5833 replies to this topic

[VicHockeyFan]

And before someone comes in and says "ya well im saving xx per month by renting and saving/investing that for my eventual house purchase", I will just disclaim it is my opinion forced saving through loan repayments @ 3% is more effective than voluntarily living below your means. Most people cant do that.

VERY well-said.

[true blue oak]

However, some people can live well below their means while renting and save substantially. These people can make the best of the situation we are finding ourselves in.

[true blue oak]

As to skeptics comment on RE being local - Garth Turner agrees!

"Odds are the next 100 days will prove without a doubt that the Era of the House is kaput, at least for a few years. I have no doubt we’re on our way to that national price correction of 15% I’ve been blathering on about – which means 0% in places like Fredericton and up to 40% in Vancouver and Victoria. And that won’t be the end, either. Expect real estate to flatline at best or slowly melt for years after that."

Further, the IMF is worried about our housing situation - in the globe and mail:


TOP BUSINESS STORIES
IMF cuts Canada's outlook, frets over housing, consumer debt

[MarkoJ]

Please watch this video from 3.5 years ago...

Take the March 2009 SFH average for Vancouver (when video was made) and compare versus now. If the average hits March 2009 again people will hail him as a genius, I just don't get it.

1S7OumrfatY

[dasmo]

Since we are discrediting Garth:
Why You Shouldn’t Listen to Media Gurus | Canadian Capitalist

[true blue oak]

Please watch this video from 3.5 years ago...

Take the March 2009 SFH average for Vancouver (when video was made) and compare versus now. If the average hits March 2009 again people will hail him as a genius, I just don't get it.

People make mistakes - lets judge based on recent events.

[dasmo]

After so many false prophesies when do you stop following the prophet?

[true blue oak]

After so many false prophesies when do you stop following the prophet?

He is no prophet, but he has been largely correct - it just has not happened as fast as he hypothesized.

[MarkoJ]

People make mistakes - lets judge based on recent events.

This guy has been predicting a housing crash forever. If you predict something for a long enough time period eventually you will be right in regards to "recent events."

In that video he is laughing at people buying in Vancouver at what was actually a decent time to buy.

A smart person would predict ups and downs, not just downs over and over again.

[MarkoJ]

He is no prophet, but he has been largely correct - it just has not happened as fast as he hypothesized.

I disagree that he has been correct, every other thing he says in that March 2009 video is wrong. He claims interest rates will go up....hmm, 3.5 years later they are substantially down. Sure, interest will go up at some point in time between now and the next 10 years. Even I can predict that.

[true blue oak]

I disagree that he has been correct, every other thing he says in that March 2009 video is wrong. He claims interest rates will go up....hmm, 3.5 years later they are substantially down. Sure, interest will go up at some point in time between now and the next 10 years. Even I can predict that.

OK - I am not going to defend Garth. However, his message on housing has largely been correct, despite no real change in interest rates.

[dasmo]

Making your home buying decisions based on what Garth Turner says is like making your investment choices based on what Jim Cramer says... They are entertainers. They say things to make money. They don't say things so you can make money.

[pherthyl]

I disagree that he has been correct, every other thing he says in that March 2009 video is wrong. He claims interest rates will go up....hmm, 3.5 years later they are substantially down. Sure, interest will go up at some point in time between now and the next 10 years. Even I can predict that.

Yup, Garth has a bad track record and he's a blowhard. No argument from me on that point. He sensationalizes numbers to get more visitors, sell more books, and drive business for his investment advisor business.

On the other hand, for every video of Garth on YouTube there's a thousand realtors and mortgage brokers spouting the equal and opposite nonsense. At least Garth is entertaining. Just don't expect any data from there.

[true blue oak]

Yup, Garth has a bad track record and he's a blowhard. No argument from me on that point. He sensationalizes numbers to get more visitors, sell more books, and drive business for his investment advisor business.

On the other hand, for every video of Garth on YouTube there's a thousand realtors and mortgage brokers spouting the equal and opposite nonsense. At least Garth is entertaining. Just don't expect any data from there.

True - the best data for Victoria comes from HHV, hands down.

[Szeven]

For the sake of a mathematical argument, consider the house I used to own in Fernwood. Its current market value I think is about 500-525. Lets assume currently I purchase the house for 500k, 25% down (investment), on a 5yr fixed, and I rent it.

385k Mortgage (I added 10k for closing and misc fees) payments are $1823. Taxes 300, city bill $100, upkeep (im being generous) 500. Total ~ 2700 per month. The top rents for 1700, the bottom 950 (these are the rents I got for it. The house cash flow per month is 0 give or take, I pay off $850 in principle per month, and I have a leveraged investment in housing prices. Im sure you could massage it to a small positive cash flow, but not by much.

Now consider a hypothetical 20% price drop and I purchase that same house. I now put only 100k down. My mortgage is now 305 ish. My payment is now $1450. Chances are rates will go down too, as we pump money around and stimulate, but we can assume they stay the same and I didnt choose variable (in which case im now at 2.25%). Im now making $3600 a year cash flow, plus my 800/mo principle, and I have a leveraged investment in housing prices. I know literally a million people who would take that deal. Me included.

I would honestly like to hear the arguments why people would not do that. I assume they would be something along the lines of rental rates fall and vacancy rising (which didnt happen in Phoenix or LV, so I dont get why it would here), rates would rise (lol), deflation in prices (unless Obama loses forget about it), the stock market or bonds somehow become more attractive (doubt it)??

[pherthyl]

Now consider a hypothetical 20% price drop and I purchase that same house. I now put only 100k down. My mortgage is now 305 ish. My payment is now $1450. Chances are rates will go down too, as we pump money around and stimulate, but we can assume they stay the same and I didnt choose variable (in which case im now at 2.25%). Im now making $3600 a year cash flow, plus my 800/mo principle, and I have a leveraged investment in housing prices. I know literally a million people who would take that deal. Me included.

I would honestly like to hear the arguments why people would not do that. I assume they would be something along the lines of rental rates fall and vacancy rising (which didnt happen in Phoenix or LV, so I dont get why it would here), rates would rise (lol), deflation in prices (unless Obama loses forget about it), the stock market or bonds somehow become more attractive (doubt it)??

I'm not sure what your question is. You're asking why people wouldn't want to buy the place now, or after a 20% drop?

[pherthyl]

Removed. Checking numbers.

[Szeven]

I'm not sure what your question is. You're asking why people wouldn't want to buy the place now, or after a 20% drop?

My question is how can people bet their families real estate lives on a 40% price drop when I think the math makes a lot of sense to buy at 20% drop.

[Szeven]

Also while I'm at it, I would LOVE to see the investments Garth Turner is advising his clients to buy. Ive seen, and personally had an account, with the Ron Paul crowds favorite American, Peter Schiff. Its all the same stuff you get at CIBC, Royal etc... Somehow if I buy Encana, Goldcorp, Suncor, and Telus, and bet on the economy, I am better off than investing in Real Estate??

[rjag]

Also while I'm at it, I would LOVE to see the investments Garth Turner is advising his clients to buy. Ive seen, and personally had an account, with the Ron Paul crowds favorite American, Peter Schiff. Its all the same stuff you get at CIBC, Royal etc... Somehow if I buy Encana, Goldcorp, Suncor, and Telus, and bet on the economy, I am better off than investing in Real Estate??

Seems to me all Garth suggests is to own the banks instead of depositing in them. ie; a basket of preferred shares paying out between 4-6% where the dividend tax is way less than the tax payable on the 1% the banks pays in a savings account as that interest is taxed as income as opposed to dividend income.

I own my house free and clear. If it is worth $750k and may depreciate 10-20% over the next couple of years then thats a negative return. But I dont care as I am in this for the long haul and have no need to access that money. However if you are a young couple and have need to upsize in a few years or face the possibility of relocating in the same period then now is not the time to tie up $'s in a property as there is a high risk of depreciation which means you could be underwater.

Speaking with my 18 year old daughter this weekend and she is all about buying a condo next year in cowtown where she is at Uni, when I explained to her that it requires careful planning and due diligence to investigate if she would at least break even in 4 years time it tended to sober her up a little.