2300 replies to this topic

[dasmo]

Isn't that what RRSPs and deductions are for?

[dasmo]

True, I can see that... A smaller place in the downtown core would probably be better that way. Maintenance on 6000 sq feet would also be a potential ticking time bomb.

[Sparky]

Isn't that what RRSPs and deductions are for?

They are if you don't mind watching your capital investment depreciate.

[davek]

You think Harper's CON-servatives are "communist tax & spend"?

They are certainly 'spend', and sooner or later, that leads to 'tax'.

[dasmo]

Anyway, if I had a 6000 sqft house I wasn't living in, I believe I would sell it over renting it. That's a lot of roof to replace when that time comes...

[Sparky]

^ Roof, walls, plumbing, paint, appliances, property tax, insurance......plus HST ()

[Dimitrios]

Perhaps, but I disagree with the implication that locals who have lived through previous cycles have any particular knowledge about how the market might behave in the future. The locals in Seattle also knew that real estate only plateaus there. Until it didn't.

Interesting. I just spent 3 days back in Seattle (I lived there for 6 years in the early 2000s) chatting with my friends still there - all 30-somethings in the prime of their careers. Seattle is booming right now, with lots of jobs- Amazon building a large new downtown campus, numerous tech startups looking for employees, housing more affordable than it's been in years, lots of infrastructure projects well underway (light rail going right through town), etc. Although I'm just going based on my friends' impressions, I got the sense that this would probably be an excellent time to move or invest there before prices start climbing steeply again.

[Szeven]

Thanks Sparky, I figured your reason wasn't, "time to panic and build a bomb shelter!". Sounds a reasonable decision.

I'd still like to hear more about the economics of peoples decisions regarding selling or buying real estate. For instance, if you do not purchase, but you have a down payment ready, what do you put it in? You might currently have it in cash or cash equivalent, but if you are really that macro worried, wouldn't you not want CAD cash if there is another downturn? In 2008 or 2009 (I don't remember) USD/CAD touched 1.28+. You could theoretically be trying to avoid one crash, while standing right in the way of another. Another consideration is the hard currency folks over at whispers blog. They preach gold to hedge against inflation, but borrowing long term at low rates heading into an inflationary period seems like the BEST thing you could do, not the worst. Are these factors non house owners are thinking about?

That's my problem with macro calls. There are so many factors, and I know I am guilty of not considering all of them. I try to diversify currency and asset class, but its definitely tough. So that is what I am wondering to the non house people, or the house people who are selling for economic reasons. Are you hedging currency risk? What are you doing with the cash? Are you willing to lose substantial ground and earn 1% at the bank, if your call is wrong?

As for the communist tax and spend governments, I was thinking NDP for sure (how about half of Victoria getting a 5% raise next year?) and the clowns over in the EU, plus Obama. Hollande, Rajoy, whoever the Greek guy is these days. All we need is Merkel to fall to a liberal coalition in 2013 and its going to get interesting.

[Baro]

Been seriously thinking of buying soon, but been keeping my eye on places within our price range. Over the last couple years I've really noticed prices coming down. Often I eve see the same thing re-listed a months later for 20-40k less. I'm going to keep waiting because I'm in no real hurry to move and I'm curious how good a deal I can get.

I also have no illusions of my home being an "investment", I'm buying it because I need a place to live, not because I'm depending on its value to rise significantly. If when I sell it I get about as much as I paid for it, adjusting for inflation, I'll be happy.

[pherthyl]

Interesting. I just spent 3 days back in Seattle (I lived there for 6 years in the early 2000s) chatting with my friends still there - all 30-somethings in the prime of their careers. Seattle is booming right now, with lots of jobs- Amazon building a large new downtown campus, numerous tech startups looking for employees, housing more affordable than it's been in years, lots of infrastructure projects well underway (light rail going right through town), etc. Although I'm just going based on my friends' impressions, I got the sense that this would probably be an excellent time to move or invest there before prices start climbing steeply again.

Yes. Their market seems to have bottomed. There was actually a good bounce this spring, so even smarter would have been to buy last year. However properties there are very affordable now compared to where they used to be.

[rjag]

As for the communist tax and spend governments, I was thinking NDP for sure (how about half of Victoria getting a 5% raise next year?) and the clowns over in the EU, plus Obama. Hollande, Rajoy, whoever the Greek guy is these days. All we need is Merkel to fall to a liberal coalition in 2013 and its going to get interesting.

There is a better description for this crowd, call them Champagne Socialists!!!

[Urbanistco]

I bought, 3 condos and a 4plex in a bit of a real estate investment rush. Believing that the markets would continually improve (for the most part anyway). Now with appreciated values flatlining and even decreasing, its very frustrating. Rental revenues only cover so much in expensive markets and each property becomes tied to another when selling for a loss. My plan is to weather the storm and hope prices do rise again someday, cash out and invest in living life without rental stress!!

[true blue oak]

You may be a long while weathering this storm - may be 8-10 years before we come back to where we were (MY OPINION).

[dasmo]

I agree 8-10 years...But we are already almost 5 years in...

[LJ]

Our beloved Canada Revenue Agency adds the rental income to your annual salary and kicks you into a tax bracket that takes the fun out of treading water.

That's why you transfer title to your unemployed kid, mother, spouse while it is still your principal residence or even after, especially in a depreciating market where capital gains won't be a problem.

[pherthyl]

I agree 8-10 years...But we are already almost 5 years in...

Well, this thread is 5 years old, but the absolute peak was actually just over 2 years ago in mid 2010.

[dasmo]

Sure, but the upward trend stopped in mid 2008...

[pherthyl]

Sure, but the upward trend stopped in mid 2008...

Sort of.

In any case, in the last 2 real estate corrections in Victoria (starting in 1981 and 1994), it took 7 years for nominal prices to recover to the peak. The peak here on a yearly basis was definitely 2010 with an average price of $629,929, compared to the 2008 yearly average of only $583,000. So if this is a normal correction, we can expect to wait until about 2017 for prices to recover.

[dasmo]

I respectfully disagree. I personally saw things start to slow in 2007 even. Especially compared to the rush up. The exact peak is not as relevant as looking at the big picture. If you look at this graph:

(Thanks Leo via HHV)
You can distinctly see what I am talking about. Mid 2007 the brakes start pumping. The exact numbers of the peaks therein can swing wildly. I predict in 2015-2017 we will be able to average this into a flat line starting from Aug 2007.

[pherthyl]

You can distinctly see what I am talking about. Mid 2007 the brakes start pumping. The exact numbers of the peaks therein can swing wildly.

I don't really disagree. Just going by the yearly averages of the two previous corrections, which show 7 years to recovery. So our previous peaks are likely earlier than 1981 and 1994 as well, but it gets pushed back a bit in the yearly averaging. So if you want to count 2008 as the peak, then I would say 8-9 years to recover, rather than 7. More than likely it doesn't really matter, as the predictive value of these previous corrections are extremely dubious.

The interest rates being dropped caused our odd camel hump peak this time, which is different from previous peaks.