# these high house prices are killing the middle class



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

Looking around at nice homes, and the average house price data (for example at the link below) and I must say this is crazy. These values are killing the middle class. With all the marriage breakdowns and single people these days (whether young people or seniors), this is making it really hard for the lower or middle classes to afford even average homes in good neighborhoods. I'm finding there are more and more crappy neighborhoods in cities and the nicer ones have houses which are far above the averages shown below. And they are far from where people actually work (which according to some law of the universe has to be in crowded inner city downtowns where most people don't want to live).

http://www.livingin-canada.com/house-prices-canada.html

To make it worse, due to all the new immigrants that don't buy houses, apartments in most cities are becoming hard to find and there haven't been many new towers built for the average person to rent in. Vacancy rates are at historic lows.

This is pretty frustrating. Are there too many middle-upper class people living beyond their means? With the poor economy, I don't understand where the money is coming from to keep pushing these housing prices to record highs. It defies logic. But it's also frustrating for the single joe lunchbucket who may want a nice home of his own in a nice neighborhood.

</rant off>

Discuss.


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## I'm Howard (Oct 13, 2010)

This is a total defeatist attitude and, as someone who has lived in the nicer neighbourhoods and now lives in a higher end home, my journey started with a one bedroom house in Lucan.

It is called the Property Ladder, you start on the first runge and gradually climb it.

I hear the same comments from relatives, they want to live in a million dollar home, but they want it now...

A journey start with the first step, many people need to live like the Immigrants of the 50's, starter home with a tenant in the basement, just keep moving up.

Today's Generation, in many cases, are in line to receive substantial inheritances because Granny bought a house in the Beach and now is 90 and still living there.

Obstacles are the things you see when you take your eyes off the opportunities.


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

Good post, Howard. Makes sense and you are right. I should just clarify that I don't need or desire a mansion or even a "high end" house. 10-15 years ago for example, I was looking for what was typically $150K. Nice neighborhood, newer single detached house etc. Today those same houses seem to START at $250K as a bare minimum, in a comparable city. And at that price they disappear fast and need work $$$ to upgrade.

Not so much defeatist, just frustrated is more like it. I don't have the time or money to keep buying a new house, work on its insfrastructure, sell and pay RE and numerous other bogus fees every time. I can't afford this! And I don't see the average single person being able to afford it, either.

Inheritance isn't anywhere within my grasp. That's decades away. I'll probably be retired by then.

</rant off again>


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## kcowan (Jul 1, 2010)

It is definitely causing a discontinuity in the bigger centers like Toronto, Calgary and especially Vancouver. If the prices do not correct over the next half dozens years, then the new world order will require some adjustments. 

Like NYC, rental might become the new normal. But without an extensive train network, commutes will become intolerable, reducing the quality of life.


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## jamesbe (May 8, 2010)

I really suspect homes averaging out this year in Ottawa but another record year of average increases.
Ottawa, Ont $325,000 + 6.3 %

OREB is saying +7.7%!!! Last year was 4.75% and the year prior 4.4% Big home / little home etc, either way that is too much per year to be sustainable for anyone.

The rich get richer as they say, if you already own it doesn't really affect you that much (assuming you don't move, or move latterally).


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## Four Pillars (Apr 5, 2009)

Lot of generalizations in that post. I don't think vacancy rates in Toronto are low.

There are a lot of people who have a lot of equity in their house. They probably bought a while ago and have been riding the upward trend. 

I live in a decent house is a nice area (but not one of the more expensive ones), but it's taken me a while to get here.

I lived in very crappy apartments until I was about 30. I bought a small house in a somewhat sketchy area (which later became a good area) with 11% down. My mortgage was 1.5 times my annual gross salary.

Over 5 years, I paid down my mortgage so that it was about equal to my annual gross salary. I was living on my own at that time.

Shortly after that, my wife and I bought a larger house and then worked on paying down the large mortgage we ended up with - which was 2.4 times my gross salary. We have worked VERY hard to pay down the mortgage and it is now about 50% of my gross pay (which now includes my business). We should be able to pay it off in about 2 years.

I have benefited a lot from rising real estate, but I've also made the effort to put in extra payments. We have reduced the principal of our mortgage by about $40k in each of the last two years. We did this by keeping our lifestyle in check.

I've also put a ton of work into my business, which has been quite successful. Since my wife stays home with the kids, even a small extra bonus makes a big difference when you are trying to get ahead.

Bottom line is: Sometimes you have to make your own luck.


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## Sampson (Apr 3, 2009)

Four Pillars said:


> Bottom line is: Sometimes you have to make your own luck.


Great post FP.

I think we have such a biased community here the generalizations are not overly relevant. I also think that as kcowan points out, there are many places in the world where renting is the norm, and maybe what we have to get over is not where the money is coming from, rich immigrants, over levered middle-class Canadians etc, but perhaps a paradigm shift away from "I must own a home" needs to occur.


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## MoneyGal (Apr 24, 2009)

I can't link to the article, because it is not online yet, but the most recent edition of Toronto Life magazine has the cover story "When did Toronto get so [effing] expensive!?"

I grabbed this as soon as it came through my mailbox and sat down to read. I'm always very interested in these kinds of stories: financial pieces with a human-interest angle. 

However, I had to put the article down in disgust before I could finish it. Now, some might accuse me of just winning a demographic war (as in, I managed to be of house-buying age when houses were relatively cheaper in Toronto, 10 years ago). But I don't think so. 

The guy who wrote the story complained that houses are TOO expensive and he can't afford to get married now. And he's worried about his long-term financial stability, and wonders whether he and his fiance can ever have a child. But in the same article, he talks about a "monumental" and "towering" level of student debt (I'm paraphrasing, he may not have used those exact words) - and he also says that owning an old house means having a crappy second job (fixing the place) that he doesn't enjoy. 

Finally, he starts and ends the piece with a description of the $5 a loaf bread that he buys that day, along with a bag of organic apples and two bottles of wine, and he justifies those purchases as being in line with his particular values, and says he's happy to pay more for a house in Toronto if it gives him a chance to live in accordance with those values. 

I'd be interested in others' take on this piece, if anyone else reads it. But this guy - in his mid-30's, I'd hazard, from the details he shares - should never be in the house-buying market. He still has substantial student-loan debt, he is a freelance writer (i.e., not a lot of job stability and not a booming industry - the price of words has been steadily decreasing over the last decade, as he himself points out in the article), and he has expensive everyday purchasing habits. (I spent $5 on a loaf of bread ONCE. This Xmas. For my kids' Xmas dinner.) 

I'm with FP. I've risked being *way* behind "the Jones" on my street in terms of my car purchases. We have one ancient TV and no cable. I eat a lunch that I haven't packed myself maybe 5 times in a year. Heck, I didn't even buy this house (a small, semi-detached 3-bedroom in east Toronto) until I was 33 (and was completely free of any student loan debt and had both a well-established career and a substantial downpayment). 

I sympathize that the former trappings of middle-class life seem to be increasingly beyond the grasp of people just starting out. But! My parents have told me over and over how they lived in a house *without curtains* for an entire year when they first bought (and they had two kids by then) because they simply couldn't afford them. They did without. 

I know I sound ancient and there isn't a big appetite for this kind of message out there in the world but seriously? Give me a break. This guy has a lacklustre career (so he says) and he wants a $380K house while he's mired in debt and consistently spending more than he earns. It ain't gonna happen and it has nothing to do with him getting shafted in life.


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## crazyjackcsa (Aug 8, 2010)

It depends on what market you're in. If you aren't in Toronto, Calgary, Montreal or Vancouver, then prices aren't as much of an issue. The issue, really, is taking those handful of large cities, and deciding that its indicitive of the entire country. Cities are expensive places. What's new about that?


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## Jon_Snow (May 20, 2009)

How a young couple can even get a foot (or toe) into the Vancouver real estate market is beyond me. Our 900 sq. ft condo bought in 2002 for 140k is typically what first time buyers would be looking for... expect now it could easlily fetch 320k. Of course I'm not crying about the increased property value, but I do cry for those just starting out.

For my wife and I, we would like to move up into a large end unit townhouse or a bungalow. Assuming we pay off our mortgage next year as planned and we use the 300k from the sale for a down payment on a nice renovated bungalow... it would probably mean we would still need a mortgage of 400k... people talk about asian money inflating property values in Vancouver - whatever the reason, it is truly insane here.


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## Four Pillars (Apr 5, 2009)

@MG - As much as I like reading those Toronto Life articles - they have to be taken with a grain of salt. They always find the fringe element and interview them.

You make some good points - not everyone can or even should be a home owner - that's just the way it is.

Another point is mobility - I really think that people have to look at their careers/income etc and decide if Vancouver, Toronto, other Expensive City is the best place for them.

I pretty much need to work in Toronto or some major center, because of my job. But - I also make decent money, so I can make it work.

I think that if you have a career that doesn't pay well - you might be better off trying to live somewhere cheaper. Or if you have a "standard pay" type of job ie teacher, cop etc - you should consider getting the equivalent job (with the equivalent salary) in a cheaper city.

Obviously, a lot of people will still choose the big city for a lot of good reasons - but then they have to adjust their lifestyle accordingly (and shut the f*** up).


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## MoneyGal (Apr 24, 2009)

Four Pillars said:


> You make some good points - not everyone can or even should be a home owner - that's just the way it is.


Agreed. This guy should live in Waterloo, Elora, Fergus, Guelph, London...not Toronto. Or, if he does, he should give up the idea of home ownership in the big detached home he bought. Sounds like he doesn't even enjoy maintaining it anyways, or like he can really afford to maintain it (BOTH my furnace and my water heater died in the last two months).


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## CanadianCapitalist (Mar 31, 2009)

Everyone has something to complain about. Young people who are just starting out complain about lack of jobs, student loans, high home prices. Listen to the baby boomers and they complain about low interest rates, crappy stock markets etc. Whatever happened to playing the hand we were dealt? It's not as if we can do anything about these things except adapt to them the best we can.


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## Berubeland (Sep 6, 2009)

Yeah, I don't get these "lifestyle" pieces. I almost killed myself laughing at the piece in the Toronto Star with Garth Turner's crony who decided to rent a house in the Annex for $4000 per month and he's really proud of his lifestyle choice. It makes me wonder what the hell they're smoking over at the Toronto Star. 

It's like they're from lalaland. They just have no clue and their posturing about the joys of renting is ridiculous. Sure if you can afford a $4000 a month spend they'll treat you nice, but this is far beyond most people's budgets as to be nonsensical. This is not the average renter. Idiots. 

As for myself, I was motivated to own my own house by the horrible customer service in buildings, from the hordes of disgusting cockroaches at 29 Spencer Ave, to my last crazy landlord who was stealing from my unit. That guy crossed out the rent amount on my lease and wrote in another amount beside it. $100 more per month. Then when I went to argue with him about that crazy deal, I saw a specific very special kind of paint I had bought to cover a little bit of tar that had landed on a customer's eavestroph. There was my can of paint with my tarry glove mark right on it sitting on his desk. 

That was what inspired me to get a house. When I talk to lots of other people including landlords the same kind of scenarios come to light. People do have a lot of inertia when it comes to moving, if rental building had been treating their tenants right in the first place there might not have been this push to home ownership that there is now. 

For 29 Spencer I was a student on a very limited budget, the vacancy rate in Toronto was less than 1% the lineups for showing for places were very long. I had no real choice but to stay in that hell hole for 2 years until my school was done. I couldn't find anywhere better. 

So yeah the $4000 a month rental guy is absurd and your 5$ bread guy is probably his cousin.


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## kcowan (Jul 1, 2010)

crazyjackcsa said:


> ... Cities are expensive places. What's new about that?


Maybe it is that fact that most of the poplulation lives there?


Berubeland said:


> It's like they're from lalaland. They just have no clue and their posturing about the joys of renting is ridiculous. Sure if you can afford a $4000 a month spend they'll treat you nice, but this is far beyond most people's budgets as to be nonsensical. This is not the average renter.


I live in lalaland in the summer and the rent is $3300/mo. As long as you appreciate the value of money, rental is OK. The property is conservatively valued at $2.4 million (3300 sq.ft. penthouse, 1400 of which is an outside patio) so the cost of renting is 1.7% including electricity, water and heating. But the nice thing is that I don't have to move to free up my equity! I went through the decision process in 1997 and decided that it makes sense to rent. Prices even then were in the stratosphere. By deciding to rent then, we were able to retire in 2002 rather than still working for the man.

So rental is not always dictated by your means. Sometimes it is because it makes sense economically. Back in the 90s, people asked us when we were going to buy a house, and we volunteered that "never" was probably our answer. At the time they seemed disappointed, and it is only in the last few years, and after visiting us, that they have started to agree.

And since 1997, our average ROI has outstripped 1.7% in most years. In fact, we have been able to pay the taxes on our income and still be ahead.

We also sublet the place for the 7 months we are in Mexico because it is so attractive.


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## kcowan (Jul 1, 2010)

CanadianCapitalist said:


> Everyone has something to complain about. Young people who are just starting out complain about lack of jobs, student loans, high home prices. Listen to the baby boomers and they complain about low interest rates, crappy stock markets etc. Whatever happened to playing the hand we were dealt? It's not as if we can do anything about these things except adapt to them the best we can.


In fact, all we have to do is look at NYC to see what the model might be. Property purchase has been out of reach for young people forever! They check the obituaries for possible rentals (remember Seinfeld)! People eventually adapt!

We know a lady who lives on the upper east side. Her apartment overlooks the ocean (which looks like a river between Manhatten and Long Island). It is a tiny 2 BR place but people get used to less space in Manhatten.

So just because properties are not affordable does not mean that a correction is coming. It means that people have to adapt to their new realities.


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## I'm Howard (Oct 13, 2010)

Hey Sports Fans, am I the only one who lived in an era when Credit Cars did not exist and 10% Mortgage Interest was the norm, not the exception

I am from TO, and I love that city, but no longer live there due to a lifestyle decision, but for most people, reality is that renting in TO is a better/cheaper alternative than owning.

I mean Toronto, not the Burbs, or Oshawa, but the City of TO.

Property Taxes will go up, they have to, those gold plated pensions will have to be paid.

Interest is going back up to 10%, today's rates are a gift and any mortgage owner who is not paying down as much as humanly possible, will regret it.

Winters we live in a manafactured home in Florida where land rent is $400 a month, and buying a fully furnished 1.400 sq ft home costs $35,000, and it is NOT a trailer park.

We could buy a much more expensive place, but the U.S is still a foreign country, and they could refuse me entry, if they wanted to.

Retirees need to look to smaller communities outside of major cities, they can free up tremendous amounts of Investable cash.

The quiet boom in RE is in areas like Collingwood and in Salmon Arm,/Shushwap, B.C, where the Boomers are heading for the next phase of their life.


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## kcowan (Jul 1, 2010)

I'm Howard said:


> ...Retirees need to look to smaller communities outside of major cities, they can free up tremendous amounts of Investable cash....


Most retirees that I know who live in West Van would not move to Salmon Arm. One of them even has a daughter who owns a pub in Salmon Arm and another daughter living in Hawaii. 

People do not want to leave their friends. I know that some people from the East settle in Parksville and Qualicum Beach but I think they do it for the weather (and healthcare).

As for living in a mobile home park, we have friends here in PV who go to the mobile that they own near Palm Springs when they rent out their condo here. But they only do it because they need the money. But then they live in Spirit River AB in the summer and do not want to return in the winter.

I think everyone has to plot how they are going to live their lives and what works for one may not work for another!

(BTW PV has a population of 300k so I guess it qualifies as a smaller community but it is much more cosmopolitan because of all the visitors who keep the restaurants, art galleries and theaters in business. We have been coming here for 20+ years so it is pretty familiar.)


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## marina628 (Dec 14, 2010)

http://www.realtor.ca/propertyDetails.aspx?propertyId=10201565&PidKey=768151527 ,In 1991 we bought a similar house on this street for $140,000 ,the people we bought from , bought it brand new in 1978 for $42,000.We rented the first 6 years we lived in Ontario so we could save for our first house.Our rent was $315-$600 when we moved to a 2 bedroom in 1990.Many kids live at home until they are 30 to save for a house.If I absolutely had to live in Toronto I think I would rent.


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## Cal (Jun 17, 2009)

IMO the asking prices are just too high for my liking. Somebody else may pay it, but I have no interest in taking on so much debt, and committing to pay it off over 35 years like others.

I work too hard for my money to pay most of these asking prices.

I do wonder if some have taken on too much debt and have not yet realized it.

I have a home, and no urgency to upgrade, so I will wait for better value for my dollar....


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## Potato (Apr 3, 2009)

Well, I'm a big RE bear, and I agree: house prices are too high, and it's bad for people. Too much spent just to put a roof over their heads, not enough saved for everything else.




I'm Howard said:


> It is called the Property Ladder, you start on the first rung and gradually climb it.



IMNSHO, the "Property Ladder" is dangerous thinking in these times. It's a great idea when RE is going up -- especially when RE gains are outpacing anyone's ability to save -- so it was a great strategy over the last decade. But it leads to more transaction fees, a lack of diversification and lots of leverage at a young age, and worst of all, can become a trap when real estate values go down and negative equity becomes a threat.




MoneyGal said:


> Toronto Life magazine [...]
> However, I had to put the article down in disgust before I could finish it.



Definitely sounds like the Toronto Life magazine I know 




> Now, some might accuse me of just winning a demographic war (as in, I managed to be of house-buying age when houses were relatively cheaper in Toronto, 10 years ago). But I don't think so.
> 
> The guy who wrote the story complained that houses are TOO expensive and he can't afford to get married now. And he's worried about his long-term financial stability, and wonders whether he and his fiance can ever have a child.
> [...]But this guy - in his mid-30's, I'd hazard, from the details he shares - should never be in the house-buying market. He still has substantial student-loan debt, he is a freelance writer



It can be both! As much as I like to rail against the housing bubble and the government policies and crowd insanity that got us here... about how it's going to affect people's long-term financial stability... whining doesn't help you live your life, and this guy doesn't _have_ to _buy _a house. There are lots of rentals out there.




crazyjackcsa said:


> Cities are expensive places. What's new about that?



Very true, cities are expensive. But the rents (used to) equally show how much more expensive the cities were. My rent in London is lower than the rent for an equivalent place in Toronto. I can buy a house in London for less than one in Toronto. Heck, PC Mac n' Cheese is 20% more expensive in a Toronto Loblaws than a London one. Toronto _is _expensive. But that's not the issue: purchasing costs have _taken off_ relative to rents, especially in the big, expensive cities. 

I'm not sure of a good source for objective rental statistics, but from what I've observed, over the last 8 years rent has gone up ~2%/year in London, and not much more than that in Toronto. Meanwhile, real estate values have gone up ~6%/year over that time (and property taxes ~4%/year). It's to the point now where it's cheaper to rent than to own, which goes against generations of mantras about the property ladder, not paying someone else's mortgage, etc.

So, I rent. I invest. I wait... but not to start living my life.

Or to put curtains in the windows.


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## kewlthing (Jan 30, 2010)

House prices aren't high if you can afford to pay the prices. It's just those people who feel they have to look and feel rich and live in a fancy and most likely unaffordable house and then complain about not being able to pay the price. Those are the ones who don't get it. I personally live in a modest home with no debts at all and I have a fairly sizeable portfolio of stocks, ETF's, mutual funds, etc. I don't look rich but I sure feel rich. I think most people are the other way around.


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## dogcom (May 23, 2009)

The way I look at you should do it the old fashion way. And that is save up for a decent down payment like 25% and keep payments to 30% of gross income and so on. It may mean buying a townhouse instead of a house or whatever. Then you wait for a correction and move up or buy the house you want.

I owned a two bedroom townhouse in Richmond BC in the 80's and we waited for a nice correction in 1990 to move up into a house into the area we wanted to live. That is the key to getting ahead and that is be ready when opportunity knocks. And now I think house prices are far to high and might move down to a 3 bedroom townhouse in a great area and wait for opportunity to knock again. But I would never go to cash and wait in the Vancouver market because once you are out you may never get back in again.


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## dubmac (Jan 9, 2011)

I agree with Jon Snow..

I bought in Vancouver in 2004 -a duplex - the bldg is no beuty - but the land..my o my!

Asian $$ is largely driving the insanity. Will it stop? As long as Canada is a "safe haven" methinks not. Also Vancouver, and many Cdn cities rank high in quality of life.
_Are there too many middle-upper class people living beyond their means? _..maybe debt levels are apparently increasing among people so says the g&M Finance Section 

_I don't understand where the money is coming from to keep pushing these housing prices to record highs. _...in one word..Asia..specifically China. 

_It defies logic. _ again I agree..

_But it's also frustrating for the single joe lunchbucket who may want a nice home of his own in a nice neighborhood._.If I was looking to start out a new job, I would not pick Vancouver because I could never had afforded to live here..but, apparently there are going to be many people over the next 10 years or so who start to inherit alot of money. As the boomers age, the money will probably make it's way down to the grandkids.


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## dogcom (May 23, 2009)

Tell me dubmac what does the money really mean to you. I can walk away with a lot of money and buy somewhere else in Richmond or Ladner or whatever. The problem is I live in the best area very quiet with eagles the water and shopping close by which the wife really likes. Also french emersion school 2 blocks away and not overcrowded with very low crime. 

If I go for the money and fail I have a lot of explaining to do which I will never live down. In 2007 I could have went for it and would have failed. I would not have failed financially but would have lost money on the table. So my plan is I have to pass or fail with the wife in agreement with everything. And before you think the wife is wrong you should think twice because she pushed me to sell the townhouse and buy the house.


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## hboy43 (May 10, 2009)

Hi:

I can't imagine putting that kind of money into a house. In fact, I was recently on the other side of the transaction, selling my first 1000SF house in Ottawa I bought in my early 20s.

People want it all NOW. I had roommates in the above house for the first 12 years of ownership.

At my peak I was earning close to $100/hr, and I now have a sizable net worth. It would scare the crap out of me to spent $800,000, even $500,000 on a house. Current humble abode was purchased for $110,000 11 years ago. Sure, it could use $200,000 work, but the work doesn't have to be done at any particular time, and can get done over the coming years/decades. Or the place can be left rough and unpolished. Still better than anything anyone lived in 100 years ago.

Probably my best financial move is not giving a sh*t what people think of me. I feel no need to live in 4000SF in Vancouver. 

I feel no need to own a fancy car, or even ANY car, though we currently drive a Patriot, perhaps an upgrade on the predecessor Focus. I never owned a car until I married at 35. 

The chair office chair I am sitting on was salvaged from somewhere as was the 4 or 5 others on the property. I pulled one out of the garbage as recently as this past summer. Whey in this society does Peter throw in the garbage a perfectly good instance of that which Paul is buying new? The desk I am at was either $25 or $125, a WW2 era government surplus big old woody. I own two and not sure which is which any more. They are 60 or 70 years old and will still be around for centuries, long past when the particle board desk has gone to the landfill.

As far as I can recall, the only piece of furnature ever purchased new is a reclinining chair. Unless you want to call the pool table furniture. Everything else is inherited, hand me down, used store, made myself.

I have never purchased a new TV for myself (but sometimes as gifts). The one in the basement was obtained gratis from a neighbour. The one in front of me was purchased for $25 from a friend leaving for Europe. The 13 inch upstairs may nave been purchased new by my wife before we met.

I have more used stereo equipment than I can put to use. People keep giving stuff to me and I just can't bear to throw it out. In the shop, the amp was given to me circa 1982 and I had to fix it. It needed a couple transistors replaced IIRC. So it is probably 40-50 years old. The tuner came from my Dad, probably dates from the 70s, It still tunes by a capacitor connected to a knob by a string, said string dragging the frequency indicator along the glass. I don't see how new stereo gear is better than 30 - 50 year old stuff that works just fine. The two section tower must be 50 years old too and came with the house. The antenna ws a freecycle find from down the township.

One can sure spend a pile of money trying to please/impress others. I'd rather be retired 10 year ago at 38 or 40, now with a (very) low 7 figure net worth, a broken down fixer up house, a broken fixer up barn, a not broken fixer up 1300SF shop (cuz I been fixer uppin it up), one modest vehicle on the road, 25 acres of maples, a few acres of field and a tractor. Oh and all the used/free/repaired material possessions as discussed above.

The tractor pulls a 3 botton mold board plow $110 at auction, and a tandem disc $85 same auction. Unfortunately I was too green to realize I should have purchased the chain harrow, so I'll have to see what turns up this coming year, or maybe I'll fashion something out of the junk pile. The tractor is actually my big lifetime splurge, purchased new against my nature. But as I have no real mechanical skills, and the tractor is the heart of a rural operation, I went with new.

You would never know my financial status from looking at me, usually ratty and unshaven. People do wonder why I don't work though.

It is all about choices. You can choose to impress others or yourself. You can choose to be proud or humble. You can choose 1000 or 4000 SF house. You can choose to rent or own. You can choose to have that 50 inch TV now or in 5 years or never. You ultimately in Canada can choose to be wealthy or poor. I maintain that in Canada anyone from the custodian to the MD can choose to be wealthy or poor. Most value the big TV/house/car/whatever (impressing others?) more than being wealthy, so they choose poor.

What will you choose?

hboy43


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## I'm Howard (Oct 13, 2010)

The fundamental differrance between Men and Women is no more clearly illustrated than in R.E, Guys buy Houses, Women buy HOMES.

The major reason most RE Sales Peope are Female is because they are selling homes to the primary decision maker, the wife.


Women are reluctant to sell and move to make a few bucks, but they will sell and move to a better neighbourhood with better schools and less commuting time.

R.E prices go up and down, it is called a cycle, just like stocks, gold, oil, bonds, nothing moves in a straight line.

Profits on your principal residance are Tax Free, a house can be left in a will, Tax Free.

25 years of renting, you have paid off the landlord's mortgage.

I live in the Blue Mountains of Ontario, many people here rent their homes to seasonal skiiers, the monies they get allow them to winter down South.

I have been tempted, wife will not allow it, feels like her privacy would be intruded, and we have no real need for the money.

London RE is good value, but you buy low and it stays low, plus for anyone who knows the city, it is not for everyone.

You may not live to be a 100 but it sure will feel like it.


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

Sorry hboy, but your post reads something like a sales pitch or a marketing brochure of some kind. Are you trying to sell us something? lol


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## LondonHomes (Dec 29, 2010)

When interest rates start to rise again (and they will some time), we should see housing prices stagnate or start to decline. Not US style prices declines since most Canadians have equity in their houses.

Remember back in 1988 just before the Toronto housing market's bubble burst, people where saying the same things.


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## kcowan (Jul 1, 2010)

I'm Howard said:


> ...London RE is good value, but you buy low and it stays low, plus for anyone who knows the city, it is not for everyone.
> 
> You may not live to be a 100 but it sure will feel like it.


Both my 2 boys were born in London, the forest city. What did you not like about it when you lived there?


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## NotMe (Jan 10, 2011)

hboy43 said:


> Hi:
> 
> 
> It is all about choices. You can choose to impress others or yourself. You can choose to be proud or humble. You can choose 1000 or 4000 SF house. You can choose to rent or own. You can choose to have that 50 inch TV now or in 5 years or never. You ultimately in Canada can choose to be wealthy or poor. I maintain that in Canada anyone from the custodian to the MD can choose to be wealthy or poor. Most value the big TV/house/car/whatever (impressing others?) more than being wealthy, so they choose poor.
> ...


You raise a lot of good points, but keep in mind there's no longer a straight line between house size and house price. My Toronto house not even downtown (DVP/Lawrence)is 1400 square feet. My brother's house in east Oshawa is easily 3000 sq. ft and we paid similar prices. 

I made a choice to have a smaller house (smaller utilities, too - I have A/C and he doesn't) but most importantly I chose a smaller commute over anything else. I could have rented and like many rational people think renting is a great option, just we could afford to buy and did. I'm 35, bought in 2007 after owning a loft when I was 26.

By the way, for those who think 'winning the property ladder' is a demographics game, it's really not. Only in hindsight is it clear that buying my loft in 2002 was a good call. At the time I didn't eat for 3 days as I pondered my imminent financial ruin.


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## MoneyGal (Apr 24, 2009)

Re: the "demographics game"...I simply meant that housing prices were considerably lower when I bought 10 years ago than now. If I was 33 now, I doubt I would buy. I can't imagine spending what it would cost now to purchase my house.


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## Larry6417 (Jan 27, 2010)

the-royal-mail said:


> Sorry hboy, but your post reads something like a sales pitch or a marketing brochure of some kind. Are you trying to sell us something? lol


If anything, his post is an "anti-sales pitch." The increase in home prices has made homes in some areas quite expensive, but people still have choices. They don't have to buy overpriced homes. Many have a sense of entitlement: they "deserve" the McMansion now - without the requisite saving (like the writer MoneyGal mentioned). 

The silver lining (if there is one) to the housing crisis in the U.S. is that some have been able to afford homes inexpensively. I don't know that we'll get the same decrease in Canada, but I suspect prices will soften.


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

I'm not saying I expect a mansion (as I clarified earlier) but I do not wish to live in crappy neighborhoods with crime, shootings and other social problems. For instance, the neighborhood I like in my area is "average"...10 years ago the houses were about $120-135K. Today those same houses start at $250K as a minimum. They were built in the '60s and are single family dwellings with yards and a small amount of space between neighbors. Each yard has a driveway and the owners take pride in and maintain their properties. There are no drug dens, shootings, gangs, junk cars in the yards or constant police presense. 

I believe it's reasonable to expect a neighborhood that suits me but c'mon, $300K? The average person simply does not have the kind of salary needed to pay for this type of mortgage or even save the downpayment.

And contrary to what someone else posted there are NOT lots of rentals out there. Vacancy rate is at historic low, around 1% or less right now. When you whittle down the ones that don't work for various reasons (ie. no pets allowed when you have a cat, no parking available, dumpy place, bedbug tower this or that etc etc) you are not left with many options. I've already done the whole room and basement rental and condo thing. I'm saying it seems impossible for me to move up given present salary, reasonable expectations as described above and living on my own. I think there are a lot of people in this situation.


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## Sampson (Apr 3, 2009)

the-royal-mail said:


> I'm saying it seems impossible for me to move up given present salary, reasonable expectations as described above and living on my own. I think there are a lot of people in this situation.


Perhaps the bottom line is that those expectations are neither realistic nor reasonable. 

While some markets are inflated by immigration from non-Canadian residents, that is not always the case - e.g. Calgary - so any 'federal legislation' to reduce run up in demand may not work - unless Ottawa stops people from Saskatchewan, BC and the Maritimes from migrating to Alberta 

There isn't much you can do other than earning more, or changing your expectations.


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## I'm Howard (Oct 13, 2010)

Both of my Boys were born at St Joes, and I actually thought of retiring there due to the attractive prices on homes, but overall we find the city boring.

I visit at least six times a year, we still have relatives there and my Dad lives in Tillsonburg, but we find a lack of things to do.

We lived in Hazelden Park, across from Springbank.


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## marina628 (Dec 14, 2010)

the-royal-mail said:


> I'm not saying I expect a mansion (as I clarified earlier) but I do not wish to live in crappy neighborhoods with crime, shootings and other social problems. For instance, the neighborhood I like in my area is "average"...10 years ago the houses were about $120-135K. Today those same houses start at $250K as a minimum. They were built in the '60s and are single family dwellings with yards and a small amount of space between neighbors. Each yard has a driveway and the owners take pride in and maintain their properties. There are no drug dens, shootings, gangs, junk cars in the yards or constant police presense.
> 
> I believe it's reasonable to expect a neighborhood that suits me but c'mon, $300K? The average person simply does not have the kind of salary needed to pay for this type of mortgage or even save the downpayment.
> 
> And contrary to what someone else posted there are NOT lots of rentals out there. Vacancy rate is at historic low, around 1% or less right now. When you whittle down the ones that don't work for various reasons (ie. no pets allowed when you have a cat, no parking available, dumpy place, bedbug tower this or that etc etc) you are not left with many options. I've already done the whole room and basement rental and condo thing. I'm saying it seems impossible for me to move up given present salary, reasonable expectations as described above and living on my own. I think there are a lot of people in this situation.


Royal where do you live? I have been on the property ladder for twenty years now and have lived in 5 homes in that time plus have owned three investment properties.
I understand everything you are saying ,we have had long term tenants who can't save for a down payment and pay us about 90% of the cost to own our house.
I see many negative comments on real estate here but I am confident before end of 2011 I will buy another investment property .At least 50% of my net worth has been with Real Estate.
Our first home was a semi and we had to rent the basement out plus had a relative living with us for first three years renting a room.It was not the ideal situation but by making these sacrifices we were able to pay down the mortgage and we sold it 9 years later for $88,000 more.The last 5 years we had no tenant and no relative living with us.
I have made about $100,000 off my current house in the two years we signed contract with builder to build it .The house took 15 months to build and by time we took possession of it ,it went up $55,000 according to our bank appraisal.
I think most people had to make sacrifices to get that first home but very few of us have regret it.I do know people who bought in late 80s only to walk from their homes 4 years later.One of my friends bought a cheap townhouse in Bramalea in 1988 and walked away in 1993 because they owed $60,000 more than they could sell it for.Back then mortgages were 9-11%.

Marina


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## I'm Howard (Oct 13, 2010)

Boomers are starting to retire this year, the pig is entering the Python, and when every day is Saturday, do Boomers want to go to the Mall everyday, or do they want to golf, hike, fish, snow shoe, play Tennis???

Boomers will have a large amount of equity in RE, will they keep that equity or want to take some money off the table to travel etc??

RE will go up where Boomers move to, drop where they are leaving.

Health Care access is important, safety is also important, easy commute to major cities is also important.

The Georgian Triangle(Wasaga Beach/Collingwood/Blue Mountains) has experianced major population growth and large RE Price increases, and it is just starting.

90 minutes from TO, Five Hospitals in the area, cheap and healthy recreation.

Five bedroom houses in the burbs are not where you want to be.

Prince Edward County, similar story.

Worst place to be right now is owning a downtown TO Condo, even more so now that HST has been added to condo fees.


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## dogcom (May 23, 2009)

For the boomers I think kcowan said that in Vancouver they do not want to move from a good area. They may move from a really high priced location to one a little farther away but they will not want to give up the good lifestyle they are living now. If I lived in Toronto and got a good price and could get a place in Whiterock BC I would do it right away. In fact in the late 80's Toronto people had the chance to move to Vancouver and a lot of people did it.

I think Vancouver is going the way of those cities that are priced to high and it will stay that way because any nice correction and the people will flood in. The burbs like Abbotsford or Langley may not hold up like you might think because they are a nice place but all the bad people from the west like Vancouver, Richmond or even Surrey are being pushed out there. I am not sure how Ontario works but it might be a lot like Vancouver where boomers don't want to live farther out and keep their life in the good area they live now.


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## marina628 (Dec 14, 2010)

My Dad was in the Military in 1961 and stationed near Boundary Bay/White Rock .They bought a small home in white rock back then that they still have.They live in Newfoundland where we are originally from and they go to BC once a year for couple months.The house stays empty at least 4 months a year but my cousins/aunts /Uncles go there 2-3 weeks a year and pay my parents for rent.My father paid $24,000 for the house when he bought it in 1961 and over 50 years he has put about $50,000 into it for two roofs and did windows twice and recently did all new bathrooms and flooring.Probably a $100,000 investment over 50 years but can't imagine what it is worth now. White Rock is beautiful for sure , the best seafood restaurant is there and we love to sit and watch the sunset there.


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## kcowan (Jul 1, 2010)

I'm Howard said:


> We lived in Hazelden Park, across from Springbank.


We lived in Lockwood Park SW of Commisioners Road and Wellington. Youngest son returned to go to Western.

I guess my point is that people who never leave are very happy there. I know a couple because I worked with them then.

(BTW we lived on Cowan Avenue in the old Cowan Estate property.)


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## bltman (Aug 12, 2010)

I actually liked the recent Toronto Life article that MoneyGal referred to about Toronto becoming too expensive. But, these articles are simply rehashes of the same type of article they write every year or 18 months or so. The article usually involves people wanting to spend beyond their means and are not willing to sacrifice location, lifestyle, etc. These articles are really about how expensive it is to live a “richer lifestyle” in Toronto. The following article is one of my favourites on this type of topic and goes back to 2005 - http://www.torontolife.com/features/going-broke/

Don’t get me wrong, I do lament living in the burbs, believe housing prices in Toronto are crazy, and generally find a lot of Toronto overpriced. But, I recognize it as a reality of the market, and I find it fascinating that people are willing to load up on dept in order to live the life they want but can’t afford. 

As for $5 bread, I once was given a loaf of $6.50 bread for free and it was very very good – the best bread I ever had. It was so good that I did end up purchasing a loaf the next week for $6.50. Thankfully, the gourmet foods place it was from closed down (not surprising – I have no idea what it was doing opening in my neighbourhood in the first place)


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## kcowan (Jul 1, 2010)

marina628 said:


> ...White Rock is beautiful for sure , the best seafood restaurant is there and we love to sit and watch the sunset there.


It is unique because of the sandy Pacific beach, facing west, sunnier than Vancouver but not for commuters who work in the city.

Close to Blaine for easy discount shopping, especially with the strong canuck buck. I would say they are very well-positioned for the retiring boomers. Much better than Collingwood where the water is always cold in the summer, and the snow always melts to ice or mud in the winter.

But the Georgian Triangle is well-positioned for retired Torontonians who want to stay close to friends/family as Howard claims. We had a family cottage in that area, a tear down, and after Dad died, I sold it for $200k in 2000 to the next-door neighbour. It was 50 feet of sandy beach with some nice ground cover. At the time that was $40k over market and we handled that as "good will" so as not to inflate taxes in the area. (It's a long story!)


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## MoneyGal (Apr 24, 2009)

bltman said:


> As for $5 bread, I once was given a loaf of $6.50 bread for free and it was very very good – the best bread I ever had. It was so good that I did end up purchasing a loaf the next week for $6.50.


I in no way meant to diss expensive bread. I adore bread. (Did you know you can even buy a loaf of Poilane at Holt Renfrew flown in from Paris for $40?)

I shouldn't have used that example. Or, I should have said, if you love artisanal bread, you can make it yourself (in 5 minutes a day! I think Brad has posted the receipe?) for literally a few pennies. 

The point (for me) is never lattes, or expensive bread, or eating out, or whatever: it is discretionary, lifestyle spending which is unsustainable over the long term...and peoples' apparent distaste for eating non-artisanal bread (or making their own) such that they create elaborate rationales for why living beyond their means is justified.


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## sags (May 15, 2010)

I live in London, born and raised here, but moved away for 20 years.

It is a great city. Close to all kinds of beaches on the Great Lakes, cottage country in the Muskokas, the US border for shopping and drives through rural Ontario.

London has always been known as a very conservative city. No fuss...no muss type of place. It is quiet for the most part, except for the rambunctious University students on Richmond Row........woot......woot.

I can appreciate wanting to live in a beautiful place out of the city, but anytime I have had the need to be in one of the world class hospitals in London, there are always people there from the surrounding areas. Access to healthcare is a major concern for a lot of retirees.

I mentioned to my doctor that I was thinking of retiring in Saskatchewan or Nova Scotia, or someplace that would be cheaper and sounded interesting, but he cautioned me that a lot of his patients give it a try and then end up back home. They get sick, or lonely, or bored. 

We have owned several homes in London and surround areas, but never experienced the kind of bubble in prices that other places have. We have sold homes and lost money, broke even, and made a little bit, but we never had a couple of hundred thousand dollars thrust into our hands. We figured we were lucky if we got our money back.

Renting here is a breeze. Lots of vacancies and new apartment buildings going up all over the place. We rent a nice 3 bedroom townhome in the Berkshire Village and our rent has gone up a total of 1% over the past three years. This year was a 0% increase again. The lady next door has lived there for 38 years and she says her rent has "doubled" over that time period. She won't say what she pays in rent, but I suspect it is around 600 a month. We pay 1,000 and live next door. They raise the rent for new tenants and then basically freeze it until you move out. They want to keep good tenants.

To each their own, but I have relatives who purchased a 350,000 home in London. They are young and both working with 2 kids. They are one financial burp away from losing their home. If interest rates remain low......great, but if they were to double or triple.........goodbye house.

I think that is the essence of the biggest problem with Canada home prices.

Too many people are dependant on low interest rates to either qualify for their high ratio mortgages or be able to maintain the payments.

If interest rates are going to remain low for the next 35 years, they will be in great shape..........if not, there are going to be a lot of homes for sale and very few buyers.


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## Potato (Apr 3, 2009)

dogcom said:


> The way I look at you should do it the old fashion way. And that is save up for a decent down payment like 25% and keep payments to 30% of gross income and so on.



Ideally, yes. But with the insanity in the market of the last few years, I can see why kids aren't. We've had a few years with moves of about 10%, and as my friend who bought said "what can we do? You can't save as fast as the prices are going up." So they bought with next-to-nothing down, afraid of being priced out forever. It's not a thesis that I buy for the long-term, but I can see where the fear comes from. Unfortunately that kind of behaviour is a positive feedback mechanism (and in this sense, "positive" is bad).




dubmac said:


> _I don't understand where the money is coming from to keep pushing these housing prices to record highs. _...in one word..Asia..specifically China.



A different set of 4 letters might be CMHC.




I'm Howard said:


> 25 years of renting, you have paid off the landlord's mortgage.



Is that a rhetorical point, or would you like to do the math?

https://spreadsheets.google.com/ccc...DFxVnpLZG53cWtacVVOY2c&hl=en&authkey=COHA0vYD

Yeah, that's how bad it is right now.




the-royal-mail said:


> And contrary to what someone else posted there are NOT lots of rentals out there. Vacancy rate is at historic low, around 1% or less right now. When you whittle down the ones that don't work for various reasons (ie. no pets allowed when you have a cat, no parking available, dumpy place, bedbug tower this or that etc etc) you are not left with many options.


Where are you TRM? In the last CMHC report, vacancy rates were in the 2% range for most cities... And that overstates a bit the difficulty in finding a place since some will come up for rent and then a new tenant will be found without a vacant period. E.g. in Toronto the vacancy rate was 2%, but the availability rate was 4%.

I thought we were pretty picky, and it did take us a few months to find a new place last time we moved (actually, 2 places, but that's a long story full of sighs), but even then in any given month there were a half dozen or dozen candidates to check out. There aren't nearly as many detached or townhomes in the rental market as there are for sale... but if you only need to find _one_, and you're concerned about property valuations, it can be done.




I'm Howard said:


> Both of my Boys were born at St Joes, and I actually thought of retiring there due to the attractive prices on homes, but overall we find the city boring.
> 
> I visit at least six times a year, we still have relatives there and my Dad lives in Tillsonburg, but we find a lack of things to do.



Well, you know what they say about London: Great place to live, but I'd hate to visit there.




marina628 said:


> I see many negative comments on real estate here but I am confident before end of 2011 I will buy another investment property .At least 50% of my net worth has been with Real Estate.


And while I may disagree as to whether RE is a good investment, you're well diversified so even if I'm right, it's not going to hurt you much. I only jump and scream at the kids my age or younger who have negative net worth, all exposed to RE, and vulnerable to interest rate risk 




> I have made about $100,000 off my current house in the two years we signed contract with builder to build it .The house took 15 months to build and by time we took possession of it ,it went up $55,000 according to our bank appraisal.



Well, preconstruction's also a bit different: you _should _make an appreciable gain on it, since you're taking on additional risks (delays, buying sight-unseen, etc.) vs something that's already in existence.


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## I'm Howard (Oct 13, 2010)

Vancouver without the scenery is not as attractive as Regina, Winnipeg, or Saskatoon.

You don't tan in Vancouver, you rust.

Traffic is a nightmare.

London is not the city I left, but its' drivers are still amongst the worst in Canada , they have this thing about not signalling.

Muskoka's are five hours from there.

75feet of lakefront property in the Georgian Triangle will sell for about $450,000, with a knock down on it.

Million Dollar homes in this area are increasingly the rule and not the exception.


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## dogcom (May 23, 2009)

Howard does the words "freezing your *** off" mean anything to you. Some may like a sunny cold as hell climate but I find it to dry and hurts all the skin on my body. I like the moisture but not to much, so if you live in the south like Richmond, Whiterock and Ladner and so on the rain is not that big of a deal out there. 

Traffic is a problem if you let it be a problem. I work where I live and can take skytrain to go into Vancouver. Traffic is a problem in every big city and is something people don't account for when buying a cheaper house. People don't think about the car mortgage you pay if you live to far away and trust me mortgage is the right word to describe those horrible costs.


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## Sherlock (Apr 18, 2010)

hboy43 said:


> You can choose to have that 50 inch TV now or in 5 years or never. You ultimately in Canada can choose to be wealthy or poor. I maintain that in Canada anyone from the custodian to the MD can choose to be wealthy or poor. Most value the big TV/house/car/whatever (impressing others?) more than being wealthy, so they choose poor.


To be fair big TVs are no longer that expensive. I saw 50" plasmas going for $500 this boxing day. Considering how long a TV will last it's not exactly something that should be considered an extravagant purchase that only the wealthy have any business buying. I bought me a 40" Toshiba LCD for $500 this Christmas. If it lasts 10 years that is $50/yr, a negligible expense even to me on my average salary, well worth the enjoyment I get from it. TVs have come a LONG way in the last few years with the introduction of digital broadcasting and high-def. Most of the channels in Toronto (and Buffalo if you got a good antenna) broadcast at 1080i which is VERY high quality, much better than DVD quality and after you watch it you can't go back to watching old TVs, it's as if the person on the screen is standing right in front of you. Live a little and buy yourself a big high-def TV, you won't be disappointed!


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## Sherlock (Apr 18, 2010)

the-royal-mail said:


> I believe it's reasonable to expect a neighborhood that suits me but c'mon, $300K? The average person simply does not have the kind of salary needed to pay for this type of mortgage or even save the downpayment.


You think 300k is high? I WISH I could find a detached bungalow for 300k, I'd probably buy right now even though it would be about 6x my salary. A 30 year old detached bungalow averages around 800k in any neighborhood within a reasonable ( < 20 mins) commute to where I work. The only thing 300k will get you is a 1 bedroom condo. And that's not even downtown Toronto, only North York.

Typical example, this 1 bedroom condo for 400k in bayview village (a boring neighborhood with nothing close by except an ikea and a mediocre mall, full of old people and 40+ year old houses): http://www.realtor.ca/propertyDetails.aspx?propertyId=10224578

But hey, it's got stainless and granite! 

I really hope a MAJOR price crash occurs to bring those prices down to something reasonable! I don't even care if a lot of people lose a lot of money, they have no one but themselves to blame for overextending themselves like that.


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## jamesbe (May 8, 2010)

$400K and $350 a month in condo fees... that's like paying $500k


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## kcowan (Jul 1, 2010)

dogcom said:


> Howard does the words "freezing your *** off" mean anything to you. ...


Sounds like a synonym for skiing Blue Mountain. That cold damp wind howls in over the water. My son who snowboards and lives in the beach area of Toronto goes to Revelstoke to ski.

Also the water never really warms up in the summer because of currents and winds.


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## loggedout (Dec 30, 2009)

It's not just high house prices...that's but one problem. Canada's "middle class" will continue to shrink, until all that we are left with are the filthy rich and the impoverished. In Ontario, the jobs that supported the middle classes are disappearing and are unlikely to ever come back, only to be replaced by lower paying, largely part time work. This is worrisome because it is easier to deal with nothing when you've always had nothing, but when people have grown accustomed to a lifestyle, it will no doubt be a difficult transition to make for many, many people. I can only predict that this combination of adjusting to lowered expectations, loss of jobs, and the decline of family will result in increasing levels of crime and other social problems. 

Our debt-fueled consumer driven economy based on the assumption of ever increasing home equity and growth in the economy is on the verge of collapse. It's a house of cards, and once the RE market crashes, it will be very hard times ahead.

R.I.P. the middle class.


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## K-133 (Apr 30, 2010)

jamesbe said:


> $400K and $350 a month in condo fees... that's like paying $500k


What's your point?

($350/month)* (12months/year) / ($400,000) = 1.05% of home value / year. 

The cost of maintaining an average home is 1-2%/year.


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## jamesbe (May 8, 2010)

Really? I've never spent anywhere close to that on maintenance, especially on a new place.


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## andrewf (Mar 1, 2010)

K-133 said:


> What's your point?
> 
> ($350/month)* (12months/year) / ($400,000) = 1.05% of home value / year.
> 
> The cost of maintaining an average home is 1-2%/year.


Keep in mind that not all typical house repairs are covered by the condo. Almost all interior work, for instance.


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

loggedout said:


> It's not just high house prices...that's but one problem. Canada's "middle class" will continue to shrink, until all that we are left with are the filthy rich and the impoverished. In Ontario, the jobs that supported the middle classes are disappearing and are unlikely to ever come back, only to be replaced by lower paying, largely part time work. This is worrisome because it is easier to deal with nothing when you've always had nothing, but when people have grown accustomed to a lifestyle, it will no doubt be a difficult transition to make for many, many people. I can only predict that this combination of adjusting to lowered expectations, loss of jobs, and the decline of family will result in increasing levels of crime and other social problems.
> 
> Our debt-fueled consumer driven economy based on the assumption of ever increasing home equity and growth in the economy is on the verge of collapse. It's a house of cards, and once the RE market crashes, it will be very hard times ahead.
> 
> R.I.P. the middle class.


Exactly. No friggin' way can the middle class afford a $500K mortgage plus the taxes and vulnerability to cash-strapped municipalities that turn to residents as their ATM. There are simply not the available jobs in our economy to support a mass middle-class migration to the higher salary positions. Not everyone is cut out for mgmt or director-up positions and many middle class jobs don't really have a lot of upward mobility options in our skills-based economy. 

The middle class is bearing the brunt of these insane prices (as well as ever increasing taxes like GST, HST, healthcare tax etc etc). As I said, no way can we pull off a $500K mortgage, whether married or not. Please do not (this isn't direct at logged) suggest that this problem is solved by the middle class simply taking courses and upgrading their skills. The problem is much bigger than that.


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## andrewf (Mar 1, 2010)

Pet peeve: GST/HST has not been 'ever increasing'. GST has been lowered by 2 ppt over the years, for instance. Let's not play fast and loose with the facts while we're engaging in Toronto Sun comment board-style rants.


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## canadianbanks (Jun 5, 2009)

This is a very interesting thread, and from what I saw most posters don't expect any serious correction in major Canadian cities. My personal opinion is that this market is artificially supported by ultra-low interest rates, combined with ultra-irresponsible lending practices enabled by CMHC. I don't expect any changes in the CMHC rules, as this will tank the market right away. However an increase in interest rates of about 2% will bring the average Canadian house prices by 20-25%. I might be wrong about the exact % of the correction, but I'm sure we'll see 2% higher interest rates within a year.


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

Let's not start with your pro-HST stance while you're engaging in your usual brief pick-outs. Stay on topic and write more than one-three sentences for a change.


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## MoneyGal (Apr 24, 2009)

You want him to say it again, but with more words?


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## I'm Howard (Oct 13, 2010)

HGTV has a series Selling New York, which I love, kinda makes TO seem cheap.

Peter Ustinov said Toronto is New york organised by the Swiss.

The ticking Time Bomb for RE is OMERS, the group that all Municipal employees belong to, those Indexed Pensions and increasing sizes and ageing of beaurecracy point to major Property Tax Hikes.

kcowan Blue is a Breeder Hill, for 95% of the skiiers it is adequate, Aspen etc is for the serious few.

15,000,000 people live within a days drive of Collingwood and visitors have gone from 700,000 annually to over 2,000,000.

It is not the cost of the home in this area , but the Tennis Raquet, Golf Clubs, Sail Board, Sea Kayak, Hiking Shoes, Off Road Bike, On Road Bike etc, or you can join the small elite group of Bikers who own Harley's, BMW's etc, and take a few road trips a year.


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## LondonHomes (Dec 29, 2010)

canadianbanks said:


> This is a very interesting thread, and from what I saw most posters don't expect any serious correction in major Canadian cities. My personal opinion is that this market is artificially supported by ultra-low interest rates, combined with ultra-irresponsible lending practices enabled by CMHC. I don't expect any changes in the CMHC rules, as this will tank the market right away. However an increase in interest rates of about 2% will bring the average Canadian house prices by 20-25%. I might be wrong about the exact % of the correction, but I'm sure we'll see 2% higher interest rates within a year.


15 years ago first time home buyers could afford to spend $1000 a month on a mortgage, that $1000 could buy them at $150,000 mortgage @ 10% interest rates. Now with current interest rates that same $1000 a month will buy them a $300,000 mortgage. Thus the price of start homes got pushed up and so did the rest of the market.

In both cases that $1000 / month mortgage still buys them a starter home, it just that the ratio of interest to principle shifted.

The problem for the real estate market is going to come when interest rates rise and that $1000 / month payment is only going to buy a $200,000 mortgage for a start homer.

Now I am simplifying the idea as there will be a buffer since over the 15 years wages will have increased so that $1000 becomes $1500 and can afford a larger mortgage. But the basic points holds is that when interest rates rise housing prices will need to fall.


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## marina628 (Dec 14, 2010)

canadianbanks said:


> This is a very interesting thread, and from what I saw most posters don't expect any serious correction in major Canadian cities. My personal opinion is that this market is artificially supported by ultra-low interest rates, combined with ultra-irresponsible lending practices enabled by CMHC. I don't expect any changes in the CMHC rules, as this will tank the market right away. However an increase in interest rates of about 2% will bring the average Canadian house prices by 20-25%. I might be wrong about the exact % of the correction, but I'm sure we'll see 2% higher interest rates within a year.


I am not sure about 20-25% correction but I do believe interest rates will rise 1.5-2% in next year.I have had variable rates for 9 years or longer but we choose to lock in both our mortgage and investment mortgage in October/November 2010.

People seem to count on 35 year amortization and variable rates .Most banks still require the buyer to qualify for the 5 year posted rates .I think they should require 5% down plus cash to be paid for closing costs/CMHC fees and land transfer fees.People put 5% down but end up owing 105% of purchase price once CMHC gets added to the loan.Back when we bought our first house we had to put 10% down and 25 year was the only option.

Another possibility is if prices continue to go up they will let the 40 year mortgages back and before we know it a 50 year loan !
My daughter is getting a bachelor apartment and will come home on weekends to stretch her legs just so she can save .


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## Larry6417 (Jan 27, 2010)

*Off topic, but what the heck...*

People seem to be bemoaning the fall of the middle-class in Canada. However, by some measures (including government largesse), the middle-class is rising in Canada. See www.neowin.net/forum/index.php?automodule=blog&blogid=41&showentry=1223

This was from 2007, so the number may be slightly worse now. People in the GTA may have a skewed view because the middle-class is shrinking rapidly in Toronto. See www.cbc.ca/canada/toronto/story/2010/12/15/three-cities-report542.html

It bears repeating: Toronto is not Canada.


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## kcowan (Jul 1, 2010)

Larry6417 said:


> ... Toronto is not Canada.


Toronto is not Canada! Vancouver is not Canada. Ottawa is not Canada. Calgary is not Canada.


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## hboy43 (May 10, 2009)

Sherlock said:


> Most of the channels in Toronto (and Buffalo if you got a good antenna) broadcast at 1080i which is VERY high quality, much better than DVD quality and after you watch it you can't go back to watching old TVs, it's as if the person on the screen is standing right in front of you. Live a little and buy yourself a big high-def TV, you won't be disappointed!


Television is not something I suffer willingly. I regrettably end up in front of one way more than I want to due to my spouse. She went away for 4 or 5 weeks one summer, and the TV was on here under 2 hours total in that time. Juts watching the news at noon while eating lunch.

I am a print man.

Ironically, I think I have an application for a big TV. I gave my buddy the 100+ year national geographic DVD set recently because he's a good guy. The both of us don't care for trying to view it on a laptop. To get the print large enough that we can read it, means scrolling all around the place. This is definately not the equivalent experience of having a physical book in your hands. I am pretty sure any modern TV can be a computer monitor, so If I can suss out the details, I imagine that the two full pages of NG could be on screen with sufficient size and resolution such that we old guys could read it.

hboy43


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## I'm Howard (Oct 13, 2010)

My wife is a voracious reader, you will have to break her wrists to get Her Kindle away from Her.

Print size is ajustable, new books within second, you don't have to cut down a tree or fill the recycling bin.


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## Jon_Snow (May 20, 2009)

Love the Kindle as well... the real kicker is the FREE 3G internet browsing.


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## Murph (Sep 9, 2009)

the-royal-mail said:


> Good post, Howard. Makes sense and you are right. I should just clarify that I don't need or desire a mansion or even a "high end" house. 10-15 years ago for example, I was looking for what was typically $150K. Nice neighborhood, newer single detached house etc. Today those same houses seem to START at $250K as a bare minimum, in a comparable city.
> 
> </rant off again>


It's called inflation and the basic problem is that salaries haven't kept up with the pace of inflation. That's why you see two income families struggling to pay the rent and make ends meet...


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