-27-2015, 12:55 PM   #4128
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I wouldn't say they're "rich as fuck", more like a lot of people are living beyond their means and living in homes they can't really afford. House prices keep going up so you have room to borrow and money to borrow right now is cheap, once rates start going up and home prices start to come down we'll see how many people can hold on their homes or investment properties.

It's like with everything else...what goes up must come down, eventually.
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Old 10-27-2015, 02:35 PM   #4129
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Even if rates go back up to 5%, it's not catastrophic provided you're gainfully employed or have other sources of income.

The great recession of 2008 should have resulted in the market coming down to earth, but it didn't. People who should've been wiped out survived for the most part and are now stronger than ever in terms of financial position. Even if we were to suffer another collapse, I highly doubt you'll see huge price drops. You might get stagnation in the condo market, but if you're in a detached or semi-detached in Vancouver, I think you'll be fine provided you can service the mortgage. And if one family is forced to sell in a downturn, there's a horde of buyers ready to pounce.

Lots of parents are gifting down payments to their kids. Don't underestimate the impact of wealth transfer in this market either. It's not just happening amongst the Asians - it's happening across ethnic lines. You think the hipsters in Strathcona can afford to buy their heritage homes working at a local microbrew?

On the other hand, if housing becomes political, all bets are off. Doubt it will though as there are too many in the game.
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Old 10-27-2015, 05:01 PM   #4130
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Housing already is political, CREA and major developers lobby the ever living fuck out of all levels of government.

The gov will not step in and squash the party unless we hit critical mass, why would they force hundreds of thousands of Canadians into bankruptcy and obliterate the market cap of major financial institutions? That obviously wouldn't offer a net benefit to the country.
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Old 10-27-2015, 08:31 PM   #4131
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I would argue that at worst, the right type of real estate in Vancouver is equivalent to bonds.

Don't you hold bonds in your portfolio?
What 4444 said. I'm not rich enough that I can shrug off a 300k loss on a property, but if I lose $3000 on bonds, eh, whatever.
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Old 10-28-2015, 02:16 AM   #4132
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Even if rates go back up to 5%, it's not catastrophic provided you're gainfully employed or have other sources of income.

The great recession of 2008 should have resulted in the market coming down to earth, but it didn't. People who should've been wiped out survived for the most part and are now stronger than ever in terms of financial position. Even if we were to suffer another collapse, I highly doubt you'll see huge price drops. You might get stagnation in the condo market, but if you're in a detached or semi-detached in Vancouver, I think you'll be fine provided you can service the mortgage. And if one family is forced to sell in a downturn, there's a horde of buyers ready to pounce.

Lots of parents are gifting down payments to their kids. Don't underestimate the impact of wealth transfer in this market either. It's not just happening amongst the Asians - it's happening across ethnic lines. You think the hipsters in Strathcona can afford to buy their heritage homes working at a local microbrew?

On the other hand, if housing becomes political, all bets are off. Doubt it will though as there are too many in the game.
gainfully employed OR another source of income?! and that's enough? I wouldn't underestimate how overstretched people are - you lose one source of income, or it is decreased - boom, can't afford that lifestyle (mortgage)

don't underestimate the speed at which parents gifting kids money for houses stops as soon as real estate stagnates.

i can't tell the future, nor do i care to, but i'll repeat what's been said before, vancouver has had a stupid 15 years of growth, but before that - boom and bust, like any other market. maybe this is just a slightly drawn out boom before an impending bust (of what size and length, i don't know).

it's not different this time, there was loads of HK money in the 90's, and real estate was dead in the early 2000's
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Old 10-28-2015, 10:55 AM   #4133
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Even if rates go back up to 5%, it's not catastrophic provided you're gainfully employed or have other sources of income.
Over 16% of Canadian disagrees. :

Nearly one in six Canadians could not handle $500 increase in mortgage payment: Poll | Metro News

And that's on a 300k mortgage. Given Vancouver's 1M+ average price, it takes much less increase on interest rate to reach $500.

As 4444 said, unless you are rich as fuck or at least have more than enough disposable income after expenses, hold on tight to your job.
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Old 10-28-2015, 02:29 PM   #4134
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Over 16% of Canadian disagrees. :

Nearly one in six Canadians could not handle $500 increase in mortgage payment: Poll | Metro News

And that's on a 300k mortgage. Given Vancouver's 1M+ average price, it takes much less increase on interest rate to reach $500.

As 4444 said, unless you are rich as fuck or at least have more than enough disposable income after expenses, hold on tight to your job.
While I agree that most Canadians are in too much debt and that an increase in rates would screw a few people over, do we really expect interest rates to go up any time soon?

Let's face it, every country is in a race to the bottom with reducing rates. Rates are at all time lows. It's more likely that rates will go down then to go up anytime soon.

People were expecting a Bond market bubble as nations start increasing rates. But nope, Feds stand pat, europe decrease their rates, china decreases their rates. Don't see it going up anytime soon.

I'm surprise inflation isn't higher. Oil prices are down, but prices of everything else seems to be up.
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Old 10-28-2015, 05:51 PM   #4135
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While I agree that most Canadians are in too much debt and that an increase in rates would screw a few people over, do we really expect interest rates to go up any time soon?
And to echo this sentiment, even IF rates do go up, will they go up by as drastically as 1-2% - knowing the amount of household debt that is possibly being held by Canadians?

After watching the 2008 story unfold, I doubt we would be stupid enough to make another mortgage crisis happen again within our lifetimes.
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Old 10-29-2015, 01:33 AM   #4136
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While I agree that most Canadians are in too much debt and that an increase in rates would screw a few people over, do we really expect interest rates to go up any time soon?

Let's face it, every country is in a race to the bottom with reducing rates. Rates are at all time lows. It's more likely that rates will go down then to go up anytime soon.

People were expecting a Bond market bubble as nations start increasing rates. But nope, Feds stand pat, europe decrease their rates, china decreases their rates. Don't see it going up anytime soon.

I'm surprise inflation isn't higher. Oil prices are down, but prices of everything else seems to be up.

While the bank of canada may not be about to raise rates due to Canada's not great economic situation, the liberals are about to spend, spend, spend - given the cdn dollar is not a global base currency, rates on cdn bonds will rise.

Also, saying inflation is high, but that the BoC won't raise rates is a scary thing to say - ur saying economic growth isn't enough to require a rate increase, but prices of everything bar oil is going up, I.e. Pressure on consumers - that's an ugly, ugly situation (stagflation).

If u don't know, stagflation is one of the worst economic situations to be in... Canada is dancing with the devil, here
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Old 10-29-2015, 10:24 AM   #4137
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There's been talk about changing the CPI basket of goods. The cost of food has been going up because we import most of it.

But, this country has a history of muddling through, no matter the circumstances. Even if we face stagflation, I don't see how the market will contract to the depths that some here feel it will (or are secretly wanting so that they can pick up the scraps). Sure, people at the margin will feel the pinch and will be forced to sell, but the vast majority will fight tooth and nail to keep their payments up. Data and charts don't tell the whole story.
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Old 10-29-2015, 11:14 AM   #4138
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Over 16% of Canadian disagrees. :

Nearly one in six Canadians could not handle $500 increase in mortgage payment: Poll | Metro News

And that's on a 300k mortgage. Given Vancouver's 1M+ average price, it takes much less increase on interest rate to reach $500.
That article is also based on interest rate jump from 2.75% up to 5.75%, a more than double rate jump. Given the current landscape, this will take years to accomplish, IF it can even get up there.

So the level of sensationalism in that article is just a bit reaching, not far off from the plane and bus loads full of cash in their suitcases Asian overseas buyers IMO.
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Old 10-29-2015, 11:18 AM   #4139
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wouldn't one way to protect yourself from having your world crumble around you if you lose your job to have a HELOC and only pay the min. payments until you get back on your feet?

you won't be paying down your mortgage and the bank benefits on the interest, but it gives some flexibility/breathing room until things settle.

or are a majority of the people out there doing a mortgage with fixed monthly payments or unable to get a HELOC due to the 25% down payment requirement?
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Old 10-29-2015, 04:58 PM   #4140
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VANCOUVER (NEWS 1130) – The federal housing agency is changing its tune, now saying the Metro Vancouver housing market is moderately becoming overvalued.

The report looks at the April to June quarter and finds overvaluation particularly in single-detached homes priced over a million dollars.

Overvaluation is one of four risk factors monitored by Canada Mortgage and Housing Corporation, along with accelerating price growth, overbuilding and overheating of demand.

“Our approach here is to try and design this as an early warning indicator so we’ve gotten to the point now where Vancouver shows one model that shows a problematic level of overvaluation and that’s why we went from weak to moderate evidence,” explains Chief Economist Bob Dugan.

He says that in Vancouver, Toronto, Montreal, Edmonton, and Saskatoon “price levels are not fully supported by economic and demographic factors.”

“We’ve seen more activity and price growth in the upper end of the market so if that sort of subsides and you see more balanced growth, you’d see less upward pressure on average prices,” explains Dugan.

The report only goes to the end of June and summertime in the local market saw a dearth of listings for single-detached homes despite strong demand, resulting in bidding wars and homes selling for far above the asking price.

Essentially when a market is not considered overvalued it means people will continue to pay the price, regardless of how high that may be. If a market becomes overvalued, that could change.

Is Metro Vancouver's housing bubble going to burst? - NEWS 1130
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Old 10-29-2015, 06:21 PM   #4141
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While the bank of canada may not be about to raise rates due to Canada's not great economic situation, the liberals are about to spend, spend, spend - given the cdn dollar is not a global base currency, rates on cdn bonds will rise.

Also, saying inflation is high, but that the BoC won't raise rates is a scary thing to say - ur saying economic growth isn't enough to require a rate increase, but prices of everything bar oil is going up, I.e. Pressure on consumers - that's an ugly, ugly situation (stagflation).

If u don't know, stagflation is one of the worst economic situations to be in... Canada is dancing with the devil, here
Well, the official inflation numbers are low - it fell to 1% last month or something? which is to my surprise because I feel like the cost of living has increased - even if you don't count housing.

Because inflation is still low, means that the BoC can cut rates, which some are expecting. But they did say that they don't want to further fuel the housing market so they don't really want to cut the rates.
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Old 10-29-2015, 06:25 PM   #4142
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detached homes increased 30% this year. Tear down homes in metro Vancouver costs at least $1 million, and the term is MODERATELY?
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Old 11-01-2015, 08:03 PM   #4143
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Well, I'll add some value to this thread shortly. My condo is gonna be listed tomorrow on MLS. I'll update when it sells.
Real world update: Got full asking price in less than a week, with an average of 3 showings per day. Just waiting for subjects to be lifted this coming weekend.
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Old 11-01-2015, 10:29 PM   #4144
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Real world update: Got full asking price in less than a week, with an average of 3 showings per day. Just waiting for subjects to be lifted this coming weekend.
If I may ask, how close is your asking price compared to the BC assessment value?
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Old 11-01-2015, 10:41 PM   #4145
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finalized my purchase of a detached home in Burnaby, ended up paying less than asking but around 250k above assessed value.
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Old 11-01-2015, 11:40 PM   #4146
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To add a datapoint

Parents sold their place in Coquitlam. Assessed 1.95M Sold for 2.4M
Took 6 months to sell. Outside of Vancouver it's hard for houses over $1.5M

Buyer was a local, not a foreigner.
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Old 11-02-2015, 01:22 AM   #4147
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To add a datapoint

Parents sold their place in Coquitlam. Assessed 1.95M Sold for 2.4M
Took 6 months to sell. Outside of Vancouver it's hard for houses over $1.5M

Buyer was a local, not a foreigner.
same here, parents sold a property in a suburb, lets say similar to Coquitlam.

I got exactly what I wanted for it (sold after 3 days), an ungodly amount if you ask me, purchaser was local (who knows, they could have sold their place to a foreigner, or foreign looking person - no data = we clueless, I assume ppl that purchased were "local", they were Caucasian Canadian, so one can assume).

In this neighbourhood there is literally no inventory at the moment, and that house was located somewhere really desirable.

I don't mind admitting, i'd rather have the cash than the house.
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Old 11-02-2015, 05:52 AM   #4148
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There are tons of local people who took advantage of this massive price increases. They sold their house in more central location Burnaby/Van, purchased another place in a more suburban area, and pocketed the difference.
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Old 11-02-2015, 06:58 AM   #4149
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If I may ask, how close is your asking price compared to the BC assessment value?
Got about $80k higher than assessed value. Equivalent to just over 21.5% higher than assessed value.
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Old 11-02-2015, 08:32 AM   #4150
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If you're selling in under a week at asking, you/your realtor probably undervalued your home IMO.

It's not greed to get what the market is paying.
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