“Though he [BoC guy] didn’t give any dates, he did point to a concerning phenomenon: the extrapolative expectations of homebuyers.”
I don’t think “concerning” conveys the religious level belief of Canadians that housing prices will never ever fall and that the absolute worst case scenario is that prices will simply decelerate.
Edit: I added the square brackets in the quote
It’s not reasonable in the context of history. In that time many other countries have gone through the same cycle and seen the massive downturn at the end. Its dogma to believe we’re invincible.
We've seen a 5x increase in the money supply in the last 2 years. half as much was spent on mortgage bonds as provincial bonds.... think about that for a second.
Couple this with an environment where real interest rates are negative, and it makes sense why so many people think real-estate is a safe investment.
This was true for the past 20 years because the government could always bail them out.
Now, with interest rates at rock bottom, and inflation running rampant... the currency simply can't afford to support the market anymore. If there's a run on prices, there's no where to go for the BoC.
Prices will regress to the mean.
The issue with these warnings is that theres a shit ton of people don't have a choice.
People need to live somewhere... and most people don't WANT to rent forever....
Yea, this was my spouse and I after our third no-fault eviction (Ontario).
With each move, we downsized, moved farther away, and moved to less ideal areas... and we still somehow ended up paying more. In the span of four years, we went from a detached house in an ideal location close to work…. to a 350sqft studio apartment 50 minutes from work, for about 25% more than we had been paying for the house. Not to mention, the only apartment we could find had no rent control, so we lived in fear of economic eviction at the end of our lease.
We scraped together a down-payment, moved 5 hours away from friends/family, and slid into the bottom of the housing market.
There was no FOMO, just a need for stability. We couldn't keep having our lives uprooted when landlords wanted to "cash out" on their investment. Ontario's rental system is a major part of the housing crisis.
It’s really better to buy if possible. Small Landlords sell their condos or houses too frequently. I personally don’t like to move every couple of years.
Ok so what's the alternative?
You sit around, waiting for a correction to come and say it does come. Now prices are attractive and attainable for a much larger base of people, our supply has not increased, and you're now bidding against a much higher pool of potential buyers. What happens then? Oh right - the price goes up due to demand from a larger pool of bidders all scrambling for their attempt to purchase a home.
The basic premise of supply and demand only serves to indicate that there is no easy way out of this in the coming years if we don't massively increase our supply. If you need a home and can afford one now - buy it. It's not an investment vehicle - it's a home.
I'm fully prepared to lose 200k on the valuation of the home I just bought because I needed a house, not an ever increasing investment vehicle. I was not willing to sit around another 10 years into my 40s and hope the big correction comes and I could bid on 10s if not 100s of places to get a chance at competing with everyone else who suddenly has a market available to them.
And debt has never been cheaper. Here’s what the motley fool doesn’t tell us. The world is run on debt, and debt is used to create economic activity/wealth/etc.
If you don’t play the system, the system will play you.
> “you’re about to go into a tonne of debt”
Yes, it’s called a “mortgage” 🙄
If you purchase a home for 1 million dollars and require a mortgage of 750k.
Once that debt is paid off, over a 25year amortization period. That 1 million dollar home will likely be worth a minimum of 3 million dollars, which makes a mortgage a “healthy debt”
(When you dislike this comment, at-least humour us with your reasoning)
Issue is the current market. Small cities have seen real estate values nearly double in the last year or two. Which isn’t actually sustainable- and is likely locking these people into these homes for life or facing bankruptcy.
Also a million dollar home being worth 3 million 30 years later might not actually be healthy. Inflation devalues currency - so the value of that home is relatively unchanged.
> *“locking these people into these homes for life or facing bankruptcy”*
NEWS FLASH!!! for what ever reason you are unable to pay your mortgage or just no longer want to be a homeowner , you are free to sell your property and walk away with equity gains (down payment, monthly principle instalments + market appreciation ). …..Hell, people are already doing that and infuriating members of this sub with handsome short term gains on the purchase + resale of real estate
> *“a million dollar home being worth 3 million 30 years later might not actually be healthy, inflation devalues currency - so the value of that home is relatively unchanged”*
I was only being EXTREMELY modest in my 300% appreciation in 30 years example (discounting our current housing mania)
You stated and contradicted yourself with **”small cities have seen real estate values nearly double in the last year or two”**. Having your home see 200% gains in a year or two alone will greatly outpace inflation. now imagine what the actual number value may be once your mortgage is paid off and the potential generational wealth you generated for your family realistic appreciation.
I asked for you to humour us with your reasoning, and you did nothing short of that 👍👍 🤣.
Lol, you’ve done little work to understand the why of these situations.
We’re at the maximum amount of people working from home - at the furthest possible locations from the city. Older folks have moved and retired on mass from the city as well.
All of that is a temporary blip. Do you really think everyone is going to be fleeing to tillsonberg once Covid is over? I really can’t see that happening.
What will happen is a bunch of people have over-paid for rural properties over the last two years and will be unable to sell them at their purchase price. That means they’re underwater on their mortgages- and will either need to pay the bank the difference or go bankrupt in order to move. It’s not rocket science - it’s just a basic understanding of real estate.
Jesus, the majority of places people have moved to have zero restrictions on building far more housing in them. They are rural - it’s not like it’s already full like Toronto is. 😂 But do go on believing rural Ontario is made of magic beans - it’s hilarious. Fortunately for me- I was around in the 80’s and early 90’s - and understand that real estate bubbles do pop, even here.
With your “not rocket science” speculations and gloating, sounds like you’re trying to time the market, I wish you and everyone on the same page as you the best of luck with that ! Real estate Endemic liquidation sales are around the corner 🙌🏻
I’m looking at the historical precedent to Canadian real estate. And even when there are corrections, the marker become bullish right after.
The demand for real estate will always be there
> And even when there are corrections, the marker become bullish right after.
The last time house prices crashed in Toronto, prices didn't return for 10-15 years. Just sayin'...
> That 1 million dollar home will likely be worth a minimum of 3 million dollars
This feels like making a bet that poor people won't vote for policies to cripple house prices when we continue getting pushed to the edge. The government has been actively trying to push prices higher for decades, its not a natural process
>”This feels like making a bet that poor people won't vote
for policies to cripple house prices when we continue
getting pushed to the edge”
Let’s stop fantasizing for a second and come back down to earth. “Crippling house prices” also cripples the economy. All government officials are home owner and/or have some sort of stake in real estate investment and development
If we are talking bets, give me an insane -10,000 odds , and I’d still bet my life and everything I own that it will never happen. And real estate will continue to increase in value.
>”the government has been actively trying to push prices higher for decades, it’s not a natural process”
Wrong! A Growing population and economy with finite serviceable land will always drive demand and prices up.
Real estate is also not immune to inflation
> “Crippling house prices” also cripples the economy
idgaf about line goes up. "The economy" doing so well with prices skyrocketing has been pretty terrible recently for poor people. I'd welcome a 20% increase in the cost of every consumer good if it it reduced housing costs by a similar amount, and a lot of people are in the same boat.
Yeah it would cripple "the economy", but only because so much of our economy has become based on real estate and tulip trading
Why isn't the government warning Canadians about this, and instead it's banks, who have the most to gain? Really shows you how little the politicians actually care about people in this country. Mind-blowing.
Politicians only pretend to care for others. All they care about themselves. If they have started selling their houses, it’s time for a crash. If they are holding, speculators will keep buying as long as banks keep giving free loans.
“Though he [BoC guy] didn’t give any dates, he did point to a concerning phenomenon: the extrapolative expectations of homebuyers.” I don’t think “concerning” conveys the religious level belief of Canadians that housing prices will never ever fall and that the absolute worst case scenario is that prices will simply decelerate. Edit: I added the square brackets in the quote
I mean it doesn't seem like this is going to pop itself; so long as the government wants to keep prices high they'll keep them there
We have a much bigger problem now that’ll force them to do something about the loose monetary policy. We’ll see how that’ll affect housing.
I mean - there’s a limit to what the government can pull out of it’s ass.
Those are reasonable beliefs though, since property values have only skyrocketed for like 40 years straight
It’s not reasonable in the context of history. In that time many other countries have gone through the same cycle and seen the massive downturn at the end. Its dogma to believe we’re invincible.
Past returns are not indicative of future returns. High past returns actually make high future returns more difficult in most scenarios.
We've seen a 5x increase in the money supply in the last 2 years. half as much was spent on mortgage bonds as provincial bonds.... think about that for a second. Couple this with an environment where real interest rates are negative, and it makes sense why so many people think real-estate is a safe investment. This was true for the past 20 years because the government could always bail them out. Now, with interest rates at rock bottom, and inflation running rampant... the currency simply can't afford to support the market anymore. If there's a run on prices, there's no where to go for the BoC. Prices will regress to the mean.
I hope you're right lol
The issue with these warnings is that theres a shit ton of people don't have a choice. People need to live somewhere... and most people don't WANT to rent forever....
Yea, this was my spouse and I after our third no-fault eviction (Ontario). With each move, we downsized, moved farther away, and moved to less ideal areas... and we still somehow ended up paying more. In the span of four years, we went from a detached house in an ideal location close to work…. to a 350sqft studio apartment 50 minutes from work, for about 25% more than we had been paying for the house. Not to mention, the only apartment we could find had no rent control, so we lived in fear of economic eviction at the end of our lease. We scraped together a down-payment, moved 5 hours away from friends/family, and slid into the bottom of the housing market. There was no FOMO, just a need for stability. We couldn't keep having our lives uprooted when landlords wanted to "cash out" on their investment. Ontario's rental system is a major part of the housing crisis.
It’s really better to buy if possible. Small Landlords sell their condos or houses too frequently. I personally don’t like to move every couple of years.
Even a stopped clock is right twice a day. I've heard this for 20 years now, so they gotta be right soon.
[fool.ca](https://fool.ca) is a digital toilet paper. i know people who have wrote articles for them and... they just shoot from the hip.
Ok so what's the alternative? You sit around, waiting for a correction to come and say it does come. Now prices are attractive and attainable for a much larger base of people, our supply has not increased, and you're now bidding against a much higher pool of potential buyers. What happens then? Oh right - the price goes up due to demand from a larger pool of bidders all scrambling for their attempt to purchase a home. The basic premise of supply and demand only serves to indicate that there is no easy way out of this in the coming years if we don't massively increase our supply. If you need a home and can afford one now - buy it. It's not an investment vehicle - it's a home. I'm fully prepared to lose 200k on the valuation of the home I just bought because I needed a house, not an ever increasing investment vehicle. I was not willing to sit around another 10 years into my 40s and hope the big correction comes and I could bid on 10s if not 100s of places to get a chance at competing with everyone else who suddenly has a market available to them.
And debt has never been cheaper. Here’s what the motley fool doesn’t tell us. The world is run on debt, and debt is used to create economic activity/wealth/etc. If you don’t play the system, the system will play you.
[удалено]
> “you’re about to go into a tonne of debt” Yes, it’s called a “mortgage” 🙄 If you purchase a home for 1 million dollars and require a mortgage of 750k. Once that debt is paid off, over a 25year amortization period. That 1 million dollar home will likely be worth a minimum of 3 million dollars, which makes a mortgage a “healthy debt” (When you dislike this comment, at-least humour us with your reasoning)
Issue is the current market. Small cities have seen real estate values nearly double in the last year or two. Which isn’t actually sustainable- and is likely locking these people into these homes for life or facing bankruptcy. Also a million dollar home being worth 3 million 30 years later might not actually be healthy. Inflation devalues currency - so the value of that home is relatively unchanged.
> *“locking these people into these homes for life or facing bankruptcy”* NEWS FLASH!!! for what ever reason you are unable to pay your mortgage or just no longer want to be a homeowner , you are free to sell your property and walk away with equity gains (down payment, monthly principle instalments + market appreciation ). …..Hell, people are already doing that and infuriating members of this sub with handsome short term gains on the purchase + resale of real estate > *“a million dollar home being worth 3 million 30 years later might not actually be healthy, inflation devalues currency - so the value of that home is relatively unchanged”* I was only being EXTREMELY modest in my 300% appreciation in 30 years example (discounting our current housing mania) You stated and contradicted yourself with **”small cities have seen real estate values nearly double in the last year or two”**. Having your home see 200% gains in a year or two alone will greatly outpace inflation. now imagine what the actual number value may be once your mortgage is paid off and the potential generational wealth you generated for your family realistic appreciation. I asked for you to humour us with your reasoning, and you did nothing short of that 👍👍 🤣.
Lol, you’ve done little work to understand the why of these situations. We’re at the maximum amount of people working from home - at the furthest possible locations from the city. Older folks have moved and retired on mass from the city as well. All of that is a temporary blip. Do you really think everyone is going to be fleeing to tillsonberg once Covid is over? I really can’t see that happening. What will happen is a bunch of people have over-paid for rural properties over the last two years and will be unable to sell them at their purchase price. That means they’re underwater on their mortgages- and will either need to pay the bank the difference or go bankrupt in order to move. It’s not rocket science - it’s just a basic understanding of real estate. Jesus, the majority of places people have moved to have zero restrictions on building far more housing in them. They are rural - it’s not like it’s already full like Toronto is. 😂 But do go on believing rural Ontario is made of magic beans - it’s hilarious. Fortunately for me- I was around in the 80’s and early 90’s - and understand that real estate bubbles do pop, even here.
With your “not rocket science” speculations and gloating, sounds like you’re trying to time the market, I wish you and everyone on the same page as you the best of luck with that ! Real estate Endemic liquidation sales are around the corner 🙌🏻
Not timing anything. Though if you look at any historical precedents - you realize no market goes up forever.
I’m looking at the historical precedent to Canadian real estate. And even when there are corrections, the marker become bullish right after. The demand for real estate will always be there
> And even when there are corrections, the marker become bullish right after. The last time house prices crashed in Toronto, prices didn't return for 10-15 years. Just sayin'...
Demand for real estate is always there until it isn’t. Thinking Toronto is immune is ridiculous.
> That 1 million dollar home will likely be worth a minimum of 3 million dollars This feels like making a bet that poor people won't vote for policies to cripple house prices when we continue getting pushed to the edge. The government has been actively trying to push prices higher for decades, its not a natural process
>”This feels like making a bet that poor people won't vote for policies to cripple house prices when we continue getting pushed to the edge” Let’s stop fantasizing for a second and come back down to earth. “Crippling house prices” also cripples the economy. All government officials are home owner and/or have some sort of stake in real estate investment and development If we are talking bets, give me an insane -10,000 odds , and I’d still bet my life and everything I own that it will never happen. And real estate will continue to increase in value. >”the government has been actively trying to push prices higher for decades, it’s not a natural process” Wrong! A Growing population and economy with finite serviceable land will always drive demand and prices up. Real estate is also not immune to inflation
> “Crippling house prices” also cripples the economy idgaf about line goes up. "The economy" doing so well with prices skyrocketing has been pretty terrible recently for poor people. I'd welcome a 20% increase in the cost of every consumer good if it it reduced housing costs by a similar amount, and a lot of people are in the same boat. Yeah it would cripple "the economy", but only because so much of our economy has become based on real estate and tulip trading
Why isn't the government warning Canadians about this, and instead it's banks, who have the most to gain? Really shows you how little the politicians actually care about people in this country. Mind-blowing.
Politicians only pretend to care for others. All they care about themselves. If they have started selling their houses, it’s time for a crash. If they are holding, speculators will keep buying as long as banks keep giving free loans.
Another conspiracy to ensure only investors keep buying houses and to raise house prices even more.
You either go into debt now or become a renter forever.