# Ah, the joys of home ownership!!



## Belguy (May 24, 2010)

Are you considering becoming a new home owner? Read on----

http://www.theglobeandmail.com/glob...e-house-forget-about-retiring/article2362155/


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## Sherlock (Apr 18, 2010)

Yup, that's why I'm not gonna buy a house as long as I stay in the GTA (unless there's a massive crash), it's just not worth it.

It's not for no reason that financial experts say your mortgage (or rent) should not exceed 1/3 of your income. That still leaves you with the ability to save for retirement.


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## sags (May 15, 2010)

How many times have you heard....."the bank said I qualified for xxx amount of dollars?"

Sure they qualify..........given a 30 year mortgage and record low interest rates, but does the bank tally up how much groceries are going to cost over those 30 years, or car expenses, or having kids..........?

Nope.........they don't care and why should they..... when CMHC (ergo......taxpayers) guarantee the mortgage.

Garth Turner wrote about an email he got from someone who went to the bank with a 20% down payment in hand and were talked into a 10% down payment by the bank. With the lower down payment the loan has to have CMHC insurance and the buyer pays the cost......not the bank to insure the loan later. The bank made more money, and had the loan insured, by having the person put less money down as equity.

There is some talk of student loans also being a bubble..........and guess who guarantees payment to the bank for those as well............yep........taxpayers.

Oh what a lovely mess we have created.

Lending huge amounts of money, with all the profit going to the bank and all the liabilities assumed by the taxpayer, to people who have no money, and have shown no ability to save any.

And some people still believe this is going to end well.


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## Dmoney (Apr 28, 2011)

sags said:


> Lending huge amounts of money, with all the profit going to the bank and all the liabilities assumed by the taxpayer, to people who have no money, and have shown no ability to save any.
> 
> And some people still believe this is going to end well.


Mitigate risk by buying bank stocks


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## Cal (Jun 17, 2009)

The article is a little misleading.

Buying too much house could wreck anyones retirement.

Not necessarily that buying a big house could. It would not affect soneome with a big amount of savings or a big paying job.

But I guess that just doesn't grab the headlines does it.


As per sags comments above, it is funny how many people feel that they are somehow not realizing their full financial potential unless they spend all of the money that a bank will allow them for a mortgage. Most people have no clue. And look upon you like you are a moron for not mortgaging yourself to the hilt. Too funny.


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## Sherlock (Apr 18, 2010)

I think the reason so many think that houses are a great investment is because they are not familiar with other types of investments. They have no idea what dividend paying stocks are, or REITs, or ETFs. They just see that houses have increased by a huge amount over the last decade, but they fail to recognize that a good balanced portfolio returned even more (compare investing in a condo vs investing in a REIT over the past few years). Stocks are regarded as risky ("but you could LOSE money!") while real estate is regarded as safe.


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## the-royal-mail (Dec 11, 2009)

Funny how we always hear 'past performance is not a indicator of future returns' when it comes to equities, yet how often do we hear people say that in regards to housing?

Notice too the banks are competing with each other to get people signed up to mortgages. The RE assoc is saying prices are starting to stagnate (thought obviously each local market is different) and Carney is suggesting a rate increase may be coming. I dunno. Doesn't seem like a good time to buy.

It's also funny to me that people say an apartment is "just an apartment" yet a house that they purchased is automatically a "home".

The liabilities strapped upon whoever signs for a property purchase are huge. I don't see this as some sort of goal that every one of us needs to achieve just because we have a pulse.


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## Guigz (Oct 28, 2010)

I think that a negative paradigm shift associated with house price behavior is only really damaging to two types of owners:

1) Those entering the market (a.k.a, first time owners). They usually have the least amount of downpayment and are thus very vulnerable to a downward pressure since they would basically be left holding the pot if prices go down and they can't renew or interest rates go up and they get squeezed.

2) Those leaving the market (a.k.a, boomers). Since most have been counting on the equity of their house as part of their retirement plan, a downward change in price would force then to either take a significant loss or delay their selling the house (a.k.a, retirement).

Those that are transitioning in the market will not be really impacted by the ups and downs of the RE market. It does not really matter if your house looses money on paper, if you are only selling to purchase elsewhere (assuming relatively similar changes accross the board).

I bought 3 years ago with a significant downpayment and it was my first home purchase. Although I would not be necessarily happy with the thought that I could "lose" thousands and thousands of pretend value on my house, we have paid a very significant portion of our mortgage already and we would not be affected by even a severe drop in price. We intend to own for the long haul, even if values get chopped in half, as long as we dont exit the market completely, we are just playing with monopoly money.


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## Causalien (Apr 4, 2009)

the-royal-mail said:


> Funny how we always hear 'past performance is not a indicator of future returns' when it comes to equities, yet how often do we hear people say that in regards to housing?
> 
> Notice too the banks are competing with each other to get people signed up to mortgages. The RE assoc is saying prices are starting to stagnate (thought obviously each local market is different) and Carney is suggesting a rate increase may be coming. I dunno. Doesn't seem like a good time to buy.
> 
> ...


This recent move by BMO on the 2.99 rate is very troubling for me. The last time this happened, Mark Carney called all the banks telling them to stop it. Then a huge audit process began on all their loans.

They couldn't have already finished the audit. I thought it'd take at least 3 months before they can pull this trick again. Something is very wrong here.


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## realist (Apr 8, 2011)

sags said:


> H
> There is some talk of student loans also being a bubble..........and guess who guarantees payment to the bank for those as well............yep........taxpayers.


My understanding was that even if you claim bankruptcy you still have to pay your government student loans, at least in Ontario. Has that changed?


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## MoneyGal (Apr 24, 2009)

The point about student loans being "in a bubble" is that it causes people to take on student loan debt that is considerably at variance with the intrinsic value of the asset (a classic definition of an economic bubble).

I'm not totally up to date on bankruptcy and student loan debt in Ontario but my understanding is that if you've been out of school for more than seven years, the SL debt is included in a bankruptcy proposal.

Editing to add link which provides a little more info: http://www.ic.gc.ca/eic/site/bsf-osb.nsf/eng/br02057.html


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