# Looking for 'expert' advice? There's no such thing!



## indexxx (Oct 31, 2011)

Just went on to market watch to read a few stock articles and the first thing the front page tells you is five conflicting headlines.
http://www.marketwatch.com

1. "These telltale indicators suggest stock prices are topping"
2. "S&P hasn't done this in 40 years- and it's a bullish sign"
3. "Goldman Sachs say stay away from stocks for the next three months"
4. "There may be no looking back from here for the S&P"
5. "How to make August the best month of the year for stocks"

Whew- So here we have the first message saying that the bull market is likely over. Then we hear there is a technical indictor that things are turning bullish. Next G/S tells us to keep away from stock until November. But then its 'no looking back' for the stock market, and finally we can only assume that G/S must be wrong, because August could be the best month of the year! 

And these are people who are getting paid to be 'experts' on the markets, writing for Marketwatch. At least the last article had self-referential truth upon reading it- nobody has any idea what's going to happen and we might as well base our prognostications on the price of butter in Bangladesh. All of these articles are the online equivalent of predicting the future with chicken entrails. How are these people getting paid to write this stuff? And where do I sign up??

Just random thoughts on a Monday night.


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## Beaver101 (Nov 14, 2011)

indexxx said:


> Just went on to market watch to read a few stock articles and the first thing the front page tells you is five conflicting headlines.
> http://www.marketwatch.com ... ... And these are people who are getting paid to be 'experts' on the markets, writing for Marketwatch. At least the last article had self-referential truth upon reading it- nobody has any idea what's going to happen and we might as well base our prognostications on the price of butter in Bangladesh. All of these articles are the online equivalent of predicting the future with chicken entrails. *How are these people getting paid to write this stuff? And where do I sign up*??
> 
> Just random thoughts on a Monday night.


 ... sign up? It's about being in bed with someone who went to bed with someone else. 

How about changing channels (or pages) to National Geographics or Planet Earth or better yet, offline and read a book and enjoy a glass of warm milk with Oreo cookies on the side instead? Help sleeps better ... try it for Tuesday's night. :smilet-digitalpoint


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## carverman (Nov 8, 2010)

indexxx said:


> Just went on to market watch to read a few stock articles and the first thing the front page tells you is five conflicting headlines.
> http://www.marketwatch.com
> 
> 1. "These telltale indicators suggest stock prices are topping"
> ...


None of these so called self appointed "experts" who think they know what the markets will do, are accurate enough that their words can be trusted all the time as the gospel truth for investors. 

So, what is an expert really in the sense of the term? Perhaps a brain or heart surgeon, because that's all he (or she does), for a living and they have to be able to perform their duties as flawless as possible..otherwise the patient develops complications and dies. No one else who is lesser qualified in that field can perform these
kind of delicate operations.

Now take a pathologist examining the remains of a dead body in various stages of decay..can you call them
an "expert" as they carve up the cadaver to see what happened? 

A money market/investment financial "expert" pundit is just that..it's just their opinion based on some misguided or misinformed facts they get from other pundits reading the other pundits opinions. 



> pun·dit
> noun
> 1.
> an expert in a particular subject or field who is frequently called on to give opinions about it to the public.


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## Just a Guy (Mar 27, 2012)

It's not hard to predict the future sometimes, what is hard is knowing the timing of it, as many factors play a role in that which we can't control.

For example, I know that the housing market is overpriced. Many things contributed to it getting to this stage, and I know it needs to correct.

The biggest factor which allowed prices to rise so much was the lowering of interest rates. 

Since a rough "rule of thumb" is for every 1% rise in the mortgage rate, your payment will increase nearly $100/month for each $100k you've borrowed, it's pretty easy to predict that many people won't be able to afford their current homes, let alone bid up he prices going forward once interest rates increase.

In fact, since most people can't afford the payments, many houses will go into foreclosure, the market will be flooded, and prices will take a major hit. We've even had proof that this happens when we look at what happened in the USA around 2007 when people were no longer able to refinance their properties to avoid huge interest rate increases in their "balloon payment" mortgages.

If we go back to historical lending rates of 2.5-3 times earnings, and look at the average income for Canadians($50k according to stats Canada) then the average house price should be $150k for a single person and maybe $300k for a dual income family...not the current $450k (also from stats Canada).

So, making a prediction to say real estate will correct, somewhere between 33% and 66% once interest rates start to rise, is very logical to someone who understands math and the history of real estate. 

However, for people who've only been in real estate for the last 20 years, while interest rates have been on a steady decline and housing prices have been climbing at unpressidented rates, I probably sound like a tin foil wearing crank, and will continue to sound that way until interest rates start to rise and we see if I'm right.

Of course, I've got no control over the interest rates, and they continue to fall with no signs of increasing...so, am I crazy or an expert? You get to decide, of course you are gambling with nearly half a million dollars on average, so I'd think you want to be right, especially as most people can't afford to be wrong.

As you can see, I've got valid reasons why I believe something will happen however, since I can't control the trigger, and nothing has happened in 20 years and counting, I probably sound like a fool. You can't control the market, at least not legally.


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## canew90 (Jul 13, 2016)

What they are Expert at is Making Headlines. It's not that they are actually giving expert advice, they are trying to grab your interest because they are getting paid to do so. Same with the Financial Post, just Noise.


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## humble_pie (Jun 7, 2009)

canew90 said:


> What they are Expert at is Making Headlines. It's not that they are actually giving expert advice, they are trying to grab your interest because they are getting paid to do so. Same with the Financial Post, just Noise.




but canew look how you yourself love-love-love the media in reality .each:

here you are only last week, promising that you'll slavishly follow one of the opinion makers, just as soon as the media reveal his newest opinions:




canew90 said:


> Read Rosenberg's current feelings:
> 
> http://www.businessinsider.com/david-rosenberg-warns-of-recession-2016-6
> 
> Been waiting to add to my positions when it happens.



.


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## carverman (Nov 8, 2010)

Just a Guy said:


> It's not hard to predict the future sometimes, what is hard is knowing the timing of it, as many factors play a role in that which we can't control.
> 
> For example, I know that the housing market is overpriced. Many things contributed to it getting to this stage, and I know it needs to correct.
> The biggest factor which allowed prices to rise so much was the lowering of interest rates.
> ...


That is pretty much a "given" even at this point in time JAG. The over inflated housing bubble in Toronto and Vancouver will at some point have to take a serious market correction because the selling prices and mortgages are getting (almost) beyond what a working couple can afford these days.

Add to the mortgage payments on these "million dollar older homes that have been renovated and flipped, or bought and flipped after the new owner lives in it for one year (or just has his mailing address
changed the new home) to escape capital gains. All sorts of games going on these days in the real estate market due the lowest mortgage interest rates many in years.

Lets not forget property taxers are constantly on the rise these days due to the resales. MPAC doesn't
even have to pull numbers from general market values in a given area..they use the sale price of the
home for the current assessment. Add to that,higher property insurance rates,increases in electricity
rates and home heating (carbon tax in Ontario) and you have a recipe for an upcoming event of some kind. 

I know that because my mothers house is now worth around $650K or even more (it's in East Toronto area) Danforth/Woodbine, a predominately older home area, but that doesn't stop the speculators from buying, renovating and flipping for a much higher resale price than these homes are realistically worth.

The house next to my mothers just recently sold for 800k. it has a tiny LANDLOCKED back yard, hardly any front yard and no driveway or garage. Is it really worth $800k in todays housing market?..I don't think so, but that's what people will pay for these old renos, that are within walking distance of the subway.



> In fact, since most people can't afford the payments, many houses will go into foreclosure, the market will be flooded, and prices will take a major hit. We've even had proof that this happens when we look at what happened in the USA around 2007 when people were no longer able to refinance their properties to avoid huge interest rate increases in their "balloon payment" mortgages.


This market correction happened Toronto in the mid 80s as well. It was triggered by a recession, where homeowners who bought towards the peak of the housing bubble lost their jobs, and had no choice in a depressed real estate market to sell higher than their mortgage and were forced to "walk away" from their homes, given back to the banks, who held the high mortgages. That meant the banks having to resell the house through a power of sale (mortgage default), at at much lower market value. In some cases what the banks finally got was no near what the original unpaid mortgage balance was.

I heard that some banks went after the mortgage defaulters for the remainder of original mortgage by suing
them. A contract is a contract after all, and if you sign the mortgage contract with the bank, you are on the hook for making sure they get their interest and principle the banks are entitled to.




> If we go back to historical lending rates of 2.5-3 times earnings, and look at the average income for Canadians($50k according to stats Canada) then the *average house price should be $150k for a single person and maybe $300k for a dual income family...*not the current $450k (also from stats Canada).


So what does the current situation tell us?. A lot of homeowners are in a false sense of security by over extending their income levels..and it won't take that much to push them over the brink. 



> Of course, I've got no control over the interest rates, and they continue to fall with no signs of increasing...so, am I crazy or an expert? You get to decide, of course you are gambling with nearly half a million dollars on average, so I'd think you want to be right, especially as most people can't afford to be wrong.


Nobody can predict the future or even what can happen in the next mortgage renewal term of 5 years down the road.
Most people just plod along on blind faith that it will all work out for them in the end.



> As you can see, I've got valid reasons why I believe something will happen however, since I can't control the trigger, and nothing has happened in 20 years and counting, I probably sound like a fool. You can't control the market, at least not legally.


JAG, nobody can control what will happen or the trigger. Just because it hasn't happened in the last 20 years (as you say), doesn't mean it WON'T HAPPEN in the next 20 years. 
World economics is constantly changing, we are not as isolated economically as we were 20 years ago..look at what happened to Alberta counting on massive oil revenues as the oil prices tumbled last year forcing an economic recession in that province and a lot of personal bankruptcies because everyone
went along for the ride, buying on credit..never thinking what could happen to them down the road.

These so called economic 'experts" didn't give any warning this was going to happen ..two years or even a few months before it happened!


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## canew90 (Jul 13, 2016)

humble_pie said:


> but canew look how you yourself love-love-love the media in reality .each:
> 
> here you are only last week, promising that you'll slavishly follow one of the opinion makers, just as soon as the media reveal his newest opinions:
> .


Yes, I do read many articles, but I don't believe I said I follow the advice given. Do hope there will be a correction so I can add to my holdings.


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## CPA Candidate (Dec 15, 2013)

The financial media should be viewed simply as a source of entertainment. I hope nobody takes any of it too seriously.


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## Just a Guy (Mar 27, 2012)

Carverman,

While you agree with what I said, I can show you numerous people who don't agree with me one bit. I've been saying there needs to be a correction for upwards of 10 years (though it hasn't stopped me from buying), and some people feel I'm a "chicken little". 

People want to know what's going to happen "right now" so they can profit from it. It's pretty impossible to make those kind of predictions, and no one wants have to wait for years. 

With enough talking heads taking up random predictions, some will hit a winning streak and be able to claim their an expert. 

The same as the "investor" who basically buys random stuff and gets a hit. They aren't experts, they have no knowledge, but they have success. 

The real investors usually don't hit home runs often, but rather try to get on base every time they step up to the plate. Not exciting, so people grow bored.


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## carverman (Nov 8, 2010)

Just a Guy said:


> Carverman,
> While you agree with what I said, I can show you numerous people who don't agree with me one bit. I've been saying there needs to be a correction for upwards of 10 years (though it hasn't stopped me from buying), and some people feel I'm a "chicken little".
> 
> People want to know what's going to happen "right now" so they can profit from it. It's pretty impossible to make those kind of predictions, and no one wants have to wait for years.
> ...


*

JAG,being involved in Real Estate, you should know this.
Talking heads are just what these experts are..nothing else...if their predictions don't come to fruition, they can blame something else that prevented it from happening. Even in a depressed economy such as housing bubble collapse, or at least a slow downward spiral of real estate prices, there are always winners and losers.

In a speculative market where real estate price soar due to high demand, the ones that sell at the beginning and take their windfall to their banks are the winners. In a depressed market, where the economy suffers and so do the wage earners who need those jobs to support all their borrowing will always end up losing. 

Why? Because nobody really can predict the future, and can only look back what has happened in the past. In most economies there are boom and bust cycles, and a lot of factors affect those cycles, not just low interest rates on mortgages increasing demand for more housing at higher prices.

Now, what would happen if all of a sudden there is no market for our oil, potash, beef and other commodities that we sell to other countries?

Would the prices be lowered just because nobody is buying these products...of course, but only to an extent that the business selling these commodities can afford to drop those prices to stay in businesd, with the consequence of cutting back on their bottom line, which includes in most case jobs first. If a business
in the GTA is not selling their products, the business doesn't need all these idle production line workers]
standing around.

In recessionary times, everyone feels the pinch, even the banks, because unemployed workers don't go out and buy big ticket items like appliances, cars and houses. They go on EI for a while, then deplete their savings (TFSAs/RRSPs if necessary) just to survive the recession until employment can be found again.

If they were unlucky to have bought real estate during the tail end of the boom cycle (high), a bust cycle follows, and lost their job in the recession that follows, they have lost a big chunk of their working lives. Some may still recover, but depending on their age, most will not. That is the sad reality of boom and bust cycles and world economy. 

You cannot always take that to the bank. Random predictions is similar to a game of "Whack-a-mole"...some you may hit with the right (market) timings, others you won't.

Gov'ts will also do their inflationary bit by increasing taxes on just about anything they can get away with. Ontario and BC are good examples of this. Now they are raising the land transfer taxes because of foreign money coming into the major cities like Vancouver area and the GTA. 

Now why on earth would they want to raise taxes on real estate..because they CAN! Greed and speculation in a commodity that thrives on inflationary prices encourages governments to do the same..they want a big chunk of that speculation..both in property taxes based on current assessments of properties just sold and increasing the land transfer tax. 

I'm sure if there was another tax they could think of and get away with legally..they would do it..as some provincial gov'ts have no shame in grabbing as much as they can!


http://www.theglobeandmail.com/real...e-to-tax-foreign-home-buyers/article31114012/*


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## carverman (Nov 8, 2010)

Here is something else profound from the G&M article in my previous post to indicate that there is a lot of speculating on real estate by foreign investors looking to make a "quick buck" off GTA real estate..they are buying up these properties and leaving them EMPTY!



> The number of international buyers snapping up homes in the GTA and leaving them empty has increased this year, Toronto real estate broker Adam Brind said. The market is already struggling with a shortage of available resale listings and prices that have gone up nearly 17 per cent from last year.


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## Market Lost (Jul 27, 2016)

Just a Guy said:


> It's not hard to predict the future sometimes, what is hard is knowing the timing of it, as many factors play a role in that which we can't control.
> 
> For example, I know that the housing market is overpriced. Many things contributed to it getting to this stage, and I know it needs to correct.
> 
> ...


Sorry, but I've been hearing this talk for over a decade now, and it's usually from those who want to be in the housing market, but either can't afford it, or aren't willing to pay the "high" prices. It's actually far from the reality of the housing market in Canada. 

First off, where do you get the information that "most people" can't afford their mortgage payments? Do you know something that the rest of us don't? Since I'm new to this board, I'm not sure if you own a house, or have even applied for a mortgage in the past few years, but it seems you are unaware that the rate they offer you is lower than the rate they qualify you at. I had to qualify at a mortgage rate about 2% higher than I was able to obtain, not that it matters because I'm paying my mortgage off much faster than I need to. Furthermore, anyone worried that they could have difficulty paying a higher rate in the future can lock in for terms up to 10 years. 

As for the "historical" average housing cost you state, this is one of those stats that get tossed around without any context. There are a few things that make this stat meaningless, first off, it is an old average that stopped being true a long time ago. In 1985 the average house in Toronto was 3.41 times the average household income (1). Back then you needed more down, and mortgage rates were around 13% - which was down from the 21% that they were hitting in 1982, which for the record I remember quite well. Furthermore, if you move back in time to the 60's and 70's, you'll remember that there was only one person working in a family, so there was much less disposable income. Not only that, food was a lot more expensive, and was around 20% of a family's after tax income. In fact food was second only to housing costs at this time. You also have to remember that houses back then were not anything like they are now. My parent's first house they bought in the mid 60's was a small bungalow with what you could call a "rustic" interior. We're talking linoleum flooring, one bathroom, no A/C basic kitchen cabinets, and three small bedrooms. It's not exactly what people would consider purchasing today.

I would also like to know where you get the 1/3 - 2/3 correction in prices? I've done a lot of mathematical modeling in my life, so I'd like to know what type of model your looking at, and what your variables are. 

Crank? A little strong, but you certainly have a negative bias that I can't figure out. Again, I've seen this talk for over a decade now, and prices still rise. That's not to say that Vancouver and Toronto aren't due for a correction, Vancouver corrects on an almost regular basis, and Toronto has it's moments, too. However, none of these corrections have been anywhere near what you predict. The worst one I know of was the Vancouver crash in the 1980's where the prices declined 30% from top to bottom - not good, but not as bad as your scenario, and it was only in Vancouver.

1) http://business.financialpost.com/p...-really-cost-that-much-more-than-30-years-ago


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## Market Lost (Jul 27, 2016)

CPA Candidate said:


> The financial media should be viewed simply as a source of entertainment. I hope nobody takes any of it too seriously.


CNBC is the king of this. I was just reading the article warning about the upcoming crash from Peter Boockvar. This is the same "expert" who claimed 2 years ago that the US was in a bear market so we were just seeing a bear-market rally. I must say, that's quite the bear-market rally.


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## Just a Guy (Mar 27, 2012)

Market lost,

First off, thank you for proving my point about people, especially the part about hearing this for the last 10 years...it would probably help if you read what I write a little more closely.

Second, make sure you are actually quoting what I say, not your interpretation or the thoughts of someone else. For example, I never said "most people can't afford their mortgage". I said, that housing prices have risen because rates are currently cheap, if interest rates rise, the increase in payments will make it unaffordable. For example, if the current mortgage is about $400k (taking the average selling price is 450-500k, minus 5-10% down) and it comes up for renewal at 1-2% higher interest, you could be looking at a "hit" upwards of an extra $1000/month. I don't know about you, but many people I know couldn't afford a jump like that.

Also, if you read what I post, you'll see where I get the model for a 1/3-2/3 correction...I gather you just skipped that part.

As for your assumption that I'm negative on real estate, maybe check my other postings, I think you'll find I have probably a few more mortgages than most people, having added 8 properties to my holdings over the past 3 years. Of course, the properties I've bought have been purchased well below market value by an average of about 50%. I know this for a fact, since the bank appraised the, rather conservatively in my opinion, at double what I paid for them after I'd had them fixed up. 

As for the correction of the 80's, the interest rates never hit such a low and prices were never as far out of ratio to incomes back then. A better comparison, had you read what I said, would be the USA during 2007/8 where because people couldn't refinance, and had mortgages with basically no interest payments for half, which then ballooned to say 6% (so their mortgage only "averaged" 3%) suddenly found that they couldn't afford payments on a mortgage they "qualified" for. Many houses fell more than 33% in value.


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## sags (May 15, 2010)

I pay more attention to the old time investors who have a proven track record of success over a long period of time.

The younger "experts" think they are discovering golden nuggets the old guys overlooked.

After the storm passes, some trees are still left standing.

The old guys have survived a lot of storms.


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## sags (May 15, 2010)

I wonder how many people figure they will sell "just" before any market crash, because they will know the precise time to do it.


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## carverman (Nov 8, 2010)

Market Lost said:


> > *First off, where do you get the information that "most people" can't afford their mortgage payments?*
> 
> 
> Interesting discussion here, welcome to the conversation, glad you could join us Market Lost.
> ...


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## carverman (Nov 8, 2010)

Market Lost said:


> CNBC is the king of this. I was just reading the article warning about the upcoming crash from Peter Boockvar. This is the same "expert" who claimed 2 years ago that the US was in a bear market so we were just seeing a bear-market rally. I must say, that's quite the bear-market rally.


You cannot believe these financial pundits..after all they write books to sell an d make a quick buck off other people wanting to read their books to see if it's all true..ah ha!
Years ago in 2002, (and I believe the guy is still around and updating it from time to time), Dan Arnold wrote a book called "The Great Bust Ahead!"..and we are not talking about some part of the female anatomy here. 
This is focused more on the US economic possibilities, but in Canada, whatever happens in the US can also affect us, the exception maybe being the financial fiasco from sub prime mortgages given to people that couldn't afford them in the first place.



> October 2007 Update:
> In* 2002 when this book was published*, in addition to the m*assive depression beginning around the end of the decade*, it forecast:
> 1. The economy, as reflected by the DJIA, would resume its upwards march in late 2002 or 2003. *This is exactly what happened.*
> 2. The DJIA would have a snapback to 13,000 to 14,000 and the FTSE to 6,000 to 7,000 by 2004, but delayed possibly by wars/politics/terrorism/scandals.* This is exactly what happened. *The full snapback was delayed for the reasons described, but the DJIA has closed over 14,100 and the FTSE over 6,700.
> ...


In his book, he mentions that seniors/retirees will make the next significant effect on the overall economy
as their overall spending is reduced and their savings withdrawn from the stock market funds.

His comment:


> It is a well-established fact accepted by all economists that around 65% to70% of the American GDP is simply consumers spending. When national and local government expenditures, first taken in from consumers as taxes of all kinds (averaging about 28% in the US per The Tax Foundation) are included, it is more like 90%. It is therefore only commonsense that the long-term trend of the economy must be controlled somehow by this absolutely massive consumer spending component.
> 
> In the short-term (1 to 3 years) many factors, such as war, terrorism, corruption and scandalous behavior by corporations and the government can seriously affect the economy, *but in the long-term they are always sideshows to the much bigger “hidden” picture*.
> 
> To figure out what is happening in this hidden picture we must look at who we the consumers are with regard to our ability to spend. Obviously, a thousand middle-aged people earning and spending $50,000 a year are going to have a vastly different effect on the economy (GDP) than a thousand 15 year-old teenagers spending an allowance of $1,000 a year. According to data published by the US Bureau of Labor Statistics the group with the biggest spending historically is the 45-54 year-olds.


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## Market Lost (Jul 27, 2016)

JAG, which point was that? The one where you acknowledge that it's been going on a long time?

Perhaps you should read more carefully. You state that they can't afford their mortgage when rates rise, and I wanted to know where you get this information. I wasn't implying they can't afford them now. If you re-read, you'll see that I said that you have to qualify under a higher rate, in fact they have to qualify under the posted rates, which are not much below 5%. I qualified under 4.79%, which is still the posted rate today, even though my mortgage rate is 2.79%. I would also like to know where you get the $400K figure from? The WSJ reported last year the average mortgage in Canada is only $159K(1), while the average first time buyer only pays $293K(2) for their home. BTW, I already pay $500/mth more than I'm required, and could easily afford another $500, but seeing as my mortgage is below $170K now, I don't think that is remotely likely.

Correct, I don't see any place that you post the assumptions, mathematical model, or variables. Would you be kind enough to repost this?

Despite your holdings, your post is incredibly negative in it's outlook. It ranks up there with David Madani, who is still waiting for the crash from what I've noticed. 

You should double check on the Vancouver housing crash, it certainly did crash 30% over a three year period(3). It was far out of wack back then, just as they are now. And no, the US crash is not even close to what we have up here. I followed that one very closely, and I fully expected a huge correction at the time. We don't have NINJA loans being rolled into some obscure CDO, and then sliced into several tranches, and sold off until no one knew where the bodies where hidden. We simply don't have the problems they had in the US. Not to say that Vancouver, and Toronto won't correct, they certainly are primed for it, but not nearly to the extreme you paint.





1) http://www.wsj.com/articles/canadia...verage-of-154-090-in-mortgage-debt-1434427272
2) http://www.canadianmortgagetrends.c...mortgage-debt-the-scales-starting-to-tip.html
3)http://jaybanks.ca/vancouverrealestatenews/2006/07/24/vancouver-estate-prices/


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## Just a Guy (Mar 27, 2012)

The point you proved was that there are still people who'll deny the obvious just because it hasn't happened. 

I did have a posting with the actual links to stats Canada, but it may have been on the other board. Try looking at this thread though...

http://canadianmoneyforum.com/showthread.php/4730-Garth-Turner-s-HouseAggedon/page3

The numbers were all researched. 

As for reposting, I've got nearly 3000 postings, feel free to read them.

As for being negative, that's your interpretation, there's a big difference between knowing a market, as opposed to wanting to believe it's a certain way, and being negative. You own one house, with a relatively small mortgage, if you're wrong it'll hurt, but as you say, you'll be okay. I, on the other hand, have millions of dollars on the line. As an investor, I need to look ahead, way ahead in the case of real estate investing, and make sure I don't lose my shirt.

I'm a big proponent of real estate investing, however, if you read my posts, you'll see I'm very cautious of what to buy given the current market conditions.

As for the "we were different" arguement, as someone who has been actively buying properties yearly, I can tell you back before 2007 the Canadian banks had a lot of mortgages approved that never should have been...we had many "stated income" mortgages which were never checked. I'm sure mortgage u/w could fill you in on some of the silliness that occurred...banks make a lot of money from mortgages, they are insured through CMHC and, had the Feds nock cracked down, I bet they would have continued their free lending ways.


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## carverman (Nov 8, 2010)

Just a Guy said:


> I can tell you back before 2007 the Canadian banks had a lot of mortgages approved that never should have been...we had many "stated income" mortgages which were never checked. I'm sure mortgage u/w could fill you in on some of the silliness that occurred...*banks make a lot of money from mortgages, they are insured through CMHC* and, had the Feds nock cracked down, I bet they would have continued their free lending ways.


True, the banks make a lot of money when the economy an real estate is booming..but who does the CMHC mortgage insurance protect?
If the mortgage borrower (mortgagee?) has less than 25% of the final sale price to put down, (5%) the CHMC mortgage insurance is tacked on as well, and the additional premiums for the mortgage insurance blended into the P&I.

Most homeowners are lulled into a false sense of security that if they have CMHC mortgage insurance, their mortgage is protected and thereby their home, if something should go wrong, like losing their jobs in a bad economy and not being able to pay the mortgage..or some other of life's calamities handed down when you least expect it..you will still come out ok, because you are paying mortgage insurance.



> A lot of folks are under the impression that if their property goes down in value or interest rates go up and they can’t keep up, they can just walk away from the property; CMHC will cover the bank’s behind on the mortgage and everything will be hunky-dory.





> You didn’t think the bank would have given you all that mortgage money without CMHC’s guarantee, did you? Not on your life. You would have had to jump through hoops of fire to qualify for that mortgage if CMHC hadn’t promised to cover the loan.





> Of course that doesn’t mean CMHC won’t come after you for any difference between what a property had to be sold for and what the insurance coverage was originally. Here’s how the process works:
> 
> Once your mortgage has been in default for three months, legal proceedings are started through power of sale and the bank takes possession of your property.





> The bank sells the property and submits a claim to CMHC for any shortfall.
> 
> CMHC gets a judgment against you as the defaulted mortgagor for this shortfall and CMHC tries to collect.



http://www.moneysense.ca/save/debt/your-cmhc-insurance-doesnt-protect-you/


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## Market Lost (Jul 27, 2016)

carverman said:


> Market Lost said:
> 
> 
> > Interesting discussion here, welcome to the conversation, glad you could join us Market Lost.
> ...


----------



## Market Lost (Jul 27, 2016)

Just a Guy said:


> The point you proved was that there are still people who'll deny the obvious just because it hasn't happened.


I haven't crashed my car into a brick wall, does that mean I'm denying it will happen to me? What is obvious is that you have made up your mind of how bad things are going to be, and that not only do I disagree with you, I'm denying reality. This despite the fact that you admit that it's something that hasn't happened in a very long time. That's rather interesting. Can you prove to me there isn't a teapot circling the sun?



> I did have a posting with the actual links to stats Canada, but it may have been on the other board. Try looking at this thread though...
> 
> http://canadianmoneyforum.com/showthread.php/4730-Garth-Turner-s-HouseAggedon/page3
> 
> The numbers were all researched.


Ok, what are you referring to? There are a lot of things you claim, so I'm not sure what I'm suppose to be looking at.
As for reposting, I've got nearly 3000 postings, feel free to read them.



> As for being negative, that's your interpretation, there's a big difference between knowing a market, as opposed to wanting to believe it's a certain way, and being negative. You own one house, with a relatively small mortgage, if you're wrong it'll hurt, but as you say, you'll be okay. I, on the other hand, have millions of dollars on the line. As an investor, I need to look ahead, way ahead in the case of real estate investing, and make sure I don't lose my shirt.


It's rather hard not to interpret someone who claims that the market is just waiting to plunge between 1/3 to 2/3 as anything, but negative. As I stated in my first post, most people that come out as negative as your post are usually the ones who feel shut out of the market. You aren't technically shut out, but you aren't willing to invest further because of the market; it's not all that different.



> I'm a big proponent of real estate investing, however, if you read my posts, you'll see I'm very cautious of what to buy given the current market conditions.


I guess that would count as a positive for some if the market crases, but I don't think there are many in the US that are thinking the crash there was positive.



> As for the "we were different" arguement, as someone who has been actively buying properties yearly, I can tell you back before 2007 the Canadian banks had a lot of mortgages approved that never should have been...we had many "stated income" mortgages which were never checked. I'm sure mortgage u/w could fill you in on some of the silliness that occurred...banks make a lot of money from mortgages, they are insured through CMHC and, had the Feds nock cracked down, I bet they would have continued their free lending ways.


Which banks were giving out stated loans here? I know that I don't have to provide proof of income when I renew my mortgage, but I certainly had to provide plenty of documentation, including my tax assessment, and a letter from my employer when I applied for it the first time.


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## GalacticPineapple (Feb 28, 2013)

An expert is just someone who gets paid to do something. Plumber? Plumbing expert. There are still going to be some plumbers who are much better (and more knowledgeable) of their craft than others.


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## Just a Guy (Mar 27, 2012)

Actually I can prove there is a tea pot circling the sun, there's one in my kitchen. Takes about 365.25 days to orbit, assuming my kids don't break it. 

As for "aren't willing to invest further", what part of 8 properties (three this year) in three years isn't investing...how much real estate have you bought lately? How many mortgages have you negotiated? I expect you should be all over this market. 

Well, as I said, I'm obviously just a talking head with no idea what I'm saying...better to listen to those with a single mortgage, in a single city. They obviously know way more about the world at large, the banking system they had dealings with one time, etc.

I bow to your greater knowledge. 

In all honesty though, I hope you are right and that I am wrong. Of course, we'll only see when interest rates start going up, until they do, I think real estate is relatively safe...but I also have aggressive paydowns on all my mortgages.

P.S. I always liked the quote "an expert is someone who knows more and more about less and less". I find there are several ways to look at that sentence.


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## sags (May 15, 2010)

Home prices in London, Ontario were just released and prices have gone up a little.

The average detached home price is $290,000 and the average condo is $200,000. 

People earn pretty much the same in London as they do in Vancouver.

People are living day to day here and I have no idea how they are managing in places like Vancouver.

I watch when I am out and I see people buying a few dollars of gas with change or having their credit card declined at the register much more often than I used to.

We had a family get together and everyone started talking about how tough times were. A couple families own their homes outright but have nothing saved for retirement.

They were talking about selling their homes for $250,000 and living off the money. 

Some asked me about CPP and OAS, and when I told them what they could expect based on their incomes they said.........."oh, is that all we will get ?"

They are starting to realize that $250,000 and CPP/OAS isn't going to pay for a $50,000 a year retirement for long.

Everyone it seems is finding it tough to either keep up with the bills, help out their struggling kids, or save anything for the future.

I don't care what the experts say about all this. I know what I see and hear.............and trouble is coming.

Anecdotal evidence for sure..........

Just like soldiers in a trench calling back to the general telling him." A storm of bullets are flying over our heads" and the general replying..."yea, well that is just anecdotal"


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## carverman (Nov 8, 2010)

Market Lost said:


> I agree with just about everything, except that I don't see someone with an average salary being qualified for a $600K house on 5% down. In fact, this isn't possible on income alone because you need a household income of over $150K just to have a house in the mid $500Ks with 5% down. People that buy these houses are people that already have a home with a good amount of equity, are very high earners, or have other wealth.


I agree that there are unique circumstances for each case. Lots of homeowners out there may have enough equity to sell their existing homes and upgrade to a better home in an area that is more suited to their lifestyle, so the financial mortgage payment "shock" is not as apparent to everyone. I was just using an online mortgage payment calculator to serve as an example to show what it would cost, IF you had no equity, or other sources of income to make the 25% down payment on a home that was affordable to avoid the extra cost
of adding the CMHC insurance to the monthly mortgage payment. 




> Alternatively, there are a lot of people that are doing this by renting out rooms, or have family members help out. I live in Ottawa, and there are several families that I know of that have parents and children buying a house. They are generally immigrants who are used to this type of living. I think it the creativity of people who are buying houses in non-traditional ways that escapes a lot of the analysis. Even in your well thought-out breakdown, you are making the assumption that people buying are the only ones living in the house, and that they are only using their jobs as a way to pay their mortgage. Although this is the case for the majority of home buyers, there are plenty of houses being sold to people who just don't fit this mold, and that's the reason people like David Madani have been wrong for so long, and will continue to be wrong. Again, not saying there won't be a correction, but not to the magnitude people are certain.


Yes, there are lot of families that live in the same home and rent out rooms or modified basement apartments to supplement their income to pay for all the expenses of owning a home these days. I live in Ottawa these days as well, and for the most part, I haven't seen the kind of real estate speculation that seems to be occurring in the major centres like Vancouver or Toronto, where prices of resale homes (in some areas) are becoming "excessive", well to me at least.

My mother's/brothers house for example. I used to live in Toronto in the early 70s, before I moved out, then back in and later on relocated finally to Ottawa, my home town. In the 70s, I and my ex now, bought a two story tiny house (about 400 sq feet per floor x 2 floors and for $25,000. We lived in it while I worked there and even modified the wiring/plumbing (professional help) to turn the upstairs into an small 3 room apt. 

I think the rent we charged back then was around $100+ and my mortgage (with $5k down, approx 25% down payment ) was in the $250 range per month. From what I remember there was a second mortgage on it that we assumed when we bought the place and soon paid that off.

I sold the house back to my mother (living in Ottawa then) in 1972, for basically what I had put into the mortgage for 2 years, because I had found a new job with Telesat Canada and was being moved to Hanover Ontario. The amount that my mother and I agreed on was somewhere between 3 or $4K. That money was used for new appliances and furniture in the house we ended up renting in Hanover.

Anyway, to make a long story short..that $25k house (with a nice back yard and private driveway) today is valued at over $600k. Only small improvements have been done to it over the years, new windows, roof, electrical upgrade and copper plumbing upgrades.

Over 45 years since we bought it (1971), the resale price is now around 24 times what we original paid for it, if it were to sell today. 
My current semi-detached home here in Ottawa, built in '71, that I bought for $121,500 in 1996, (making 65K+ at Nortel) was recently assessed by MPAC at $247K rising to $285K in 2020. The taxes are around $2700. So in the last 20 years since I bought it, it's resale value is around $285-$289K if I were to sell it today.

This is reasonable property value increase over 20 years of about 2.4 times increase in equity, as Ottawa seems to be a more stable market area because of the government being here. 

That's not the same in Toronto or the Vancouver area, where real estate prices seem to spiral
out of control these days due to low interest rates and foreign speculation. 

In your opinion Market Lost:
*Will the "good times" of low interest rates go on forever? Will the cost of housing in certain major urban centres keep going up and up?*


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## carverman (Nov 8, 2010)

sags said:


> They were talking about selling their homes for $250,000 and living off the money.
> 
> Some asked me about CPP and OAS, and when I told them what they could expect based on their incomes they said.........."oh, is that all we will get ?"
> 
> ...


Sad reality, but so true I'm afraid.

I have a serious mobility issue over the last 10-12 years forcing me to use a wheelchair/scooter pretty much 12 hrs a day.
This past winter when I was hospitalized for a heart condition requiring a pacemaker and a GI major issue, I spendt 10 days in the Ottawa Hospital. 

When I was released, I agreed to temporary convalescence at a west end Ottawa retirement home for assisted living as I was severely weakened and couldn't be at home by myself. I spent 3.5 days in that facility where most of the residents have various stages of dementia.

I lasted only 3 days there because they wanted me to sign papers to pay them $950 a week for assisted care..mostly bathroom duties, which they did not provide over the weekend anyway. 

I refused and checked my self out after 3 days instead of the month that I was supposed to stay there, and got driven home in my wheelchair, struggled up two sets of stairs on my stair lifts, and called a home assist agency to send a PSW worker to look after me each day for the next month. 

The home care agency charged $30 an hr x 3 hrs per day x 7 days..that came out to $630 a week..expensive since I have no insurance and it came out of my own pocket, but still a lot cheaper than $950 a week x 4 weeks ($3,800 per month), for their "assisted living" accommodation at the retirement home. 

Now at that rate, if I had to stay long term in these retirement homes at $3800 a month for assisted living, and had to sell my home at say.... $280K minus real estate fees etc..leaving me about $250k left...how many months could I live in these assisted living retirement homes?

65 months or about 5.5 years! Then they would kick me out and force me to go into a gov't sponsored LTC..where you end up sharing a room with dementia patients keeping you awake all night talking in their sleep or screaming for a nurse.


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## janus10 (Nov 7, 2013)

I'm weighing in on this thread, not because I desire to change anyone's opinion, nor declare myself as an expert - only because I saw so many errors with the arguments put forth that, even if the predictions offered turn out to be true, I wouldn't give credit to those here. I'm not going to exhaustively quote all of the issues I take, just a few of the ones that raised my eyebrows.

In this post, the premise is that there are certain markets in Canada that are overpriced. In fact, I infer that this poster needed only to look at this single data point to be clearly convinced. Personally, I require more than that. There certainly are years of data that support the theory that certain markets are overpriced. On the other hand, if people continue to buy houses at these prices, and are not being forced to, then isn't the market telling us that, for right now, this is what the appropriate value is? It certainly doesn't mean that next month things will be the same.


carverman said:


> I know that because my mothers house is now worth around $650K or even more (it's in East Toronto area) Danforth/Woodbine, a predominately older home area, but that doesn't stop the speculators from buying, renovating and flipping for a much higher resale price than these homes are realistically worth.



A single broker in the GTA was quoted saying there has been an increase in foreign investors buying properties and leaving them empty. The article, nor the broker, specified any detailed numbers. I could not conclude from the information provided that "there is a lot of speculating".


carverman said:


> Here is something else profound from the G&M article in my previous post to indicate that there is a lot of speculating on real estate by foreign investors looking to make a "quick buck" off GTA real estate..they are buying up these properties and leaving them EMPTY!


The following post is quite illuminating. JAG takes issue with being misinterpreted based on previous post. The problem is, that ML quoted JAG using the quote feature. JAG actually posted what JAG denied posting.
What is also interesting is while taking issue with being misinterpreted, ML was admonished for, in essence, portraying the thoughts of someone else. I find it ironic that a single person is postulating on hundreds, thousands, perhaps millions of Canadians without being aware of their individual situations and then criticizes someone for apparently putting words in their mouth.
Secondly, JAG posted a "rule of thumb" that for every 1% rise in the mortgage rate your payment will increase nearly $100/month for each $100k you've borrowed. Not a single person challenged this "rule of thumb". I assume that is why JAG stated that a 1-2% increase in mortgage rate could see a $1000/month "hit" for the example used. Feel free to do the exercise yourselves and see how erroneous that rule of thumb is and how erroneous the example given was.
I couldn't find the "model" or connect the dots to the proposed 33%-67% correction in housing that JAG has predicted and I don't think I "skipped that part". With all of the thousands of postings and hundreds of thousands of words, I'm disappointed that JAG chose the opportunity to be sarcastic rather than detail how the conclusion is that the market is going to correct so dramatically. It did seem to be based on the faulty "rule of thumb", so perhaps JAG will decide to recast the numbers. It also seemed to be based on the idea that house prices should be, on average, $300k not $450k because of historical lending rates, and average Canadian incomes. Even if the numbers quoted are correct, that would only get you the average mortgage, not the house price. My opinion is that the conclusion is built on several faulty, unqualified premises.
Also, I only have had 2 mortgages in my life. So please understand I have very limited experience and I'm not in anyway affiliated with the financial or real estate industries.


Just a Guy said:


> Market lost,
> 
> First off, thank you for proving my point about people, especially the part about hearing this for the last 10 years...it would probably help if you read what I write a little more closely.
> 
> ...



Please also remember that besides only ever having 2 mortgages, I have less than 400 postings. I don't have millions of dollars on the line. I'm not an expert. Heck, I didn't even sleep in a Holiday Inn last night. I also don't try to quote Garth Turner to support any of my points - that is just a personal position. So, I'm closer to being just a guy than maybe JAG is.


Just a Guy said:


> The point you proved was that there are still people who'll deny the obvious just because it hasn't happened.
> 
> I did have a posting with the actual links to stats Canada, but it may have been on the other board. Try looking at this thread though...
> 
> ...



Thumbs up for the following astronomical reference, especially understanding why we have leap years. 
I know, for myself, I have crossed the line when I resort to adding the "I'm older than you are", or "I've done this so many more times than you", or similar, defences. If I add in a sarcastic comment, then I've lost. Respect for myself and any expectation that others should respect what I'm saying.


Just a Guy said:


> Actually I can prove there is a tea pot circling the sun, there's one in my kitchen. Takes about 365.25 days to orbit, assuming my kids don't break it.
> 
> As for "aren't willing to invest further", what part of 8 properties (three this year) in three years isn't investing...how much real estate have you bought lately? How many mortgages have you negotiated? I expect you should be all over this market.
> 
> ...



Finally, my belief is that if interest rates rise, this will be to combat the risk of inflation exceeding BOC targets. For inflation to occur, at some point I would anticipate wage growth to also occur. Of course, that doesn't mean it will occur to keep pace with inflation, but it isn't as though everyone will see their incomes stay stagnant and mortgage payments immediately escalate.

I also didn't see mention of changing demographics. Again, this is just me thinking out loud, but I've personally seen and read that younger people are delaying owning a home. Many are living with their parents longer. Thus, I infer that they will have the opportunity to grow their incomes and their financial well being (e.g. reduce or eliminate their debt and save for a downpayment even if that is only in their RRSPs) before entering into home ownership. Secondly, that could mean that the average homeowner is older and their incomes higher than the average Canadian. So, it may be prudent to factor in average incomes and house prices and mortgages for various age ranges, rather than over all Canadians. 

My wife and I are a single example - early 50's, no mortgage, greater than average house value, greater than average household income. I'd imagine that there are more people like us in their early 50's than in their early 40's, and that there are more like us in their early 40's than in their early 30's. Etc. etc.

If my comments offended anyone, then I apologize, and that was not at all my intent.


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## carverman (Nov 8, 2010)

janus10 said:


> I'm weighing in on this thread, not because I desire to change anyone's opinion, nor declare myself as an expert - only because I saw so many errors with the arguments put forth that, even if the predictions offered turn out to be true, I wouldn't give credit to those here. I'm not going to exhaustively quote all of the issues I take, just a few of the ones that raised my eyebrows.
> 
> In this post, the premise is that there are certain markets in Canada that are overpriced. In fact, I infer that this poster needed only to look at this single data point to be clearly convinced. If I add in a sarcastic comment, then I've lost. Respect for myself and any expectation that others should respect what I'm saying.





> Finally, my belief is that *if interest rates rise,* this will be to* combat the risk of inflation exceeding BOC targets*. For inflation to occur, at some point I would anticipate wage growth to also occur. Of course, that doesn't mean it will occur to keep pace with inflation, but it isn't as though everyone will see their incomes stay stagnant and mortgage payments immediately escalate.


 A well stated opinion JANUS10, and obviously from your age and Canadian demographics, you seem to have some supporting evidence, ( if not partly factual)l, that is enough to provide a valid opinion here on this forum.



> I also didn't see mention of changing demographics. Again, this is just me thinking out loud, but I've personally seen and read that younger people are delaying owning a home. Many are living with their parents longer. Thus, I infer that they will have the opportunity to grow their incomes and their financial well being (e.g. reduce or eliminate their debt and save for a down payment even if that is only in their RRSPs) before entering into home ownership. Secondly, that could mean that the average homeowner is older and their incomes higher than the average Canadian. So, it may be prudent to factor in average incomes and house prices and mortgages for various age ranges, rather than over all Canadians.


The numbers pertaining to specific factors , such as you mention, young people delaying home ownership due to lifestyle or having to save at least 5% for a down payment isn't all..many are deeply in debt due to easy credit and overspending with credit cards on things that our parents used to save for.
That new car (with zero or very low interest rates for a 5yr-7yr financing term is (maybe) just part of the equation why they aren't buying up these..$400K to $600K homes, there are many other personal
and economic factors as well that come into play with age related demographics.

Obviously, a senior owning, lets say a $400K to $600k home isn't going to be spending a lot in their remaining life time of 10-20 years. I am one of these. Most seniors still managing to live in their own homes,are living mortgage free and realizsing the potential of the equity in their homes realized from years of real estate market growth.

When they do finally sell, who is snapping up these seniors homes to flip or wait for an opportunity to sell it when the anticipated prices will rise? The banks and the current BOC regulated prime rate is only part of the equation.

There has to be other factors involved,. otherwise the numbers are skewed. 



> My wife and I are a single example - early 50's, no mortgage, greater than average house value, greater than average household income. I'd imagine that there are more people like us in their early 50's than in their early 40's, and that there are more like us in their early 40's than in their early 30's. Etc. etc.
> 
> If my comments offended anyone, then I apologize, and that was not at all my intent.


No offence taken here, we are all contributing to this topic based on our age and experience.


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## Pluto (Sep 12, 2013)

sags said:


> They are starting to realize that $250,000 and CPP/OAS isn't going to pay for a $50,000 a year retirement for long.


The thought comes to mind, where would they be if they had rented?


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## carverman (Nov 8, 2010)

Pluto said:


> The thought comes to mind, where would they be if they had rented?


There's a TV series on CBC called Schitts Creek.:biggrin: You simply cannot survive these days
on what the gov't CPP/OAS/GIS give you without home equity available or other investments.


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## Just a Guy (Mar 27, 2012)

You're right, I made a mistake...

Scotia bank mortgage calculator...



> For a $250,000 mortgage at 1.00%, 25 years amortization, your monthly payment will be
> $941.95





> For a $250,000 mortgage at 2.00%, 25 years amortization, your monthly payment will be
> $1,058.63





> For a $250,000 mortgage at 3.00%, 25 years amortization, your monthly payment will be
> $1,183.11


Looks like I should have said $50/month. I usually try to air on the side of being conservative, but even I have to admit that's pretty far off, not that I think it's chump change either.

As for the 3000 posts, that wasn't meant as an "I've posted more, therefore I'm right", it was meant as an "this arguement has happened before, too many times, and I get sick of repeating myself". It gets tiring to have some new poster come on and say, I don't believe you, I've got no proof of my own, but you need to prove you're right and I'm wrong. Sort of like the people who start the threads "what are you going to buy? Cause I'm too lazy to do any work, I want you to tell me what I should do to make money". 

As for my statement about not saying things that were quoted, I was referring to the statement which I was attributed which said "people can't [currently - implied, by my interpretation] afford their mortgages", I said people won't be able to afford their mortgages if we see a significant increase in the interest rates.

With increased interest, there will be several other factors such as unemployment which will most likely accompany the crisis...but in trying to simplify the arguement, we leave out many of the details.

I don't claim to be an expert, I just try to share my experience, real estate is not a liquid investment, and it takes a long time to make a return as there are a lot of costs associated with it. Markets can turn on a dime.

I admit I was grumpy yesterday, and I'm sorry I was short. That being said, I get tired of seeing people make, what I consider, mistakes. So many posters come on here talking about their $500k rental which earns $1000/month and will appreciate at 5%/year or spout off quotes like "we're greater than average this, greater than average that..I'd imagine there are more people like us than...". Great arguement...unless you understand what "greater than average" means. The. There are those who say, "well the house on my block went up, so everything is fine". 

Real estate is not a fixed market, there are always exceptions...which is why I can find cheap houses in a booming market and why some people will sell houses for outrageous amounts in a bad market...that doesn't make the exception a rule. Ask the people in Calgary how they are doing. Did they expect to be in this situation say two years ago? Why are foreclosures up? The whisper numbers (the ones not public, but used in the industry) say $1M homes there took a 25% drop in value nearly overnight...of course the public numbers say prices are up...unless you talk to people in Calgary who can't sell and are sending their keys back to the bank...Google jingle mail.

Again, these are only my opinions, I don't claim to be an expert, I admit I was grouchy and that my number should have been $50, not $100. Feel free to ignore anything I say, go out and buy your $500k rentals. Hopefully I'll continue to be wrong. Of course, I've bought plenty of properties from armchair experts and, sadly, I expect that won't change going forward.


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## carverman (Nov 8, 2010)

Just a Guy said:


> You're right, I made a mistake...
> 
> Again, these are only my opinions, I don't claim to be an expert, I admit I was grouchy and that my number should have been $50, not $100. Feel free to ignore anything I say, go out and buy your $500k rentals. Hopefully I'll continue to be wrong. Of course, I've bought plenty of properties from armchair experts and, sadly, I expect that won't change going forward.


What is the saying? 



> A man must be big enough to admit his mistakes, smart enough to profit from them, and strong enough to correct them. *John C. Maxwell*


Your'e all right in my books JAG... (or should I say Just A Nice decent all round Guy?):biggrin: 
(carver holding out his hand for possible tips)

The title of this thread is a bit misleading, "Looking for expert advice"... Are any of us really qualified to be experts in the field of real estate and the state of the economy at the same time? 

I don't think there are too many out there, and most of these self proclaimed experts get it wrong at
least 50% of the time, but still manage to write books so that others can read them to contemplate following their advice..whether they get it right or wrong. 

What category do most of us fall under? Are we just sheep or leaders, and which leaders out their (in their field of expertise) can we really trust?

If some economist was to come along and predict "the sky is falling" tomorrow or next week or the next "Black FRIDAY" stock market crash..."get your money out fast"? 
would you do it on blind faith based on what this "expert" is predicting.

Same with the real estate market...if some big shot banker/economist at a major bank is predicting that interest rates will rise over the next year leading to a depressed real estate market (and falling house prices), would you buy now at the lower mortgage interest rate and negotiate the best deal for yourself at todays "inflated" market prices in some areas?

*OR*

Would you wait, then see if the prediction comes true, then buy more at depressed market prices even if interest rates are higher or possibly even lower at that point.

He who hesitates = opportunity lost?


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## Market Lost (Jul 27, 2016)

Just a Guy said:


> Actually I can prove there is a tea pot circling the sun, there's one in my kitchen. Takes about 365.25 days to orbit, assuming my kids don't break it.
> 
> As for "aren't willing to invest further", what part of 8 properties (three this year) in three years isn't investing...how much real estate have you bought lately? How many mortgages have you negotiated? I expect you should be all over this market.
> 
> ...



Yeah, I think you miss the point of not being able to prove a negative; you should look up Bertrand Russel.

I never said I wanted to be in the market. Nor am I the one saying you can get a NINJA loan in Canada. Are you saying you're actually taking out mortgages when you don't qualify? I also used to work in banking, I was a tax accountant for a wealth management unit, I'd be more than happy to call them and ask them what they think about getting away with not disclosing you income or assets properly. I've had several conversations with the risk management people, and they don't seem to be too worried about their lending policies, or in where the market is heading. 

So renting property qualifies a person as an expert in the realty market? I guess that's exactly why people that proclaim they are experts fail so much.

I've never stated that there won't be a correction. I even stated that Vancouver has corrected quite hard previously. I expect that there will be a correction in both Vancouver and Toronto, but it won't be anywhere near the apocalyptic scenarios that the bears have come out with. I've been investing in one form or another for 30 years, and I've learned the bears are always going to extremes. Even in the last meltdown when the markets lost 50%, you still saw "expert" bears that where telling you it was going to go down a lot further.


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## Market Lost (Jul 27, 2016)

sags said:


> Home prices in London, Ontario were just released and prices have gone up a little.
> 
> The average detached home price is $290,000 and the average condo is $200,000.
> 
> ...


I'm originally from London. I grew up EOA, and it's definitely been hit hard. I remember when GM Diesel, Phillips, Westinghouse, EMCO, Northern, and other factories used to power the economy like few other cities, now they're pretty much gone. 

Still, we have a very different view of things. I still have plenty of friends and family there, and they are all doing well. I'm actually heading their in two weeks, so I'll have to take a closer look. Maybe, I'll see the bullets.


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## sags (May 15, 2010)

If you haven't been in the EOA area for awhile, you will notice it........

If you are out sightseeing on Dundas Street East at night........you will probably see some sights.

I know lots of people who are doing fine as well, but many are just now contemplating retirement with a house and not much else.

All my GM buddies and those who worked in the public service will be fine. It is everyone else that is wondering how they will live.


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## Just a Guy (Mar 27, 2012)

Yes, as a matter of fact, I do remember times when I got mortgages without having to submit proof.a out 10 years ago there was a product for self employed individuals call the declared income mortgage. As self employed people rarely had NOAs which could prove they had sufficient income on paper to qualify, the bank offered you a piece of paper where you stated your income was a certain amount, but no proof was needed. The government got rid of those pretty quick around 2007. 

Even today, I don't technically qualify for mortgages. I get routinely rejected because I have too many properties and my annual income is nowhere near enough to cover all the personal guarantees I've got on all the properties. Yet, somehow, the bank always finds a way to get an exception.

Don't get me wrong, there's more than enough income to support my investments, but my finances are very complicated with many wirite offs, holding companies, reinvestments, etc. and, as far as the bank is concerned, not able to "qualify" to borrow anything on first blush. My current banker has a stack of papers 6 inches high which he uses to qualify me, most bankers can't be bothered as its too much work, it's easier to reject.

You should probably ask mortgage u/w, since he actually works as a mortgage underwriter. He can probably tell you many stories about what really happens. 

As for the teapot, I knew exactly what you were talking about, I just took the opportunity to make a joke since you misquoted the statement.


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## sags (May 15, 2010)

Pluto said:


> The thought comes to mind, where would they be if they had rented?


Renting with a couple million dollar portfolio maybe ?............likely not though. Without forced savings most people would spend it all.

As witnessed by the OECD announcement that Canadians are the #1 personal debtors in the G7 nations.......

We used to set records as world class savers. Now we set records as world class debtors.

Not to worry though. We have tax toolboxes we haven't even opened yet.

We can always socialize...............the debt that is.

Go Justin..........


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## sags (May 15, 2010)

Didn't Home Trust get caught with a big pile of shaky mortgages.........and I think there were other lenders as well.

I also seem to recall that CMHC stopped allowing the banks to insure the mortgages through CMHC and then package and sell them as AAA guaranteed derivatives.

Who knows how many shaky mortgages are insured by the CMHC.


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## Market Lost (Jul 27, 2016)

carverman said:


> Yes, there are lot of families that live in the same home and rent out rooms or modified basement apartments to supplement their income to pay for all the expenses of owning a home these days. I live in Ottawa these days as well, and for the most part, I haven't seen the kind of real estate speculation that seems to be occurring in the major centres like Vancouver or Toronto, where prices of resale homes (in some areas) are becoming "excessive", well to me at least.


I just noticed that you live in Ottawa - I actually live in Barrhaven for the time being. The place is nice, but the backyard could be bigger. 
My tax assessment shows only a 9% increase in my property in three years, so there really doesn't seem to be any speculation. Of course, I hear the people in the Hintonburg area don't see it that way.



> My mother's/brothers house for example. I used to live in Toronto in the early 70s, before I moved out, then back in and later on relocated finally to Ottawa, my home town. In the 70s, I and my ex now, bought a two story tiny house (about 400 sq feet per floor x 2 floors and for $25,000. We lived in it while I worked there and even modified the wiring/plumbing (professional help) to turn the upstairs into an small 3 room apt.
> 
> I think the rent we charged back then was around $100+ and my mortgage (with $5k down, approx 25% down payment ) was in the $250 range per month. From what I remember there was a second mortgage on it that we assumed when we bought the place and soon paid that off.
> 
> ...


What is this "backyard" you mention? ;-)



> Over 45 years since we bought it (1971), the resale price is now around 24 times what we original paid for it, if it were to sell today.
> My current semi-detached home here in Ottawa, built in '71, that I bought for $121,500 in 1996, (making 65K+ at Nortel) was recently assessed by MPAC at $247K rising to $285K in 2020. The taxes are around $2700. So in the last 20 years since I bought it, it's resale value is around $285-$289K if I were to sell it today.
> 
> This is reasonable property value increase over 20 years of about 2.4 times increase in equity, as Ottawa seems to be a more stable market area because of the government being here.


Ottawa has been pretty stable, except there were a few years when the price really shot up. I bought my current house at $278K from the builder, and within 3 years the value had jumped to around $320K. It is now only $349K, which is fine by me as I don't see my home as an investment. 



> That's not the same in Toronto or the Vancouver area, where real estate prices seem to spiral
> out of control these days due to low interest rates and foreign speculation.


Even in Toronto and Vancouver, the gains are often not that bad. I used to live in Markham (working for IBM), and the houses there have shot up a lot in the last 2 years from what people I know there have said. OTOH, I know people only a few KMs away in the north Scarborough whose homes have risen, but at a much slower rate - although it's a lot more than here.



> In your opinion Market Lost:
> *Will the "good times" of low interest rates go on forever? Will the cost of housing in certain major urban centres keep going up and up?*


I know that the rates will increase, but I've known that for so long that I gave up trying to predict it. I bought my house in Ottawa 6 years ago, and I was sure that rates where going up soon, so I locked in to a 5-year term. At the time, rates where poised to jump, but the up trend faded quickly. So, yes they will go up, and if they go past the 5% then you can certainly expect the prices to correct. However, I don't see anything that drastic. Even the risk management people I've spoken to at one of the Big 6 banks don't think the markets will correct more than 10-15% in Toronto, but Vancouver, they say up to 25% may happen. They say the recent stress tests are suppose to give a wide margin of error.


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## Market Lost (Jul 27, 2016)

janus10 said:


> Please also remember that besides only ever having 2 mortgages, I have less than 400 postings. I don't have millions of dollars on the line. I'm not an expert. Heck, I didn't even sleep in a Holiday Inn last night. I also don't try to quote Garth Turner to support any of my points - that is just a personal position. So, I'm closer to being just a guy than maybe JAG is.


I was listening to Garth on the CBC a few weeks ago about housing prices, and trust me, you don't want his support on anything. He was a total jerk to any of the younger callers who said they were going to buy a condo. He even went so far as to tell one young woman that she shouldn't buy a condo because she'll get married and have kids. He then followed this up by telling a young man that his garage was larger than the condo he was looking into. Yeah, that's the kind of "expert" I want on my side.


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## Market Lost (Jul 27, 2016)

sags said:


> If you haven't been in the EOA area for awhile, you will notice it........
> 
> If you are out sightseeing on Dundas Street East at night........you will probably see some sights.
> 
> ...


I thought that Flesh Gordon's was shut down. 

I'll definitely take a look around. I used to attend Clarke Road, so I'm familiar with the area. Mind you it was always an "interesting" area, so maybe I'll know some of the sights.


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## Market Lost (Jul 27, 2016)

sags said:


> Didn't Home Trust get caught with a big pile of shaky mortgages.........and I think there were other lenders as well.
> 
> I also seem to recall that CMHC stopped allowing the banks to insure the mortgages through CMHC and then package and sell them as AAA guaranteed derivatives.
> 
> Who knows how many shaky mortgages are insured by the CMHC.


Home Trust is actually a sub-prime lender, so they are already in the high-risk category. The problem from what I read wasn't their mortgage approval process, but rather there was clear cases of fraud perpetrated by brokers. It's actually not all that big of an issue, at least from what this article seems to indicate.

http://www.canadianmortgagetrends.c...trends/2015/07/home-trust-clears-the-air.html


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## Market Lost (Jul 27, 2016)

carverman said:


> There's a TV series on CBC called Schitts Creek.:biggrin: You simply cannot survive these days
> on what the gov't CPP/OAS/GIS give you without home equity available or other investments.


I don't think there was actually ever a time that this was possible. The last CPP reform actually provided for a higher payout, but at least previous generations had generous pension plans.


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## sags (May 15, 2010)

I think what we sometimes forget as we enjoy low interest rates and oil prices, is that they are the result of very weak economies.

The UK dropped their overnight rate to 0.25% and expanded their QE program. Mark Carney............the steady hand at the wheel.

Many countries now have negative interest rates. An astounding amount of debt is earning nothing in interest.

This is worrisome, as I think it is far more likely that a housing collapse could be ignited by economic problems and lost jobs rather than slightly higher interest rates.

People love their homes and can and will make adjustments in their spending to keep them. 

Losing jobs takes the options out of the home owners hands.


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## janus10 (Nov 7, 2013)

carverman said:


> There has to be other factors involved,. otherwise the numbers are skewed.


Your comment made me wonder if there is another item at play - immigration. My wife comes from a different culture, my stepdaughter's boyfriend, my stepson's girlfriend and my daughter's boyfriend all come from different cultures. In each of these 4 different cultures, it is not at all uncommon for the children to remain at home and, in some cases, get help from the parents to purchase their first home. In one of the cultures, it is not even unheard of that when the child gets married that they move into one of the sets of parents homes. In fact, one my wife's nieces is in a 4 generation household now.

I also anticipate that, in every instance I'm referring to above, the houses (or at least house equity) will be passed onto the children. Since there are multiple children in each family, I think that one child is likely to buy the others out in some fashion. This assumes that the culture of multi-generational living continues to pass along to subsequent generations.

So, how does one factor this into the statistics? Mom and Dad own the home and have the mortgage. Their adult children contribute to the expenses of running the household, but no income shows up on Mom and Dad's returns. So, in spite of what on paper looks like an untenable position, they have no problem comfortably operating the household as a family unit. 

I've seen this very, very common occurrence in the suburbs near Vancouver and Toronto.


At some point, perhaps Mom and Dad and the adult children, with the home fully paid off and enjoying the gain in house value, agree that a child should have their own place. They take out a HELOC to help with a very generous downpayment (e.g. $100-200k), yet still keeping a reasonable monthly loan payment that doesn't cramp their lifestyle.

On face value, you would end up with 2 households which own homes of higher value, and perhaps lower mortgages, than the "math" based on the homeowners' incomes calculates. Context is key and that won't be found in generic statistics.


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## sags (May 15, 2010)

Market Lost said:


> I thought that Flesh Gordon's was shut down.
> 
> I'll definitely take a look around. I used to attend Clarke Road, so I'm familiar with the area. Mind you it was always an "interesting" area, so maybe I'll know some of the sights.


Ha.........I was a Trojan in Grade 9 before heading off to the US. I lived on Churchill Street.


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## janus10 (Nov 7, 2013)

sags said:


> I think what we sometimes forget as we enjoy low interest rates and oil prices, is that they are the result of very weak economies.
> 
> The UK dropped their overnight rate to 0.25% and expanded their QE program. Mark Carney............the steady hand at the wheel.
> 
> ...


Other than offering the oil glut and slowly correcting supply/demand/production imbalance is a significant cause for lower oil prices, I agree.

I believe that we will see rising interest rates happen at a slow enough pace to cause a soft landing, not a crash, *all else being equal*. Certain areas could see a crash (I've not read that Calgary has yet seen a crash - the sales volume is down, but the prices are actually up YOY ever so slightly), but I know the government is trying to put small headwinds into unfettered price escalation.

I read that this recent move by BC to tack on a foreign ownership/investment tax for real estate purchases is unconstitutional. Seems to me that well heeled people could afford a lawyer to challenge this, considering how expensive it would be to simply shut up and pay it.


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## janus10 (Nov 7, 2013)

Just a Guy said:


> You're right, I made a mistake...
> 
> Scotia bank mortgage calculator...
> 
> ...


Very nice post - thanks. I was more surprised, to be honest, with so many very intelligent and knowledgeable people, that no one caught the miscalculation. It is good to question everything and anything and I try to teach my kids to not just take everything they hear, even from me in a subject that I know a lot more about than they do, as gospel. I've been embarrassed too often by my assertions on topics so that humility has finally, thankfully, become a more constant companion.

We all make mistakes, but character is demonstrated from how you show accountability. I've got no issues with you there, either.

As for being grumpy - I've just recently learned that when I'm in a foul mood, I warn my wife before she takes off her shoes when coming home. The last thing she needs is to get blindsided by me for something that had nothing to do with her. Unfortunately, there is no "mood ring" avatar or the like when we post online. One saving grace is we can reread our posts before hitting send - I typically find my posts benefit from the "take it down a notch... or two" filter.

Certainly I understand the frustration with certain types of posts. Some people post to get a rise out of people - I stop taking their bait early on. But, a reasoned contrarian point of view should be welcomed - helps me raise my humility ratio when I find something that counters my previous perspective.

I don't own any REITs, let alone rental properties, as that is not "my thing". I am curious, however - if you are strongly of the opinion that certain markets are going to suffer, why not sell high, buy lower? Why not get out of at least some of your positions and be better positioned to buy into the various markets after the downturn? In other words, how do you plan on hedging?

Funny enough, my wife said maybe we should sell our home now and rent when we received our MPAC statement last month. Isn't it a bubble if she had said, why don't we go out and buy another house? :biggrin:


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## Market Lost (Jul 27, 2016)

Just a Guy said:


> You're right, I made a mistake...
> 
> Scotia bank mortgage calculator...
> 
> ...


It's good that you admitted a mistake. I appreciate that.



> As for the 3000 posts, that wasn't meant as an "I've posted more, therefore I'm right", it was meant as an "this arguement has happened before, too many times, and I get sick of repeating myself". It gets tiring to have some new poster come on and say, I don't believe you, I've got no proof of my own, but you need to prove you're right and I'm wrong. Sort of like the people who start the threads "what are you going to buy? Cause I'm too lazy to do any work, I want you to tell me what I should do to make money".


And as a new poster, I'm not psychic, do you think it reasonable to ask someone to wade through almost 3K of your posts? It cuts both ways.



> As for my statement about not saying things that were quoted, I was referring to the statement which I was attributed which said "people can't [currently - implied, by my interpretation] afford their mortgages", I said people won't be able to afford their mortgages if we see a significant increase in the interest rates.
> 
> With increased interest, there will be several other factors such as unemployment which will most likely accompany the crisis...but in trying to simplify the arguement, we leave out many of the details.
> 
> I don't claim to be an expert, I just try to share my experience, real estate is not a liquid investment, and it takes a long time to make a return as there are a lot of costs associated with it. Markets can turn on a dime.


If it were about employment, then that would be a totally different argument. In addition, markets don't just turn for no reason, and even interest rate hikes aren't that reason, unless they are massive up ticks. Even if the markets do turn, it isn't necessarily a painful process. Do you even remember the prices for detached homes in Toronto plummeting 25%? It happened in 2008 to 2009, where the median home price dropped 25% from Jan 08 to Jan 08. However, since the drop started in Jul 08 and the market totally recovered by Jul 09, people are usually surprised that it happened when they weren't looking. 



> I admit I was grumpy yesterday, and I'm sorry I was short. That being said, I get tired of seeing people make, what I consider, mistakes. So many posters come on here talking about their $500k rental which earns $1000/month and will appreciate at 5%/year or spout off quotes like "we're greater than average this, greater than average that..I'd imagine there are more people like us than...". Great arguement...unless you understand what "greater than average" means. The. There are those who say, "well the house on my block went up, so everything is fine".


So you're sorry people made you angry? While we're at it, can you point out the post in this thread where someone made even one of those claims?





> Real estate is not a fixed market, there are always exceptions...which is why I can find cheap houses in a booming market and why some people will sell houses for outrageous amounts in a bad market...that doesn't make the exception a rule. Ask the people in Calgary how they are doing. Did they expect to be in this situation say two years ago? Why are foreclosures up? The whisper numbers (the ones not public, but used in the industry) say $1M homes there took a 25% drop in value nearly overnight...of course the public numbers say prices are up...unless you talk to people in Calgary who can't sell and are sending their keys back to the bank...Google jingle mail.


Jingle mail, aka strategic default, isn't possible for most people as most loans are full recourse. I don't know why Alberta is an exception, but even in the US jingle mail was all over the media, it was not as common as made out. It may have been about 1/3 of all defaults during the housing crisis, but even that is likely a high number because nobody actually kept official numbers. BTW, the average house has only dropped a little over 4% since last year, so I'm not sure where you get the 25% number from. 

http://globalnews.ca/news/2861023/c...nues-to-cool-board-cites-rising-unemployment/



> Again, these are only my opinions, I don't claim to be an expert, I admit I was grouchy and that my number should have been $50, not $100. Feel free to ignore anything I say, go out and buy your $500k rentals. Hopefully I'll continue to be wrong. Of course, I've bought plenty of properties from armchair experts and, sadly, I expect that won't change going forward.


I'd really like to know who is doing this.


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## Market Lost (Jul 27, 2016)

sags said:


> Ha.........I was a Trojan in Grade 9 before heading off to the US. I lived on Churchill Street.


Small world. I lived down by Hale St, so it was a long walk in the winter. Of course that was a long time ago, I graduated in the mid 80's.


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## humble_pie (Jun 7, 2009)

.

here's a chart for the US case shiller home price index since its debut in 2001. The chart shows a wildly volatile aggregated national index, across 15 years of reliable US statistics.

the present case shiller monitors 20 US cities. The predecessor index, commencing in 1988 & monitoring 10 US citries, appears on the same chart.

there are regional case shiller tracking studies in canada, but for a number of reasons these are said to be slightly less relevant for our country.

from this chart, one would have to say that Just a Guy made a very sound case upthread for volatile home prices across the past 20-25 years, no?


https://www.google.ca/search?q=case...=JrijV5WQPIPYjwT3_7TACg#imgrc=YqS46vhoIUsCbM:

.












.




.


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## Just a Guy (Mar 27, 2012)

Janus, 

I have been tempted to sell some of my holding, however it's not really in my nature. I'm a buy and hold investor by personality. Besides, I buy well below market value, fix them up and then get them financed, so I have none of my own money in them.

My realtor, of course, has been bugging me since he sees the price increases...he says "why not sell and trade up?" I point out that finding things at my price range isn't very common, and that prices of buildings cost more on a per door price than I pay for individual units.

Since there isn't much on the market, I can't replace the cash flow, I don't trust REITs (having managed properties myself I know there are too many ways to hide the money), so I just hold on. 

Of course the capital gains I've been deferring would also be significant, and I don't think the government should get to spend the money instead of me leveraging it to reinvest.

Then there is the issue that it takes a lot of work and time to set up a real estate system. Ask humble about trying to get back in after cashing out...not likely going to happen.

As for the "extreme" interest rate correction, I don't think that'll happen either...but what happens over 5 years between renewals I'd interest rates move up .25%/year...now what happens if it moves up .25 a quarter like it used to move? The interest rate doesn't hit until renewal time...how many people follow it?


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## carverman (Nov 8, 2010)

janus10 said:


> Funny enough, my wife said maybe we should sell our home now and rent when *we received our MPAC statement last month. Isn't it a bubble if she had said, why don't we go out and buy another house?* :biggrin:


 Just got mine last week. My semi was assessed $44K higher than my next door neighbours..same house, same construction and the only difference is my lot being on the corner is 5 ft wider. Both lots are the same depth 100ft.

I have appealed for a reassessment of course...being a senior on a very limited and fixed income living alone, I have trouble some months with the monthly tax payment, which is bound to rise..depending on how successful I am in rolling back the current assessment from$247K (2016) to $285k in 4 years time (2020).

I'm sure that the city, and the province always hungry for more money, will no doubt, raise the mil rate in their next budget to grab some more gold out of my pocket. 

Housing bubble? I guess MPAC thinks so, sitting in their ivory towers in the GTA where real estate prices are spiralling upwards on a month to month basis.
Maybe with the cheapest mortgage rates in years and only a 5% down payment to qualify..shouldn't I sell, and buy something better too and make some money after living in it for a year? 

Is the housing bubble going to burst within the next 4 years? ..MPAC and the citiies don't think so.


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## bgc_fan (Apr 5, 2009)

Funny, mine went down. And I know some areas in Orleans have seen their assessment go down as well.


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## janus10 (Nov 7, 2013)

humble_pie said:


> .
> 
> here's a chart for the US case shiller home price index since its debut in 2001. The chart shows a wildly volatile aggregated national index, across 15 years of reliable US statistics.
> 
> ...


I've been a homeowner (again) since 2001. I don't remember seeing any evidence of such volatility but perhaps I look at it the wrong way. First, I'm not buying and selling (e.g. investing in) real estate, so my focus has been more on paying down my mortgage which has always gone down. Secondly, I've certainly not seen any property tax reductions as each MPAC assessment has shown an increase.

But, moving away from my personal situation, if one graphed the actual value of the US housing over time, rather than this YOY index, it would mask some of the volatility which is perhaps the way my brain is wired. What does the S&P YOY performance look like compared to this index? Show the same level of volatility I assume? I'm not able to quickly find a way to comparatively graph both indices over the last 15 years.


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## janus10 (Nov 7, 2013)

Just a Guy said:


> As for the "extreme" interest rate correction, I don't think that'll happen either...but what happens over 5 years between renewals I'd interest rates move up .25%/year...now what happens if it moves up .25 a quarter like it used to move? The interest rate doesn't hit until renewal time...how many people follow it?


I have no idea how many people have a variable rate mortgage (or HELOC), but they will be impacted sooner rather than later. Then, some people might take the option to move their VRM to a fixed one as they anticipate a trend for rising interest rates. If I'm not mistaken, they will see a jump in the rate to have the bank guarantee the rate for 5 year - so a mini double whammy.


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## janus10 (Nov 7, 2013)

carverman said:


> Just got mine last week. My semi was assessed $44K higher than my next door neighbours..same house, same construction and the only difference is my lot being on the corner is 5 ft wider. Both lots are the same depth 100ft.
> 
> I have appealed for a reassessment of course...being a senior on a very limited and fixed income living alone, I have trouble some months with the monthly tax payment, which is bound to rise..depending on how successful I am in rolling back the current assessment from$247K (2016) to $285k in 4 years time (2020).
> 
> ...


Perhaps I've misinterpreted MPAC. They are suggesting that my house has already gone up 30% in the last 4 years, but they are only phasing in the increase equally over the next 4 years. So, I don't believe that MPAC is telling me anything about the future, only about the present and the past.


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## Just a Guy (Mar 27, 2012)

Have you ever tried to appeal your property tax assessment? Just because the city says it's worth a certain amount, doesn't mean they are right. I routinely appeal property taxes, usually at least in the year I buy something new. So far, I've won every year. I'm not talking a few thousand dollars off either, it wouldn't be worth my time for that, we're talking significant amounts.

I get my realtor to print off a list of properties sold that are comparable to what I'm appealing, I've usually got my bill of sale, and I send that in proving that the price they assessed is too high. So far, I've never lost an appeal in all my years.

Of course, I know a few "experts" who prefer a high tax assessment, they think it's better for selling. Probably makes them feel "richer than they think" as well.

There are some cities that I know who usually assess properties well under market value to eliminate any chance of appeals. Since your payment is based on the relative value, compared to others in the same city. Of course, that doesn't always help in a correction. I remember once, even with their conservative estimates, the market corrected quite suddenly and dramatically and they had a record year of appeals which they had no system in place to handle as they thought they were too clever to get many appeals...

As for variable mortgages, they are the best mortgage to have when interest rates are falling or stable by far. No question about it. Of course, 5 year fixed is the most profitable for the bank. Guess which one is the most commonly held?

Of course, in rising interest rates, variable is one of the worst mortgages to hold.

Btw, even if you lock in for 5 years, what happens at renewal time?

Oh, did you ever read your mortgage documents? Did you see the clause which says if your property LTV ratio changes the banks can demand a onetime payment from you to bring the LTV back into line or foreclose on you? While banks generally don't care if your property is underwater as long as you make your payments, what happens if the bank starts to panic and decides to enforce such clauses?


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## carverman (Nov 8, 2010)

janus10 said:


> I've been a homeowner (again) since 2001. I don't remember seeing any evidence of such volatility but perhaps I look at it the wrong way. First, I'm not buying and selling (e.g. investing in) real estate, so my focus has been more on paying down my mortgage which has always gone down. *Secondly, I've certainly not seen any property tax reductions as each MPAC assessment has shown an increase.*


MPAC assessments are on the rise expecting that the housing markets will ensure the property values on on the increase for each assessment. I just got mine and it's a phased in assessment with my property values being assessed at $247k (semi-detached) and "this municipal property tax assessment impact" notification today from the city of Ottawa;

for 2016 $247K taxes $2,135 Annual increase/augmentatiion $63
for 2017 $256.5K taxes $2,198 * Annual increase/augmentation $62
for 2018 $266.5K taxes $2,260 * Annual increase/augmentation $62
for 2019 $275.5K taxes $2,322 * Annual increase/augmentation $60
for 2020 $285K taxes $2,382 * Annual increase/augmentation $60
* city set municipal taxes, does not include the education taxes set by the province

% change in property value 15.38% for 2016 over 2015 
Annual phase in impact $9,500 (3.85%)
Ottawa's average residential change is 3.45% Average change in my ward is 3.49% 

So based on this MPAC assessment data; is it correct to assume that my assessment will rise $9500 per year at a 3.85% change in property value? 

Over the next 10 years 2016-2026 the assessed value should go up by $95,000 on average, 
unless MPAC comes up with new market data to increase the average assessments by even a larger change.

If so, for 2026, I can expect my property value to be around $247K + $95K(annual assessment increase over 10 years) = $342K.

If the average selling price in my ward area is at least $25K above assessment , my home in 30 years, will have increased in market value from $121.5k ( bought in 1996) to roughly $367K to $370K when I am ready to sell for health reasons. 

Other than a new furnace;hot water tank requirement in the next 10 years, and a further ($5K to $6K investment for these), I can live here for another 10 years and reap the benefit of home ownership/equity. 
So according to MPAC the housing bubble (if you want to call it that in Ottawa) will continue slowly and surely with no market correction. Would I be correct in assuming that?


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## carverman (Nov 8, 2010)

Just a Guy said:


> Have you ever tried to appeal your property tax assessment? *Just because the city says it's worth a certain amount, doesn't mean they are right.* I routinely appeal property taxes, usually at least in the year I buy something new. So far, I've won every year. I'm not talking a few thousand dollars off either, it wouldn't be worth my time for that, we're talking significant amounts.
> 
> I get my realtor to print off a list of properties sold that are comparable to what I'm appealing, I've usually got my bill of sale, and I send that in proving that the price they assessed is too high. So far, I've never lost an appeal in all my years.


You mean MPAC, not the city..the city just sets the tax increases for each budget.

I'm appealing my assessment right now. My next door neigbour who owns the other half of the building (semi-detached) is assessed at $44K less than my property. 
The only difference between the two halves of the semis is that my frontage is 5 feet wider than hers. 
The length of the lots are the same. 
My side is adjacent to a side street (corner lot I suppose) but the other house on the other side of the side street (also a corner lot is still assessed below mine), so there are big descrepancies in the MPAC assessments. 

It's easy to find out assessed property value from MPAC, if you register with them , log into your acct and provide your tax roll number.
You can look at other homes in your area (MyProperty) and (MyNeighbourhood) and compare what other homes on your street or even a couple streets down from you are assessed at.


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## janus10 (Nov 7, 2013)

Carverman, when I look at my MPAC, the value that they say my property has been assessed, as of Jan 1 2016, is probably very close to the actual value of the home. However, for 2017, I'm only paying for 1/4 of that increase from the last 4 years. In 2018, I'm paying for 1/2 of that increase, and for 2019 it's 3/4. The reason is that they are only phasing in the increase over the next 4 years.

In other words, I reap the "benefit" of paying taxes on a home that is significantly higher than the assessed value they are putting on it. That's why I say they are not making any statement about what the future value is.

Using nice round numbers for an example to make it easy:

MPAC assessed value of your property as of Jan 1 2016 is $1,200,000
MPAC assessed value of your property as of Jan 1 2012 is $800,000

Tax Year............Assessed Value
2016.................$800,000
2017.................$900,000
2018.................$1,000,000
2019.................$1,100,000
2020.................$1,200,000

So, did your 2020 value of $285k match what they said is your value as of Jan 1 2016?


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## Market Lost (Jul 27, 2016)

For everyone on the thread, looks like we may have an opportunity to see what the downturn in GVA is going to be like a lot quicker than we could imagine. BNN, is reporting that the number of sales have plummeted after the announcement.

http://www.bnn.ca/vancouver-agents-say-home-sales-plunge-in-wake-of-new-foreign-buyer-tax-1.538610


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## carverman (Nov 8, 2010)

janus10 said:


> That's why I say they are not making any statement about what the future value is.
> 
> Using nice round numbers for an example to make it easy:
> 
> ...


The homes in my area of west end Ottawa have been traditionally lower in actual selling prices over the last 20 years since I bought it. Really don't know why that is, perhaps that it's an older area and most of the activity
is now in Kanata and outlying areas.

The assessments have been about right on, for the selling price of homes that actually sold on my street and adjoining street)s,
Typically there is a spread from the lowest assessed $244K (my next door neighbour who owns the other half of our semi-detached, to mine ($285K) to 2667K , 270K, 279K, $288K,$299K, $304, $313K, to the highest at 322K (this property is in a cul-de-sac street and has a HUGE BACKYARD. 

The assessment spread is 78k on the homes in my area. The construction (semi or bungalow), frontage and back yard dimensions seem to vary so that affects the actual assessment as well.

My place could be considered a corner lot, since my frontage is on one street and the length (100ft) of the lot is on another street, in which I have access to a double gate to park trailer or boat, and a small 36 chain link gate (motorized) so I can get into my back yard with my wheelchair or scooter. 

( The front yard (39.8 ft frontage) is a knoll that was landscaped by the builder so it's hard for me to get up the hill with my wheelchair which doesn't manage about 6 steps from the driveway to the top of the walk. 
It's a side split BTW ((900 sq ft top floor and about 500 sq.ft two lower floor bedrooms/2piece,laundry/furnace and a single car garage.
In Jan 2008, it was assessed at $198K and by 2013 it was assessed at 215K , 2014 ($232K), 2015 (249K) and 2016 at $266K (property value changed over 4 years by $68k)

In the last assessment 2012, it was assessed at $266K. 

*I sent in a RFR and it was rolled back from $266K to $247K on Jan 14, 2013.* $19K reduction. 

This year (2016) it is assessed at $247K

Next year the assessment is $256K.5 and rising to $285K by 2020. 
So between 2012 and 2020, (8yrs) my property assessed value has changed only by about $38K, but
with the RFR reduction the assessment increase is about $19K (increase reduced to half)


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## Market Lost (Jul 27, 2016)

carverman said:


> The homes in my area of west end Ottawa have been traditionally lower in actual selling prices over the last 20 years since I bought it. Really don't know why that is, perhaps that it's an older area and most of the activity
> is now in Kanata and outlying areas.


I've found that Ottawa is really strange for realty. I've seen properties in Riverside South selling for $20K less than those around here, but I have no clue how that works considering the new bridge means it's only a few minutes drive.


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## Pluto (Sep 12, 2013)

Yes, Market Watch and similar publications contradict themselves. They are in the business of making money via advertising. Sooner or later one of the so called predictions will come true and then they can say you heard it there first, meanwhile most will for get all the ones that were wrong. The goal for DIY investors who are interested should be to become one's own guru. 

the Perfect Recession Indicator, well almost perfect. 

http://www.philosophicaleconomics.com/2016/02/uetrend/

Clearly, its about as perfect as it will ever get, and equally clearly, when US unemployment is consider low, it is time, for those who are interested, to pay attention.


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