Recession incoming

[rookiepilot]

Hey, your favourite politician agrees. Nothing to worry about.

https://www.ctvnews.ca/politics/irrespo ... -1.4739153

[DadoBlade]

"vermont" said that "in the US all that matters is the individual", yet they are a patriotic society, and usually identify as "American" when asked, yet a Canadian, two generations removed, just might identify as "Hungarian". Funny that. Actually stoopid-sad. Canadian trade barriers on trans-provincial commerce are draconian. And are horrendous, unlike America's, (USA's), nearly unrestricted inter-state trade. Even today, economically at least, the U.S.A. looks like a country, while Canada resembles a loose collection of fiefdoms.

[DadoBlade]

"piperdriver" said "...make ends meat". Isn't that what they do to wieners at the old Schneider's Plant in Kitchener?

[motuara]

look on the bright side , if theres a recession, house prices might go down.........

[mbav8r]

look on the bright side , if theres a recession, house prices might go down.........

Who for? I’m guessing you don’t own a house!

[7ECA]

look on the bright side , if theres a recession, house prices might go down.........

Who for? I’m guessing you don’t own a house!

It's a double edged sword. For those whom own a house free and clear and want a windfall selling - they'll consider that a loss. For those whom own free and clear but have no intention of joining the rat race - a decrease in value is often welcomed as it will decrease property taxes. For those whom do not own free and clear, but rather are mortgaged to the hilt, if the value declines - they're still F'd and continue to pay top dollar for a mortgage on an asset with declining equity.

Of course, there's also the millennial generation who as of a recent study have a less than 50/50 shot at home ownership in their lifetime, so they may benefit marginally in a decline in value. Then again odds are values will not decrease anywhere near enough to give the working poor a shot at ownership.

[digits_]

a decrease in value is often welcomed as it will decrease property taxes.

That is incorrect. If housing prices go down, it is safe to say all housing prices in your city/municipality will go down. Hence your property taxes will be unaffected.

If only your house decreases in value, then your poperty taxes will go down.

['97 Tercel]

[vermont]

look on the bright side , if theres a recession, house prices might go down.........

Nobody would loan you the money though

[vermont]

"vermont" said that "in the US all that matters is the individual", yet they are a patriotic society, and usually identify as "American" when asked, yet a Canadian, two generations removed, just might identify as "Hungarian". Funny that. Actually stoopid-sad. Canadian trade barriers on trans-provincial commerce are draconian. And are horrendous, unlike America's, (USA's), nearly unrestricted inter-state trade. Even today, economically at least, the U.S.A. looks like a country, while Canada resembles a loose collection of fiefdoms.

brb pulling driving back into ottawa since we can't bring beer across the bridge, wtf!

[7ECA]

That is incorrect. If housing prices go down, it is safe to say all housing prices in your city/municipality will go down. Hence your property taxes will be unaffected.

If only your house decreases in value, then your poperty taxes will go down.

Dub-yah's on the right track - pardon me?

Property taxes are generally based off of the assessed value of a property (land and dwellings/structures), with some convoluted and mostly horseshit formula involved. Thus, if your value goes up - so do the taxes. So..., if you carry the one and consider the prevailing winds; one could surmise that a decrease in value be it of your property or all properties within a municipality, would cause a decrease in your property taxes.

[digits_]

That is incorrect. If housing prices go down, it is safe to say all housing prices in your city/municipality will go down. Hence your property taxes will be unaffected.

If only your house decreases in value, then your poperty taxes will go down.

Dub-yah's on the right track - pardon me?

Property taxes are generally based off of the assessed value of a property (land and dwellings/structures), with some convoluted and mostly horseshit formula involved. Thus, if your value goes up - so do the taxes. So..., if you carry the one and consider the prevailing winds; one could surmise that a decrease in value be it of your property or all properties within a municipality, would cause a decrease in your property taxes.

Nope. Municipality determines how much money/tax it needs. That tax gets divided amongst all the properties in the municipality. The more expensive properties pay more, cheaper ones pay less. Assuming a constant municipality budget, a 10% drop in home values will not change anything about the tax you pay. If your house depreciates 10% and all other homes lose 20%, your property tax will actually increase.

[iflyforpie]

That is incorrect. If housing prices go down, it is safe to say all housing prices in your city/municipality will go down. Hence your property taxes will be unaffected.

If only your house decreases in value, then your poperty taxes will go down.

Dub-yah's on the right track - pardon me?

Property taxes are generally based off of the assessed value of a property (land and dwellings/structures), with some convoluted and mostly horseshit formula involved. Thus, if your value goes up - so do the taxes. So..., if you carry the one and consider the prevailing winds; one could surmise that a decrease in value be it of your property or all properties within a municipality, would cause a decrease in your property taxes.

No.. that’s not how it works at all.

I know... because I’ve lived with a lower assessment combined with a tax increase. You try to appeal but everyone was in the same boat. This was during the 2008 recession.

All your assessment does is determine how much of the pie you have to pay into. So if you put a 7,000 sq ft McMansion on your property you will pay more, or if your neighbourhood is descending into a slum you’ll pay less. But in a macroeconomic swing like a recession or boom...
just about everyone is going to be in the same boat.

[TalkingPie]

The thing that many members of the real estate cult seem to miss is that there are only a few ways of cashing in on real estate wealth.

Let's say you buy a house, and the value increases like crazy. You're all excited because you've made six figures' profit doing nothing. You can even borrow against this windfall and buy all kinds of consumer crap, but you still have a huge mortgage, which doesn't go away unless you sell the house. Now you've done that, but all the other houses in your area have also increased in value. If you want to downsize, then your new cheaper house has increased by a lesser dollar figure than your old house did, and you've gained some ground, but if you want to upgrade, as most younger people do, the houses you want to buy have increased by more than the house you sold, so you're worse off than if the market had stayed reasonable. And that's before we talk about the money you spend on realtor commissions and land transfer taxes, which are proportional to the sale price. Maybe you'll rent, but the rents have also all gone up as a result of the increase in property values. The only way to truly cash out is to sell and move to a lower cost area, which most are unwilling to do.

While all this is happening, you're living in an area where the younger locals have no hope of settling down where they grew up, which puts a divide between the haves and have-nots. All that everyone talks about is real estate. They put every cent they have into their houses, smugly playing the wise investor while hoping that the scheme doesn't collapse, hiding from their neighbours the fact that they're leveraged to the hilt. Housing never goes down, except for when it does (see: Toronto in the early 90s, much of the US in 2008-2009, and much of Calgary since the oil boom went sideways).

I live in an area where houses are still relatively affordable, and I'm here to say that that's better. Even though I'm already on the ownership ladder (older 2,700 sq ft home + double garage on a 25,000 sq ft lot), I have no desire to see a bubble form. Houses are more enjoyable when you can view them as just a place to live. Put your retirement nest egg into a diversified portfolio.

[iflyforpie]

The thing that many members of the real estate cult seem to miss is that there are only a few ways of cashing in on real estate wealth.

Let's say you buy a house, and the value increases like crazy. You're all excited because you've made six figures' profit doing nothing. You can even borrow against this windfall and buy all kinds of consumer crap, but you still have a huge mortgage, which doesn't go away unless you sell the house. Now you've done that, but all the other houses in your area have also increased in value. If you want to downsize, then your new cheaper house has increased by a lesser dollar figure than your old house did, and you've gained some ground, but if you want to upgrade, as most younger people do, the houses you want to buy have increased by more than the house you sold, so you're worse off than if the market had stayed reasonable. And that's before we talk about the money you spend on realtor commissions and land transfer taxes, which are proportional to the sale price. Maybe you'll rent, but the rents have also all gone up as a result of the increase in property values. The only way to truly cash out is to sell and move to a lower cost area, which most are unwilling to do.

While all this is happening, you're living in an area where the younger locals have no hope of settling down where they grew up, which puts a divide between the haves and have-nots. All that everyone talks about is real estate. They put every cent they have into their houses, smugly playing the wise investor while hoping that the scheme doesn't collapse, hiding from their neighbours the fact that they're leveraged to the hilt. Housing never goes down, except for when it does (see: Toronto in the early 90s, much of the US in 2008-2009, and much of Calgary since the oil boom went sideways).

I live in an area where houses are still relatively affordable, and I'm here to say that that's better. Even though I'm already on the ownership ladder (older 2,700 sq ft home + double garage on a 25,000 sq ft lot), I have no desire to see a bubble form. Houses are more enjoyable when you can view them as just a place to live. Put your retirement nest egg into a diversified portfolio.

The emperor wears no clothes.

If you asked a stock broker what he thought about you buying a half million dollars of a single stock in a company leveraged at 75% or even 90 or 95% with annual fees of tens of thousands of dollars and tens of thousands more dollars to sell out and cash in.... he’d probably think you were nuts.

The things the real estate cult never tells you:

How much of your mortgage payment is interest in the first few years, and how much interest you will pay by the time you have your house paid off assuming you don’t dig into your equity like so many people do. Even more so if you’re paying CMHC insurance and fire/death insurance for the benefit of the banks, not yourself.

How much a realtor, lawyer, and closing fees cost when you sell a property... which either have to come out of your savings or equity. First time homebuyers think realtors are the best people in the world.. doing all of this work helping them buy a home for FREE!!

Home repairs... from a $2000 hot water tank to a $30,000 roof repair and appliances and renos all kinds of thousand dollar sundries in between. Nobody ever adds those up when talking about how much money they made when they sold their house.

That’s an awful lot of money to try and avoid “throwing money away renting” when renting is often significantly cheaper due to economics and the (usually) more established owners of income properties.

Then there’s the people who build up little rental empires all on the unsustainable rise of real estate values. What’s going to happen if the values reverse? Maybe smart renters with a bunch of savings will decide that’s the time to buy, and dumb ones won’t be able to afford rent because of the economic situation.

The only time a house makes sense is if you can buy one for about 3-4 times what your household makes in a year and you’re going to put over 25% down and live in it for at least 20 years... making extra payments that go directly against the principle. That way when you retire you won’t have rent or mortgage and an asset that you can sell when you can no longer live independently.

Otherwise, rent. Use your mobility to take advantage of employment opportunities. Put the extra money you would be paying mostly for interest into diverse and more liquid investments. Then when you are where you want to be in career and life and ready to settle down, buy a home in an affordable area.

That’s the advice I wish I would have given myself before being goaded by boomer parents to buy a house at too young of an age and yes making tons of money in transactions but also losing tons and being house broke for a significant portion of my 20s and 30s.

[flyingjerry]

The thing that many members of the real estate cult seem to miss is that there are only a few ways of cashing in on real estate wealth.

Let's say you buy a house, and the value increases like crazy. You're all excited because you've made six figures' profit doing nothing. You can even borrow against this windfall and buy all kinds of consumer crap, but you still have a huge mortgage, which doesn't go away unless you sell the house. Now you've done that, but all the other houses in your area have also increased in value. If you want to downsize, then your new cheaper house has increased by a lesser dollar figure than your old house did, and you've gained some ground, but if you want to upgrade, as most younger people do, the houses you want to buy have increased by more than the house you sold, so you're worse off than if the market had stayed reasonable. And that's before we talk about the money you spend on realtor commissions and land transfer taxes, which are proportional to the sale price. Maybe you'll rent, but the rents have also all gone up as a result of the increase in property values. The only way to truly cash out is to sell and move to a lower cost area, which most are unwilling to do.

While all this is happening, you're living in an area where the younger locals have no hope of settling down where they grew up, which puts a divide between the haves and have-nots. All that everyone talks about is real estate. They put every cent they have into their houses, smugly playing the wise investor while hoping that the scheme doesn't collapse, hiding from their neighbours the fact that they're leveraged to the hilt. Housing never goes down, except for when it does (see: Toronto in the early 90s, much of the US in 2008-2009, and much of Calgary since the oil boom went sideways).

I live in an area where houses are still relatively affordable, and I'm here to say that that's better. Even though I'm already on the ownership ladder (older 2,700 sq ft home + double garage on a 25,000 sq ft lot), I have no desire to see a bubble form. Houses are more enjoyable when you can view them as just a place to live. Put your retirement nest egg into a diversified portfolio.

The emperor wears no clothes.

If you asked a stock broker what he thought about you buying a half million dollars of a single stock in a company leveraged at 75% or even 90 or 95% with annual fees of tens of thousands of dollars and tens of thousands more dollars to sell out and cash in.... he’d probably think you were nuts.

The things the real estate cult never tells you:

How much of your mortgage payment is interest in the first few years, and how much interest you will pay by the time you have your house paid off assuming you don’t dig into your equity like so many people do. Even more so if you’re paying CMHC insurance and fire/death insurance for the benefit of the banks, not yourself.

How much a realtor, lawyer, and closing fees cost when you sell a property... which either have to come out of your savings or equity. First time homebuyers think realtors are the best people in the world.. doing all of this work helping them buy a home for FREE!!

Home repairs... from a $2000 hot water tank to a $30,000 roof repair and appliances and renos all kinds of thousand dollar sundries in between. Nobody ever adds those up when talking about how much money they made when they sold their house.

That’s an awful lot of money to try and avoid “throwing money away renting” when renting is often significantly cheaper due to economics and the (usually) more established owners of income properties.

Then there’s the people who build up little rental empires all on the unsustainable rise of real estate values. What’s going to happen if the values reverse? Maybe smart renters with a bunch of savings will decide that’s the time to buy, and dumb ones won’t be able to afford rent because of the economic situation.

The only time a house makes sense is if you can buy one for about 3-4 times what your household makes in a year and you’re going to put over 25% down and live in it for at least 20 years... making extra payments that go directly against the principle. That way when you retire you won’t have rent or mortgage and an asset that you can sell when you can no longer live independently.

Otherwise, rent. Use your mobility to take advantage of employment opportunities. Put the extra money you would be paying mostly for interest into diverse and more liquid investments. Then when you are where you want to be in career and life and ready to settle down, buy a home in an affordable area.

That’s the advice I wish I would have given myself before being goaded by boomer parents to buy a house at too young of an age and yes making tons of money in transactions but also losing tons and being house broke for a significant portion of my 20s and 30s.

There is so much of this that is just made up guidance based on your own beliefs. It doesn't matter whether you put 5% down or 50% down. If you buy a house, in 25 years you will have no mortgage payment. If you rent, you will be susceptible to rent increases every year for the rest of your life. If the plan is to invest the difference between renting and buying, you will need to have quite a large sum to be able to pay $XX dollars in dividends in 25 years.

Most importantly, people will always need a place to live. Even if housing drops 90%, in 25 years you will have somewhere to live, mortgage free. And you still have the option to be mobile by renting out or Air Bnbing your home.

[ayseven]

It is pretty disheartening all round. Investments not in real estate are hugely risky too. Unless they're big banks...

[iflyforpie]

The thing that many members of the real estate cult seem to miss is that there are only a few ways of cashing in on real estate wealth.

Let's say you buy a house, and the value increases like crazy. You're all excited because you've made six figures' profit doing nothing. You can even borrow against this windfall and buy all kinds of consumer crap, but you still have a huge mortgage, which doesn't go away unless you sell the house. Now you've done that, but all the other houses in your area have also increased in value. If you want to downsize, then your new cheaper house has increased by a lesser dollar figure than your old house did, and you've gained some ground, but if you want to upgrade, as most younger people do, the houses you want to buy have increased by more than the house you sold, so you're worse off than if the market had stayed reasonable. And that's before we talk about the money you spend on realtor commissions and land transfer taxes, which are proportional to the sale price. Maybe you'll rent, but the rents have also all gone up as a result of the increase in property values. The only way to truly cash out is to sell and move to a lower cost area, which most are unwilling to do.

While all this is happening, you're living in an area where the younger locals have no hope of settling down where they grew up, which puts a divide between the haves and have-nots. All that everyone talks about is real estate. They put every cent they have into their houses, smugly playing the wise investor while hoping that the scheme doesn't collapse, hiding from their neighbours the fact that they're leveraged to the hilt. Housing never goes down, except for when it does (see: Toronto in the early 90s, much of the US in 2008-2009, and much of Calgary since the oil boom went sideways).

I live in an area where houses are still relatively affordable, and I'm here to say that that's better. Even though I'm already on the ownership ladder (older 2,700 sq ft home + double garage on a 25,000 sq ft lot), I have no desire to see a bubble form. Houses are more enjoyable when you can view them as just a place to live. Put your retirement nest egg into a diversified portfolio.

The emperor wears no clothes.

If you asked a stock broker what he thought about you buying a half million dollars of a single stock in a company leveraged at 75% or even 90 or 95% with annual fees of tens of thousands of dollars and tens of thousands more dollars to sell out and cash in.... he’d probably think you were nuts.

The things the real estate cult never tells you:

How much of your mortgage payment is interest in the first few years, and how much interest you will pay by the time you have your house paid off assuming you don’t dig into your equity like so many people do. Even more so if you’re paying CMHC insurance and fire/death insurance for the benefit of the banks, not yourself.

How much a realtor, lawyer, and closing fees cost when you sell a property... which either have to come out of your savings or equity. First time homebuyers think realtors are the best people in the world.. doing all of this work helping them buy a home for FREE!!

Home repairs... from a $2000 hot water tank to a $30,000 roof repair and appliances and renos all kinds of thousand dollar sundries in between. Nobody ever adds those up when talking about how much money they made when they sold their house.

That’s an awful lot of money to try and avoid “throwing money away renting” when renting is often significantly cheaper due to economics and the (usually) more established owners of income properties.

Then there’s the people who build up little rental empires all on the unsustainable rise of real estate values. What’s going to happen if the values reverse? Maybe smart renters with a bunch of savings will decide that’s the time to buy, and dumb ones won’t be able to afford rent because of the economic situation.

The only time a house makes sense is if you can buy one for about 3-4 times what your household makes in a year and you’re going to put over 25% down and live in it for at least 20 years... making extra payments that go directly against the principle. That way when you retire you won’t have rent or mortgage and an asset that you can sell when you can no longer live independently.

Otherwise, rent. Use your mobility to take advantage of employment opportunities. Put the extra money you would be paying mostly for interest into diverse and more liquid investments. Then when you are where you want to be in career and life and ready to settle down, buy a home in an affordable area.

That’s the advice I wish I would have given myself before being goaded by boomer parents to buy a house at too young of an age and yes making tons of money in transactions but also losing tons and being house broke for a significant portion of my 20s and 30s.

There is so much of this that is just made up guidance based on your own beliefs. It doesn't matter whether you put 5% down or 50% down. If you buy a house, in 25 years you will have no mortgage payment. If you rent, you will be susceptible to rent increases every year for the rest of your life. If the plan is to invest the difference between renting and buying, you will need to have quite a large sum to be able to pay $XX dollars in dividends in 25 years.

Most importantly, people will always need a place to live. Even if housing drops 90%, in 25 years you will have somewhere to live, mortgage free. And you still have the option to be mobile by renting out or Air Bnbing your home.

Yeah. It’s just made up the interest and CMHC insurance you will pay on a 5% vs a 25% down. Money that’s gone, never to come back.

It’s just made up that 5% or 10% down can see your entire equity be eaten up in market swings and closing costs if you have to move early in your mortgage. Ever had the pleasure of paying several hundred dollars a month for someone else to live in the place that you own based on the disparity between mortgage payments and market rental rates? I’ve been on both sides of it.

It’s just made up that house for house, neighbourhood for neighbourhood, that renting is often cheaper than buying initially, and that the point where you actually start building equity in your house in any sort of sustainable fashion (that won’t be wiped out by an interest increase or bad economy) is further along that people realize.

It’s just made up that often market swings are accompanied by job losses making you unable to service the debt that you acquired based on being gainfully employed.

I didn’t say don’t buy a house. I said don’t buy one early, don’t buy one for a minimum down payment, don’t buy one that’s too expensive, don’t take on a mortgage you can only just service, and don’t forget what it actually costs to OWN a house, too.

Yeah... everyone needs a place to live, including retirees who still have to live for decades. Better not have everything tied up in your house.

Is that bad advice?

[corethatthermal]

The only time a house makes sense is if you can buy one for about 3-4 times what your household makes in a year and you’re going to put over 25% down and live in it for at least 20 years... making extra payments that go directly against the principle. That way when you retire you won’t have rent or mortgage and an asset that you can sell when you can no longer live independently.

Excellent sage advice !

[digits_]

You can buy a house with 5% down. Assuming no increase in home value, and assume that your rental income exceeds all payments and costs, what other investment will multiply my money by 20 after 25 years?

Sure you pay intrest and you have to deal with tenants. But still... It is hard to beat those numbers...