# We're in the money



## sags (May 15, 2010)

Congratulations to Toronto owners of "average homes" who just joined Vancouver in the millionaire status.

Projections are that by 2026 an "average" home in Vancouver will be worth almost $6 million.

http://www.huffingtonpost.ca/2016/0...c_n_9732022.html?utm_hp_ref=vancouver-housing


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## carverman (Nov 8, 2010)

sags said:


> Congratulations to Toronto owners of "average homes" who just joined Vancouver in the millionaire status.
> 
> Projections are that by 2026 an "average" home in Vancouver will be worth almost $6 million.


It's a fools paradise (inflated resales). Sooner, or later perhaps, it will all come crashing down...in the meantime..buy-flip-buy-flip, and oh yes......
don't forget to make the flipped property a principle residence for a least a year to escape the clutches of the capital gains taxman.

I remember something similar in the 80s...resales went way up-up up in asking prices because there were fools outbidding each other.
When the severe recession hit, a lot of them had to walk away from their homes and give them back to the mortgage holder because they simply could not afford their homes once they lost their jobs and new jobs were not that plentiful.

Paying for an inflated mortgage, then renovating on top of that to flip the homes is ludicrous, but I guess there are lots of the younger that don't remember that it CAN happen.
The younger generation that have discovered "easy money" where you don't have to work 8-5 for it and pay the tax man 30-50% of your gross income.

The GTA is also a winner collecting inflated property taxes on inflated properties, so everyone is a winner..at least for now as long as
the economy doesn't tank..like in Alberta.

My question would be to the flippers out there? ....what happens when real estate prices come crashing down? Do the property taxes come down as well due to the MPAC assessments going down instead of up?

[


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## treva84 (Dec 9, 2014)

This is what happens when interest rates stay low and money is cheap!


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## Pluto (Sep 12, 2013)

But a million doesn't mean much does it? Its about what 150000 was in 1970 if I calculated correctly. Kind of shows that home owning is a fairly good way to retain purchasing power of ones dollars.....but come to think of it, in 1970 30,000 would probably get one a decent house in To in 1970, wouldn't it?


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## carverman (Nov 8, 2010)

Pluto said:


> But a million doesn't mean much does it? Its about what 150000 was in 1970 if I calculated correctly. Kind of shows that home owning is a fairly good way to retain purchasing power of ones dollars.....but come to think of it, in 1970 30,000 would probably get one a decent house in To in 1970, wouldn't it?


1970-71, I was in Toronto working for a recording studio. My salary was about $9k a year. Found a old house in the Woodbine-Danforth area close to the subway because I needed to travel downtown to Yorkville. This house was the only house with a private laneway going to a garage in the back. Inside it was very tiny with old lead pipe plumbing and knob and tube wiring.

Bought it for $25K in '71. I would not call this house "decent" as size-wise and the tiny kitchen bathrooms made it more Cozy like, the way RE agents like to describe it..however it was only 1 short block away from the subway stop and that means you don't have
to drive and fight the traffic to get to work.

Today , my mother and middle brother is still living there, but I would venture a guess that if it was put on the market today, it would list for $700 to -$750K price range, and be snapped up quickly as it is the only house on the street with private parking.

Inflation wise $25K USD) in 1970 is $ $156,846.82 in todays (2016) dollars...and the online calculator is in US dollars which is
significantly different from Canadian dollars, worth less and don't have the same buying power as USD.
http://www.saving.org/inflation/inflation.php?amount=30,000

Since 1971, the old lead cold water pipes from the street have been replaced with copper. They got so bad after 80yrs that the pressure was extremely low with lots of whitish corrosion inside. The knob and tube wiring has been updates with new electrical panel.


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## sags (May 15, 2010)

I don't think people think about it.

If they are paying 2.5% interest with payments of $3000 a month and they are barely surviving...........what do they plan on doing if interest rates rise to 6% and their payments are $6000 a month ?

That is one problem with interest rates so low. It doesn't take much of an increase to double payments.


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## rl1983 (Jun 17, 2015)

To stop the bleeding, the interest rates have to go up. 

That still, won't stop the wealthy Chinese from purchasing with cash only, that falls on our incompetent government(s) to deal with.


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## none (Jan 15, 2013)

sags said:


> I don't think people think about it.
> 
> If they are paying 2.5% interest with payments of $3000 a month and they are barely surviving...........what do they plan on doing if interest rates rise to 6% and their payments are $6000 a month ?
> 
> That is one problem with interest rates so low. It doesn't take much of an increase to double payments.


Math doesn't work out that way.

If you have a 670K mortgage and you are paying 2.5% (over 25 years) then your monthly mortgage payment is 3,001.37. If interest rates go to 6% your monthly mortgage payment is then $4,286.70.

Still sucks but a far cry from $6000 a month as you suggest.


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## piano mom (Jan 18, 2012)

Just been told by a realtor who has successfully sold multiple homes in my neighourhood that he can get us $1.3 mil for our house we paid $400k 12 years ago. With no mortgage, that's one heck of a pay check but where will we live??????


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## sags (May 15, 2010)

Quite a difference from one coast to the other.

Nova Scotia has a website that lists the past prices for homes and they are dropping in price significantly as they stay on the market over time.

http://www.viewpoint.ca/

This home has been for sale since 2014 and the price has dropped several times from $144,000 to $137,000 to $130,000.

http://www.viewpoint.ca/property/cutsheet/00980961


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## piano mom (Jan 18, 2012)

Neighbours houses are sold within 7 days and most over asking. Hubby thinks it will keep going up. It's very tempting to sell and pocket the money but where would we live? A nice problem to have I suppose


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## Nordic (Dec 17, 2014)

piano mom said:


> Just been told by a realtor who has successfully sold multiple homes in my neighourhood that he can get us $1.3 mil for our house we paid $400k 12 years ago. With no mortgage, that's one heck of a pay check but where will we live??????


He can get you that much because it happens to be the top of a real estate bubble right now. I think it's highly likely housing in Canada will implode within 24 months.


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## kcowan (Jul 1, 2010)

The answer is to "check out". Come to PV and live in a $100k 3 BR home with 2 car carport and swimming pool, with no ocean view. I know some people from Texas who have done that. Prices are very favourable right now. Shop for food at local markets and eat in.

If you currently live in Vancouver, then you can afford a $500k 2000 sq.ft. condo with ocean view. My friend who live on Galiano Island was considering buying a home in Victoria. I said: "Why pay $800/sq.ft when you can live on the ocean for $250/sq.ft?" He did that 4 years ago.


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## piano mom (Jan 18, 2012)

The only problem with that is:

My husband wants to keep working for another 7 years to get unreduced DB pension AND my youngest still has 4 more years of highschool. Either buy a smaller fixer upper or rent until kids go to college. If rent, the dividend of our then invested money will push us into higher tax brackets. Still, it's very tempting as the realtor said we don't need to renovate to get good price as he has many qualified buyers waiting to snap up any new listing. We are trying not to make a rash decision. Not going to list until we have thought things through.


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## nobleea (Oct 11, 2013)

piano mom said:


> The only problem with that is:
> 
> My husband wants to keep working for another 7 years to get unreduced DB pension AND my youngest still has 4 more years of highschool. Either buy a smaller fixer upper or rent until kids go to college. If rent, the dividend of our then invested money will push us into higher tax brackets. Still, it's very tempting as the realtor said we don't need to renovate to get good price as he has many qualified buyers waiting to snap up any new listing. We are trying not to make a rash decision. Not going to list until we have thought things through.


Who cares if you get pushed in to higher tax brackets. A) It's marginal tax rates, not like you're going to lose money, B) dividends are taxed favourably compared to income.

Realtors will say whatever it takes to get a listing in a hot market like YVR. It's a guaranteed 40K for them.


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## sags (May 15, 2010)

Tough decision to make, especially when making no decision at all may have expensive consequences.

I would think home prices in Vancouver have skyrocketed almost straight upwards for some time. The mathematics would suggest it can't go on forever. Home prices will at some point be higher than people can or will pay for them.

At which point along the rise in prices we are.............nobody knows for sure.

What is known for sure is that people "cashing" out today will make a lot of money. On the downside they may miss future price escalations up to the point that it stops.

Basically it comes down to the sure thing versus the gamble. 

A few people can win a big jackpot and walk away happy with the cash. They don't care if they "could" win again.

A gambler believes they will win again and increase their winnings. They almost always put their winnings back into the slot machine.

I guess a person has to ask themselves, if they believe home prices will continue to rise...........stay where they are............or fall in the future.

Sometimes it isn't as simple as money. People like their homes and plan to stay forever, so they don't care about prices.

These people could have sold anytime along the rise in prices, but chose not to. They plan to stay and don't care.

Others plan to sell when the kids are gone.........maybe a few more years down the road.

If people plan to sell in the near future.............maybe taking the money now isn't such a bad idea.

How would you feel if your home valued at 1.4 million today were to fall back to the $400,000 purchase price ?

Would it bother you or would you care ?


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## piano mom (Jan 18, 2012)

@sags: that's the million dollar question &#55357;&#56833;

"I guess a person has to ask themselves, if they believe home prices will continue to rise...........stay where they are............or fall in the future."


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## sags (May 15, 2010)

This is cool............a roller coaster ride of Vancouver home prices. It only goes from 1975 to 2010 so it needs updating...........straight upwards now.

The one thing that stands out is that prices have historically gone up and away and then plunged..............time after time.

As it says in the video..............it is a roller coaster ride where it is best to exit at the top. The troughs can last for years before prices climb back up again.


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## nobleea (Oct 11, 2013)

It reminds me of those games that are popular on the radio these days. Beat the bank or similar where a caller gets to open 'bags' over the phone and the pile of money in each bag gets bigger and bigger until eventually it explodes and they lose all the money. Most people cash out around 800-$1500. After they've cashed out and 'won', the DJs will usually keep on opening the bags to see how much they 'could' have won. Sometimes it explodes right after, sometimes it goes to 10K. When it goes high, most feel bad that they 'only' won 1500. but they're $1500 richer than they were before they called in.


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## steve41 (Apr 18, 2009)

And if I had watched that video in 2010 and sold my home in West Van, I would be some pissed off now.


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## sags (May 15, 2010)

An interesting comparison on US home prices beginning in 1890 to 2007.

Prophetic that the video stops in 2007 at the end of the track. After that............real estate collapsed back to the ground.

Both videos reveal that after long climbs upwards, home prices have historically collapsed into a trough for many years. The higher the peak..........the bigger the collapse.


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## sags (May 15, 2010)

steve41 said:


> And if I had watched that video in 2010 and sold my home in West Van, I would be some pissed off now.


That is the seductive lure.

I was in the slot casino one time and only had about $40 on me, so I was playing a slot machine based on that television show where people had to pick the right suitcases full of cash. (Deal or no Deal)

I was playing the minimum.........pennies at a time. I got into the jackpot round and won the whole darn game. Fireworks going off.......bells and whistles..........and a jackpot of $180 or so.

The noise attracted onlookers who were initially impressed that I had won the big jackpot.......but that quickly turned to dismay when they saw I was betting pennies.

Oh gee they said...............you should have been playing the maximum. Yea right............like I have $40 a spin to spend.

The lure of the gambler..............would have, could have, should have.............didn't.

And of course, had I been betting the maximum and winning suitcases of large amounts of money.............would I have stayed in the game until the very end or cashed out sooner.


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## piano mom (Jan 18, 2012)

The good thing is my husband and I are doing financially well either with or without "cashing in" at the top. We do not need our house to finance our retirement as he will have good dB pensions. However, no one can deny the fact that prices (either houses or stock market) always come back higher than before.


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## nobleea (Oct 11, 2013)

piano mom said:


> However, no one can deny the fact that prices (either houses or stock market) always come back higher than before.


Generally yes. Though that can take some time. Will you still be alive or active enough to enjoy it if you wait for it to come back?

I think that bubbles go much higher than anyone can explain or expect. And troughs last way longer than people expect. In both cases, it becomes a bit of a self fulfilling prophecy.


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## sags (May 15, 2010)

Given the rise in home prices in Vancouver, and as noted by pianomom the price does seem to return back to their former heights "eventually"...........as noted by nobleea.

I don't hear much about bequeathing a home to kids anymore. It used to happen all the time, but I seldom hear of anyone actually inheriting and living in an inherited home these days.

It seems that most people are planning on selling their home to fund their retirement or just because they want to.

In places like New York City or Boston, many of the homes are passed from generation to generation.

With the price of homes in Vancouver and young people who were raised in Vancouver unable to afford a home............nobody thinks this way anymore ?

Maybe the prices of homes will force 50 or 100 year mortgages to make them affordable and passed down to the next generation.


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## Eclectic12 (Oct 20, 2010)

sags said:


> ... I don't hear much about bequeathing a home to kids anymore. It used to happen all the time, but I seldom hear of anyone actually inheriting and living in an inherited home these days.


How many are staying in the same neighbourhood, area as their parents?

A home at the other end of the province or in another country doesn't do much for the kids.




sags said:


> ... It seems that most people are planning on selling their home to fund their retirement or just because they want to.


I hear far more complaints from people about their parents staying in homes they can't keep up anymore. A few have posted in here that they have sold to rent, up until they find a reasonable price.


Cheers


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## RCB (Jan 11, 2014)

My daughter (21) and her boyfriend (25) are about to start house hunting. I would really like them to either buy our house (we're moving), or one like it. It's not good enough, too small. (Post-war, 1 1/2 storey.). Not my daughter so much, but him, I think.

I think HGTV and its granite everything has created unrealistic expectations, and most are following suit, including manufacturers. Just try buying something for your house...everything is over-sized for McMansions. I'm encountering difficulty in a number of areas while attempting to buy for a reno of the new 1000 sq ft house. Light fixtures, cabinets, furniture, laundry appliances...everything is for huge rooms.


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## Karen (Jul 24, 2010)

sags said:


> Given the rise in home prices in Vancouver, and as noted by pianomom the price does seem to return back to their former heights "eventually"...........as noted by nobleea.
> 
> I don't hear much about bequeathing a home to kids anymore. It used to happen all the time, but I seldom hear of anyone actually inheriting and living in an inherited home these days.
> 
> ...


I'm surprised that you think that, sags. Many of my friends hope to be able to stay in their mortgage-free houses for as long as they live and leave the house to their children. I certainly plan to do that; the only thing that would stop me is if I was unable to look after myself and had to go into a care home. I have plenty of money to fund my retirement without selling my house, so I hope I'll be able to stay here until I die.

One of my two children has a house, but it has a mortgage of over $200,000 on it so she can use some of the money from my estate to get rid of their mortgage and still have quite a bit to spare. My other daughter has never owned a house, so she will probably use her share to pay cash for a townhouse, rather than take out a huge mortgage to buy a stand-alone house. Or she might use her inheritance to buy out her sister's half interest in my house; unless something totally unexpected happens that requires me to spend most of my money, they will each inherit over half a million dollars, so she would have enough to do that. I just wish I'd still be around to see their pleasure when they realize what they will be able to do when the time comes!


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## carverman (Nov 8, 2010)

sags said:


> I don't hear much about bequeathing a home to kids anymore. It used to happen all the time, but I seldom hear of anyone actually inheriting and living in an inherited home these days.
> 
> It seems that most people are planning on selling their home to fund their retirement or just because they want to.


It seems that CHIP (reverse mortgage) and in the GTA, equity financing/debt consolidation has taken over any possibly of
most parents leaving their children a free home.

CHIP goes after the seniors, 62 and older, who want some money to have that last blast in life or kick at the can whichever applies and
need that extra tax free cash to travel the world while they can or spend their winters in Florida.
The equity financing companies go after the younger generation that have overspent and deeply in debt. 




> With the price of homes in Vancouver and young people who were raised in Vancouver unable to afford a home............nobody thinks this way anymore ?


The younger generation, born without money or parents that will them the family nest egg, will either have to rent or move on to other nareas they can still afford. 
The younger generation that still have to live in the city will be squeezed financially and face the harsh reality
that the larger cities where finding work is easier, is no longer a viable option for them. 



> Maybe the prices of homes will force 50 or 100 year mortgages to make them affordable and passed down to the next generation.


Just can't see a 50 year mortgage on the horizon though. It would drive what is still affordable through the roof and who in the younger generation wants to be tied down to a 50 year mortgage?
Most mortgages are about 20 years..that's pretty much the working life of most..age 20>45, some 25 to 50. 

By the time they reach 50 or 60, they should be planning how to live on what they have saved for retirement and any equity, not a mortgage still left to pay.


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## carverman (Nov 8, 2010)

Karen said:


> I'm surprised that you think that, sags. Many of my friends hope to be able to stay in their mortgage-free houses for as long as they live and leave the house to their children. I certainly plan to do that; the only thing that would stop me is if I was unable to look after myself and had to go into a care home. I have plenty of money to fund my retirement without selling my house, so I hope I'll be able to stay here until I die.


That is my plan too, unless my health deteriorates even more..then somebody will have to make the decisions for me. 

Sometimes in later years, it is not up to us to make those choices.
I have caught a glimpse of that in February. These retirement homes are ripoffs and prey on seniors that have beginnings of dementia or advanced dementia but have built up savings and equity.


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## carverman (Nov 8, 2010)

Strictly my opinion here, but inflation and government greed (taxes and increased taxes) will equalize any potential wealth of those where its taken years to save..a lifetime if you want to call it that.

My property assessment keeps going up, so do the property taxes every year. Property taxes that I was paying 20 years ago this day, are now reaching a 35% increase. The property value may be doubled now ($123k in 1980 vs $279k listing value today.
While it sounds like "I'm in the money" too...it's a fallacy because so many things (goods and services) have gone up at least that much in the last 20 years.

In Ontario, you have to pay sales tax on property insurance premiums and real estate commissions, legal costs have gone up, 'so is the land transfer tax for purchase of properties. 

That $155k in property appreciation for me to list at $279,900 today, gets reduced by real estate commission: 4-5% based on a MLS listing. 

$7750 on the appreciated value and $13,950 on the total sale price
Then HST on commission: $387 on appreciated value or $1813 on total sale price
Then there are the closing costs legal fees.

So inflation and price increases have whittled away $8137 on the appreciated value or $15,750 of the total listed price.


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## piano mom (Jan 18, 2012)

We have made our decision: Not selling. It's a comfortable home and our kids absolutely love it here. I really appreciate discussing the topic here. An awesome forum &#55357;&#56842;


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## carverman (Nov 8, 2010)

I find it totally ludicrous of what is happening in the real estate market. cheap financing money, easy money when properties are flipped, and the ridiculous percentage commissions that RE agents make these days skimming off the selling price at a fixed rate that they prefer not to change for obvious reasons.

The sad reality of "we're in the money!"

Take that 1 million dollar home in Toronto, each time it sells it will fetch $50,000 in easy money for the listing agent broker and selling agent broker. That's $25K a piece (if the selling agent does nothing except to list it..$25k easy money, and similar for the selling agent.

HST on the commission: $6500, both gov'ts pick up as a result of the sale.

Then there is the land transfer tax: In Toronto: $32,000 goes to the province and city which the purchaser has to pay.
http://www.trebhome.com/buying/ltt_calculator/ltt_calculator.htm

Now the closing costs added to the monthly payment over... say a 30 year mortgage; 
http://www.myfico.com/loancenter/mortgage/calculators/closingcosts.aspx

Lender origination charge
$1,500 Charge for specific interest rate $8000
Your adjusted origination charges:$9500

Appraisal: $300
Credit report $0
Flood Certification $50
Tax Service $150
Title services and lender's title insurance $350
Owner's title insurance: $350
Survey: $175 or more
Pest Inspection:$100
Government recording charges:$25
Transfer taxes $0 (already paid separately -see above) 
Initial deposit for your escrow account :$708
Daily interest charges: $1,667
Homeowner's insurance:$1,000

*Charges for all other settlement services: $4,875
*
Total estimated settlement charges:*$14,375*

Principal and interest: $4,295
Taxes and insurance:$354
Mortgage insurance:$733
Total monthly payment:*$5,382*
http://www.trebhome.com/buying/ltt_calculator/ltt_calculator.htm

So you just bought this 1 million dollar inflated home in Toronto (or GTA), 
Mortgaging the rest over 30 years...360 payments...

Now your total cost if you were to stay that long on this property:
$5,382 x 360 payments = $1, 937, 520!

How much do you need to earn as wages if you could afford to pay this monthly?

$64,584 per year? How much income tax would you pay on your salary to get even $65K as net income per year.
lastly, how old will you be after 30 years of this kind of mortgage or your health to go out into the rat race
every working day to earn that kind of money? 

So in 30 years it will be worth perhaps that much, but what will it cost for the next buyer to own it and..more importantly
what is the RE agents going to charge on 2 million selling price?
$100,000!...and the cycle begins again with all the other taxes.


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## Beaver101 (Nov 14, 2011)

carverman said:


> *I find it totally ludicrous of what is happening in the real estate market*. cheap financing money, easy money when properties are flipped, and the ridiculous percentage commissions that RE agents make these days skimming off the selling price at a fixed rate that they prefer not to change for obvious reasons.
> 
> The sad reality of "we're in the money!"
> 
> ...


 ... just wait for the housing bubble to pop or how about when low interest rates reverse or a tighter job market hits? Everything works in cycles ... matter of when, not if.


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## Nordic (Dec 17, 2014)

piano mom said:


> The good thing is my husband and I are doing financially well either with or without "cashing in" at the top. We do not need our house to finance our retirement as he will have good dB pensions. However, no one can deny the fact that prices (either houses or stock market) always come back higher than before.


With regard to the stock market, it took almost 6 years for the TSX to get back to where it was after the 2000 tech bubble burst. When the bubble burst, stocks fell 45% over the next two years. 
If you're locked in for the long-term, and are not viewing your home as an investment, you will be fine though. Just gotta be willing to ride it out.


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## carverman (Nov 8, 2010)

Beaver101 said:


> ... just wait for the housing bubble to pop or how about when low interest rates reverse or a tighter job market hits? Everything works in cycles ... matter of when, not if.


Well that's what I'm wondering about, not if it's going to happen but when it's going to happen.

At 1 million average cost, even with $200,000 down payment, these homes are now starting to slip out of the range of affordability of most first time home buyers. Maybe someone who is selling a lesser home for $500k or so, may be able to still afford these, but not growing families, I would think.

If the trend continues with market price escalation , as the prices go up, a certain percentage of the buying public will not be able to afford these or even think about looking at them.

Now the other thing;l..if the market takes a downturn and there is a glut of houses for sale and prices reduce, what happens to the MPAC tax assessments..do they reduce similarly, stay the same or keep going up to support the property tax base needed by the cities?


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## Beaver101 (Nov 14, 2011)

carverman said:


> ...
> 
> Now the other thing;l..if the market takes a downturn and there is a glut of houses for sale and prices reduce, what happens to the MPAC tax assessments..*do they reduce similarly, stay the same or keep going up to support the property tax base needed by the cities*?


 ... stays the same as I don't think MPAC would be so kind enough to re-assess at lower MV unless challenged. They figured if you can buy a $1M house at MV in the first place, then you can afford to pay the taxes accordingly.


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## nobleea (Oct 11, 2013)

Beaver101 said:


> ... stays the same as I don't think MPAC would be so kind enough to re-assess at lower MV unless challenged. They figured if you can buy a $1M house at MV in the first place, then you can afford to pay the taxes accordingly.


The average property value has no effect on the tax you pay. The RELATIVE value of your house compared to everyone elses, as well as the RELATIVE change, is what determines your taxes.
If the average home value is 1mil and you pay 6K in taxes and in a bubble pop, the average home value drops to 500K, you will still pay 6K in taxes. The mill rate goes up to get them whatever taxes they need to meet their budget.
Now if the average value went from 1 mil to 500K, but your house value only dropped 25% (due to increased desireability or upgrades), then your taxes would increase.


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## rl1983 (Jun 17, 2015)

Unless the government actually puts the hammer down on Foreign buyers, and schemes involving foreign money, I don't think this rollercoaster will drop in the near future. This isn't locals buying, so any interest rate increases and restrictions that they have brought in will not cool the market.

Then there's the other question, if the roller coaster does drop, do the prices stay stagnant, or do they drop? 

I've talked about 2011 before, when there was a " dip " in the market, and the prices for detached houses dropped at best guess 30-60k? And even then, all the houses for sale the week before, were pulled off the market. No one is going to sell at a loss unless foreclosed on or other personal circumstances.


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## kcowan (Jul 1, 2010)

It is like the Dutch Tulip craze. It is all good until it isn't. Nobody knows when the music will finally stop. No one wants a disruption. So they keep fine tuning.

Are Toronto and Vancouver really like Manhattan now?No one will know until we have the benefit of hindsight. One things is for sure: the suburbs will get hit in both cities. The Manhattan effect never influenced Brooklyn or The Bronx.


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## MrMatt (Dec 21, 2011)

carverman said:


> The GTA is also a winner collecting inflated property taxes on inflated properties, so everyone is a winner..at least for now as long as
> the economy doesn't tank..like in Alberta.
> [


Tax rate is half that in other Ontario cities such as London. Really if you can afford a million dollar home, maybe you should be paying $1k/month or more in property tax to run the city.


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## Beaver101 (Nov 14, 2011)

nobleea said:


> The average property value has no effect on the tax you pay. *The RELATIVE value of your house compared to everyone elses*, as well as the RELATIVE change, is what determines your taxes.


 ... I didn't say "average" property value, I said MV=Market Value which is what MPAC assess the value of your house on and of which the property tax is based on. And how do you define 'RELATIVE' value in your statement? If the RELATIVE value of my house drops relative to everyone else, then I should expect a lower assessment and the property taxes drop accordingly but this is not the way MPAC works.



> If the average home value is 1mil and you pay 6K in taxes and in a bubble pop, the average home value drops to 500K, *you will still pay 6K in taxes*


 ... that's what I said in my post #37 "stays the same as MPAC ...". But here you're using "average" home drops to $500K, then you still pay same amount of taxes of $6K as a $1M house. So what do you base it on - average or RELATIVE value? 



> The mill rate goes up to get them whatever taxes they need to meet their budget.


 ... correct that the mill rate goes up (always) to meet the "city's" budget. MPAC does not establish the mill rate - the city does ... your property tax pays for the school, police, fire-fighting, etc. services.



> Now if the average value went from 1 mil to 500K, but *your house value only dropped 25% (due to increased desireability or upgrades),* then *your taxes would increase.*


 ... not sure increased desirability or upgrades would cause a drop in the value of your house - shouldn't it be the other way? 

The drop in the value of your house is notional until you sell, which is dependent on what the market offers/bid. Your property tax will drop only when you get MPAC (ie. challenge) to lower your assessment because you bought it lower than what was previously assessed for. It's not relative to what your neighbor paid for (or compared to everyone else as per your posting above) although MPAC may take that into consideration in re-assessment.


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## carverman (Nov 8, 2010)

MrMatt said:


> Tax rate is half that in other Ontario cities such as London. Really if you can afford a million dollar home, maybe you should be *paying $1k/month or more in property tax to run the city.*


LoL! you are funny Mr. Matt.
Even if I could afford a Million Dollar home, I wouldn't pay another red cent (or nickel now) to the city tax man that
wastes a fair chunk of our taxes on decisions that have nothing to do with me.


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## carverman (Nov 8, 2010)

Beaver101 said:


> .. If the RELATIVE value of my house drops relative to everyone else, then I should expect a lower assessment and the property taxes drop accordingly but this is not the way MPAC works.
> 
> ... that's what I said in my post #37 "stays the same as MPAC ...". But here you're using "average" home drops to $500K, then you still pay same amount of taxes of $6K as a $1M house. So what do you base it on - average or RELATIVE value?
> 
> ...


 Yup! This is exactly what I have discovered, most of the homes on my street are assessed at a slightly different MV, which is about $20K below the listed value (MV). 
How they come up with these random assessment numbers is beyond me. I've had to appeal on a couple of assessments as mine being on a corner lot is assessed more than the kitty-corner same construction house on the opposite corner lot.
Taxes keep going up every year along with the assessments.

If the MV of the homes in my area fell by 10--20%, MPAC would still increase their next assessment based on their
previous assessment and a fudge factor loaded into their computer. MPAC would not generally consider a local drop
in MV unless an appeal was launched by all residents concerned.
After all, their sole existence is to set up the tax collection values of each property for the municipality.


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## Beaver101 (Nov 14, 2011)

carverman said:


> Yup! This is exactly what I have discovered, most of the homes on my street are assessed at a slightly different MV, which is about $20K below the listed value (MV).


 ... you can have 2 similar houses side-by-side that have different assessments. It would depend at what price the house was bought at (aka MV) ... as I originally said, if you can buy a $1M house (or $10K house in 1970?), then you can afford its property tax. 



> How they come up with these random assessment numbers is beyond me. I've had to appeal on a couple of assessments as mine being on a corner lot is assessed more than the kitty-corner same construction house on the opposite corner lot.


 ... it's based on numerous factors according to MPAC - more complicated than rocket science (secretive). :rolleyes2:



> Taxes keep going up every year along with the assessments..


 ... hey, government employees expect their wages to keep up with their inflation.



> If the MV of the homes in my area fell by 10--20%, MPAC would still increase their next assessment based on their
> previous assessment and a fudge factor loaded into their computer. *MPAC would not generally consider a local drop
> in MV unless an appeal was launched by all residents concerned.*


 ... and how successful would that be? There is the argument of "do you think your house is worth less now than what you bought it at?" Or better yet "do you want the value of your house to be assessed less" when you sell?



> After all, their sole existence is to set up the tax collection values of each property for the municipality.


 ... increasing property taxes - I think the *main question *I have is "are we getting value for the services" on the taxes we pay?


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## carverman (Nov 8, 2010)

Beaver101 said:


> ... you can have 2 similar houses side-by-side that have different assessments. It would depend at what price the house was bought at (aka MV) ... as I originally said, if you can buy a $1M house (or $10K house in 1970?), then you can afford its property tax.
> 
> But that's not all though. Suppose just one house on the block sold recently for say $280K, (which is more realistic in my area),
> and all the others were still with the original owners who perhaps bought in 1972, when these places were built for around $18k to 22K.
> ...





> Sadly, however, that appears to be just what Canadians are doing. A Bank of Canada report two years ago found an average of $*8 billion in annual renovation spending between 1999 and 2010 was financed through debt,* including loans borrowed against the existing value of real estate through home equity lines of credit, or HELOCs. The Houzz survey found that a growing number of Canadians borrow to pay for their renos, with 34 per cent saying they would take out a line of credit in 2013, compared to 14 per cent a year earlier.




... hey, government employees expect their wages to keep up with their inflation. [/quote]

What about the rest of us falling behind.especially those on fixed incomes.


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## piano mom (Jan 18, 2012)

When we first bought our current home, our assessment shot up to be the highest in our immediate neighbourhood. I didn't like this because that equals higher taxes than my neighbours but to some people it's an ego thing that say they have the most expensive house on the street. So I called and complained. They finally agreed to reduce the assessment. Now we are the same level with the others.


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## carverman (Nov 8, 2010)

piano mom said:


> When we first bought our current home, our assessment shot up to be the highest in our immediate neighbourhood. I didn't like this because that equals higher taxes than my neighbours but to some people it's an ego thing that say they have the most expensive house on the street. So I called and complained. They finally agreed to reduce the assessment. Now we are the same level with the others.


Any sale of property in Ontario triggers an assessment and is passed on to MPAC. The assessments are about every 2 years, I got mine a couple of years ago and it lists my assessment for 2014 -2016. 
If your purchase (or sale) falls in between the assessment dates, you property will be listed at the higher assessment, but eventually in the next assessment, it should even out as the other properties will be assessed higher based on the sale of your property.

if two or more properties in your immediate area are sold within the same time frame and one is higher than the other, then they might take the average of the two, to come up with an assessment..provide all properties are more or less the samem, but again who knows what numbers they actually use.


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## My Own Advisor (Sep 24, 2012)

Really though, how high can it go in VanCity or TO?

Nuts....


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## carverman (Nov 8, 2010)

piano mom said:


> Just been told by a realtor who has successfully sold multiple homes in my neighourhood that he can get us $1.3 mil for our house we paid $400k 12 years ago. With no mortgage, that's one heck of a pay check but where will we live??????


Hmm..let me guess..in a 1.5 million dollar house that may need some renovations?


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## Beaver101 (Nov 14, 2011)

carverman said:


> ... What about the rest of us falling behind.especially those on fixed incomes.


 ... they would consider you as house-rich$$$ and cash poor$$$. In which case, a financial advisor (should you see one) may recommend a reverse-mortgage for you to generate income. 

Alternatively, as a low-income senior, would you not qualify for a deferral of your property tax (penalty free)?


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## sags (May 15, 2010)

The frenzy continues in Vancouver with detached home prices up 25% April 2015 to April 2016 to an "average" value of $1.8 million.

http://business.financialpost.com/p...-larger-amid-intense-competition-among-buyers


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## OnlyMyOpinion (Sep 1, 2013)

Does anyone know (anecdotally I suppose) if these Vanc prices are causing any number of folks to decide to 'cash out', move elsewhere (where real estate is cheaper), and retire or take on a different job?


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## Nordic (Dec 17, 2014)

sags said:


> The frenzy continues in Vancouver with detached home prices up 25% April 2015 to April 2016 to an "average" value of $1.8 million.
> 
> http://business.financialpost.com/p...-larger-amid-intense-competition-among-buyers


Pure comedy; playing out like the final buying frenzy of a classic asset bubble.


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## rl1983 (Jun 17, 2015)

OnlyMyOpinion said:


> Does anyone know (anecdotally I suppose) if these Vanc prices are causing any number of folks to decide to 'cash out', move elsewhere (where real estate is cheaper), and retire or take on a different job?


I know several who have cashed out and moved to the Okanagan.


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## carverman (Nov 8, 2010)

Beaver101 said:


> ... they would consider you as house-rich$$$ and cash poor$$$. In which case, a financial advisor (should you see one) may recommend a reverse-mortgage for you to generate income.


Naw, briefly inquired about "wouidn't be nice" and they called me and told me that they would be willing to give me up to 55% of my home's value.
one home on my street listed for $279,900, so I used that number because i don't want a real estate agent bugging me right now..

anyway, it came out to $151,000, but there's a catch to it..there are other charges that amount to about $3500 or so on top of that..assessment
charge, admin charge, register reverse mortgage charge an one other charge..

so in essence I would only get 147,500. Now what couid I do with that money? Spend it on wine women and song, in one last fling (or kick at the
can) or invest it at .08% interest in my PCF TFSA?

Now the other catch with this reverse mortgage, the interest rate on the money they give you is at least 6.5%. 

That's about 8 times what I would earn on the money , say $147K), in my TFSA while I spend it slowly.

And if "I choose to move or sell...there is the loan in full plus interest, plus administration charges to pay..or they just take your property..if you can't pay them what they ask.



> Alternatively, as a low-income senior, would you not qualify for a deferral of your property tax *(penalty free*)?


The interest on the deferred property taxes continues and adds up. the city charges you to put a lien against the property, in case you might try and sell to weasel out of the deal..and lastly...

I suppose I could qualify for the full property deferral program (income under $40,465 per year):



> *Low-income Seniors*
> 
> In addition to meeting the program requirements, an applicant applying for tax deferral, or the applicant’s spouse, must be at least 65 years of age and be eligible for benefits under Old Age Security (OAS) pension.
> 
> ...


OR
maybe for the partial tax deferral, (income from all sources $30,000 or less) because my Nortel pension is in the process of being wound up this year and I will be receiving an annuity in lieu of the pension...

however, I still have to hire a lawyer and go back to court to eliminated a indefinite support judgement against me to pay the remarried ex $300 a month..and that is going to cost me a few thousand in legal fees. 

I decided to wait until I get the notification that my former company pension is switching to an annuity, which no doubt, be a lot less than I am receiving now and then register with the tax deferral program.


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## kcowan (Jul 1, 2010)

OnlyMyOpinion said:


> Does anyone know (anecdotally I suppose) if these Vanc prices are causing any number of folks to decide to 'cash out', move elsewhere (where real estate is cheaper), and retire or take on a different job?


All my friends are at various stages of retirement (part time to full time), and they have all been discouraged to move because high frictional costs and the exceptionally high cost of new construction.

My personal experience was rejecting a perfectly fine 1030 sq.ft. condo because for $900k, I got the privilege of paying agents, lawyers and fees plus $900/mo in various costs (incl. heating and AC but not water, telco, TV) for the privilege of living on the 9th floor with a peek-a-boo view of the water in North Van and construction all around for maybe 8 more years. (172 Victory Ship Way)

Granted this was the only thing we found that came close to what we would move for. There are many cheaper alternatives. This was 2010 construction.


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## Pluto (Sep 12, 2013)

carverman said:


> 1970-71, I was in Toronto working for a recording studio. My salary was about $9k a year. Found a old house in the Woodbine-Danforth area close to the subway because I needed to travel downtown to Yorkville. This house was the only house with a private laneway going to a garage in the back. Inside it was very tiny with old lead pipe plumbing and knob and tube wiring.
> 
> Bought it for $25K in '71. I would not call this house "decent" as size-wise and the tiny kitchen bathrooms made it more Cozy like, the way RE agents like to describe it..however it was only 1 short block away from the subway stop and that means you don't have
> to drive and fight the traffic to get to work.
> ...


OK, cool. Good to have a real life example. So then maybe 50,000 would get a decent house back then. 1/3 of the 150,000 then, that is the approximation of a million today. So 1/3 of a million won't get one much now, if anything. Gee.


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## Eclectic12 (Oct 20, 2010)

kcowan said:


> OnlyMyOpinion said:
> 
> 
> > Does anyone know (anecdotally I suppose) if these Vanc prices are causing any number of folks to decide to 'cash out', move elsewhere (where real estate is cheaper), and retire or take on a different job?
> ...


I can only recall people posting that they decided to rent instead of buy as opposed to selling. I would think there would be a few.

IAC, according to a survey fifty six percent of those fifty five to sixty four are considering selling. The challenge is buying in a place they are happy with to make the costs/work worthwhile.
http://business.financialpost.com/p...ent-getting-tempted-to-sell-new-data-suggests

According to this 2013 article, a financial advisor says she is seeing this more with seniors and those close to retirement.
http://www.theglobeandmail.com/real...me-to-sell-my-house-and-rent/article10465869/

There's also a link to an article from 2012 of someone in the Vancouver market who sold.
http://www.theglobeandmail.com/real...-bold-sell-the-house-and-rent/article4104146/


It seems clear it is happening.


Cheers


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