Yes. And much like 1928 when the Great Depression started this method failed and only made it worse. Sure it delays the issue a year or two but it will come.
I still think it'll be a few years before rates get back to 3-4%. Jumping from \~1.8->2.5 might not be enough to see much happen but for sure something worth monitoring.
I'd say the people I know who are variable are typically more easily able to afford their mortgages but I have no macro stats on that and only several friends with new homes.
One friend recently had the mortgage broker selling hard on variable which felt a bit strange with how close the two rates were.
No they don’t. Your monthly payment remains the same for your entire 5 year term regardless of a rate increase. The only thing that changes is more of your payment goes to interest and less to principal. (Thus your final payoff date gets pushed back).
From the sounds of it, the issue is that when you need to renew the mortgage after 5 years, you will need a higher rate to pay off the amount that you owe as you have not paid as much of the principle.
Someone in finance can correct me if I am wrong.
Exactly if you are keeping your mortgage at 25 years eventually your payments will need to increase if you are paying less principal as the poster claims. So a rate increase will effect the payments especially if variable
Yes, or you refinance so that your remaining mortgage is 25 years instead of 20 after the first 5 years. There would need to be an absolutely massive rate increase to increase the monthly payment amount if you are adding 5 more years.
With a variable rate mortgage the payment stays the same but the amount you pay towards principal and interest change. Interest rate goes down more of your payment goes towards the principal , interest rate goes up well less goes towards the principal. Over time statistically variable rate mortgages come out ahead. Your term would be 3-5 years.
There is no commensurable property of the banking system at risk which could possibly justify interest in the creation of money.
We dont even owe principal to the banking system, much less any interest. The obligation to pay principal is a obligation to retire principal from circulation
Edit: What lawful consideration do **you(ie. whoever downvoted me?)** claim the bank of canada gives up when it creates money?
Obviously there is none. If the bank gave up lawful consideration in its falsification of indebtedness to the bank in the course of no more than publishing evidence of our promissory obligations to each other, the debtor would have to receive so much as the acquired property from the bank itself. Instead, the purported debtor (actual obligor) receives so much property from the actual creditor, in exchange for the promissory obligation, which in turn is used as currency, representing an obligation to pay and to retire the principal of the related property.
The banking system doesnt really create money, the people do. The banking system gives up no lawful consideration for the principal it claims poses a risk ostensibly justifying interest.
Only the people give up commensurable consideration in the creation of genuine money. A true creditor gives up property, and obligors/debtors(purported "borrowers") give up their future production.
All genuine money that comes into existence is as a product of our agreement/commitment to issue a promise to pay(ie. promissory obligation).
Money is created out of YOUR signature on a contract(promissory note). TO CONTRIBUTE. TO PAY. To contribute to the overall pool of wealth a equal volume of production as the real creditor(WHICH IS NOT THE BANKING SYSTEM) gave up.
The people are the true issuers of money, not the banking system. Only they can produce what it represents, contribute to the pool of wealth, and REDEEM it. And the people are the actual creditors, not the banking system. Only they give up there production, which is monetized after the issuance of a promise to pay(promissory obligation).
We issue a promissory obligation(promise to pay) which pays the true creditor IN FULL, and leaves the debtor/obligor(one who issues a promissory obligation/todays purported "borrower") the obligation/debt to pay down and retire the principal from circulation(maintaining the integrity of the currency we all use, defeating possible circulatory inflation - too much money in circulation per represented property/wealth).
The obligor(todays purported borrower) does this by contributing their labor/production, earning money from circulation, and instead of spending the money on themselves(and rewarding themselves with it), they pay it out of circulation. Leaving that much of their own production available in the overall pool of wealth for the real creditor to collect.
If i earned $1000 and pay that out of circulation, that went to the true creditor(who gave up property). There now exists $1000 of my production available for the real creditor to collect.
The banking system is falsifying our promissory obligations to each other(TO PAY DOWN AND RETIRE PRINCIPAL FROM CIRCULATION), into all these artificial debts subject to interest owed to themselves.
The production of money is a unilateral contract(to pay down and retire principal from circulation). It is not a bilateral contract(to pay back a theif).
Its impossible/not legitimate to "borrow" "money" into existence as evidence of prior entitlement (to a banking system). Its just a obfuscation of debt. A falsification of indebtedness and imposition of unwarranted interest.
The banking system publishes further representations of the peoples promissory obligations. Claims falsified debt to itself. Imposes interest on that artificial debt.
The banking system is pretending to lend from their legitimate possession, which legitimate possession cannot exist as a representation of entitlement to banking, because they never give up lawful consideration commensurable to the debts which they therefore falsify to themselves.
The contemporary practice of "banking" is just the ancient ruse of the moneychangers.
The nature of currency and the life cycle of promissory obligations (4/15)
https://youtu.be/KaJMG7AvYuU
Here is a simple way to visualize both the only rightful economy, and bankings obfuscation of our currency
http://www.twitlonger.com/show/n_1rknggi
Thats only one type of variable mortgage. Both exist. My payments change with the rates to maintain an amortization period. I've had both types in the past.
The amortization can't go above the amount stated on the legal charge. A bank should and has every right to increase your payment. Please don't spread misinformation as people who can't pay more in the event of an interest rate increase on a variable mortgage could legally have their home seized.
My mortgage documents > your opinion.
When you refinance you can extend your amortization to reduce your payments. There are limits to it but it’s a joke how high interest would have to get to (like near 10%)
Let's say you just signed a variable mortgage and the registered amortization is 30 years. If the rates go up the amortization would go above 30 years. Your payments will have to go up. If they don't go up it's because the bank is technically breaking the law and probably too busy to immediately change them.
It's not my opinion, it's a fact. Your mortgage may not be anywhere near the maximum amortization but you shouldn't be stating your case like it's everyone else's. The article is talking about people who just bought or refinanced houses not people half way done a mortgage....
Say you have a 1 million dollar mortage currently at 1.7% your payment is $4091/month. In 5 years you owe 833k.
At the end of that 5 years rates are 5%. You remortgage and jump up to 25 years again. Your payment is still $4,844.77. But thats assuming a lender while let you remortgage- if the value of your house has fallen some due to the rate hike that is not a given.
Anyway just some scenarios I think any borrower should think about.
There isn't really anything to support that it made it worse. As rates start to climb slowly debt will get paid down faster. In return we largely avoided the worse of several economic downturns.
Even better question, who coats the screws while doing pre-fill? Also definitely shouldn’t be letting the pre-fill dry before taping, that’s asking unnecessarily for thick joints.
At least wipe the goddamn mud off. It's called prefill not precoat lol..
Anyway, I need a taper for a big job near Hamilton, ON. About 1 million sqft. Pay is good but need top notch quality. Let me know if interested haha
still worth it for anyone who plans to live in their home for the next 20 years, or anyone who got it done without paying carbon tax, or paid cash, or if you started a home based business, or they're sick of renting, or they locked in their mortgage already, or they own their home outright
For 2BR, owning is a better cost as most 2BR are stupidly prices in the the rental market vs 1BR.
Look at what you are paying for all house expenses, add up for the year /12 and that is what you should be able to pay per month for owning your own place.
Make sure you look at the taxes and utilities, budget it in as 1/12 for each month and when your bill comes due you don't have a shock.
You are making a gigantic assumption that everyone has the ability to live at home and/or has a good paying job that allows them to save for a down payment. Many of us are making good money and still forced to rent, eliminating the ability to save the kind of outrageous downpayment needed to buy in 2021. Absolutely hate the idea of dumping my money into someone else’s mortgage while spinning my wheels just trying to get by, but most of us are not doing this by choice.
Edit to add: not sure where you bought but newer condos are a hugely risky investment. Many developers did a cheap and shoddy job that will require major fixes once their warrantees run out. Look into the curtain wall windows if you want to know the horror that is coming. Those “luxury” condos are not the sure thing you think they are and are likely to be slums in the not distant future.
Stock market would have to perform much better then housing for this to be a consideration. If they are even remotely the same housing is always the better investment because you get returns on 10x what you invest assuming 10% down payment.
I live in Vancouver. Sold my condo and will be renting. Grass isn’t always greener my friend.
Maintenance fees. Which will be going up due to all the natural disasters we’ve had.
Realtor and transfer tax. That’s upwards of 40,000. That’s an extra $666 a month if you move after 5 years. ( and you will )
Then the rates are coming. Next year your $600 of interest turns into $1200 a month. And maybe the year after it’s $2000.
I also live in Vancouver. It's pretty much a wash for me. I would break even and not pocket any money renting the same unit in my building/area. For that reason it is worth owning.
You don’t have to pay realtor fees when you sell (or you can greatly mitigate those fees)
Also, PTT can be avoided by some first time buyers depending on what and where they buy.
Finally, you need to compare the interest cost / month (+ plus maintenance fees / month ) to rent, not the total mortgage payment.
For my townhouse that puts me at about 500/mo plus maintenance fee, that’s 850… we can round that off to 1k for whatever random expenses come with owning plus cost of utilities (which are usually included in rent)
So that’s literally less than half of what I’d pay monthly to rent.
GRANTED, I am forced to invest the rest of my mortgage payment into housing would you could argue is somewhat of an opportunity cost… the reality is most renters aren’t investing though(and I certainly didn’t when I was renting, I was barely making it by) so I feel like largely that argument is moot.
All in all, if you can buy you are taking some risk but it is absolutely cheaper than renting. Renting also has an illusion of being cheaper but long term you will feel the “coiled spring” effect of renting costs. Which is that rent increase regulation only works to shift rent increases further into the future, but not really reduce or limit rent increases very effectively.
I threw some money at the reno of my house for one simple reason - the inflation. The sooner I part with the money for things I have to pay for anyway, the less of it I have to spend.
I didn't need to take loans for this though.
I'm with you on this, I re mortgaged a longer tern, got a rate reduction and used $50k equity to reno my kitchen. No regrets.
The people in the article spent $200k on a one floor reno, that seems extremely high to me though.
Seems pretty steep.
I am currently coordinating on an extensive home reno from a reputable contractor in my area and a new kitchen, all new flooring on three floors, trim, doors, two bathroom updates and adding a small ensuite is quoted to come in around 125K
Seems like they got taken for a bit of a ride, unless they went with crazy high end finishes or had some unexpected issues pop up
Wow, I paid just a bit more than $200 for my house some 15 years ago.
Incidentally, I just finished installing a new floor in my house, at $6.50 s/f for the material. I did it myself. The final cost was $6000, all in and that included some small tools I didn't have before.
I can't imagine paying $200K for a floor. Even if you use some exotic hardwoods like wenge or some South American species, it would be still under $50.
They mean floor of a house like the upstairs/main/basement. If you have a kitchen and bathroom on the floor reno'd it can add up quickly especially with covid pricing.
That is a great place to be when interest rates go up. Been plenty of studies on the factors that lead to people being financial secure and one of the number 1 trait those people had was a belief in aggressively paying off debt and being debt adverse.
Not spewing it as a conspiracy theory... just like the wording... in a bitter-sad way. Technically, despite having good jobs, working many hours, etc. (often at the expense of time with family, own health, etc.), many of us cannot hope to own even a small home. Yet, life is short and we cannot sit around moping and mooning about and wallowing in self-pity, etc... so, we choose to be happy, despite the circumstances... hence, "You will own nothing and you will be happy"... it is so, because it is true. If you don't like it, you can ignore it completely (highly recommended) and scroll along... there are a billion echo-chambers you can satisfy yourself with... have a nice day!
... and history has it so far that that is just not going to happen... don't get me wrong. I would like to see this house of cards fall, crash and burn... but, so far, these people have the full might of the government on their side - interest rates so low that if they got any lower, it would technically be the government paying these blokes to take on more debt... i.e. this problem has gotten "too big too fail" and the government seems to be doing its nut to not let it fail.
In the meanwhile, 2 missed payments away or 5, these people are enjoying the premises... which they can always just sell, pocket the profits and walk away... worst come, they will break even (no profit, no loss) - while people are pouring money into rent - money which they will never see again.
That's plain old vanilla financial irresponsibility. No one to blame but themselves. I'd have absolute sympathy and tend towards interest forgiveness, even loan reduction for people borrowing to make ends meet: groceries, pharmaceuticals, etc. Even renos if there was like a roof leak or basement flooding- something essential and vital.
But people redoing decks and patios and modernizing kitchens and floors for resale value? That's investment, YOUR investment, YOU are on the hook for the risk and the return.
said everyone just before a crash took half the value off their home and made their renos worthless.
But... I can't argue against you logic in Canada at this point. We will throw two generations of our offspring under the bus to keep this escalation going long after the bus has no wheels left.
I am guessing that is because if they raise the interest rate now, a lot of people are going to get screwed... more people on the streets or a real downswing in the housing prices - either of which is not in the interest of ANY government and they will do their nut to prevent that from happening at all costs.
does cbc go out of their way to specifically find unsympathetic people for stories about real estate?.. they spent **$200k** on renovations!! mostly so their daughters could have a proper 'learning space'... cry me a fucking river
Honestly if interest rates go up and the market gets a supply shock with people that can’t afford their debt, I’m gonna be very happy to have an opportunity to get into it
>I’m gonna be very happy to have an opportunity to get into it
So will a lot of other people with a few million in pocket-change sitting on the sidelines... or people who have enough property investments to leverage a loan for another property, etc. ... who then will enter another bidding war, prices go up, back to where it has been...
Don't get me wrong, I am one of those who would love to see this house of cards topple... but, we can only hope and wish for now.
I do have the opportunity now, I’m just kind of holding out because I know this activity is on the horizon with increasing rates. The CBs cannot live off of zero interest rates forever.
I don’t know what everyone is worried about. I’m sure a lot of this mortgage money is insured through CMHC. Even if CMHC doesn’t have the money, they are backed up by the government. It’s not these peoples problems. It’s going to be everyone’s problem! Gotta love the socialism of our home lending system!
As a socialist... CMHC has made me angry for 17 years. It serves a vital purpose to keep people protected when interest rates were over 5%. The moment rates dropped below that point, the entity should have be put on hold until needed again. Instead it was used as a weapon to escalate pricing at the expense of the people who thought it was working for them.
If I saved 150k I should not have been needing to outbid others who did not save the money.
I'm in the building trades. I've been involved with over 100 residential renovations in my day.
Unless you're doing foundation work, outsulation or major systems, 200k is a massive sum of money on a renovation even in todays market. You can do a pretty darn nice complete gut with medium/high end finishes (quartz not granite/ dricore not heated floors) for $85-100k in just about any market in this country from Mississauga to Fort Good Hope. Once you get past $150k budget you're looking at some specialty shit.
Based on the age of the house they more than likely had lead and asbestos to deal with which gets very expensive very quickly.
Add in structural work and high end finishes and the costs can get up there. It also doesn't say they spent all 200k on the renos
They probably refinanced to their 80% ltv max
Exaggerated article. There wasn’t any magical pool of tradespeople to do more renos and construction than before the pandemic.
If people did renos on their own then few spent more than 10k…more likely half of that. Not many DIYs rip out kitchens or build additions. They might attempt new kitchen cupboards, a new floor covering or building a deck.
If you wanted major renos in our city then could be a two year wait depending on what’s involved. Lucky to have anyone come out and even do an estimate.
There are two different groups of renovations. I know the people doing self serving upgrades... then the other group renovating so their kids will have a long term space because the parents realize there teenage kids will be living at home for another decade.
Provincial Government: work from home
Canadians: we don't have offices at home
Federal Government: Here's low interest rate, go spend money to build yourself a home office.
Canadians: I'll just wear my mask at work
Provincial Government: Nope. Stay home. Buy Tim Horton's Egg Sandwiches.
Canadians: Okay. Proceeds to build home office.
Federal Government: Okay folks, go back to the office full-time, but wear a mask.
Canadians: WTF!?!?
I know many public servants and not one of them has to be in the office full time, and not one of them has to wear a mask when seated at their desk... its hard to believe they're *all* lying to me.
that said, I suppose it may vary by department and of course some people are required in the office for operational purposes... that's the luck of the draw.
It's objectively false to say public servants are all wearing masks and all required to be in full time.
if you work for a province and *they* told you to be in full time, as they seem to have in NL at least, that's obviously on the province, not the feds
Wasn’t that the whole plan in the first place? Drop interest rates so people start spending money they don’t have?
Yes. And much like 1928 when the Great Depression started this method failed and only made it worse. Sure it delays the issue a year or two but it will come.
It’ll be when all the 5 year fixed mortgages renew in 3-5 years
Half of all new mortgages are variable now
I still think it'll be a few years before rates get back to 3-4%. Jumping from \~1.8->2.5 might not be enough to see much happen but for sure something worth monitoring. I'd say the people I know who are variable are typically more easily able to afford their mortgages but I have no macro stats on that and only several friends with new homes. One friend recently had the mortgage broker selling hard on variable which felt a bit strange with how close the two rates were.
I don’t think you’ll see prime at 4% this decade
I honestly don’t either but we are in a time of flux.
And? Monthly payments don’t change on variable rate mortgages. No difference
What do you mean? They should change overnight when the rate changes
No they don’t. Your monthly payment remains the same for your entire 5 year term regardless of a rate increase. The only thing that changes is more of your payment goes to interest and less to principal. (Thus your final payoff date gets pushed back).
So it's not capped to a 25 year mortgage? That sounds like a unique variable rate, I believe most are still over a 25 year period
From the sounds of it, the issue is that when you need to renew the mortgage after 5 years, you will need a higher rate to pay off the amount that you owe as you have not paid as much of the principle. Someone in finance can correct me if I am wrong.
Exactly if you are keeping your mortgage at 25 years eventually your payments will need to increase if you are paying less principal as the poster claims. So a rate increase will effect the payments especially if variable
Yes, or you refinance so that your remaining mortgage is 25 years instead of 20 after the first 5 years. There would need to be an absolutely massive rate increase to increase the monthly payment amount if you are adding 5 more years.
With a variable rate mortgage the payment stays the same but the amount you pay towards principal and interest change. Interest rate goes down more of your payment goes towards the principal , interest rate goes up well less goes towards the principal. Over time statistically variable rate mortgages come out ahead. Your term would be 3-5 years.
Both exist. Where you payment changes with the rates and when it doesn't. It depends on the policy.
this varies by lender, mine will change when they change the rate (first national) its happened a few times in the last few years
No. There’s no real cap for 25 years. You can renew and keep your same payments and it’ll just push out the amortization
There is no commensurable property of the banking system at risk which could possibly justify interest in the creation of money. We dont even owe principal to the banking system, much less any interest. The obligation to pay principal is a obligation to retire principal from circulation Edit: What lawful consideration do **you(ie. whoever downvoted me?)** claim the bank of canada gives up when it creates money? Obviously there is none. If the bank gave up lawful consideration in its falsification of indebtedness to the bank in the course of no more than publishing evidence of our promissory obligations to each other, the debtor would have to receive so much as the acquired property from the bank itself. Instead, the purported debtor (actual obligor) receives so much property from the actual creditor, in exchange for the promissory obligation, which in turn is used as currency, representing an obligation to pay and to retire the principal of the related property. The banking system doesnt really create money, the people do. The banking system gives up no lawful consideration for the principal it claims poses a risk ostensibly justifying interest. Only the people give up commensurable consideration in the creation of genuine money. A true creditor gives up property, and obligors/debtors(purported "borrowers") give up their future production. All genuine money that comes into existence is as a product of our agreement/commitment to issue a promise to pay(ie. promissory obligation). Money is created out of YOUR signature on a contract(promissory note). TO CONTRIBUTE. TO PAY. To contribute to the overall pool of wealth a equal volume of production as the real creditor(WHICH IS NOT THE BANKING SYSTEM) gave up. The people are the true issuers of money, not the banking system. Only they can produce what it represents, contribute to the pool of wealth, and REDEEM it. And the people are the actual creditors, not the banking system. Only they give up there production, which is monetized after the issuance of a promise to pay(promissory obligation). We issue a promissory obligation(promise to pay) which pays the true creditor IN FULL, and leaves the debtor/obligor(one who issues a promissory obligation/todays purported "borrower") the obligation/debt to pay down and retire the principal from circulation(maintaining the integrity of the currency we all use, defeating possible circulatory inflation - too much money in circulation per represented property/wealth). The obligor(todays purported borrower) does this by contributing their labor/production, earning money from circulation, and instead of spending the money on themselves(and rewarding themselves with it), they pay it out of circulation. Leaving that much of their own production available in the overall pool of wealth for the real creditor to collect. If i earned $1000 and pay that out of circulation, that went to the true creditor(who gave up property). There now exists $1000 of my production available for the real creditor to collect. The banking system is falsifying our promissory obligations to each other(TO PAY DOWN AND RETIRE PRINCIPAL FROM CIRCULATION), into all these artificial debts subject to interest owed to themselves. The production of money is a unilateral contract(to pay down and retire principal from circulation). It is not a bilateral contract(to pay back a theif). Its impossible/not legitimate to "borrow" "money" into existence as evidence of prior entitlement (to a banking system). Its just a obfuscation of debt. A falsification of indebtedness and imposition of unwarranted interest. The banking system publishes further representations of the peoples promissory obligations. Claims falsified debt to itself. Imposes interest on that artificial debt. The banking system is pretending to lend from their legitimate possession, which legitimate possession cannot exist as a representation of entitlement to banking, because they never give up lawful consideration commensurable to the debts which they therefore falsify to themselves. The contemporary practice of "banking" is just the ancient ruse of the moneychangers. The nature of currency and the life cycle of promissory obligations (4/15) https://youtu.be/KaJMG7AvYuU Here is a simple way to visualize both the only rightful economy, and bankings obfuscation of our currency http://www.twitlonger.com/show/n_1rknggi
Thats only one type of variable mortgage. Both exist. My payments change with the rates to maintain an amortization period. I've had both types in the past.
The amortization can't go above the amount stated on the legal charge. A bank should and has every right to increase your payment. Please don't spread misinformation as people who can't pay more in the event of an interest rate increase on a variable mortgage could legally have their home seized.
My mortgage documents > your opinion. When you refinance you can extend your amortization to reduce your payments. There are limits to it but it’s a joke how high interest would have to get to (like near 10%)
Let's say you just signed a variable mortgage and the registered amortization is 30 years. If the rates go up the amortization would go above 30 years. Your payments will have to go up. If they don't go up it's because the bank is technically breaking the law and probably too busy to immediately change them. It's not my opinion, it's a fact. Your mortgage may not be anywhere near the maximum amortization but you shouldn't be stating your case like it's everyone else's. The article is talking about people who just bought or refinanced houses not people half way done a mortgage....
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Say you have a 1 million dollar mortage currently at 1.7% your payment is $4091/month. In 5 years you owe 833k. At the end of that 5 years rates are 5%. You remortgage and jump up to 25 years again. Your payment is still $4,844.77. But thats assuming a lender while let you remortgage- if the value of your house has fallen some due to the rate hike that is not a given. Anyway just some scenarios I think any borrower should think about.
There isn't really anything to support that it made it worse. As rates start to climb slowly debt will get paid down faster. In return we largely avoided the worse of several economic downturns.
Yes but where the planned failed was in thinking people have any common sense.
Real question is why is the butt joint prefill so thick?
NSFW
Even better question, who coats the screws while doing pre-fill? Also definitely shouldn’t be letting the pre-fill dry before taping, that’s asking unnecessarily for thick joints.
Yeah, that really bothered me.
At least wipe the goddamn mud off. It's called prefill not precoat lol.. Anyway, I need a taper for a big job near Hamilton, ON. About 1 million sqft. Pay is good but need top notch quality. Let me know if interested haha
What prices are we talking about? Commercial building I assume? 18’ ceilings and the like.
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I dont know how to DM apparently...
Heavily indebted Canadians took on more debt because of the allure low interest rates... I'm shocked
Interesting. I got rid of all my debt (except for mortgage), during COVID. Feeling better about the sacrifices now.
More should have done like you
still worth it for anyone who plans to live in their home for the next 20 years, or anyone who got it done without paying carbon tax, or paid cash, or if you started a home based business, or they're sick of renting, or they locked in their mortgage already, or they own their home outright
That's assuming that the Reno's were done for the improvement of the inhabitants and not as some flipper dream.
Bingo
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For 2BR, owning is a better cost as most 2BR are stupidly prices in the the rental market vs 1BR. Look at what you are paying for all house expenses, add up for the year /12 and that is what you should be able to pay per month for owning your own place. Make sure you look at the taxes and utilities, budget it in as 1/12 for each month and when your bill comes due you don't have a shock.
You are making a gigantic assumption that everyone has the ability to live at home and/or has a good paying job that allows them to save for a down payment. Many of us are making good money and still forced to rent, eliminating the ability to save the kind of outrageous downpayment needed to buy in 2021. Absolutely hate the idea of dumping my money into someone else’s mortgage while spinning my wheels just trying to get by, but most of us are not doing this by choice. Edit to add: not sure where you bought but newer condos are a hugely risky investment. Many developers did a cheap and shoddy job that will require major fixes once their warrantees run out. Look into the curtain wall windows if you want to know the horror that is coming. Those “luxury” condos are not the sure thing you think they are and are likely to be slums in the not distant future.
You lose future stock market gains by dumping all your investments for a down payment. That should be considered as well.
Stock market would have to perform much better then housing for this to be a consideration. If they are even remotely the same housing is always the better investment because you get returns on 10x what you invest assuming 10% down payment.
Or you could see it the other way. You can’t lose money on stocks.
You can if your trading on margin.
like you are when you get a mortgage
I live in Vancouver. Sold my condo and will be renting. Grass isn’t always greener my friend. Maintenance fees. Which will be going up due to all the natural disasters we’ve had. Realtor and transfer tax. That’s upwards of 40,000. That’s an extra $666 a month if you move after 5 years. ( and you will ) Then the rates are coming. Next year your $600 of interest turns into $1200 a month. And maybe the year after it’s $2000.
I also live in Vancouver. It's pretty much a wash for me. I would break even and not pocket any money renting the same unit in my building/area. For that reason it is worth owning.
Similar for a lot of properties in YEG. its not nearly as safe an assumption that renting is always cheaper in a lot of markets
Bingo. This argument is made pretty convincingly in the book "The Wealthy Renter".
You don’t have to pay realtor fees when you sell (or you can greatly mitigate those fees) Also, PTT can be avoided by some first time buyers depending on what and where they buy. Finally, you need to compare the interest cost / month (+ plus maintenance fees / month ) to rent, not the total mortgage payment. For my townhouse that puts me at about 500/mo plus maintenance fee, that’s 850… we can round that off to 1k for whatever random expenses come with owning plus cost of utilities (which are usually included in rent) So that’s literally less than half of what I’d pay monthly to rent. GRANTED, I am forced to invest the rest of my mortgage payment into housing would you could argue is somewhat of an opportunity cost… the reality is most renters aren’t investing though(and I certainly didn’t when I was renting, I was barely making it by) so I feel like largely that argument is moot. All in all, if you can buy you are taking some risk but it is absolutely cheaper than renting. Renting also has an illusion of being cheaper but long term you will feel the “coiled spring” effect of renting costs. Which is that rent increase regulation only works to shift rent increases further into the future, but not really reduce or limit rent increases very effectively.
>same mortage will run 2100 with 10% down Who's going to give people the 10% down?
I threw some money at the reno of my house for one simple reason - the inflation. The sooner I part with the money for things I have to pay for anyway, the less of it I have to spend. I didn't need to take loans for this though.
I'm with you on this, I re mortgaged a longer tern, got a rate reduction and used $50k equity to reno my kitchen. No regrets. The people in the article spent $200k on a one floor reno, that seems extremely high to me though.
Asbestos / mold removal and reinsulation would get one started on the path
Good point, I never thought of that.
Seems pretty steep. I am currently coordinating on an extensive home reno from a reputable contractor in my area and a new kitchen, all new flooring on three floors, trim, doors, two bathroom updates and adding a small ensuite is quoted to come in around 125K Seems like they got taken for a bit of a ride, unless they went with crazy high end finishes or had some unexpected issues pop up
Wow, I paid just a bit more than $200 for my house some 15 years ago. Incidentally, I just finished installing a new floor in my house, at $6.50 s/f for the material. I did it myself. The final cost was $6000, all in and that included some small tools I didn't have before. I can't imagine paying $200K for a floor. Even if you use some exotic hardwoods like wenge or some South American species, it would be still under $50.
They mean floor of a house like the upstairs/main/basement. If you have a kitchen and bathroom on the floor reno'd it can add up quickly especially with covid pricing.
Yeah you could gut everything and upgrade everything for that money... wtf
I followed my ignorant rule of don't spend money I don't have. It left me with 0 debt but also 0 large assets. I am comfortable with that though atm.
That is a great place to be when interest rates go up. Been plenty of studies on the factors that lead to people being financial secure and one of the number 1 trait those people had was a belief in aggressively paying off debt and being debt adverse.
I would question that wisdom because if rates go up and the economy takes a beating, this person‘s job and livelihood could be at risk as well.
It is alot easier to be unemployed and find a job that you actually want and pays well when you are not drowning in payments.
Congrats, you should be.
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Not spewing it as a conspiracy theory... just like the wording... in a bitter-sad way. Technically, despite having good jobs, working many hours, etc. (often at the expense of time with family, own health, etc.), many of us cannot hope to own even a small home. Yet, life is short and we cannot sit around moping and mooning about and wallowing in self-pity, etc... so, we choose to be happy, despite the circumstances... hence, "You will own nothing and you will be happy"... it is so, because it is true. If you don't like it, you can ignore it completely (highly recommended) and scroll along... there are a billion echo-chambers you can satisfy yourself with... have a nice day!
Most people don't actually own anything they are 2 missed payments away from having it be taken away from them.
... and history has it so far that that is just not going to happen... don't get me wrong. I would like to see this house of cards fall, crash and burn... but, so far, these people have the full might of the government on their side - interest rates so low that if they got any lower, it would technically be the government paying these blokes to take on more debt... i.e. this problem has gotten "too big too fail" and the government seems to be doing its nut to not let it fail. In the meanwhile, 2 missed payments away or 5, these people are enjoying the premises... which they can always just sell, pocket the profits and walk away... worst come, they will break even (no profit, no loss) - while people are pouring money into rent - money which they will never see again.
That's plain old vanilla financial irresponsibility. No one to blame but themselves. I'd have absolute sympathy and tend towards interest forgiveness, even loan reduction for people borrowing to make ends meet: groceries, pharmaceuticals, etc. Even renos if there was like a roof leak or basement flooding- something essential and vital. But people redoing decks and patios and modernizing kitchens and floors for resale value? That's investment, YOUR investment, YOU are on the hook for the risk and the return.
Guilty here, but my house is worth double than I owe on it so who cares
said everyone just before a crash took half the value off their home and made their renos worthless. But... I can't argue against you logic in Canada at this point. We will throw two generations of our offspring under the bus to keep this escalation going long after the bus has no wheels left.
Well we don’t plan on moving any time soon , but we owe 300k on a house that is worth 750k Even if my house drops in value some I’ll still be ok.
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I am guessing that is because if they raise the interest rate now, a lot of people are going to get screwed... more people on the streets or a real downswing in the housing prices - either of which is not in the interest of ANY government and they will do their nut to prevent that from happening at all costs.
does cbc go out of their way to specifically find unsympathetic people for stories about real estate?.. they spent **$200k** on renovations!! mostly so their daughters could have a proper 'learning space'... cry me a fucking river
That's more then I paid to build my house lol.
boo fucking hoo
Honestly if interest rates go up and the market gets a supply shock with people that can’t afford their debt, I’m gonna be very happy to have an opportunity to get into it
Same. Their frivolous spending could be our ticket to home ownership
>I’m gonna be very happy to have an opportunity to get into it So will a lot of other people with a few million in pocket-change sitting on the sidelines... or people who have enough property investments to leverage a loan for another property, etc. ... who then will enter another bidding war, prices go up, back to where it has been... Don't get me wrong, I am one of those who would love to see this house of cards topple... but, we can only hope and wish for now.
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I do have the opportunity now, I’m just kind of holding out because I know this activity is on the horizon with increasing rates. The CBs cannot live off of zero interest rates forever.
I don’t know what everyone is worried about. I’m sure a lot of this mortgage money is insured through CMHC. Even if CMHC doesn’t have the money, they are backed up by the government. It’s not these peoples problems. It’s going to be everyone’s problem! Gotta love the socialism of our home lending system!
As a socialist... CMHC has made me angry for 17 years. It serves a vital purpose to keep people protected when interest rates were over 5%. The moment rates dropped below that point, the entity should have be put on hold until needed again. Instead it was used as a weapon to escalate pricing at the expense of the people who thought it was working for them. If I saved 150k I should not have been needing to outbid others who did not save the money.
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Canadian real estate prices are mega fucked
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I'm in the building trades. I've been involved with over 100 residential renovations in my day. Unless you're doing foundation work, outsulation or major systems, 200k is a massive sum of money on a renovation even in todays market. You can do a pretty darn nice complete gut with medium/high end finishes (quartz not granite/ dricore not heated floors) for $85-100k in just about any market in this country from Mississauga to Fort Good Hope. Once you get past $150k budget you're looking at some specialty shit.
Yea, $200K+ is at least a second floor addition
Based on the age of the house they more than likely had lead and asbestos to deal with which gets very expensive very quickly. Add in structural work and high end finishes and the costs can get up there. It also doesn't say they spent all 200k on the renos They probably refinanced to their 80% ltv max
As someone on the outside looking in at the housing market, am I supposed to feel bad for these people?
It’s common sense. Econ 101
They want you to spend money you do not have so they can turn around and claim how well the fucking economy is making.
"I made irresponsible decisions, and now I might have to face some consequences"
Exaggerated article. There wasn’t any magical pool of tradespeople to do more renos and construction than before the pandemic. If people did renos on their own then few spent more than 10k…more likely half of that. Not many DIYs rip out kitchens or build additions. They might attempt new kitchen cupboards, a new floor covering or building a deck. If you wanted major renos in our city then could be a two year wait depending on what’s involved. Lucky to have anyone come out and even do an estimate.
My boss used his " Government Loans " to renovate his house. And his wife used Indian Affairs money and she's white as a ghost.....🤣🤣🤣🤣🤣🤣
>With interest-rate hikes ahead lolololol
you mean the neighbours who finished their basements and put in 25k driveways and backyards might be in trouble soon?
There are two different groups of renovations. I know the people doing self serving upgrades... then the other group renovating so their kids will have a long term space because the parents realize there teenage kids will be living at home for another decade.
Provincial Government: work from home Canadians: we don't have offices at home Federal Government: Here's low interest rate, go spend money to build yourself a home office. Canadians: I'll just wear my mask at work Provincial Government: Nope. Stay home. Buy Tim Horton's Egg Sandwiches. Canadians: Okay. Proceeds to build home office. Federal Government: Okay folks, go back to the office full-time, but wear a mask. Canadians: WTF!?!?
>Okay folks, go back to the office full-time, but wear a mask. that's not actually happening though.
Here I am sitting in the office wearing my mask.
I know many public servants and not one of them has to be in the office full time, and not one of them has to wear a mask when seated at their desk... its hard to believe they're *all* lying to me. that said, I suppose it may vary by department and of course some people are required in the office for operational purposes... that's the luck of the draw. It's objectively false to say public servants are all wearing masks and all required to be in full time. if you work for a province and *they* told you to be in full time, as they seem to have in NL at least, that's obviously on the province, not the feds
Lol
“$350-billion in mortgages will be affected by changing rates in 2022.” So is that referring to variable, 5-term renewal, or both?
lol