COVID and the housing market | Page 245 | GTAMotorcycle.com

COVID and the housing market

There is so much more to the have / have not gap . It’s not housing and the I have arrived , I have a house ! It’s education, academic and practical, family history ( 3rd generation welfare cases ) , and being trained about money. My dad said there are two kinds of people , those that understand compound interest and those that pay it.
Teach kids about credit , it’s not a majic card. Loans need payed and just because every kid in your class has $300 sneakers , maybe Keds are for you.

The Gap on haves / have nots is so much more complicated than giving them a house . They will refinance it and buy a motor home . Or buy a new bike at the bike show with Honda credit at 9.8%


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crankcall said:
There is so much more to the have / have not gap . It’s not housing and the I have arrived , I have a house ! It’s education, academic and practical, family history ( 3rd generation welfare cases ) , and being trained about money. My dad said there are two kinds of people , those that understand compound interest and those that pay it.
Teach kids about credit , it’s not a majic card. Loans need payed and just because every kid in your class has $300 sneakers , maybe Keds are for you.

The Gap on haves / have nots is so much more complicated than giving them a house . They will refinance it and buy a motor home . Or buy a new bike at the bike show with Honda credit at 9.8%


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While I agree with your comments about training people about money (for better or for worse), I disagree that housing is not a part of it. Buying a house in canada has been like launching an arrow. It creates five or six figures a year in tax free equity. Sure, you can tap it and spend it but next year, you get another bump. It drastically changes your net worth over time (or alternatively allows you to have far more disposable income than working alone). For those with good lessons about money, lightcycles invest and rent can work too but few people have that footing.

Now, I'm not just picking on housing here. Most tax code benefits the prosperous. I would be happy with a flat tax on income regardless of how it was earned. Taxing someone working their ass off double what you tax someone with money sitting in an investment is wrong imo.
 
mimico_polak said:
I agree with you 100%. My only point is that if the housing market takes a solid poo in a short amount of time, our entire economy is pooched.

Many of those that could not afford to buy in, will STILL not be able to afford to buy in, because rates will definitely go up, their jobs may be in jeopardy, and we're none the better.

IMHO (and uneducated on the matter) a soft landing / correction is the best course of action to make it affordable.

Plus, put in heavy taxes / penalties / whatever on speculative flipping/investing.

I'm also a big fan of the capital gains tax on any property but only as follows:

Live in a house:
- <1 year - 70%
- 1-2 years - 50%
- 2-3 years - 30%
- 3-5 years - 20%
- >5 years - 0%

Make the mortgage interest a write-off if you implement a capital gains tax on primary residence. This is to prevent those that buy a house, live in it for a year and a day, and then sell it.

I have nothing against flippers that do it properly, fix it, and pay tax on their profits.

While it happens, I don't think many people have to move houses often within a 5 year span.

I keep hearing the 'Taxpayer Association' or whatever chirping on the radio about a federal study on capital gains tax for housing...I haven't read the study, or the purpose of it...but I already have many people I know crying foul about capital gain tax on primary residence.
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I don't mind capital gains taxes being paid on a house, I'd make the scale even longer -- 20 years? Do it like the USA, if you sell one, you have a window that allows you to roll over your gain into a new property without triggering a tax bill.

I'd also strengthen rules and enforcement, particularly those surrounding serial builder/occupiers (builders who repeatedly cycle through build-occupy-sell) in order to disguise their construction income as PRE qualified gains.
 
Mad Mike said:
I don't mind capital gains taxes being paid on a house, I'd make the scale even longer -- 20 years? Do it like the USA, if you sell one, you have a window that allows you to roll over your gain into a new property without triggering a tax bill.

I'd also strengthen rules and enforcement, particularly those surrounding serial builder/occupiers (builders who repeatedly cycle through build-occupy-sell) in order to disguise their construction income as PRE qualified gains.
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A lifetime real-estate CG exemption limit could be effective. Not perfect but it means if you flip for a living, you pay the proper tax. Or alternatively, if you are using housing as an investment first and dwelling second, you pay tax for that. The old owners of our house are in their fourth house in four years (our current house, a new build, a rental for a year and now another new build). All houses within 2 km and similar size/style. They are obviously doing it for financial reasons. Nobody wants to move every bleeping year.
 
GreyGhost said:
A lifetime real-estate CG exemption limit could be effective. Not perfect but it means if you flip for a living, you pay the proper tax. Or alternatively, if you are using housing as an investment first and dwelling second, you pay tax for that. The old owners of our house are in their fourth house in four years (our current house, a new build, a rental for a year and now another new build). All houses within 2 km and similar size/style. They are obviously doing it for financial reasons. Nobody wants to move every bleeping year.
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I would move every year if I knew I could make 100k tax free each move (after expenses).
 
mimico_polak said:
I would move every year if I knew I could make 100k tax free each move (after expenses).
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They're doing way better than that. I suspect they made seven figures off the house after ours (in a year, buyer was a trust fund baby and really wanted it), paid 60K to rent (could have been covered from investing proceeds of sale) and could probably make mid-six figures with their current house (which is still gravel driveway and huge pile of dirt for a back yard).
 
Recession here we comee

Global Economic Prospects

The latest global economic outlook for 2024-2025 from the World Bank. Learn about economic trends, policies, GDP growth, risks, and inflation rates affecting the world economy, stability, and development.
www.worldbank.org www.worldbank.org
 
Georg3__ said:
Recession here we comee

Global Economic Prospects

The latest global economic outlook for 2024-2025 from the World Bank. Learn about economic trends, policies, GDP growth, risks, and inflation rates affecting the world economy, stability, and development.
www.worldbank.org www.worldbank.org
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You might get your wish!!

I'm just hoping rates don't go to the moon.
 
mimico_polak said:
I would move every year if I knew I could make 100k tax free each move (after expenses).
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1919 Forest Valley Dr Innisfil. Right beside the 400. Bought for 1.7 one year ago. Some renovations done. Listed for 3 (was 3.3). Probably aiming for >1M tax free in one year. Now, nobody is forcing anyone to buy it but it is embarassing that government completely ostriches on people making seven figures and paying zero income based tax.
 
A LOT of people have made stupid money in the last three yrs. Friends bought 4 houses , three “adult” children were in them . One finished Uni , other two are working . Each kid ‘made’about 1 mil each in three yrs after dad took 250k per house as administrative fees . And the rich get richer .


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crankcall said:
A LOT of people have made stupid money in the last three yrs. Friends bought 4 houses , three “adult” children were in them . One finished Uni , other two are working . Each kid ‘made’about 1 mil each in three yrs after dad took 250k per house as administrative fees . And the rich get richer .


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Yup. All comes down to having the money to play.

I would do the same thing for my kids. It’s legal and I’m not breaking any laws.

And to think why everything is skyrocketing. Lot of big money still out there.
 
A subdivision outside of Barrie has had a couple houses relist quickly after sale. One sold in Dec 2021, the other end of Jan 2022. Both were recently resold. Jan house went for 70K more (so probably a loss once RE and LTT paid but close), Dec house was up 125K so probably a wash. Remarkable considering they only held for ~six months and the market is theoretically softening. That subdivision is pretty firmly cemented in sales starting with a 2 now. Crikey.
 
Two good friends in my circle , one a RE agent and other a mortgage broker both say there are lots of quick shuffle houses when a separation or divorce is pending . You have trouble getting a mortgage when separated, and sometimes people move thinking it will fix a marital problem ( almost never) and a house goes on market in 6 months . Some unlucky moves also , you move closer to work , and work closes down. There are lots of stories outside flipping . Sometimes it just comes down to dumb .


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crankcall said:
There is so much more to the have / have not gap . It’s not housing and the I have arrived , I have a house ! It’s education, academic and practical, family history ( 3rd generation welfare cases ) , and being trained about money. My dad said there are two kinds of people , those that understand compound interest and those that pay it.
Teach kids about credit , it’s not a majic card. Loans need payed and just because every kid in your class has $300 sneakers , maybe Keds are for you.

The Gap on haves / have nots is so much more complicated than giving them a house . They will refinance it and buy a motor home . Or buy a new bike at the bike show with Honda credit at 9.8%


Sent from my iPhone using GTAMotorcycle.com
Click to expand...

Not every kid can learn from reading. Some have to experience the pain of bad decisions. Too many parents, working too many hours, neglect their kids and double down on that mistake by over-compensating when the kid screws up.

IMO, today, if you could only teach a kid one lesson it is to understand advertising. Advertising is meant to make you unhappy with what you have so you will buy a replacement. A person could be completely happy with their Keds until it is pointed out that the other person has Nikes.
 
Marketing to kids while “ restricted “ is so wide spread , I’ll agree it’s a problem . When our news feed is what Brad Pitt thinks about the provincial election we are in trouble , especially when the only question the interviewer asks is who made your girlfriends dress .
Our culture is our handicap.


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mimico_polak said:
In all honesty my issues are easy:

1. Scared of screwing up
2. Not sure how to get first clients

Outside of that...I'm just a pansy as I've got the time, tools, and can pull on others experience.

I'm willing to put the work in for evenings and weekends...but not sure how many clients would actually want someone to come in and work on evenings/weekends.
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A young lady I met when I was young came to mind and the story involves a side gig.

We met at a dance liked each other but logistics didn't work. Decades later I met a property manager with the same unusual last name and I got the family update.

The girl's dad had been a truck driver for a construction company and got laid off. He used the lay off time to pour a new sidewalk at his house on Dagmar Ave. A neighbour saw the work and asked him to do his sidewalk.

One thing led to another and it developed into a huge company doing a lot of Toronto's excavation work. The kids fly to Arizona to buy cars at auctions.
 
mimico_polak said:
This sounds promising. Mind you the BOC can’t predict 100% a year in advance let alone 4-5.

apple.news

Typical mortgage payment could be 30% higher in 5 years, Bank of Canada warns — CBC News

Inflated house prices and high household debt levels are a major vulnerability to Canada's economy, the Bank of Canada warned in a report assessing the strength of the country's financial system on Thursday.
apple.news apple.news
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Boc and Cmhc recently have been less accurate than a monkey throwing darts. They seem to predict the opposite of what actually happens
Not sure if that is due to political interference or lack of competence and complete separation of performance required for continued employment.

Edit:
That article says average mortgage payment is 1260. Like hell it is. That would mean that the average loan at initiatiation was ~250K. There is no way that is the average. Did they average in zeroes for all the dwellings that were paid off? Over the last 5 to 10 years, probably 95% of mortgage initiations were more than 250k. Many three or four times that. Older mortgages may be lower but they will only represent half the pool of open mortgages and many wouldnt be a hell of a lot lower.
 
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GreyGhost said:
Boc and Cmhc recently have been less accurate than a monkey throwing darts. They seem to predict the opposite of what actually happens
Not sure if that is due to political interference or lack of competence and complete separation of performance required for continued employment.
Click to expand...
Why not all of the above?

I still don't expect rates to pop past the 5% mark or so. But I'm an idiot when it comes to this stuff...they may just want to scare people to ease off the borrowing.

But an interesting question is...if people can't afford the things they NEED to live, and wages aren't keeping up...the end result will not be pretty.

Borrowing for toys / fun is one thing...borrowing to survive is quite another.
 
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