Coronavirus

[GreyGhost]

There are multiple points to this.

Yes, there is a massive issue of people over extending themselves. I wouldn't put the blame on cheap credit but rather financial literacy. I'm sure we all know someone that walked into a car dealership and said I can afford $400 a month, what does that get me? Without any concept of what and how much they're actually paying.

On the other hand, there is a fairly high cost of living to be in Toronto. Your average starter condo is going for $400k, which needs a ~$80k salary to comfortably afford. This puts even financially literate people into a tight spot.

My initial housing plan was keep doing 200k jumps. That leaves a super affordable mortgage payment while building equity. Between the ridiculous time and money required to jump houses and the tiny difference in house that 200K gets you (one extra bedroom and bathroom yippee) we made a much larger jump and dont plan on changing again for 20+ years. Debt way higher than I want, but way lower than most of my friends.

One friend was renting and just bought his first house in TO for 1.6. Crazy. They were smart renters though and had a huge pool of investments to take much of the sting off. Still, it's hard to have a reasonable debt load when a house is way more than 10x a single good income.

 

[GreyGhost]

I'll take that bet, I rent and my returns are on par with the average net gains from owning property.

A very basic look at both options;

Housing grows at 3.5% is grossly out of line for GTA recently.

If you really want to be ahead financially, the best path I have found is buy a house with one income in a two income house. Pay the minimum on the mortgage. Take all spare money and put it in the markets. Now you have a highly leveraged but quite safe asset and no leverage in the market where you can be absolutely obliterated if you are leveraged and make the wrong bet. You should be able to get returns over 30% this way. If I had done that with the last house instead of paying off the mortgage to make myself feel better, the current mortgage would be six figures smaller with the same money input.

 

[Lightcycle]

There are multiple points to this.

Yes, there is a massive issue of people over extending themselves. I wouldn't put the blame on cheap credit but rather financial literacy. I'm sure we all know someone that walked into a car dealership and said I can afford $400 a month, what does that get me? Without any concept of what and how much they're actually paying.

Yes, financial literacy is also to blame.

However, the population hasn't gotten more or less financially literate (or illiterate) over the decades. Your example of buddy with the $400/month budget could easily have played out in 2000 or 1980 or any other period. The biggest difference today is that the lending industry has gotten a lot more savvier, but the consumers have not.

Just as an example, I can't ever remember a time when financing companies have offered 96-month car loans.

And also 0.9% teaser rates to get you in the door... oh, but you can't do a 24-month loan? Well, we'll let you pay it off over 8 years at the normal rate of 3.9% then... It's still a good rate!

On the other hand, there is a fairly high cost of living to be in Toronto. Your average starter condo is going for $400k, which needs a ~$80k salary to comfortably afford. This puts even financially literate people into a tight spot.

Agreed on that. It's a harsh reality. Cost of housing and living has gone up while wages has stagnated.

 

[Evoex]

Housing grows at 3.5% is grossly out of line for GTA recently.

If you really want to be ahead financially, the best path I have found is buy a house with one income in a two income house. Pay the minimum on the mortgage. Take all spare money and put it in the markets. Now you have a highly leveraged but quite safe asset and no leverage in the market where you can be absolutely obliterated if you are leveraged and make the wrong bet. You should be able to get returns over 30% this way. If I had done that with the last house instead of paying off the mortgage to make myself feel better, the current mortgage would be six figures smaller with the same money input.

GTA is not the baseline, i wouldn't mortgage a million dollar house in downtown toronto even if you offered to pay for half of it. It's just stupid and everyone crawling over themselves to get into it are just feeding the frenzy. I met a guy a few months back who put 10% down on a $972k house, i just stared at him, shook my head and walked. He's living pay check to pay check with 1 kid and the 2nd on the way with no prospect of looking for a better job. Nuts!

I consider it on par with the apple sheeple lining up year after year for a new phone even if it's a marginal increase over their last device. They are the reason phones costs are jacked.

/rantoff

back to the topic!

 

[AllistonGT]

As a millennial, I can tell you none of us care for the American dream and it was dead years ago. We don't want a house in the suburbs with a nice car, 9-5 job, happy wife and kids waiting for retirement paying a mortgage (Mortgage translates to bound till death). We're okay renting for life, not owning cars and using ubers, working multiple jobs over the years (I've had 3 new employers in a 6 year span, never had a steady job for more than 3 years before moving on, same with all my friends) etc... Learning new skills is easier than any other generation, and adapting to new fields easier, same with information, so what we're seeing is rapid change in a small period triggering uncertainty and sparking fear. Everyone on this forum is blessed to be in Canada and the opportunities we have now, and going forward.

Well good thing most parents of millennials have done ok and will leave their children an inheritance because living like that they will need it. Thank them before they pass on.

 

[Wingboy]

Well good thing most parents of millennials have done ok and will leave their children an inheritance because living like that they will need it. Thank them before they pass on.

And those parents of the millennials are inheriting a trillion dollars from their parents who went thru the great depression and world war 2 barely spending anything. But SURPRISE they are going to spend it on muscle cars, retro bikes and travel.
Better start saving your own hard earned dollars kiddies!

 

[AllistonGT]

And those parents of the millennials are inheriting a trillion dollars from their parents who went thru the great depression and world war 2 barely spending anything. But SURPRISE they are going to spend it on muscle cars, retro bikes and travel.
Better start saving your own hard earned dollars kiddies!

I won't have to. I already have that stuff because I paid off all my debts early.

 

[Lightcycle]

I'll take that bet, I rent and my returns are on par with the average net gains from owning property.

A very basic look at both options;

This is a very good video.

The one thing it doesn't take into account (not that it should have) is the maturity level and financial savvy of Roger and Owen at the beginning and over the 25 year period.

I bought my home when I was young and quite financially immature.

If I hadn't had saddled myself with oppressive mortgage debt at that age, I would have blown my entire take-home salary on cars and electronics. Which I did anyway - at least what little I had left over after every mortgage payment.

It was only much later that I wised up and thought: "f*ck, maybe I should be investing the leftovers instead of buying toys..."

Fortunately by that time, the decision I had made 10 years earlier had already netted me a nice nest egg.

A more realistic version of the video goes like this:

If Roger and Owen are 25 years old when they make the decision to own or rent, Roger the Renter at 25 years old would have blown his $35K on hookers, blow, a Toyota Supra, or whatever. Roger the Renter wouldn't start investing until he was 35 years old, having lost his initial $35K and missing out on ten years of compounding returns.

Mortgage payments are all about forced savings, at least in the beginning for young people.

 

[GreyGhost]

And those parents of the millennials are inheriting a trillion dollars from their parents who went thru the great depression and world war 2 barely spending anything. But SURPRISE they are going to spend it on muscle cars, retro bikes and travel.
Better start saving your own hard earned dollars kiddies!

I tell everyone in the generation above to spend it all. They have worked hard, enjoy it. We'll be fine.

 

[oioioi]

 

[Lightcycle]

View attachment 42832

Fauci is a good man. Unfortunately there is an expiry date for people like him in the current administration. He won't last the end of the summer before he's out and replaced with a Yes man. And quite probably somebody with zero medical background.

This is the way it is down there. Dog have mercy on them.

 

[Mad Mike]

Well, if the banks don't extend the 6-month deferment on mortgage payments, the housing market will be in for a rude surprise.

I don't think you're going to see much change in housing costs in the GTA -- supply and demand drives prices, weak economies drive people into cities and hold interest rates down. You nay see a glut on small condos, that's a bit of a different story as a larger percentage is in short term rentals AND there may be a lot of folks looking for suburban distancing once the dust settles.

They aren't making more land, I'm guessing as the USA tightens immigration Canada will open wide further driving demand in urban centers.

 

[Trials]

I'll take that bet, I rent and my returns are on par with the average net gains from owning property.

A very basic look at both options;

But Randy the Renovator bought a really nice piece of waterfront property with a scummy little shack on it and then built a mansion on it,
where does he stand

 

[Brian P]

Fauci is a good man. Unfortunately there is an expiry date for people like him in the current administration. He won't last the end of the summer before he's out and replaced with a Yes man. And quite probably somebody with zero medical background.

This is the way it is down there. Dog have mercy on them.

Evidently another doctor on that team got the boot today for publicly criticising Trump's favourite magic drug, hydroxychloroquine, that he has promoted for treating this virus. (There's mounting evidence that it doesn't work.)

I hope Health Canada makes their own decisions.

 

[sburns]

But Randy the Renovator bought a really nice piece of waterfront property with a scummy little shack on it and then built a mansion on it,
where does he stand

Randy is not a millennial, he can do more then push buttons on a phone.

 

[PrivatePilot]

Canada has a huge debt problem, exacerbated by cheap credit. Poor government policy has made it too easy for people to over-extend themselves. It's not going to end well.

The government made it significantly harder to buy a house in 2018 by putting in place stress testing and increased income requirements.

And what did they get for it? Flack. People cry about it to this day because god forbid they can't go out and extend themselves to the absolute bleeding edge of affordability anymore, so close that they're 1 missed paycheque away from insolvency.

I'm going to go out on a limb and suggest that there's quite a few poeple right now living in smaller homes than they desired because of these restrictions, screamed about it at the time, and are now secretly extremely happy to find themselves in this situation given what's happening.

I tell everyone in the generation above to spend it all. They have worked hard, enjoy it. We'll be fine.

We will be.

My parents gave us a small amount when we got married to help towards the downpayment on our house and when my last surviving parent passed away there was about $10K left for each of us. And I didn't even expect that, and was totally cool with it.

I do NOT plan to live on a shoestring budget when we retire just so we can pass on a huge sum to our kids. We've saved, we have 2 pensions, and we have a paid off house. Health allowing, we will enjoy our retirement by travelling and experiencing the world, and if we time things just right...we'll skid into the nursing home broke but with a **** eating grin on our faces, and too senile to realize or care we're eating cat food.

 

[PrivatePilot]

Park full of Karen's think the rules don't apply to them....because their crotch goblins need play time.

https://www.reddit.com/r/PublicFreakout/comments/g62gb9

 

[Lightcycle]

The government made it significantly harder to buy a house in 2018 by putting in place stress testing and increased income requirements.

And what did they get for it? Flack. People cry about it to this day because god forbid they can't go out and extend themselves to the absolute bleeding edge of affordability anymore, so close that they're 1 missed paycheque away from insolvency.

Yeah, that one was completely misdirected anger.

There's so much to be angry about; so many reasons why housing is expensive to begin with, from the very accommodating regulatory and taxation policies on foreign ownership and RE speculators, lax enforcement on anti-money laundering...

But a policy designed to cool down the housing market and protect Canadians from themselves...? Anger is definitely not warranted there. I blame the Realtor industry for stoking the flames on this one. A commission structure based on the sale price of the house? Of course, they are going to want to put on a full-court press to villainize the Stress Test. Anything to keep the bidding wars going and those house prices increasing!

Everywhere on the news, in newspapers and magazines: articles and interviews with RE agents and the realtor industry claiming the Stress Test is the reason why people can't get homes.

"Get yourself deeper into debt so we can make more money off of you! DO IT!"

And people ate it up and Amen-ing like it was the Gospel.

Wow. SMH. I can't even.

 

[regder]

Park full of Karen's think the rules don't apply to them....because their crotch goblins need play time.

Some good layers to this story. It was a staged protest setup on Facebook, she's anti-vax. Some more info, There's More To Know About The Video Of A Mother Arrested On A Playground For Violating Stay-At-Home Orders

Of course, the intention was to spin the story like this

https://twitter.com/x/status/1252760509113344002

 

[PrivatePilot]

she's anti-vax

Well, that explains a lot.

On the bright side, I did hear on the radio today that the percentage of Canadians who are now willing to accept vaccinations is up to 70%, with 80% saying that they would be lining up to get the Covid19 vaccination when it becomes available.

Although that's good news and the 70% figure constitutes a significant uptick from just a few months ago, that just further reinforces my often stated figure that 20% of the population is still stupid. I

In the end us 80% will once again save the stupid population from themselves by that whole "herd immunity" thing.

Oh....in more good news, Ford said today that he's targeting the May two four weekend for the first round of lockdown relaxation assuming we keep on the current trajectory. I'm personally wondering if some things may actually happen earlier considering that's still 3 weeks away, and if numbers keep falling at the trajectory we are currently seeing.. there's going to be a lot of (potentially cranky) people wondering exactly what we're waiting for whilst more businesses and households cross the line of no return.