# What's a millennial to do in this housing market?



## DollaWine (Aug 4, 2015)

Living in Toronto... interest rates at an all-time low for a long time, semi-detatched and detached houses hard to come by, real estate inflated and overpriced, "bubble" is becoming more and more realistic... Vancouver is shambles. Market is crazy hot! But eager to leave home and start fully embracing the challenges and growth associated with being fully independent and responsible... no debt, in a long-term relationship... mid 20's with marriage in the near future, making good income (100k+ combined) but still in our mom's basements, living apart still after 5 years of dating (very frugally and no issues continuing to be frugal), unsure about waiting out the real estate storm...

When do you draw the line between "stay at home and save" and "leave the nest, learn to fly and start your life" when the real estate market is on FIRE? Buying a home is still the ultimate goal, but not if it means a $600k mortgage in this inflated market... Thoughts on renting if your income allows you to save a good amount for a future home while renting? Sure savings grow faster when you're living at home than they would if you're dropping $1700/month for an apartment, but there's something to be said about independence and truly being a self-sustaining adult in your mid-20's...

Second-guessing everything before taking the next big step in life! Advice and tips for the millennials who are watching the real estate market go crazy in the GTA?


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## CrazyEights (May 17, 2016)

Interesting post. Sometimes I find myself in this boat as well - granted i'm not even sure if I fall in the millennial generation while being 31.
For me, its a matter of a few things (which you have suggested). Good stable jobs with decent incomes, available capital (down payment), and the view of whether the real estate purchase is an "investment or a home".

If you have good incomes (which yours looks appears to be maybe just above average combined) with stable jobs, but more importantly a decent down payment (20%), then possibly it 'may' be okay for you. And if you view the Real Estate purchase more as a home than an investment purchase i believe you'll be more inclined to ride out the waves than looking and wondering at the value of your purchase is; not only that, your more incline to live there longer....the longer you live there, the more likely you will lose 'less' money, and the price becomes less of a concern. Having said that I live in Edmonton, where home prices are not as inflated as Toronto. If I were living in Toronto, I'd probably be more inclined to rent than purchase at this point of the RE cycle in Toronto. You are still very young, and time is on your side. And if you don't even have the 20% down, i probably wouldn't even consider purchasing at this point in time.


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## CrazyEights (May 17, 2016)

Save up money for your wedding first - as that is not cheap either.


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## Mortgage u/w (Feb 6, 2014)

What CrazyEights said 1000%.

All I have to add is you should not feel pressured to leave your folks' place. You can learn to live independently without necessarily leaving the nest. Remaining frugal is key and saving your money should be your top priority. I come from european parents and leaving the nest in your mid to late 30s or only when you marry is a very common thing. I still learned to be independant and built a hefty savings portfolio by the time I left. I was way ahead of my peers - first one to; own a car, own a house, own RE investments, own a business.

Good luck and continue on the right track!


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## My Own Advisor (Sep 24, 2012)

re: "When do you draw the line between "stay at home and save" and "leave the nest, learn to fly and start your life" when the real estate market is on FIRE?"

Ugh, unless you are making a few hundred thousand per year, and that job is stable, taking on a $600k mortgage is not smart. Just my take!

The best thing that can happen in Canada is an interest rate spike, at least 25 basis points. It won't happen but it would be a great wake-up call.


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## DollaWine (Aug 4, 2015)

Thanks for the tips guys. CrazyEights you're definitely right about saving for a wedding. She has a huge family (And loves to plan ahead even though I haven't even proposed yet.. haha), we expect it to cast upwards of $20k. We're in no rush to buy a house because she hasn't broken into her field yet (teacher), so she doesn't know which part of the city she'll end up working in. So it would be a bad idea to buy a house in Ajax for example only to find out in 2 years she gets offered a full-time position in Mississauga...

Mortgage u/w, we don't necessarily feel _pressure_ to move out. None of our friends really have. But they're also all either not making good money, in student loan debt, or both. We're making pretty good money for our age, both very frugal and both debt-free with emergency money saved up. We want to rent - this real estate market isn't attractive at all. We're just unsure about rent + save a good amount or stay home + save a GREAT amount. Ontop of that, there's the whole social/emotional side of it. Like I mentioned, we've been dating for 5 years but have never lived together... there's certain strains and things we haven't been able to fully experience yet because we live apart.



My Own Advisor said:


> Ugh, unless you are making a few hundred thousand per year, and that job is stable, taking on a $600k mortgage is not smart. Just my take!


Agreed... we have no interest in taking on a massive mortgage so early in our lives/careers. It's scary that so many young people are eager to rush into houses when they're overvalued and can barely squeak in with 5% down. I wake up every morning with fingers crossed that interest rates went up a bit... a market correction is sooooo needed right now. We have NO interest in signing up for that... our dilemma is more renting vs stay at home.


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## tygrus (Mar 13, 2012)

Why are you so anxious to own a house. I didnt buy my first home until I was 31.

Govt wont let this market go on forever, it will either correct on its own or be done forcibly like Vancouver. 

Until you are actually married and your career looks stable, dont worry about. Save and invest, then you will be ready to pounce when it does turn.

Or else move out of Toronto.


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## Just a Guy (Mar 27, 2012)

Well, if I look back at my life at that time, housing prices were indeed much lower, but the interest rates were much, much higher, making payments almost the same. Job prospects were nearly non-existent, unemployment was high...of course, nothing like the problems being faced today.

Personally, I would have loved to move into a nice house, or at least a prime apartment located in a great area...but that wasn't in the cards. I started off with a good apartment in an okay area, and got roommates. I started my first company and worked hard to build it. Eventually, as things started to take off, I upgraded apartments, but still needed roommates. Then I bought a small house, also with roommates...all while working on building my company. 

Eventually, things started getting traction, company made money, married one of my roommates, still had another roommate for a few years and did whatever it took to make it work.

Too many people seem to want their cake and eat it too, instead of finding a way to gather the materials and learning to cook for themselves.


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## Mortgage u/w (Feb 6, 2014)

DollaWine said:


> Mortgage u/w, we don't necessarily feel _pressure_ to move out. None of our friends really have. But they're also all either not making good money, in student loan debt, or both. We're making pretty good money for our age, both very frugal and both debt-free with emergency money saved up. We want to rent - this real estate market isn't attractive at all. We're just unsure about rent + save a good amount or stay home + save a GREAT amount. Ontop of that, there's the whole social/emotional side of it. Like I mentioned, we've been dating for 5 years but have never lived together... there's certain strains and things we haven't been able to fully experience yet because we live apart.


I hear you. 
The best advice I can give is to buy an average property that has a rental income suite. This will offset your payments and provide a good income supplement down the line.


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## CalgaryPotato (Mar 7, 2015)

A lot of people have feelings very strongly on home ownership.

Especially in Canada we have insanely high levels of home ownership and many see it as an absolute failure for an adult not to own a home at some point. That said there are some very great advantages of owning a home. While there are many good landlords, I'd argue that there are probably more bad ones. And the good landlords tend to keep people a very long time, so they can be hard to find. 

Still in places like Toronto and Vancouver the home prices are ridiculous. If you are millennial unless you have parents giving you a boatload of money or you have an extremely high paying salary (doctor, dentist, successful business owner) buying a home probably shouldn't be a priority, because it's a lot of risk, and it takes up too much of a percentage of your salary to the point where you could be working to pay your mortgage for the rest of your life.

If you can save money by renting I would highly recommend that route.


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## Spudd (Oct 11, 2011)

Between renting a place and staying at home, I would lean towards renting a place. Just because living with your partner is sooo much better than living at your parents'. Yes, it will cost some money, but it will let you try out living together before you get married, which is always good. I would hate to marry someone I'd never lived with.


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## DollaWine (Aug 4, 2015)

Mortgage u/w said:


> I hear you.
> The best advice I can give is to buy an average property that has a rental income suite. This will offset your payments and provide a good income supplement down the line.


This is something I've given some thought to - buying a townhouse and living in the basement while renting out the upper levels. But, even still, everything in Toronto is overpriced! So it wouldn't be wise to buy a townhouse right now if it might stagnate in value for the next few years, or quite possibly even go down.


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## cashinstinct (Apr 4, 2009)

DollaWine said:


> So it wouldn't be wise to buy a townhouse right now if it might stagnate in value for the next few years


Well, contrary to what Canadians got in the last 10-15 years, a home is not supposed to be a wonderful long-term investment according to statistics for a long-term period. 

If the outcome is "stagnate in value"', I don't see why someone would not buy IF they want a home AND they are ready to pay the annual recurrent costs associated with one (taxes, maintenance, utilities, etc.).

The potential issue is buying a home at a high price and needing to sell at a lower price in the future (or regret not waiting to buy at a lower price...)

I had similar thoughts in Montreal area in 2012 (milennial that thought that prices were too high...). I decided to buy for personal use. Since then, mostly stagnation in my area ... jealous of people in Toronto/Vancouver, but I never planned to move anyway. I am happy my house does not seem to lose value at least.

____

For a property with a rental income suite, I would check the price difference with a property without one, since the ones with income suite seem really popular in GTA area.

____

I agree with the "live together before marriage" idea. I would not buy a home /marry before living with someone. You can learn a lot by living together 24 / 7... real life!

Is renting throwing money away? Well... try a divorce and tell us after how expensive it is


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## andrewf (Mar 1, 2010)

CrazyEights said:


> Save up money for your wedding first - as that is not cheap either.


If you're spending more on the wedding than you expect in gifts (cash/in kind), I would suggest paring back. In 20 years you are not going to regret having a more modest wedding.


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## james4beach (Nov 15, 2012)

I'm a millennial and I'm not buying. Even if I wanted to live in a house, I could just rent one.

"Owning" a home isn't really owning one, when you have a massive mortgage that goes along with it. It's just renting by a different name, though admittedly it gives you more freedom and power to do what you want with the home.


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## lifeliver (Aug 30, 2010)

You can rent a decent place in Toronto for much less than $1,700. You don't have to live in a CONDO. There are plenty of apartments and low rises that rent for $1000 - $1200 for a one bedroom and are close to downtown. We had a place at Bathurst and St.Clair for $950. Start small and see how it goes. I waited until 24 to move out of my parents house and it was far too long. Do it now and start living life as an adult. Its been 6 years and I still rent and save lots of money. I moved from Toronto to Vancouver, and now to interior BC to follow the lifestyle that I want. If I bought a house or condo in Toronto, these moves would have been a major headache.


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## james4beach (Nov 15, 2012)

Agreed, Toronto has some very affordable rent, and in good locations. Toronto is a very liveable city with quite reasonable cost of living. I highly recommend living right in the downtown core.


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## Saniokca (Sep 5, 2009)

Spudd said:


> Between renting a place and staying at home, I would lean towards renting a place. Just because living with your partner is sooo much better than living at your parents'. Yes, it will cost some money, but it will let you try out living together before you get married, which is always good. I would hate to marry someone I'd never lived with.


I agree with this - live together for some time before getting married. You haven't proposed yet but you guys have already talked about how much the wedding will cost. You're considering buying a house with someone you are not married to yet. It could turn out well but also could be a disaster 

By renting a place you'll know what you guys need. What kind of a kitchen, what kind of space, condo vs. house, etc.

P.S. After living together with my first fiancee for a year or so it became pretty obvious that it was not going to work out.


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## madmoney (Jan 17, 2015)

A comment on the wedding....a but unconventional but my wife and I dumped every cent we had into a down payment for our first house, then saved for our wedding, which occurred 3 years later. We had never lived together before, and she had only ever lived with her parents. 

Small wedding, less than 5K, and because we knew exactly what we needed, we asked for cash in lieu of gifts. We ended up generating enough cash to pay for our honey moon. 

13 years after buying our house, our mortgage is paid off and we still have great memories of our wedding and honeymoon. 

Unconventional, but we had the blessing of our family and I wouldn't change anything.


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## Just a Guy (Mar 27, 2012)

One could also point out that most of our ancestors, when faced with places too expensive to live in, moved across an ocean to barren land and started a new life.

Canada is a big place, lots of opportunities all across it...no one has to remain in Toronto. Contrary to some people's beliefs the rest of Canada has electricity, internet, computers, cars, jobs, places to eat, places to shop, places to work (even places that pay more)...


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## andrewf (Mar 1, 2010)

For jobs, it depends on what you do. I would have a hard time working in my line of work anywhere else in Canada.


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## Just a Guy (Mar 27, 2012)

Curious as to what job only exists in one city in the entire world...or who would teach someone how to do a job that only exists in one city, can't imagine any school would offer a course, can't be that big of a market.

I suppose, if you're the primier, the other provinces wouldn't elect you after seeing what you did, but then again there is Notley in Alberta, so you can never say never I suppose.


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## andrewf (Mar 1, 2010)

I said Canada. Most of the companies I could work for in Canada are based in the GTA. I could do something else and get a job elsewhere, but it would be a career change.


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## Just a Guy (Mar 27, 2012)

Still curious as to what job is exclusive to gta...there are high finance jobs in other provinces, engineering, medicine, law, food trucks, manufacturing, import/export...

You're not Rob Ford who faked his death are you?


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## andrewf (Mar 1, 2010)

Think along the lines of a specialization that large companies need (some, at least) and would tend to have centralized at the head office. Not the CEO . Not especially well-paid or requiring advanced qualifications, though it can help. I could probably get a job in Montreal, but my french is middling at best. It would be a stretch, but I could work for government, such as DND. On the other hand, in the US, there are quite a number of cities I could work. I could probably live elsewhere in Canada if I consulted and did a lot of travelling, but I would probably spend more time in Toronto on business than living 'at home'.

If I gave up on this particular specialization, I could work in a lot of other different management positions.

I'm not trying to be overly coy, I just don't want to get too specific.


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## Ag Driver (Dec 13, 2012)

I agree with Just A Guy. I work in the downtown core, but I sure as hell won't move to Toronto. The prices are outrageous and I afford a much better life even with the commute into work. I still come out well ahead of some co workers living within walking distance paying outrageous prices for a shoe box stacked on shoe boxes.

My advice..... Don't live in the GTA.


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## CrazyEights (May 17, 2016)

andrewf said:


> If you're spending more on the wedding than you expect in gifts (cash/in kind), I would suggest paring back. In 20 years you are not going to regret having a more modest wedding.



True that, no one remembers your center pieces, decor, flowers, etc...


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## hboy54 (Sep 16, 2016)

Just a Guy said:


> Canada is a big place, lots of opportunities all across it...no one has to remain in Toronto. Contrary to some people's beliefs the rest of Canada has electricity, internet, computers, cars, jobs, places to eat, places to shop, places to work (even places that pay more)...


I second this thought.

In the nearest little town to me, Bancroft, one can get for $200,000 what would cost north of $1M in Toronto. A teacher might earn 5% less than TDSB teacher, that is pretty much the same. Said teacher in Bancroft could walk to at least 4 schools from anywhere in Bancroft, that is get by without 2 cars quite easily.

In summary, a single teacher salary around here long term results in a likely better financial future than a dual teacher family in Toronto buying a >$1M house and owning 2 cars. The reality is that the teacher/teacher or teacher/police offices families up here with $200,000 annual income can live like absolute royalty. (I don't know how some of them still manage to live paycheck to paycheck, but they do.)

For consideration ...

hboy54


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## CalgaryPotato (Mar 7, 2015)

andrewf said:


> Think along the lines of a specialization that large companies need (some, at least) and would tend to have centralized at the head office. Not the CEO . Not especially well-paid or requiring advanced qualifications, though it can help. I could probably get a job in Montreal, but my french is middling at best. It would be a stretch, but I could work for government, such as DND. On the other hand, in the US, there are quite a number of cities I could work. I could probably live elsewhere in Canada if I consulted and did a lot of travelling, but I would probably spend more time in Toronto on business than living 'at home'.
> 
> If I gave up on this particular specialization, I could work in a lot of other different management positions.
> 
> I'm not trying to be overly coy, I just don't want to get too specific.


Hmm, we have lots of large head offices in Calgary so I'd be surprised if you couldn't find whatever specialized job here. Not that I would necessarily recommend moving here right now. I'm just not sold that Toronto has that many specific opportunities not offered elsewhere.

Anyway, for myself I bought a house with my fiancee, rented out the basement to save for our wedding, but that was a different housing market. I wouldn't recommend that now. I agree with the majority to really think hard about how important an expensive wedding is. They get you for every little thing, and while a $30K wedding is fancier than a $10K wedding it won't actually affect anyone's enjoyment of the day or the success of the marriage. It's also really easy to overestimate what percentage of the people you want to invite to your wedding today you'll even be talking to in 5-10 years.


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## mossman1 (Feb 22, 2017)

The earliest millennials would technically be 35 this year. Alot of them in the last 4 years beat their next generation to it. I know because I've been studying, observing for a long time. 

When Danforth East Semis were going for 550K 4 years ago, all I saw at open houses were hipsterish millennials. But they all just had a baby or were pregnant. My wife and I used to joke that they were probably condo renters from Liberty Village. What last bastion of affordability in Toronto West of Victoria Park was wiped out starting the spring of 2014 with the infamous Rhodes 3-brm semi going over 700K shattering a psychological barrier. 

I know one Millennial couple that bought a Scarbs bungalow just 1.5 years ago for about 600K. They definitely got help from their parents and or over leveraged. Now it's worth over 800K. Too many Millennials I found just wanted it too close to the city , along the subway, or new up in the real burbs where it's also exploded. They didn't even remotely consider the more affordable areas of the city. And even now, that's unaffordable (2 bedroom row townhouse at Kennedy Stn going for at least 450K with ~300$ in monthly maintenance cost). So the newer generation, there's still pockets in Ajax, semis, townhouses which are relatively cheaper. 

But really, the time to marry, live with Parents is becoming more real and real. Just like what has happened in other parts of the world.


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## protomok (Jul 9, 2012)

I'm curious why everyone stays in Toronto? I can understand folks with specialized jobs or family obligations but this can't be the majority...

You could move a couple hours away to Ottawa where salaries are comparable except you can buy a house and a rental property for less than one house in the GTA, significantly less downside risk in RE, less traffic, better hockey team  etc.


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## afulldeck (Mar 28, 2012)

The problem is Job availability. Toronto does have more job options. With the fall of Nortel and RIM, Ottawa job options has shrunk in scope to mainly public sector work if your a STEM worker.


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## protomok (Jul 9, 2012)

^Agreed, I'm sure Toronto has the largest number of opportunities for most fields. But my personal experience has been no issues finding (tech) jobs in Ottawa and a very reasonable cost of living and great quality of life.

Here are some job searches in Ottawa...the vast majority being private sector jobs.
monster.ca - 'IT' - 1000+ jobs, 'software' - 948 jobs, 'hardware' - 49 jobs, 'mobile' - 251 jobs
glassdoor.com - 'IT' - 2165 jobs, 'software' - 1430 jobs, 'hardware' - 331 jobs, 'mobile' - 469 jobs

For reference - glassdoor results for Toronto:
'IT' - 12945 jobs, 'software' - 7064, 'hardware' - 1388 jobs, 'mobile' - 2951 jobs

So Toronto has about 4-6x as many tech jobs as Ottawa, but about 5x the population (i.e. more people applying for these jobs).

I suspect that as the GTA becomes more and more unafordable either talent (particularly millennials) will leave or salaries will have to adjust.


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## stryder1587 (Feb 27, 2017)

I just joined this forum thinking the exact same thing as the OP. We are at about 150k+ combined salary, have saved enough for more than 20% down payment, and if need be, can get a bit of help from the bank of mom and dad. 

I'm 29 living with my gf in a condo, haven't proposed yet, but plan to within the next few months. 
I've been sitting on the fence, just watching real estate prices inflate year over year and people kept telling me about this bubble that's inevitably going to burst and just wait. 
Just in the past 3 years alone, prices haven't changed dramatically. It would have made so much sense, in hindsight, to leverage myself up even when I was making less money and had less savings, to get anything and ride it out to make massive capital appreciation that my salary wouldn't even come close to providing me in the same time frame. 

Now my to-be in-laws are telling me, don't wait any longer cause I've already lost out so much and that Toronto isn't the type of city that will ever depreciate. 
My personal thinking is that there might be a slowdown or minor market correction, but the prices won't ever drop/crash since the government needs to facilitate that change slowly whether it's with interest rate hikes/mortgage tightening rules/foreign buyers tax etc.

From reading these posts, it sounds fairly unanimous that we should just sit here and wait until that correction/crash comes. Unlike OP, we've already been living together for nearly 3 years in her condo. If we bought a new place, that condo would then become a rental unit to ideally offset her mortgage. I understand that the fundamental economics to support these prices aren't there, but I think that holds more true if you view Canada as a closed economy. There are so many foreign buyers that have tons of money to drop on places that they view are still relatively cheap compared to what they could buy in their home country. Say the BoC does raise interest rates, buyers slow down, home owners with mortgages get pushed beyond their means, foreclosures start happening and the bubble burst we've all been waiting for happens. The people that get hurt the most by this are those millennials that bought into this crazy market with mortgages up to their necks. The foreign buyers now see Canada as EVEN cheaper and continue to flood the market which will somewhat sustain housing prices. After what Vancouver did, now everyone from China is flowing over to Toronto. Keep in mind how many wealthy buyers there are from China where interest rates/mortgages don't affect their buying power at all. Sure there are stats saying it's not actually foreign buyers, as they only represent x% of sales volume, but what that doesn't show is the number of properties bought using a proxy like a local but still using foreign money. 

I really regret not entering the market several years ago as the sound advice given to me then is exactly the same as what's being suggested now...to rent and wait out the crash. Just how much longer should we wait...what if waiting ends up pricing me out of the market...from being able to afford a detached home in a reasonable location a few years ago, and now being downgraded to townhome in a similar location now. What's next, wait 3 years and find myself paying the same to get into a condo?


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## mordko (Jan 23, 2016)

Here is the thing: you can't predict the future with any degree of certainty. It's a game of probabilities. There are several scenarios which may or may not materialize, each impacting Toronto housing market differently. Some of the factors:

- Government changing rules (e.g. BC style foreigner tax).
- Banks imposing additional mortgage requirements to cut risks.
- Inflation going up, pushing interest rates up.
- Inflation going down, pushing interest rates down.
- Oil price going up, boosting incomes.
- Oil price going down, cutting incomes.
- NAFTA falling apart, leading to job losses.
- US economy booming, leading to job gains. 
- China imposing further capital controls. 
- Increase in construction
- Speculative stream ending based on recent forecasts from industry experts and the banks. 
- Impact from increases in immigration under the Trudeau government. 
- Things I haven't thought of. 

You should really assign a probability and consequence to each of the above events and look at the resulting event tree. Thats a lot of guessing meaning that the outcome is highly uncertain. 

Having said this, the risk of the downside is higher than the other way around. You can see that by simply counting the "for" and "against" and looking at the scope for the downside vs upside in interest rates. 

In the end of the day decision on buying a home should be primarily based on living requirements rather than investment considerations. If you plan to stay long term (>10 years), short term price movements will be less important. And the downside can be reduced by a prudent selection of location.


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## mossman1 (Feb 22, 2017)

stryder1587 said:


> I just joined this forum thinking the exact same thing as the OP. We are at about 150k+ combined salary, have saved enough for more than 20% down payment, and if need be, can get a bit of help from the bank of mom and dad.
> 
> I'm 29 living with my gf in a condo, haven't proposed yet, but plan to within the next few months.
> I've been sitting on the fence, just watching real estate prices inflate year over year and people kept telling me about this bubble that's inevitably going to burst and just wait.
> ...


Alot of people have regrets, even existing home owners like myself. Though the wife bought it when we were dating many years ago, I was eyeing properties in undervalued areas (Scarborough) for along time. I had no debt, making 70+ K for the 5+years. But didn't pull the trigger due to being risk adverse, having kids, etc. You also have to consider that you making more money now with your spouse is also because of the inflationary environment. I have friends in higher finance pulling in about 200K but even can't look to buy. That's because the very thing that has increased the income and job situation in Toronto is also part of the global force that has led to the skyrocketing home prices here. 

Also, your gf wife-to be has a condo. There are now bidding wars for condos, so also consider yourself more fortunate than others. It also has undoubtedly increased in value. If you do plan to rent it out, rents have also increased. Either way, this extreme credit fueled inflation to get us out of the crash of 08-09 has actually resulted in huge market distortions and a loss of purchasing power when it comes to housing here. The risk takers were rewarded (as designed in a low interest rate, easy credit situation). I personally would suggest you look for something that you think you would be comfortable raising kids in. There are still cheaper places mainly in the east GTA. Even Scarborough. But you'd definitely have to also consider housing types that isn't right away 'turn key' or typically desirable home.


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## ericho (Mar 9, 2017)

My suggestion: for investment, hold on. for your own inhabitant , buy it as early as possible.
--- From a Chinese.

I bought my first condo in 2012 in DT and sold it to buy a townhouse in Bayview village in 2015. In 2016, I sold my townhouse and now, I am trying to buy a detached home in Newmarket, and yesterday I lose the bid again(7 times this year). The winner was not Chinese, so I figure, why do I go to non-Chinese forum to see how other buyers think about this market, and how eager they would make offers these days.

When I go through this post, honestly, i checked back and forth to make sure, this post and replies are in 2017, not 2014.I am not an expert in real estate, I just write down what I see and know.

From 2012 to 2017, I saw the richest buyers are not from China but other countries like Russia, Iran and middle east. And, Chinese prefer its own communities, Markham, Richmond hill, now Aurora, Oakville (richer ones). New immigrants from China are rich and willing to purchase big houses, no doubt. But it hurts people like me, Chinese-Canadian, barely you guys, because you dont want to live in Chinese communities, like it never hit me to live in Little Italy or Greek town or Brampton. 

Check North York, check midtown, who is building those 3,4 million houses on the ground of 1 million land they just purchased a year ago. the builders, the government, who make the most portion of the hit market? foreign buyers? seriously? Maybe Vancouver, but not the case in Toronto. Refugees(40k last year only), rich immigrants (fr political unstable countries, riches protect their wealth), small builders (buy, flip and sell, quick money), government(tax), are the major players to push the market increase, not foreigners from China.


I am not helping Chinese to defend, I am just telling you something that no one tells you, at least no media in Canada will tell you, that Chinese Government restrict its citizens' money going out to buy other country's property. If you are a Chinese and you are sooooo rich, like you have $1bil Chinese currency in Chinese bank, you want to buy a 1mil house in Canada, no way, because you dont even have $200k CND downpayment. You say ok, can I exchange some? Can not! case close. But you are seeing Chinese buying houses around you, and media say so too. Yes, but they are immigrants, have the same right to buy as you do.

TORONTO IS BECOMING A BIG INTERNATIONAL CITY. THE HOUSE PRICE WAS TOO LOW BEFORE. It is making balance to the other international cities like London, Sydney, Tokyo and Beijing. Because Toronto is top best city to live in this whole world! Everyone is wanting to live here. That is why.

Oh, and green belt. But I love green belt i think it is necessary to exist. 

If you dont see the truth(more people coming, less land to build houses) about this market, who is buying, who is winning, where the money come from, is it sustainable, you will not make correct decision, buy or wait. you will still put your hope on the government to increase the tax on foreign buyers. If so, the target is wrong, the price will keep going up, till you can not even afford a condo.


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## rebel_ins (Apr 6, 2009)

"Everyone wants to live here" is a nice theory.

In reality, the population growth rate in Toronto (census to census) between 2011-2016 is the slowest the metropolitan area has experienced in at least 40 years.

And yet, the house price growth rate in the same time period (census to census) is by far the highest in 40 years.

http://www.macleans.ca/economy/econ...isnt-driving-toronto-house-prices-so-what-is/


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## mossman1 (Feb 22, 2017)

ericho said:


> My suggestion: for investment, hold on. for your own inhabitant , buy it as early as possible.
> --- From a Chinese.
> 
> I bought my first condo in 2012 in DT and sold it to buy a townhouse in Bayview village in 2015. In 2016, I sold my townhouse and now, I am trying to buy a detached home in Newmarket, and yesterday I lose the bid again(7 times this year). The winner was not Chinese, so I figure, why do I go to non-Chinese forum to see how other buyers think about this market, and how eager they would make offers these days.
> ...


Selling in 2016 was a big mistake. You should have bought first, then sold. Especially in a rising market. Chances of getting a detach are unlikely. Now what is it about NewMarket that you wanted?


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## stryder1587 (Feb 27, 2017)

I can provide a bit more context to some points of Ericho's post. Specifically about the case of Chinese currency leaving China. The government has mandated that they can only take out 50k usd per year. This is one factor that will slightly ease the effect of "rich foreign Chinese buyers". This applies to the Chinese immigrants that have landed in Canada to live here as well, as their parents can't give them unlimited cash anymore. 

I read somewhere that on Chinese real estate listing websites that there's a huge push to buy in Toronto, cause we're relatively undervalued, especially now that Vancouver is not a good deal for them. Somebody translated a message to the effect of "If you don't buy now, you will cry later". 

For those waiting for the crash, I don't think it's coming. 20% yoy growth definitely not sustainable and will slow down, but I doubt that massive crash is coming unless interest rates spike more than 3% all of a sudden.


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## rebel_ins (Apr 6, 2009)

stryder1587 said:


> For those waiting for the crash, I don't think it's coming. 20% yoy growth definitely not sustainable and will slow down, but I doubt that massive crash is coming unless interest rates spike more than 3% all of a sudden.


I think a recession would probably trigger a crash, even if interest rates stayed at their current levels.


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## carverman (Nov 8, 2010)

cashinstinct said:


> ____
> 
> For a property with a rental income suite, I would check the price difference with a property without one, since the ones with income suite seem really popular in GTA area.
> 
> ...


All very good points. 

I had a nasty financial "wakeup-and-smell-the -coffee " bath in divorce court after 22 years of marriage. 
People change, situations change. It cost me $50K
in legal bills up to the time of divource + 8K in interest on outstanding issues from time of separation to time of divorce on property and equalzation payment to the Ex. Her lawyer calculated the interest penalty from Sept 1, 1994 to April 10th 1998...4 long years of dragging it out with lawyers and finally into the divorce court. 

I went through 3 lawyers (fired the first two for not paying attention to my case, yet very eager to bill me hundreds/thousands for their professional services.
I survived that scary unforseen episode in life, at age 52, fortunately for me, I was still working at the time and managed to recover after about 5 years with my mother's help. She came in as 50% owner of current principle residence and with her help , I managed to buy a semi and pay it off after 8 yrs by cashing in my RRSPs to pay of the mortage.
Its a real eye opener in divorce court...the person that you trusted for many years becomes your adverserial "enemy" and it all boils down to dollars and cents.


As far as buying a home in the OVERHEATEd GTA real estate market...you need to really be diligent. It's due for a correction, I don't care what any 
"expert" is saying here. I the economy turns sour, and jobs start to erode, real estate prices and affordability will be the first casualties felt. 

My brother who lost his home in Brampton a few years back due to divorce as well, he survived and now lives with my mother. He also has experienced the
harsh reality of what can happen as well to your future dreams.
In serious situations, your family is about the only people you have left that you can trust.


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## DollaWine (Aug 4, 2015)

Interesting interview about Toronto/Vancouver:

https://www.youtube.com/watch?v=7pkr86X8VBo


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## rebel_ins (Apr 6, 2009)

Macbeth's book is a very, very good read.


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## FinancialPanther (Jul 13, 2013)

I'm in this boat also, 32, live with gf in rented condo, north of $250k saved myself (gf will be in school the next 2 years, has <$15k).

My point of view was that I wanted to only buy a house when it was time to put down roots (ie have kids). Otherwise, I would stay relatively liquid and not be tied to a leveraged bought property for investment purposes. I have been happy renting, but now rents are starting to creep up, and now property is high anyway.

I am looking at living in Europe for a couple years instead; I hold an EU passport, and always admired the lifestyle there.


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## stryder1587 (Feb 27, 2017)

rebel_ins said:


> I think a recession would probably trigger a crash, even if interest rates stayed at their current levels.


Agreed, a recession would trigger job loss. But where's this recession going to come from? Canadian economy is based is based in natural resources, energy and the financial sector. The oil sands and Calgary just got wrecked, there's no where lower to go. For the financial sector, the crash of 09 was pretty devastating but Canadian banks were the most resilient in bouncing back due to our conservative risk policies. Does it look like our financial sector is due for some cyclical recession again?

FinancialPanther, which part of Europe are you thinking? Some places are pretty expensive there too (Moscow, Paris, London, Monaco)


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## rebel_ins (Apr 6, 2009)

stryder1587 said:


> Agreed, a recession would trigger job loss. But where's this recession going to come from?


A debt crisis could do it. Many high level bank execs - including CEOs - have expressed concerns about housing prices the last few weeks. The US has just hiked their rates, and more are expected to come. This should affect fixed mortgage rates in Canada - they should increase. Canadians are already close to their limits, with a debt to income ratio at 170%. If banks become more risk averse, they will tighten credit. If Canadians borrowing power is reduced, they will stop spending and will focus on debt reduction. This could very well trigger a recession.


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## FinancialPanther (Jul 13, 2013)

stryder1587 said:


> FinancialPanther, which part of Europe are you thinking? Some places are pretty expensive there too (Moscow, Paris, London, Monaco)


I am open to anything really, this is temporary so it is really more career dependent and being in a major-ish city with good transit, English being a usable language, and airport access. I like Germany, Netherlands, Denmark. Girlfriend will be studying in Sweden, so Stockholm would be good.


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## internalaudit (Jan 27, 2017)

It's really a bet on the interest rate outlook in Canada for the next few years. If you think the actual/contract mortgage rates won't hit 5% from the current 2-2.5% in the next decade then maybe buying will look smart in hindsight after 10 years. 

The inflation rate in Canada is manipulated. When our Loonie went down, everyone was complaining about ever increasing grocery food items, rent and housing is going up, hydro and electricity going up yet Stats Can manage to compute below 2% inflation rate. What products have we not seen go up in price because our Canadian dollar had depreciated against the USD? Inflation has to be reported low in Canada because most provincial and the federal government had been on a debt binge the past few years and increasing interest rates will mean more funds going to servicing debt. 

Currently, every payment on a 25-year amortization is 55% principal and 45% interest. This makes it look so much cheaper than renting but of course, you have potential building maintenance and there's property tax to pay.

It is really a crazy market out there.

The good news is I think we are about to peak whether or not there is government intervention. Before the changes to mortgage lending rules, households were allowed to borrow 5.5x of their income. After the qualification at 4.64%, that factor may have dropped to 5x.

If interest rates go up, that factor will keep decreasing.

Let's say the interest rates stay about where it is.

Only 5% of Canadian households make $200k over. These households can afford to buy $1m+ properties but I'm sure most of them have already bought a principal residence and may be delving on investment properties. 

I think in the GTA (especially the suburbs), decent sized detached home will peak around $1.6m at the most, semi's maybe around $1.2, and townhomes around $1m. No way will it keep going up unless wealthy foreign buyers exert that much influence. 

You can see that is what's happening where the Durham area is now facing the higher increases because the prices are the cheapest within 100 km of Toronto. People are moving east because they can still afford to choose the biggest structure they can qualify for.

Stock markets have hit all time highs so that's additional ammunition for people but the 20-30% returns on indexes is probably a thing of the past until after a minor stock market correction.


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## mordko (Jan 23, 2016)

Can't predict the future but... A large chunk of GTA buyers are speculating. Houses are not really affordable, not even to people with $200K incomes. We need a sparkle and the whole thing will go up in flames. Interest rate rise, even a small one could change the balance. The rate is on the move in the States; Canada will follow with a 6-9 months lag. 

Chances are pretty good for a fall in the fall.


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## redsgomarching (Mar 6, 2016)

Can see a fall in the next year or so. If inflation picks up or maintains its rate then the BoC has no choice but to raise rates to tackle the increase in inflation.


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## rebel_ins (Apr 6, 2009)

Forgot to add something.



stryder1587 said:


> For the financial sector, the crash of 09 was pretty devastating but Canadian banks were the most resilient in bouncing back due to our conservative risk policies. Does it look like our financial sector is due for some cyclical recession again?


Actually, our banks were effectively bailed out by the CMHC: http://www.macleans.ca/economy/business/the-real-canadian-bank-bailout/

Also, a lot of people are borrowing from private lenders. In fact, homeowners were being pitched to become second lien lenders at the Real Estate Wealth Expo.
https://onbeyondinvesting.com/blogs...-canadian-housing-market-so-you-didnt-have-to

I don't believe our banks will be in much trouble even in the advent of a crash, due to the taxpayers sharing the risk. However, the risk exposure of our entire financial ecosystem may be severely underestimated.


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## DollaWine (Aug 4, 2015)

Found this on another forum, and it's too crazy to not share. An article from 1988 about bubbling housing in Toronto:

https://www.scribd.com/doc/31450525...source=impactradius&medium=affiliate&irgwc=1#


Some excerpts:



> Absolutely everyone from cab drivers to chief executives has a story about Toronto’s crazy housing market. *Politicians and tenants’ groups have declared a housing ‘affordability crisis’ – again – and have called for a tax on speculators’ profits to cool down the frenzy. Dark words are muttered about how foreign money is to blame.*





> In fact, the price explosion has occurred for simpler reasons. *Mortgage rates are low…* Residents of this huge, rich, expensive urban conglomeration have taken somewhat hopefully to *calling their city ‘world class.’ *But the price of being world class is ‘Manhattanization.’ Torontonians are getting a taste of the housing problems of the world’s major cities.





> *Owning a house is now the investment of choice for most of the middle class.* Because inflation has outpaced wage gains for most of the decade, salary earners feel they can gain ground only by possessing property. The equity in a house provides – tax free – a major portion of most people’s retirement nest egg. *To cope with the high costs, it’s become standard practice for house-poor owners to build and rent out a self-contained apartment.*





> *For many Torontonians, the North American dream of home ownership has already faded*, and they’ve joined the ranks of renters, probably for good.[/B] Those intent on owning will find themselves forced to think small.



Seems like deja vu...

But the biggest x-factor in all this that makes it even worse:











Obviously there are differences between now and almost 30 years ago, different economy, etc... but still interesting to see the similarities.


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## Just a Guy (Mar 27, 2012)

Found this article for a different forum debate...

http://www.huffingtonpost.ca/2016/03/25/houses-canada-price-of-car_n_9489000.html


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## My Own Advisor (Sep 24, 2012)

Cool article JAG.


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## Mukhang pera (Feb 26, 2016)

But leave us not forget, we are warned daily that all of Canada is in a housing "bubble". One day soon it will blow and those houses featured in the article cited by JAG will be available for purchase at the price of a coffee at Starbucks.


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## Just a Guy (Mar 27, 2012)

Real estate is not a fixed price market, unlike stocks. Even in a bubble you can find deals in real estate. They may not be common, but they are there if you look. I've been picking up places 40-60% below market over the past few years. 

If you buy with the correction built in, your downside risk is significantly reduced. If you get into a bidding war, well people in a war generally don't come out unharmed.


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## fplan (Feb 20, 2014)

rebel_ins said:


> Forgot to add something.
> 
> 
> 
> ...


My friend purchased a detached home in Brampton 3 months ago for 740k. Initially the idea was to put 10% down. But he did not have enough cash so he put 50k down and mortgage was not approved for 690k. Then realtor got his mortgage approved and realtor charged 2% of the mortgage amount as commission. He is married and has two kids. He makes about 85k. He wife is not working currently but on his mortgage application they put income for his wife to get the approval.

Yesterday I came to know that couple other friends purchased home in Brampton for 820k from the same broker. Their spouses don't work so you can imagine how they got approved for mortgage.. 

My friends idea is sell in couple of years make 200k . so far people like him are in driving set. People are making free money..
I am not sure how wide spread the problem is but I am sure gov't know this and they just don't want to stop the party.. I think foreign buyer tax will be removed in Vancouver after elections..

If there is slow down Canada can bring wealthy immigrants to improve the situation. For GTA, one side you have lake other side too cold so city expansion is only possible east and west.. so I don't think there will be crash. Look Calgary even after two years of slowdown there is no crash.. prices are not down much...


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## redsgomarching (Mar 6, 2016)

get an advance on your inheritance.


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## My Own Advisor (Sep 24, 2012)

Mortgage for $690k and making $85K...did I read that correctly?

That is nuts. #forevermortgage

I keep saying this but I would love to see *interest rates go up. That would be great and start putting an end to this madness. It would reward savers too, finally. 

*It won't happen. BoC doesn't care.


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## mordko (Jan 23, 2016)

fplan said:


> He is married and has two kids. He makes about 85k. He wife is not working currently but on his mortgage application they put income for his wife to get the approval.
> 
> My friends idea is sell in couple of years make 200k . so far people like him are in driving set. People are making free money..
> 
> ...


^nuts. There is no such thing as "free money". People are taking on a huge risk because the trend has been up for a while and they forget how it feels when the opposite happens. 

Probability of interest rates going up and of the bubble bursting within 12 months is actually pretty good.


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## Mortgage u/w (Feb 6, 2014)

fplan said:


> My friend purchased a detached home in Brampton 3 months ago for 740k. Initially the idea was to put 10% down. But he did not have enough cash so he put 50k down and mortgage was not approved for 690k. Then realtor got his mortgage approved and realtor charged 2% of the mortgage amount as commission. He is married and has two kids. He makes about 85k. He wife is not working currently but on his mortgage application they put income for his wife to get the approval.
> 
> Yesterday I came to know that couple other friends purchased home in Brampton for 820k from the same broker. Their spouses don't work so you can imagine how they got approved for mortgage..
> 
> ...


If your friends and their realtor are committing fraud by falsifying mortgage docs, you should maybe get new friends.


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## mordko (Jan 23, 2016)

One has to wonder how much mortgage fraud is really going on in the GTA right now. And by how much the banks are underestimating their bad loans.


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## redsgomarching (Mar 6, 2016)

My Own Advisor said:


> Mortgage for $690k and making $85K...did I read that correctly?
> 
> That is nuts. #forevermortgage
> 
> ...


they would have to in order to maintain inflation.

also would help if they introduced a foreign buyers tax. any non resident for tax purposes buying a house in canada should be subject to a tax.


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## mossman1 (Feb 22, 2017)

fplan said:


> My friend purchased a detached home in Brampton 3 months ago for 740k. Initially the idea was to put 10% down. But he did not have enough cash so he put 50k down and mortgage was not approved for 690k. Then realtor got his mortgage approved and realtor charged 2% of the mortgage amount as commission. He is married and has two kids. He makes about 85k. He wife is not working currently but on his mortgage application they put income for his wife to get the approval.
> 
> Yesterday I came to know that couple other friends purchased home in Brampton for 820k from the same broker. Their spouses don't work so you can imagine how they got approved for mortgage..
> 
> ...


How did the realtor get the mortgage approved? Did you mean mortgage broker? So basically they lied about her income, even though she's not working?


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## Just a Guy (Mar 27, 2012)

Realtors often have contacts in the finance area, especially ones that have been doing real estate for a long time. Remember that a realtor only gets paid if they sell a house, so it's in their best interest to find ways to close deals. For some, that means getting people what they want, no matter the cost. I know a few realtors who, like a used car salesman, can always find you financing...the interest rate may be astronomical (as in double digits), but the fools they sell to don't really understand math in the first place. These guys know which appraisers to call to get the right numbers you'll need, or whatever it takes...

Then, a few years later, when the purchaser goes bankrupt from the financial burden, they get the listing again and repeat the cycle...there are big commissions, fees, (kickbacks), interest rates, etc. Enough to go around for everyone...

It's the same as any rent to own, pawn shop, speacialty used car place, etc. They serve a need...supplying "wants" to people who can barely afford "needs", but are to stupid to know better.

We keep telling people they can live their dreams, and anyone can for a little while at least, until reality comes crashing down... we're probably doing people a disservice by doing that, it would be better to have them watch a rocky movie...



> “Let me tell you something you already know. The world ain't all sunshine and rainbows. It's a very mean and nasty place, and I don't care how tough you are, it will beat you to your knees and keep you there permanently if you let it. You, me, or nobody is gonna hit as hard as life. But it ain't about how hard you hit. It's about how hard you can get hit and keep moving forward; how much you can take and keep moving forward. That's how winning is done! Now, if you know what you're worth, then go out and get what you're worth. But you gotta be willing to take the hits, and not pointing fingers saying you ain't where you wanna be because of him, or her, or anybody. Cowards do that and that ain't you. You're better than that! I'm always gonna love you, no matter what. No matter what happens. You're my son and you're my blood. You're the best thing in my life. But until you start believing in yourself, you ain't gonna have a life.”
> ― Sylvester Stallone, Rocky Balboa


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## fplan (Feb 20, 2014)

mordko said:


> ^nuts. There is no such thing as "free money". People are taking on a huge risk because the trend has been up for a while and they forget how it feels when the opposite happens.
> 
> Probability of interest rates going up and of the bubble bursting within 12 months is actually pretty good.


I think we need to wait till December 2018 to know whether this is a good move or bad move..


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## fplan (Feb 20, 2014)

Top to bottom everybody is involved in this scam including banks , RE agents , gov't people..


Mortgage u/w said:


> If your friends and their realtor are committing fraud by falsifying mortgage docs, you should maybe get new friends.


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## fplan (Feb 20, 2014)

Banks know tax payers will bail them and none of them are going to be prosecuted ..why worry.. enjoy the party till the end..


mordko said:


> One has to wonder how much mortgage fraud is really going on in the GTA right now. And by how much the banks are underestimating their bad loans.


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## fplan (Feb 20, 2014)

mossman1 said:


> How did the realtor get the mortgage approved? Did you mean mortgage broker? So basically they lied about her income, even though she's not working?


May be realtor has a MB who does mortgages for his clients..


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## fplan (Feb 20, 2014)

RE and O&G are two of the largest employers in Canada.. O&G is down and no one knows when that going to come back up.. so govt will not take any measures to create troubles for RE.. % increase also may not happen in the near future unless US raises their rates to 1.5% ..


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## Mortgage u/w (Feb 6, 2014)

fplan said:


> Top to bottom everybody is involved in this scam including banks , RE agents , gov't people..


Although there are a few bad apples in every division to allow these scams to happen, your buddies will be the main culprits since they signed for falsified documents for their own benefit. Its only a matter of time that they end up in collections and lose the house since clearly, they cannot afford it.


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## fplan (Feb 20, 2014)

http://vancouver.24hrs.ca/2017/03/2...-foreign-ownership-rise-in-vancouver-victoria


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## vivienne (Mar 28, 2017)

CrazyEights said:


> Save up money for your wedding first - as that is not cheap either.


Agree!


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