# Anyone remember when this used to be a financial forum?



## Just a Guy (Mar 27, 2012)

Is it just me, or has this board been hijacked to become a political forum with a weak veneer of financial discussions?


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## jargey3000 (Jan 25, 2011)

the overall activity / discussin seems to be ebbing of late....


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## andrewf (Mar 1, 2010)

Especially discussion of US politics, which is almost totally irrelevant to Canadian personal finance.


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## doctrine (Sep 30, 2011)

We all made our millions from the early days and now prefer to be sailing our yachts.


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## chiifea (Jun 27, 2018)

*Great*

What is happening here and i like it.


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## Joe Black (Aug 3, 2015)

I think people mostly stay on topic in the sub-forums - if you don't want to see anything about politics just stay in "Investing", "Real Estate", etc. and out of "General Discussion".

I like to see what people who are like-minded with me on financial matters think about other topics, so I like the "general" sections.


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## new dog (Jun 21, 2016)

andrewf said:


> Especially discussion of US politics, which is almost totally irrelevant to Canadian personal finance.


I am not so sure about that as it seems the trade issue has people worried.


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## 30seconds (Jan 11, 2014)

Tbh the mobile version of CMF is terrible. I seem to be reading on rfd and reddit more even though i find the financial content here better.


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## james4beach (Nov 15, 2012)

There definitely seems to be less financial discussion lately. Maybe everyone has finally perfected their investment portfolios?


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## andrewf (Mar 1, 2010)

30seconds said:


> Tbh the mobile version of CMF is terrible. I seem to be reading on rfd and reddit more even though i find the financial content here better.


I use the desktop site on my phone.


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## Eclectic12 (Oct 20, 2010)

james4beach said:


> There definitely seems to be less financial discussion lately. Maybe everyone has finally perfected their investment portfolios?


My impression is that those with financial interests are getting ready for summer vacation etc. without that much to adjust in the summer months.
Remember the "sell in May, come back in Sept" advice?

Those with political views can't keep themselves away. :biggrin:


Time will tell ... otherwise, what financial steps do you need to ask questions about that you plan to do from June to Sept?

Cheers


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## kcowan (Jul 1, 2010)

I think there is more to talk about politically than there has been for years. As long as the mods stay on the toes, it should be no problem.


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## 30seconds (Jan 11, 2014)

andrewf said:


> I use the desktop site on my phone.


Well that is much better!! Thanks for that ahah.


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## lonewolf :) (Sep 13, 2016)

Complacency nothing to talk about the mantra buy & hold for ever enough said


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## marina628 (Dec 14, 2010)

I have been here for a few years now and I think many key contributors moved on and it has not been the same since that time.


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## new dog (Jun 21, 2016)

My thinking it usually takes volatility to spike discussion. The markets have been managed since 2009 and it has settled out to be the same old thing day after day with the market unnaturally just going up most of the time. 

Having said that the political volatility has ratcheted up big time in all media including financial and that is where the action is now. I think when they lose control and the next recession starts there will be a lot of financial as well as political talk. 

From there the political situation may go more to the back burner and the financial talk will take centre stage again.


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## Just a Guy (Mar 27, 2012)

I don't know, there's been some great buying opportunities in real estate lately. I just picked up two two bedroom places for $65k each. Ironically, one of them was one I tried to buy last year for $75k back when it needed renovations. Instead, the owner pulled it from the market, spent a small fortune renovating it completely, put it back on the market for $150k and watched it sit there, dropping his price every few months, until we bought it and rented it for $1200 the day after taking possession...

The real estate market is almost dead in some parts of Canada making this an excellent buying opportunity...

I was actually thinking of not buying any more properties, but when places like this are just sitting there, it's hard to pass them up. Imagine, it sat at these low prices (well, we negotiated it down, but it was still listed cheaply) for over a month and there were no other offers.


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## MrMatt (Dec 21, 2011)

andrewf said:


> Especially discussion of US politics, which is almost totally irrelevant to Canadian personal finance.


I actually see political/policy risk as the single biggest risk to my financial well being.

Also the incredibly divisive attitude in politics and free speech is scary. The amount of serious debate is dropping, being replaced with tweets and ignorant memes.


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## lonewolf :) (Sep 13, 2016)

MrMatt said:


> I actually see political/policy risk as the single biggest risk to my financial well being.
> .


 Politicians destroy the money world


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## stantistic (Sep 19, 2015)

*Nationality*

Does there exist a website of major Canadian corporations which lists (by nationality) the percentage owned by Canadians ? 
In particular BCE ? ….(to settle a bet)


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## humble_pie (Jun 7, 2009)

stantistic said:


> Does there exist a website of major Canadian corporations which lists (by nationality) the percentage owned by Canadians ?
> In particular BCE ? ….(to settle a bet)




don't know of any such website & ottomh the data would surely not be very solid anyhow, since offshore entities investing in canadian public companies can themselves be owned by anonymous canadians

but if your side of the bet is that BCE is maple leaf forever, through & through, world without end, you're probably correct. Foreign ownership in Ma Bell, as a federally regulated company, is limited to 10%.


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## fatcat (Nov 11, 2009)

Just a Guy said:


> Is it just me, or has this board been hijacked to become a political forum with a weak veneer of financial discussions?


its the markets ... we are all just making money and it has gotten really boring 

though i am pretty sure this is all about to change


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## Mukhang pera (Feb 26, 2016)

As I recall, the forum had a distinct financial flavour until it morphed into the We Hate Trump forum.


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## stantistic (Sep 19, 2015)

Thanks h_p .

Your reply has established my reputation in the coffee shop.


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## humble_pie (Jun 7, 2009)

Mukhang pera said:


> As I recall, the forum had a distinct financial flavour until it morphed into the We Hate Trump forum.



it's true that the financially successful do not support donald trump ...

have u not noticed how the trump acolytes on here tend to be financial no-shows?


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## james4beach (Nov 15, 2012)

Currently my moderation approach is that the moment I see anything contentious, or a political argument, I move it into Hot Button. A political issue that is raised within the context of financial discussion (like Hydro One) is about normal and I don't do anything with those, unless it becomes an argument.

The argumentative content bothers many of our members and there are many people who never look at Hot Button. I consider it the CMF cesspool.

I suggest we keep sending any political debates/Trump material directly into the CMF cesspool. If you see any thread that isn't already in Hot Button, just report the post and mention that you think it should be in Hot Button.


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## fatcat (Nov 11, 2009)

why not just suspend hot button discussions for say 3 months and see what happens on the forum ? ... just for fun ...


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## james4beach (Nov 15, 2012)

fatcat said:


> why not just suspend hot button discussions for say 3 months and see what happens on the forum ? ... just for fun ...


That's not a bad idea, but we'd have to ask the admins.


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## kcowan (Jul 1, 2010)

I suspect the pent up demand will seep into financial threads?


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## Spidey (May 11, 2009)

I was first interested in this forum because there were some new, often young people with unique ideas on investing. Lately I don't see much along those lines. I think there is less to discuss as more of us become convinced of the logic of passive portfolios or even a combination of passive portfolios and blue chip dividend stocks. It is an effective investing approach but doesn't make for the most exciting discussions.


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## sags (May 15, 2010)

Which is more likely, given the dismal statistics..........people aren't interested in financial matters, or people don't have any money so they aren't interested in financial forums ?


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## fatcat (Nov 11, 2009)

james4beach said:


> That's not a bad idea, but we'd have to ask the admins.


bad idea, the admins don't give a shite ..., they are going to be interested in one thing only ... eyeballs ... maybe i am wrong though ... all you need to do is shut down hot button, if indeed it is the "cesspool" that you describe james, why are we allowing it ? ... it certainly has changed the character of the forum



> *kcowan* I suspect the pent up demand will seep into financial threads?


part of the problem is that right now especially, politics and finance are inextricably intertwined, spanky mcmoron is about to unleash political forces that are going to affect all of our portfolios


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## kcowan (Jul 1, 2010)

fatcat said:


> part of the problem is that right now especially, politics and finance are inextricably intertwined, spanky mcmoron is about to unleash political forces that are going to affect all of our portfolios


Yes and I expect to see any affect will leak into the financial forums anyway.


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## james4beach (Nov 15, 2012)

Spidey said:


> I was first interested in this forum because there were some new, often young people with unique ideas on investing. Lately I don't see much along those lines. I think there is less to discuss as more of us become convinced of the logic of passive portfolios or even a combination of passive portfolios and blue chip dividend stocks. It is an effective investing approach but doesn't make for the most exciting discussions.


I feel like that's part of it. More passive couch potato, less active stock picking or other strategic investing.

Additionally, being in the younger demographic myself, I'd say that very few people in their 20s and 30s have any money to invest. Even among my high income earning peers, there are very few investors. The high cost of housing and other debts eat up all the cashflow... and I'd say it's due to poor real wages and poor job stability/continuity over the last 20 years, plus this housing bubble fuelled by the government (CMHC) and Bank of Canada.

We've seen the stats after all. Canadians have record high debt/income ratios. There is no excess money to invest.

If even the higher income earners (> 70K) aren't investing, then obviously the others aren't even _dreaming_ of investing. IMO this leads to popularity of things like crypto currencies and pot stocks. Lottery tickets, things you can buy with small amounts of money with some hope it can produce huge riches.


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## james4beach (Nov 15, 2012)

fatcat said:


> bad idea, the admins don't give a shite ..., they are going to be interested in one thing only ... eyeballs ... maybe i am wrong though ... all you need to do is shut down hot button, if indeed it is the "cesspool" that you describe james, why are we allowing it ? ... it certainly has changed the character of the forum


Interesting. I think the idea is that people inevitably want to talk about politics, so Hot Button creates the outlet to do that. But I think you're suggesting the idea of eliminating that, which means eliminating any political discussion that goes beyond civil and polite. This would mean that the moment moderators see any hostility or argument in a thread, the thread would go to the trash bin instead of Hot Button.



fatcat said:


> part of the problem is that right now especially, politics and finance are inextricably intertwined


Politics and finance will always be linked, but I think there's a difference between a politics based thread (e.g. Trump or Immigration) and an investment based thread (e.g. Hydro One)



fatcat said:


> spanky mcmoron is about to unleash political forces that are going to affect all of our portfolios


So why aren't we discussing that some more? There are asset allocations and other risk reduction approaches that are possible. For example why would someone sit there with a 60/40 or 80/20 stock-heavy portfolio leaving them exposed to those kind of storms, possibly ruining their ability to retire, when there are many other AA options?

Thread: Stock investing with black swan protection


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## Eclectic12 (Oct 20, 2010)

sags said:


> Which is more likely, given the dismal statistics..........people aren't interested in financial matters, or people don't have any money so they aren't interested in financial forums ?


Based on conversations that went nowhere ... most aren't interested in financial matters.

One guy I talked to said he regretted how he had a set figure in mind of income before learning about finances would be worthwhile. After hitting the number then learning - he realised that he had missed years of opportunity.


Cheers


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## fatcat (Nov 11, 2009)

james4beach said:


> So why aren't we discussing that some more? There are asset allocations and other risk reduction approaches that are possible. For example why would someone sit there with a 60/40 or 80/20 stock-heavy portfolio leaving them exposed to those kind of storms, possibly ruining their ability to retire, when there are many other AA options?
> 
> Thread: Stock investing with black swan protection


as spidey has said above, many of the old timers are "holders", not "traders"

i will be 70 next year and i am moving toward exactly the traditional recommendation of holding fixed investments equal to your age so i am close to 30% equities most of which are blue-chips

5 years ago i made 100 trades a year, now i make 5-10

i am no longer interested much in theory or looking for new investments so i have little to contribute finance wise

i do think it would worth considering shutting down hot button because it may well appeal to those of us lunatics that love to yell about politics but i suspect may really be turning off possible newcomers and young people who might otherwise join the forum, they may be intimidated by the tone of the discussion

and this forum has been a source of real knowledge to people, you can learn more here than reading the globe and mail for example ... but i still read the globe and mail


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## fatcat (Nov 11, 2009)

james4beach said:


> Additionally, being in the younger demographic myself, I'd say that very few people in their 20s and 30s have any money to invest.


news flash james, all of us "greedy geezers", i.e. boomers ... we didn't have any money to invest in our 20's and 30's either


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## Just a Guy (Mar 27, 2012)

The whole system of buying real estate that I've used my entire life has been based on no money. Even today I still buy properties with 100% financing because that's my system, not because I have to. 

I was watching one of those videos in the other thread by Jordan and I liked his idea that opportunities increase exponentially with success or failure. Things were pretty slow to grow in the beginning but, after a while, opportunities just started to come to me. It became much easier to make money, find deals, etc.

Of course, nothing would have happened had I not started.


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## james4beach (Nov 15, 2012)

fatcat said:


> news flash james, all of us "greedy geezers", i.e. boomers ... we didn't have any money to invest in our 20's and 30's either


Sure, nobody in their 20s ever has much money, but don't try to diminish the *massive* difference between our generations: the cost of housing. Housing was much cheaper in the 80s when the boomers were building their careers. Even if they had no money when they started, their ability to pay for housing and have excess savings was far superior to anyone in my demographic.

Canadian average home prices were just 2.5x disposable income in the 80s. Today the average home is 5x disposable income with as much as 10x in some centers. There has also been virtually no increase in real wages over this time span!

For example, say with 100K gross salary = 70K net income, a Canadian family might be looking at a 350K home today. If I was a boomer hanging out with fatcat in the 1980s, with the same household income, my house would have only cost 175K (using today's dollars). Yeah I know interest rates were higher, but it's still no contest.

It's a massive difference. If this was the 1980s, I'd (a) have enough money to buy a home outright today, (b) would have plenty of excess money to invest even after the purchase


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## like_to_retire (Oct 9, 2016)

james4beach said:


> If I was a boomer hanging out with fatcat in the 1980s, with the same household income, my house would have only cost 175K (using today's dollars). Yeah I know interest rates were higher, but it's still no contest.


Really, no contest? I remember in the fall of 1981 when mortgage rates were 21.75%, I got this great offer from the bank to renew my mortgage at 19% for one year and I had to take it because I would have lost my house if I had to sign at 21.75%. Many of my friends lost their homes, and believe me, we didn't own these monster homes that you youngsters own today, and all the other ridiculous luxuries you enjoy. Go ahead and recalculate your mortgage at 21% and see if it's no contest!

James4beach, you have no idea of what you speak.

ltr


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## Just a Guy (Mar 27, 2012)

Yeah, the reason why housing is so much more today is because the interest rates went down so much. As a cost factor, it's much more affordable today than it was when interest was double digits. (Run some numbers through a mortgage calculator if you don't believe me). 

Heck, if you did a little looking you can find all sorts of places that are cheap. I just picked up two two bedroom apartments for 65k each (over 1000 sq. ft., move in ready, just renovated). I've got an offer in on two one bedroom places that I hope to get around 45k, also move in ready and about 800 sq. ft. At 3% interest, these places cost next to nothing to own. Certainly not like the $800-$1000 I had to Paul for rent when I was in university back when minimum wage was not very much.


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## AltaRed (Jun 8, 2009)

Not only the difference in mortgage rates, a vast difference in finishings in the average house and square footage. The average house of the '70s and '80s does not remotely resemble the expectation of an average house of today.


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## like_to_retire (Oct 9, 2016)

AltaRed said:


> Not only the difference in mortgage rates, a vast difference in finishings in the average house and square footage. The average house of the '70s and '80s does not remotely resemble the expectation of an average house of today.


Yeah for sure. I go to my oldest son's house and all the finish of granite and multiple bathrooms and it's all so beautiful and the house is so huge and everyone walking around with smartphones and ipads and every other luxury you can imagine, and I compare it to the pitiful little bungalow everyone had in those days with a single bathroom and no luxuries along with their 20% mortgages. It makes me want to scream when I hear all the nonsense about boomers and all the privilege we have. Comparing houses today and then is an apples and oranges comparisons that can't be appreciated unless you were there.

ltr


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## james4beach (Nov 15, 2012)

Mortgage interest rates are a concern, but that's still beside the point of absolute cost. Again, as of today, I now have enough to buy a home at 80s valuations. I could buy one outright.

Sure the mortgage rates were higher, but people also had the ability to save up more money and take on the house with smaller debts, and also eliminate the debts faster in 80s/90s. You could have even lived in an apartment for a few years, and then basically bought a house outright. That's what my parents did in southern Ontario around the time I was born. They were NOT high income earners, only had a single income earner, and they only had the mortgage for a couple years. It doesn't take long to own a house outright when you buy it for 2.5x income.

So I could have bought a home in the 80s, but I can't afford one now, even after renting for many years. Yes I realize the decor inside a home was a bit crappier in the 80s. But I would have still had a home/shelter. Today I can't afford one. What am I missing guys? Are you saying I'm super lucky to be able to borrow 300K at 5% today? Lucky me.


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## james4beach (Nov 15, 2012)

I don't even know how to react to those posts about home decorations and the granite countertops. We have some _very_ different values.


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## AltaRed (Jun 8, 2009)

James, I was making $620/month in 1971 when I graduated. 

I will use my real life example from 1974 in southern Ontario: Wage $1000/month (guess on my part), Duplex cost: ~$50k, 20% down payment, interest rate ~10.5%, Monthly payment: $377.67/mo

Today: Much nicer and bigger duplex not far from us in the Okanagan: Duplex MLS: $480k, 20% down payment, interest rate 5 year fixed term ~3.6%, Monthly payment: $1943.05 ---- early 30something Millennial we know buying earns ~$80k/yr (about $6700/month)

Not perfectly apples to apples, but please explain to me the difference?

Added: Okay, one difference is I bought at about age 25. Today's millennial is buying early 30s. The only reason I could buy 3.5 years after graduation is spouse and I saved every penny we could from what we earned to get the down payment. We had junk for possessions for the purpose of getting in before the inflation of those early '70s got too far ahead of us. We bought the minute we could make the numbers add up and qualify to the dollar.


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## Just a Guy (Mar 27, 2012)

I just ran the numbers on one of my old houses where I lived. It was a 900 sq. Ft. Bungalow, built after the war. Bought it for around $110k back in the 90’s, middle of a recession, jobs were scarce, pay was probably $2500/month before taxes, interest rate was only 8% (a steal), my payment was about $1100/month. 

Today the same house sold for $300k. At 3% interest, payment is $1700/month and the average income is more than double what I was earning back then. From a price to earnings comparison, the house is cheaper today than it was back then. 

You can’t just compare prices and ignore the increase in wages. Of course, today, people are buying those houses and tearing them down to build Mc mansions as the lot was huge. 

Also, as I pointed out, you can buy nice apartments on basically a credit card if you look and are willing to live outside of the gta or gva.

The west has some very good deals right now. Real estate has basically stalled making it a buyer’s market.


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## doctrine (Sep 30, 2011)

Wow, just wow. There are places in this country you can buy a house for $50,000 that look a lot like the house you want to buy back in the 1980's. Or go fancy and get a $150,000 house. Or a $150,000 condo in a big city. 

Unfortunately for you, those places are not new, need a lot of work, or aren't in a big fancy city. 

It's never been easier to live outside a big city, with cheap cars with more mileage and reliability than ever before, plus fibre internet everywhere. Flights are cheaper now than 20 or 30 years ago, even without inflation.

Why don't you start looking for solutions, rather than problems? That's what a lot of people in the 80's did too. 

People stuck in a world of $800,000 mortgages with $100k incomes are in a world of punishment of their own making.


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## dubmac (Jan 9, 2011)

I read ltr's reply above, and did some research.
If a person took a $150,000 mortgage in 1980 at 21% interest, his payments would be around $2530 per month (in 1980 dollars)
Convert $2530 (1980) to 2018 dollars and you get around $7600, in mortgage payment, per month.
That truly is nuts..crazy...whoever got through that showed some real savvy.


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## AltaRed (Jun 8, 2009)

That is why there was a substantial recession in the early '80s, with many foreclosures, and trust (mortgage companies) were going under by the dozen. Just look at the list of companies CDIC had to intervene in during that period http://www.cdic.ca/en/about-cdic/resolution/Pages/history.aspx It rinsed and repeated in the '90s with the Toronto and Vancouver 10 year housing busts. 

Let's hope there is not another repeat, but perhaps millennials can better understand the hand wringing from some of us old codgers concerned about the ridiculous GTA and GVR run up in prices. It could be a house of cards if interest rates move up substantially and thus the rationale for the increased stress test (qualifying at a higher rate) from the Feds. Something has to squeeze the heat out of the market.


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## dubmac (Jan 9, 2011)

AltaRed said:


> Let's hope there is not another repeat, but perhaps millennials can better understand the hand wringing from some of us old codgers concerned about the ridiculous GTA and GVR run up in prices. It could be a house of cards if interest rates move up substantially and thus the rationale for the increased stress test (qualifying at a higher rate) from the Feds. Something has to squeeze the heat out of the market.


so true Alta..so true.
BTW. at 3.2% interest today, you can borrow 1.5 million for a mortgage payment of around $7600. Just to put things in perspective.


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## Just a Guy (Mar 27, 2012)

I don't think we'll avoid a bloodbath in real estate. My back of the napkin calculations say it's 40-60% overvalued today. That's quite a correction. GTA and GVA are a lot worse. When interest rates rise and renewal shock hits, it'll make what happened in the USA in 2007 look like a minor blip. People will lose their shirts, houses, and a lot more. 

It's going to be ugly. The government has been trying mitigate the outcome for a while from these low interest rates but it's not going to help much, the prices went way too high to be fixed with these minor changes. 

For every 1% increase in interest, your payments will go up $50/month for each 100k you borrowed. That adds up quickly for people who barely can make ends meet now. Especially with average 400k mortgages. Most people won't understand the implications until renewal time either. One month you could make the payments, the next you can't. 

And, if you think you can just sell and get out...who do you sell to? The new buyers can't afford it any more than you can. Prices will crash. It's one of the reasons I look for undervalued properties that people need to sell cheap, I have to price in the correction before it happens.


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## AltaRed (Jun 8, 2009)

I don't think it will be nearly as bad as you suggest, not with the new stress tests in place. I believe the current qualifying rate is 5.34% these days, about 1.5 points or so above actual 5 year fixed rates. That doesn't capture those who got in under the wire and could face financial ruin with another 3-4 BoC overnight rate changes but that is not a lot of people. And I don't think central bankers have much ability to increase overnight rates another percentage point or two. Too much debt out there everywhere.


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## nathan79 (Feb 21, 2011)

james4beach said:


> I don't even know how to react to those posts about home decorations and the granite countertops. We have some _very_ different values.


James, a lot of commenters on here are out of touch with the average person. They see a 30-year-old millennial making 80K and think that's typical, when it's probably the top 10th percentile for that age group.

All of my friends started out with crummy old apartments, either renting or buying. We were somewhat lucky since most of us bought in our mid 20's, 10-15 years ago, when real estate was still somewhat reasonable even in major cities.

The same houses my parents bought in the 1980's for around 100K are now selling for 800K-1MIL. I'm not even taking about new houses with huge square footages and granite, etc. I don't care how low interest rates are -- the math simply doesn't work.

You could easily buy a detached home with a 30K income in the 80's. That is 60K adjusted for inflation, which will hardly buy you a 2-bedroom condo within 50 km of a major city today.


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## like_to_retire (Oct 9, 2016)

nathan79 said:


> You could easily buy a detached home with a 30K income in the 80's. That is 60K adjusted for inflation,


Inflation from 1980 to 2017 is 196.36%. Don't wages usually keep up with inflation?

$30,000 in 1980 would then be $88908 in 2017. Yep, that's about the $80K I would expect for a millennial.

Average 2.98% over 37 years.

ltr


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## nathan79 (Feb 21, 2011)

like_to_retire said:


> Inflation from 1980 to 2017 is 196.36%. Don't wages usually keep up with inflation?
> 
> $30,000 in 1980 would then be $88908 in 2017. Yep, that's about the $80K I would expect for a millennial.
> 
> ...


I said 1980's, not the year 1980 specifically. Obviously there will be a range, with 30K being considered a good income by 1980 standards, and just an average one by 1990 standards.

The last house my parents bought in 1989, cost them roughly $105,000. If you were making 30K a year then, that's $53,500 in today's dollars. A similar house in a similar neighborhood in that area sells for about 800K today.


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## nathan79 (Feb 21, 2011)

like_to_retire said:


> $30,000 in 1980 would then be $88908 in 2017. Yep, that's about the $80K I would expect for a millennial.
> ltr


Where are all these millennials making 80K is what I wonder. Surely some do, but how is it representative?

Statcan shows median income for age 25-34 as $37,400, and for age 35-44 as $46,400 (2016 numbers).

Millennials were born between 1982 and 1996 (roughly speaking), which makes them between 22 and 36 years old, so I'm leaning towards the first set of numbers being the more accurate one.


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## AltaRed (Jun 8, 2009)

nathan79 said:


> Where are all these millennials making 80K is what I wonder. Surely some do, but how is it representative?


I think generally we are talking about professionals with degrees in engineering, science, business, law, medicine, etc... Not an average wage earner and not everyone is "entitled" to buy a single detached house in a nice neighbourhood. 

As I mentioned earlier, I started as an engineer at $620/month ($7.44k/yr) in 1971. I understand in Canada $60k/yr is a reasonable starting level this year for an engineer. Add 5-8 years of experience when one is entering the home buying phase and I would guess $80k is not unreasonable. Salaries will be more in places like Toronto and Vancouver to be able to attract talent. e.g. Vancouver engineers are paid more than those elsewhere in the province.


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## Eclectic12 (Oct 20, 2010)

james4beach said:


> Sure, nobody in their 20s ever has much money, but don't try to diminish the *massive* difference between our generations: the cost of housing. Housing was much cheaper in the 80s when the boomers were building their careers. Even if they had no money when they started, their ability to pay for housing and have excess savings was far superior to anyone in my demographic.
> Canadian average home prices were just 2.5x disposable income in the 80s ...


Too bad in the '90's I couldn't signup for this average. 

In my case, it was *3.8x gross income*.
You mention a $100K gross salary for a family where for my co-workers who were buying within a couple of years of when I did, it was more like a $60K gross.




james4beach said:


> ... Sure the mortgage rates were higher, but people also had the ability to save up more money and take on the house with smaller debts, and also eliminate the debts faster in 80s/90s.
> 
> *You could have even lived in an apartment for a few years, and then basically bought a house outright.
> That's what my parents did* in southern Ontario around the time I was born. They were NOT high income earners, only had a single income earner, and they only had the mortgage for a couple years. It doesn't take long to own a house outright when you buy it for 2.5x income ...


Your parents were able to do it means this applies to everyone else?

Sorry ... I did live in an apartment for a few years before buying a house. The savings meant I had a down payment that helped get me approved. It did next to nothing for reducing the years of mortgage or to enable buying the house outright.

I'd have to run the numbers to see what difference it would have made to buy at 2.5x disposable income instead of the real life number of 3.8x gross income.


Cheers


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## james4beach (Nov 15, 2012)

nathan79 said:


> Where are all these millennials making 80K is what I wonder. Surely some do, but how is it representative?
> 
> Statcan shows median income for age 25-34 as $37,400, and for age 35-44 as $46,400 (2016 numbers).


For 25-34 yo's, salaries of 40K sound about right to me by looking at my group of friends. Also remember there is no job stability, so while there may be bursts of high income (as I've experienced) it is not continuous. This is why I generally suggest to my peers that they don't invest much in stocks, because they realistically don't have the ability to leave the portfolios alone for the next few decades.

One needs job stability and/or a back-stop such as a pension to really be able to aggressively invest in stocks when young.

As for the hand wringing about the housing market? I agree. It won't even take interest rates going higher; just a downturn in the employment market will make many people unable to pay their debt servicing costs. Rising interest rates would make it worse of course but households barely have enough cashflow as it is, today.


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## Just a Guy (Mar 27, 2012)

Funny, millennial complaining that we're "out of touch" with reality...I remember being the only guy in my class of 650+ to get a job for the summer during school. They used to have the industry come in to tell us about what employment and life would be like after graduation...they consisted of "we're not hiring, we don't plan on hiring and I may be fired next week". 

Forget what you think we used to earn, there were no jobs to be had at any pay. Yet, somehow, we all managed to survive. Times change, so did the economy. Prices go up, they also go down. There are places available, nice places, all across Canada for under 100k (I know since I'm actually buying them today) but soomehow the millennials can't find them in the neighbourhood they want...

Of course, my kids will all want houses...I bet they'll have no trouble finding one. I've taught them to actually look for solutions instead of sitting the basement complaining about how unfair life is. Life has always been unfair, every generation thinks they had it rough...you know what? They're probably partially right. Life isn't easy, find a solution and overcome already.


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## nathan79 (Feb 21, 2011)

AltaRed said:


> I think generally we are talking about professionals with degrees in engineering, science, business, law, medicine, etc... Not an average wage earner and not everyone is "entitled" to buy a single detached house in a nice neighbourhood.
> 
> As I mentioned earlier, I started as an engineer at $620/month ($7.44k/yr) in 1971. I understand in Canada $60k/yr is a reasonable starting level this year for an engineer. Add 5-8 years of experience when one is entering the home buying phase and I would guess $80k is not unreasonable. Salaries will be more in places like Toronto and Vancouver to be able to attract talent. e.g. Vancouver engineers are paid more than those elsewhere in the province.


My bad... I was talking about how average wage earners were buying detached homes in the 1980's. The neighborhood I'm thinking of are average ones, not high end, but those homes are still approaching a million dollars today.


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## like_to_retire (Oct 9, 2016)

nathan79 said:


> I said 1980's, not the year 1980 specifically. Obviously there will be a range, with 30K being considered a good income by 1980 standards, and just an average one by 1990 standards.


hehe, OK, not the year 1980 specifically. Hey, I already spotted you the 2018 inflation by using 2017 figures, but who's splitting hairs.




AltaRed said:


> I think generally we are talking about professionals with degrees in engineering, science, business, law, medicine, etc... Not an average wage earner and not everyone is "entitled" to buy a single detached house in a nice neighbourhood.
> 
> As I mentioned earlier, I started as an engineer at $620/month ($7.44k/yr) in 1971. I understand in Canada $60k/yr is a reasonable starting level this year for an engineer. Add 5-8 years of experience when one is entering the home buying phase and I would guess $80k is not unreasonable.


Yep, I started a little later in engineering situation than you in 1974 and made $8000/yr to start. I would concur that today after reaching five years experience an engineer should be in the $80K plus range. Should be ample salary to afford a small townhouse. No one is entitled to start out with a detached home and three bathrooms.

ltr


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## AltaRed (Jun 8, 2009)

nathan79 said:


> My bad... I was talking about how average wage earners were buying detached homes in the 1980's. The neighborhood I'm thinking of are average ones, not high end, but those homes are still approaching a million dollars today.


Not a chance of $1 million for an average house in an average Canadian city. A very nice average house in Kelowna that you speak of is about $600k. Probably about the same in Calgary where we used to live. Toronto and Vancouver don't count in this discussion as they are aberrations that need to collapse. Don't even begin to argue around those numbers. Several millennials we know are fleeing Vancouver area for the BC Interior.

P.S. I started in a cheap poorly constructed duplex in a cookie cutter neighbourhood in Burlington, ON in 1974.


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## Eclectic12 (Oct 20, 2010)

AltaRed said:


> nathan79 said:
> 
> 
> > Where are all these millennials making 80K is what I wonder ...
> ...


It seems to me that different people are talking about different wage earners/groups.

James talks about averages then talks about his low-single income parents as an example of how most didn't have have a mortgage in a few years. This doesn't match up with my experience as someone without an engineering, science, business, law, medicine etc. degree.

If we truly are talking this type, I know of several who out of university in the '90s were starting for between $55K to $80K. They certainly could have polished off the mortgage for my house in a couple of years, if so inclined.


Cheers


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## james4beach (Nov 15, 2012)

Still, I think it's safe to say that average national home prices are high by historical standards. You can always focus on just the high income earners and just cheaper homes, but I think the national averages still show that housing is generally more expensive than in past decades.

Maybe I didn't understand the opposing viewpoint. Are some of you saying that housing is not more expensive or unaffordable now than in the 80s/90s ?


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## AltaRed (Jun 8, 2009)

james4beach said:


> Maybe I didn't understand the opposing viewpoint. Are some of you saying that housing is not more expensive or unaffordable now than in the 80s/90s ?


Indeed, in the average national scene, taking into account increases in both wages and housing carrying costs, i.e. $/month (not actual house prices). Actual house prices are meaningless.... it is the ability (purchasing power) to carry the house, not unlike the ability to pay the rent (which is why CPI uses rent as the purchasing power proxy). 

Our federal gov't made a ton of stupid moves over the decades in an effort to make housing more 'affordable', i.e. increasing amortization to 40 years, 5% down payments, etc. That never works because the resultant demand will always revert to the mean, i.e. the ability to 'carry' the monthly payments drove up house prices. Any donkey could have told them that but it was politically expeditious to do stupid things.


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## Just a Guy (Mar 27, 2012)

It's not just housing, when I was younger, we always knew the price of things when we went to buy...somewhere areounf the millennium, that all changed and everything is now advertised in terms of payments. Cars are no longer $49,990, they are $50/bi-weekly with no indication as to how many weeks you're actually talking about. Go in to a bank and mortgages are discussed in regard to their monthly payment. I know people who furnish their places based on monthly payments....

Never adding up to see what the they are actually spending. Gets people into a lot of trouble I've found, and they usually wind up overpaying by a lot too.


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## james4beach (Nov 15, 2012)

I disagree that the carrying cost or interest expense is the main consideration. I think the absolute price matters.

A primary theme during the US real estate/mortgage bubble was this idea that only the monthly payments matter, and people evaluating their home purchases purely based on the carrying cost. They ignored price. The whole concept blew up on both the home owners and the banks.


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## AltaRed (Jun 8, 2009)

james4beach said:


> I disagree that the carrying cost or interest expense is the main consideration. I think the absolute price matters.
> 
> A primary theme during the US real estate/mortgage bubble was this idea that only the monthly payments matter, and people evaluating their home purchases purely based on the carrying cost. They ignored price. The whole concept blew up on both the home owners and the banks.


It doesn't matter what YOU think. It is how the system still operates. IOW, how realtors and mortgage brokers promote purchases, how people buying and paying for houses think, and how housing is ultimately priced, i.e. by carrying cost. If carrying cost goes up, house pricing stalls or turns over. If mortgage rates go down as they have been for a very long time, the demand drives up house prices. ECON101.


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## nathan79 (Feb 21, 2011)

james4beach said:


> I disagree that the carrying cost or interest expense is the main consideration. I think the absolute price matters.
> 
> A primary theme during the US real estate/mortgage bubble was this idea that only the monthly payments matter, and people evaluating their home purchases purely based on the carrying cost. They ignored price. The whole concept blew up on both the home owners and the banks.


Low absolute price benefits savers with modest incomes, while low carrying costs benefit spenders with high incomes.

It's fair to say that in modern times the playing field has tilted toward the latter. So if you have the cash flow, you reap the benefit of low interest rates and extended payment terms. If you have a more modest income, not enough for monthly payment, all you can do is save -- but good luck "keeping up" as prices get further out of reach by the day.


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## AltaRed (Jun 8, 2009)

James, indeed the wheels can come off this train as it did in the US in 2008/2009. And it probably will in certain markets to some degree someday. But until the wheel stops, house prices will be priced at the margin, i.e. the carrying cost buyers can qualify for. That is just the psyche of the herd mentality saying they just gotta own a house and/or they just gotta be part of the 'real estate prices never go down'. 

The first thing that happens when carrying costs go up is a smaller pool of buyers being able to purchase. That reduces the number of house sales with prices holding because sellers are in denial. But if sales volume drops far enough, and long enough, eventually sellers who have to sell, e.g. foreclosure or death or divorce or corporate transfers, or the flipper needs his money out, have to reduce their prices to sell. If the median/average selling price falls far enough, that snowball starts to become an avalanche as sellers holding out get panicky an start a flood of listings. The price free fall only stops when the bottom feeders return to the market. I saw it in Calgary in the early '80s, and Toronto/Vancouver in the late '80s/early '90s. I believe it was the 1991? recession that caused the Toronto/Vancouver market to capitulate.

All this will happen again to some degree. Gov't trying to engineer a soft landing could possibly work but when was the last time Ottawa did something that worked as planned?


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## james4beach (Nov 15, 2012)

AltaRed said:


> It doesn't matter what YOU think. It is how the system still operates. IOW, how realtors and mortgage brokers promote purchases, how people buying and paying for houses think...


Actually, it does matter what I think. I'm representative of a class of participant in the housing market:

- I'm a potential buyer... those mortgage originators, RE agents, and shiny granite countertop-makers are all salivating over me
- I have good income, and have savings
- I can afford a property
- I don't want to go into debt

If I look at my closest friends, there are people fitting this description across the land. Certainly in the US pacific northwest, but I also have friends in Vancouver, Kelowna, Winnipeg, Toronto who are all in the same boat. One of these guys on Bay Street even sold his Toronto condo because he didn't like the outlandish position it created on his balance sheet. He's been renting ever since, and I should add, doing terrifically well with his investment portfolio.

Personally, I'd be happy renting for the rest of my life. At least 2 of my coworkers rent entire houses.

When you said it doesn't matter what I think, this made me wonder if all those property builders and granite countertop makers are thinking the same thing. Real estate and home luxuries, like any other business, requires year-on-year growth in revenue to be viable. It's possible they are over-estimating the demand for their business. How tragic would it be if all those cranes that litter the sky lines of Toronto are up there, oblivious to the fact that potential buyers (me) have other options and don't have to buy their overpriced junk.


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## Just a Guy (Mar 27, 2012)

If you're in the minority, then you really don't matter. If all the lemmings are heading for the cliff, one hampster not going over won't stop the rest.


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## AltaRed (Jun 8, 2009)

james4beach said:


> Actually, it does matter what I think. I'm representative of a class of participant in the housing market:


You missed my point, or I did not qualify it. It was about housing prices, where you said they did matter, and I said they didn't matter because it was all about carrying cost. 

RE transaction volume is driven, on the margin, by the ability to qualify and carry the monthly costs.


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