COVID and the housing market

[mimico_polak]

No more condos for me. I can't stand the crap and incompetence that goes on with condo boards, and the utter waste that happens when incompetent people are put in charge of managing maintenance and repairs. I wish there was a mandatory course that one had to pass in order to be part of a condo board. I've had a couple of whopping assessments that funded deficits and some outrageously expensive repairs.

You would think that changing garage doors would be cheaper when you do them 80 at a time - nope, $1750/door for the condo corp when they bought 80 doors vs $1250/door for me when I did the same at my house - and I got new tracks and hardware. Same goes for windows, roof replacements... all double what I would have expected to pay.

You need to account for the kickbacks to the board for selecting a contractor.

Our last place was a condo. I joined the board to see what the eff they’re doing. Holy hell…the logical and normal people (I’ll include myself in this group) got shouted down and beat down by the idiots. We all left the Board as it was insanity.

This is a good representation of what the Board members expected…

 

[AllistonGT]

Aquaintance has a nice lot on the lake , just paid 8m for the lot. The McMansion will be about 12 when done. Property taxes will be in the 25K range . There is a lot of money around , for a select few

25K would be a bargain. I think it will be a lot more than that. I bet a least double. Did a job for a client about 20 years ago that was in Oakville, right on the lake. At that time his taxes were $40000 year.

 

[Deleted member 50930]

Rent in KW has become berserk

 

[GreyGhost]

Rent in KW has become berserk

It's going to get worse before it gets better . Anyone that bought a property recently that they want to rent out will require every penny they can squeeze out of renters to try to stay solvent. As long as the market keeps climbing, the landlords will come out way ahead as they can easily unwind their position. Tenuous though. A correction could cost them their rental properties and their principal residence.

 

[Deleted member 50930]

It's going to get worse before it gets better . Anyone that bought a property recently that they want to rent out will require every penny they can squeeze out of renters to try to stay solvent. As long as the market keeps climbing, the landlords will come out way ahead as they can easily unwind their position. Tenuous though. A correction could cost them their rental properties and their principal residence.

I feel bad for the minimum wage workers.

 

[GreyGhost]

I feel bad for the minimum wage workers.

Hell, even median wage earners are getting squeezed hard. Commoditizing housing and making it a great investment (limit supply, cheap interest, etc) has screwed it up as a place to live.

 

[nobbie48]

How much of a gamble is it when 10% of a house value is spent on a fix up in order to sell to the granite and marble crowd?

If the solid but tired 60 year old place worth $1.5M gets a $150K facelift is it worth the risk?

The concerns being a market shift and the availability of trades.

 

[GreyGhost]

How much of a gamble is it when 10% of a house value is spent on a fix up in order to sell to the granite and marble crowd?

If the solid but tired 60 year old place worth $1.5M gets a $150K facelift is it worth the risk?

The concerns being a market shift and the availability of trades.

My inlaws lost at that game before. About 10 years ago, they had a parents house to dispose of in toronto. Spent some time and money ripping up carpet, refinishing hard, painting etc. Spent low five figures and during the time it took, market dropped some so they got low six figures less for the house.

 

[nobbie48]

The bird in the hand psychology is hard to beat.

 

[crankcall]

My inlaws lost at that game before. About 10 years ago, they had a parents house to dispose of in toronto. Spent some time and money ripping up carpet, refinishing hard, painting etc. Spent low five figures and during the time it took, market dropped some so they got low six figures less for the house.

Its also a patience game. the market corrections only last a year. if you can hold on it ALWAYS comes back. The bubble has bounced a few times not never blown up.
I've only spent about 30yrs playing this market, the bubble has yet to burst, even the early 80's 18% interest didnt kill the market.

people get cold feet and bail, its a patience game. Being under capitalized has poisoned more projects than warfarin .

 

[mimico_polak]

Hell, even median wage earners are getting squeezed hard. Commoditizing housing and making it a great investment (limit supply, cheap interest, etc) has screwed it up as a place to live.

There’s a radio ad that keeps playing for the ‘Simple Investor’ that has the catch phrase:

‘Real restatement investing, it’s not a fad, it’s the future’

paraphrasing but it’s very close.

www.thesimpleinvestor.com

People see that it’s ‘easy money’ so until that changes. Nothing will change, except it’ll get worse for renters and those trying to buy in.

 

[nobbie48]

There’s a radio ad that keeps playing for the ‘Simple Investor’ that has the catch phrase:

‘Real restatement investing, it’s not a fad, it’s the future’

paraphrasing but it’s very close.

www.thesimpleinvestor.com

People see that it’s ‘easy money’ so until that changes. Nothing will change, except it’ll get worse for renters and those trying to buy in.

I don't know what percentage of the population could make a long term difference if they thought things out. Forget being cool now (Trendy vacation, hot cars and Starbuck lifestyle) and be financially cool later in life.

In some occupations one has to look cool, or do they?

If a person had an appointment with you to oversee your investments would you be more impressed by someone arriving in a BMW or a five year old Hyundai?

It's possible the Hyundai is paid for and has a trunk full of lucrative stocks. The BMW could be a lease and have a glovebox full of unpaid parking tickets.

 

[Baggsy]

Neighbor's place is going up for 2.1. Wheeeee! My kids may never move out.

 

[ChrisCBR]

I don't know what percentage of the population could make a long term difference if they thought things out. Forget being cool now (Trendy vacation, hot cars and Starbuck lifestyle) and be financially cool later in life.

In some occupations one has to look cool, or do they?

If a person had an appointment with you to oversee your investments would you be more impressed by someone arriving in a BMW or a five year old Hyundai?

It's possible the Hyundai is paid for and has a trunk full of lucrative stocks. The BMW could be a lease and have a glovebox full of unpaid parking tickets.

Forgoing vacations and driving used shitboxes into the ground worked well when the deposit rate was several percent, housing rose a little above inflation per year, houses were 5x income and a couple could save a 20% downpayment within 12-18 months.

Cars, vacations etc have risen at inflation while housing hasnt. By forgoing those things you might reduce the time it takes to save 20% from 6 years to 5. In that time, the 20% downpayment is now a 12% downpayment.

The problem isnt as much the mortgage payment as it is saving 20% when housing is rising so fast, cost of living is so high and people not in the market have no equity.

Lease rates for cars these days can be 0-1% vs years ago when they were several %.
You really dont save much by driving around in an old shitbox and having to maintain it.
My last few cars have been cheap civic leases around $300-350 a month @ 0%. Other than buying winters and doing oil changes I have spent nothing on them. I know someone who just spent $2k on maintenance on a 2016 Civic..

My point is if you are savvy you can drive new cars for not much more than older ones. The cost difference has a negligible affect on me saving a 20% downpayment.

 

[nobbie48]

Forgoing vacations and driving used shitboxes into the ground worked well when the deposit rate was several percent, housing rose a little above inflation per year, houses were 5x income and a couple could save a 20% downpayment within 12-18 months.

Cars, vacations etc have risen at inflation while housing hasnt. By forgoing those things you might reduce the time it takes to save 20% from 6 years to 5. In that time, the 20% downpayment is now a 12% downpayment.

The problem isnt as much the mortgage payment as it is saving 20% when housing is rising so fast, cost of living is so high and people not in the market have no equity.

Lease rates for cars these days can be 0-1% vs years ago when they were several %.
You really dont save much by driving around in an old shitbox and having to maintain it.
My last few cars have been cheap civic leases around $300-350 a month @ 0%. Other than buying winters and doing oil changes I have spent nothing on them. I know someone who just spent $2k on maintenance on a 2016 Civic..

My point is if you are savvy you can drive new cars for not much more than older ones. The cost difference has a negligible affect on me saving a 20% downpayment.

I don't think a frugal lifestyle would make home ownership for the masses practical but a few that are marginal could jump the gap. The market has been so wild lately that any set of calculations would be hypothetical. How brutally frugal do you want to be or can you stomach, one step above panhandling?

Flop house and food banks, no car, hand me down clothing, might work for a labourer but be a scar later for someone working towards an executive position dependent on connections. Or maybe not.

 

[nobbie48]

What would happen if the government (Us) made low or no cost housing available to people with a game plan to get into their first property?

It would have to be a hardball arrangement. IE You give your paycheque to the housing corporation and you get a weekly allowance, $50.00? on a debit account. The rest is invested for you. There would have to be a realistic goal and NO excuses. Sorry your grandmother died. Send a card.

No credit cards or hidden debts. Sorry your kids don't want to participate with their earnings. Put them up for adoption. They will appreciate richer parents. The richer parents may not appreciate them.

No non paying guests.

Make it like a TFSA to avoid taxes.

When a purchase is viable make the organization act as the selling agent in a real estate deal and kick the commission back to the buyer to help with settling into the new place. You get a starter home. You don't get to plug the system to get your dream home.

Screw up and you're banned from the program for life along with your immediate family. Learn to work together.

Break the rules and you get booted out. Vandalize the property and you get the boot. You get back your money less reasonable rent and damages. Interest paid will be the same as the bank, not the stock and bond market gains. NO EXCUSES. F*** the legal aid bleeding hearts.

 

[mimico_polak]

I know a couple of guys / families that have just given up on home ownership.

‘Housing is going up so quickly we can’t keep up with getting the down payment’…these are families in the 120-160k income range for the household.

At this stage they just say eff it and we will enjoy our renter lifestyle. Planning trips, toys, and experienced so they can enjoy their money instead saving like misers only to be miserable AND without a house.

I actually think it’s the proper call. If you can’t keep up with it…going the miser lifestyle isn’t for everyone.

 

[Lightcycle]

I know a couple of guys / families that have just given up on home ownership.

‘Housing is going up so quickly we can’t keep up with getting the down payment’…these are families in the 120-160k income range for the household.

At this stage they just say eff it and we will enjoy our renter lifestyle. Planning trips, toys, and experienced so they can enjoy their money instead saving like misers only to be miserable AND without a house.

I actually think it’s the proper call. If you can’t keep up with it…going the miser lifestyle isn’t for everyone.

I like the way your friend thinks.

Why be house poor when there are other ways to build equity? That's provided you have the discipline to sock money away into some investments instead of spending every cent that's left over after all the bills have been paid.

 

[mimico_polak]

I like the way your friend thinks.

Why be house poor when there are other ways to build equity? That's provided you have the discipline to sock money away into some investments instead of spending every cent that's left over after all the bills have been paid.

Yes. Forgot that part. They’d rather invest in funds for their future instead of buying a house and living on bread and water.

 

[Lightcycle]

Yes. Forgot that part. They’d rather invest in funds for their future instead of buying a house and living on bread and water.

There are many ways to make money. Real estate is only one option, but some people on here seem to think it's the ONLY way to build equity and that if you don't buy a house you'll be destined to be a pauper forever.