CMHC: Home prices could fall 47.9%

With the housing market going crazy, I was wondering what CMHC was forecasting....I don't think I want to know now :)

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Canada Mortgage and Housing Corporation (CMHC) says house prices could fall 47.9 per cent peak-to-trough with an unemployment rate of 25 per cent in its worst case scenario.

That worst case outlook is for a W-shaped recovery, which is a partial recovery followed by a resurgence of COVID-19 leading to a prolonged recession and a loss of confidence. The scenario assumptions include no government assistance, stocks and oil would fall, and four mid-sized financial institutions and one private mortgage insurer would fail.

CMHC says without government intervention in such a scenario, its solvency and capitalization would be in question. Even with help, the agency says prices would fall 31.8 per cent and the unemployment rate would be 24.2 per cent.

In a U-shaped scenario, which involves a steep but short peak-to-trough decline in GDP of 7 per cent before recovery, it sees prices falling 33.9 per cent and an unemployment rate of 14.8 per cent.

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https://ca.news.yahoo.com/cmhc-home-...185740208.html

No worries ! Budgets will balance themselves !!!

Worst case scenario,MikePal. The "doom and gloomers" are at it again. Real Estate company forecasts aren't anywhere near that,although,they are forecasting a "mid market" correction if we don't get the vaccines rolling on a consistent basis citing unemployment and the collapse of the small business segment.

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Originally Posted by trimmer21

Worst case scenario,MikePal. The "doom and gloomers" are at it again. Real Estate company forecasts aren't anywhere near that,

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It says that in the first line....but CMHC is far more attuned to the negative side of Housing market than the Real Estate boards that want to project the most positive side of the Market. We all know a market correction is coming, so somewhere in between, I'm guessing the higher side of loses

I was watching an analysis of the vacancy rates in the cities. This pandemic is killing the business real estate/leasing market. Swaths of storefronts and office towers are empty and a whack of condo's sitting empty as tenants moved out of the city when their jobs could be done at home.

Saw this morning 1 in 6 businesses have failed in the past year...

I doubt if houses will fall by that amount, you cannot build a house for less then 200 thousand excluding the land. Just to replace my house which was built in 1973 the cost would be approx 275000 with material and labor.

There might be a correction coming but the one rule that will buck market trends is LOCATION - LOCATION - LOCATION. You may see a drop in some areas or type of houses (ex) condo's but there are areas that will still demand top $$ and there are people that will pay that, and maybe more, to move there.

I doubt you will see a large correction without increasing the mortgage rate

I believe it. With all the small business closures and loss of income the UBI will only cover so much rent or home ownership. The housing bubble will burst.

"Prior to the second wave of infections, the CFIB estimated 160,000 businesses in Canada would fail before the pandemic ends. Kelly raised that number to 225,000, or more than one-in-seven."

https://www.bnnbloomberg.ca/up-to-22...-ceo-1.1520974

"As of December 2017, the Canadian economy totaled 1.18 million employer businesses. Of these, 1.15 million (97.9 percent) were small businesses, 21,926 (1.9 percent) were medium-sized businesses and 2,939 (0.2 percent) were large businesses."

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Originally Posted by impact

I believe it. With all the small business closures and loss of income the UBI will only cover so much rent or home ownership. The housing bubble will burst.

"Prior to the second wave of infections, the CFIB estimated 160,000 businesses in Canada would fail before the pandemic ends. Kelly raised that number to 225,000, or more than one-in-seven."

https://www.bnnbloomberg.ca/up-to-22...-ceo-1.1520974

"As of December 2017, the Canadian economy totaled 1.18 million employer businesses. Of these, 1.15 million (97.9 percent) were small businesses, 21,926 (1.9 percent) were medium-sized businesses and 2,939 (0.2 percent) were large businesses."

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I would like to say that if this keeps going there will be a large protest, rebellion (or at least some push back) but Canadians are way too soft - we are good complainers but that is about it. That is why I admire some European countries. They do not take any crap from their gov't and are not afraid to have a strike to protest.

It is clearly obvious that both the provincial and federal gov't are talking our of both sides of their mouth. What gets me angry is that they are not even hiding it anymore because they know we will do squat.

That likely won't happen until they raise the prime interest rate to around 4% to 5%.
We need the dollar to crash first, sending inflation through the roof.

I'm not a money guy..but if I understand the basics: A $500K buy will require $100k downpayment (20%) to get a CMHC insurance at 2.4 % so will add $12K to the cost. So that mortgage will cost you about $520K over 25 yrs at 2%. If mortgages go up to 5% that will drive it up to about $720K .

Yea that will break a few balls HaHa..

I think 20% is only required if you already have 1 home otherwise 5% down.

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Originally Posted by MikePal

I'm not a money guy..but if I understand the basics: A $500K mortgage will require $100k downpayment (20%) to get a CMHC insurance at 2.4 % so will add $12K to the cost. So that mortgage will cost you about $520K ($550k -$100K downpayment + CMHC) over 25 yrs at 2%. If mortgages go up to 5% that will drive it up to about $720K .

Yea that will break a few balls HaHa..

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We can't forget about the "stress test" where buyers must have 25% down and qualify at double their stated interest rate.

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Originally Posted by greatwhite

I think 20% is only required if you already have 1 home otherwise 5% down.

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I pulled this off the front page for the CMHC Mortgage Calculator...I think it is because of the stress test stuff they implemented...

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Did You Know?
If your down payment is under 20% of the purchase price, you will need mortgage insurance on your loan. We will determine the size of this premium and automatically include it in the calculations. Mortgage insurance is only available when the purchase price is below $1,000,000.

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https://www.cmhc-schl.gc.ca/en/finan...age-calculator

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Originally Posted by MikePal

I'm not a money guy..but if I understand the basics: A $500K mortgage will require $100k downpayment (20%) to get a CMHC insurance at 2.4 % so will add $12K to the cost. So that mortgage will cost you about $520K ($550k -$100K downpayment + CMHC) over 25 yrs at 2%. If mortgages go up to 5% that will drive it up to about $720K .

Yea that will break a few balls HaHa..

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Another reason not to buy what you cannot afford, with room.

So many people are rich based on salary and poor in the books, glad we moved out of town and bought when we did, a 50% market crash to the over inflated properties will probably do nothing to our little property.

I bet most people that bought have done well and will continue to do so.... I don't understand how that is possible, it makes no sense but house prices have been increasing steady over the last few years.
You would have thought given the pandemic (people loosing their jobs etc...) housing prices would have dropped but for the life of me, I just can't figure out why that has not happened.... They say it's coming but that is what they have been saying for the last 10 yrs.

Well I hope vacant land prices drop, I will be ready.

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Originally Posted by Deer Hunter

Well I hope vacant land prices drop, I will be ready.

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Recreation properties will be the first to go.

Looks like the West is seeing or will see more of a hit than the East. I'm liking the Niagara & Burlington numbers!

https://financialpost.com/real-estat...firing-equally

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Originally Posted by fratri

I bet most people that bought have done well and will continue to do so.... I don't understand how that is possible, it makes no sense but house prices have been increasing steady over the last few years.
You would have thought given the pandemic (people loosing their jobs etc...) housing prices would have dropped but for the life of me, I just can't figure out why that has not happened.... They say it's coming but that is what they have been saying for the last 10 yrs.

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There is a ton of Chinese money coming in here buying up everything and anything. An old 1,100 foot re modelled wood clad bungalow on the next street over from me just sold for asking price One MILLION two hundred and fifty thousand.

I have a 4,000 square foot detached home right over my backyard, bought by Chinese 3 years ago, bunch of kids were in there all going to the UOT Mississauga campus, their parents paid One Million three hundred thousand, they went back to China last January, house has been sitting empty for over a year, back window blew open in the summer and is hanging off, nobody checks the mail in the last 6 mths.

I jog by a brand new built 10,000 foot mansion on the Queensway, built over two years ago Chinese money, probably cost over Two Million,
there has been NOBODY living in that home since it was built, period.

The last two big 200 acre lots by my cabin have been bought by Chinese buyers, they have money to burn.

If the Government gets the 400,000 immigrants it expects each year and if they happen to be Chinese or other well heeled immigrants ,the prices are only going one way and that is straight up like a rocket ship.

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Originally Posted by 410001661

Recreation properties will be the first to go.

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Sorry 41000 but you may be to late already, the Chinese are ahead of you right now. You could have bought a 10 acre rural lot south of me for
$25,000 up until a few years age, straight bush, no hyrdo .Last SPRING ONE SOLD FOR $71,000, NOW AN AGENT IS TRYING TO FLIP IT FOR
$250,000 so basically a 10times increase over the past two years.

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Originally Posted by Gilroy

There is a ton of Chinese money coming in here buying up everything and anything. An old 1,100 foot re modelled wood clad bungalow on the next street over from me just sold for asking price One MILLION two hundred and fifty thousand.

I have a 4,000 square foot detached home right over my backyard, bought by Chinese 3 years ago, bunch of kids were in there all going to the UOT Mississauga campus, their parents paid One Million three hundred thousand, they went back to China last January, house has been sitting empty for over a year, back window blew open in the summer and is hanging off, nobody checks the mail in the last 6 mths.

I jog by a brand new built 10,000 foot mansion on the Queensway, built over two years ago Chinese money, probably cost over Two Million,
there has been NOBODY living in that home since it was built, period.

The last two big 200 acre lots by my cabin have been bought by Chinese buyers, they have money to burn.

If the Government gets the 400,000 immigrants it expects each year and if they happen to be Chinese or other well heeled immigrants ,the prices are only going one way and that is straight up like a rocket ship.

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British Columbia, Banff ?

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Originally Posted by Gilroy

Sorry 41000 but you may be to late already, the Chinese are ahead of you right now. You could have bought a 10 acre rural lot south of me for
$25,000 up until a few years age, straight bush, no hyrdo .Last SPRING ONE SOLD FOR $71,000, NOW AN AGENT IS TRYING TO FLIP IT FOR
$250,000 so basically a 10times increase over the past two years.

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Same here but not the Chinese........Torontonians! War time wood bungalows around the corner being sold for anywhere between $1M and $1.2M and town down for a new build. New builds are anywhere between $1.8M and $2M and are selling. We get letters weekly and phone calls weekly for people asking if we are interested in selling. I moved to downtown Burlington for a reason and that is location to amenities (pubs, restaurants, access to the lake) and re-sale. I am not overly concerned about rural property pricing as I think that my Burlington house and my student rental in St. Catharines will far out pace rural property value over the next 10 years.

I see that I am not far off........Niagara #1 and Burlington #3:

https://financialpost.com/real-estat...firing-equally

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Originally Posted by trimmer21

We can't forget about the "stress test" where buyers must have 25% down and qualify at double their stated interest rate.

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Double 1.5% is still nothing ... wait until it hits 5% to 6%, then see what happens ... I heard nightmare stats that 25% of homeowners will fold. If that doesn't create a fiasco and major drop in prices, then I don't know what will.

For now, everyone is being saved by low interest rates.

To compound the issue, my theory (and likely the same with many of your opinions) is that people are spending beyond their means, which is only made possible by appreciating home prices ... people re-mortgage every 3 to 5 years, access a few extra $100k of line of credit, and then use that credit to subsidize their lifestyle. It's worked for decades because home prices have gone up, up, up. If we end up in a correction, that takes a while to deal with (several years before the prices come back to where they were before the correction plus some more $$ to create a line of credit increase) ... then people will be in huge trouble ... spending will be curbed, economy drops, some declare bankruptcy ... anyhow, it literally would be a disaster.

So, we don't need to make it complicated ... watch interest rates ... when you see evidence of it going to 5% ... it's almost a given, the market will be in big, big trouble.

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Originally Posted by 410001661

There might be a correction coming but the one rule that will buck market trends is LOCATION - LOCATION - LOCATION. You may see a drop in some areas or type of houses (ex) condo's but there are areas that will still demand top $$ and there are people that will pay that, and maybe more, to move there.

I doubt you will see a large correction without increasing the mortgage rate

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Allow me to change your wording.
the one rule that will buck market trends is EMPLOYMENT-EMPLOYMENT-EMPLOYMENT.

Where would any one look to move and work...........For the last 12 years, today, and the next 5 years.....No argument the GTA has taken a hit in job losses like...... everywhere else. Likely less than other areas, other provinces ( Alberta anyone?) Regardless, where are the jobs? This year is an anomaly with immigration, and who knows when it will open back up but there are reasons for demand far outstripping supply. Immigration alone adds over 100,000 people per year to the GTA. That doesn't count Ontarians/Canadians looking for a better life/work

I heard a report the other day that Durham region grew by 80,000 people in 2020.
Correction" Sure. Outright crash?
Who knows, but the bottom line is, demand is still through the roof. If it wasn't there would be no bidding wars, no stupid prices, no ripples now into outlying areas

No that is correct and I think always there. When I purchased my first home in 1996 I only had 5% to put down so I had to go under CMHC for Mortgage insurance. I don't know much about the stress test but I think it has more to do with a minimum interest rate. For example I have told my daughter and her boy friend that they should make sure they can afford the mortgage based on an 8% interest rate.

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Originally Posted by MikePal

I pulled this off the front page for the CMHC Mortgage Calculator...I think it is because of the stress test stuff they implemented...



https://www.cmhc-schl.gc.ca/en/finan...age-calculator

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Originally Posted by greatwhite

For example I have told my daughter and her boy friend that they should make sure they can afford the mortgage based on an 8% interest rate.

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Tell them they shouldn't buy anything that will suck more than 30% out of the their household income. That's what the banks were doing back in the early 90's...made sense. Not sure why they don't stick to that anymore.

Also don't listen to your banker. They kept telling me I could afford a house about $90K more than I was mortgaging. I said "no" amortize it for 15 yrs instead of 25. Made for bigger monthly payments but the mortgage got paid off in 15 yrs.

I'm not sure what the banks are doing with allowing people to forgo their mortgage payments since the pandemic hit. If there will be a penalty or if they will just tack it on at the end.

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Originally Posted by MikePal

I'm not sure what the banks are doing with allowing people to forgo their mortgage payments since the pandemic hit. If there will be a penalty or if they will just tack it on at the end.

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No penalty but the interest continues for the length that you push it back, compound that over 20 years on a $500K home and the banks are going to do fine.

We made sure that we could pay the mortgage on 1 pay of the 4 pays we get a month between my wife and I, that way if I go on EI or if she was home on mat leave we would not be screwed. Fast forward 4 years, coming up to mat leave without top up number 2 and we will have a mortgage payment more than we need a month based on our salaried jobs and still have our side gig to pay off anything we want to do for fun. I feel like we did things right, did not end up house poor and will have some backup in case things hit the fan down the road.

There is so many people up to their eye balls in debt. They will fall hard. This craziness has to plateau sometime, Im better its not far away. Save your Pennies!

Sent from my SM-G960W using Tapatalk

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Originally Posted by MikePal

Tell them they shouldn't buy anything that will suck more than 30% out of the their household income. That's what the banks were doing back in the early 90's...made sense. Not sure why they don't stick to that anymore.

Also don't listen to your banker. They kept telling me I could afford a house about $90K more than I was mortgaging. I said "no" amortize it for 15 yrs instead of 25. Made for bigger monthly payments but the mortgage got paid off in 15 yrs.

I'm not sure what the banks are doing with allowing people to forgo their mortgage payments since the pandemic hit. If there will be a penalty or if they will just tack it on at the end.

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First house buy a duplex or a triplex and live in part of the house and rent the rest out. If rates do what they say there will be lots of renters. After 5-8 years you can either sell for profit or keep it as income and buy another house to live in.

As far as the future goes cash is KING! You need to insulate yourself from the ability of the gov't to claw back anything.....because you know they will be recouping COVID for the next 10-15 years

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Originally Posted by 410001661

First house buy a duplex or a triplex and live in part of the house and rent the rest out. If rates do what they say there will be lots of renters. After 5-8 years you can either sell for profit or keep it as income and buy another house to live in.

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Had a cousin do that back in the 80's. Bought a big house, put a suite in the basement for himself and rented the top floors for enough to pay off the all the bills. Smart move for a young 25 yr old construction worker.

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Originally Posted by MikePal

Had a cousin do that back in the 80's. Bought a big house, put a suite in the basement for himself and rented the top floors for enough to pay off the all the bills. Smart move for a young 25 yr old construction worker.

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That's what i did when i was 21. Bought a house in a university town close to the school and rented most of it out to classmates and than to the children (who were than students) of my parents friends. Did that for 10 years until house was paid for. Flipped that place when the time was right and have not had a mortgage or owed anybody anything since - that was 25 years ago.

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Originally Posted by 410001661

First house buy a duplex or a triplex and live in part of the house and rent the rest out. If rates do what they say there will be lots of renters. After 5-8 years you can either sell for profit or keep it as income and buy another house to live in.

As far as the future goes cash is KING! You need to insulate yourself from the ability of the gov't to claw back anything.....because you know they will be recouping COVID for the next 10-15 years

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No way, I am not sharing my new 2400 Sqft house with anyone..... I want the two car garage and all brand new stuff, seem to hear this more often than not from our youth these days.... Wants vs Needs.....they should teach that a little more in school...

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Originally Posted by fratri

No way, I am not sharing my new 2400 Sqft house with anyone..... I want the two car garage and all brand new stuff, seem to hear this more often than not from our youth these days.... Wants vs Needs.....they should teach that a little more in school...

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......sorry but listen to the post. A guys daughter and husband is looking for a 1st house......probably not in Brantford where housing is the cheapest I have ever seen. If they are looking in a higher priced area and have nothing to sell as leverage you have limited clout. Use other people to leverage your first buy. Buy smart and you will be better off when you sell or (keep as an investment property) vs going to where real-estate is cheap........it is cheap for a reason

So,what does everyone think of this? I was just talking with my daughter (real estate agent). Her clients,5 years ago,bought a house in North York in a middle class neighborhood for $779K,just got in under the wire and mortgaged the property up the wazoo at almost 75% of the value,including a huge second mortgage from the Bank of Mom&Dad. They struggled to make the payments and taxes which took almost 90% of their combined income,so,for 5 years,they're literally living hand-to-mouth. They list their house for sale last week,daughter shows them an older house south of Peterborough for $510K that needs some work,but,nothing immediate. She lists their house at $1.4M and it sells unconditionally in a week. The kids pay cash for the house and there's lots left over for renos. This stuff is typical according to my daughter. The kids are sacrificing like crazy in the short term and making out like bandits in the long term. Kids are smart. We don't give them enough credit.

Looks like they did well, but now they're stopping at the gas pumps more often, more hours on the road, is it really worth it.

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Originally Posted by Fisherman

Looks like they did well, but now they're stopping at the gas pumps more often, more hours on the road, is it really worth it.

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This is what blows my mind, I have coworkers who drive 2 hours 1 direction in perfect weather and traffic. Imagine the vehicle costs and the toll on health and family. Come winter time or cottage season traffic they spend half their life during the week driving. I opted to suffer up front and pay more on the mortgage to live driving junkers and have no internet or cable for a few years and I'm sure glad I did because commuting 3-4 hours daily and replacing my vehicle every couple years would get old quick.

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Originally Posted by Fisherman

Looks like they did well, but now they're stopping at the gas pumps more often, more hours on the road, is it really worth it.

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Evidently,the commute for them is no biggie. The trick is to own your home free and clear. Once you're there,and as long as they can carry utilities,traveling and taxes,not a hell of a lot else really matters. The economy could crash completely and as long as you can turn a few bucks to keep the heat on and the tax mutts away,the world can crash around you.

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Originally Posted by trimmer21

The trick is to own your home free and clear. Once you're there,and as long as they can carry utilities,traveling and taxes,not a hell of a lot else really matters.

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That's very true..I've been mortgage free for almost 10 yrs now with a pension that covers all the ancillary costs. Sure is a nice to be settled in.

I've been talking to a few other pensioners, with housing market being so good, is it time to sell off the 'family' home and head towards renting or owning a condo closer to amenities for the last phase of our existence. Mix views. Most would have enough equity to bank and live comfortable off it.

Some worry about leaving an inheritance for the kids. Funny thing is, their own parents are still alive and they are in the 60's with no real need for the money that will be left to them.

Some interesting stats:

In fact, almost 9 in 10 Canadian homeowners aged 25 to 44 (88%) have a mortgage. In comparison, only about 17% of Canadian seniors aged 65 or older have a mortgage. Among those who have an outstanding balance on their mortgage, the median amount owing is $200,000. In fact, the median mortgage debt of Canadian families has more than doubled since 1999, even after adjusting for increases in salaries and the cost of living.

On top of this, about 13% of Canadians have an outstanding balance on a home equity line of credit (HELOC) attached to their primary residence. For those with an outstanding balance on their HELOC, the median amount outstanding is $30,000.

from: https://www.canada.ca/en/financial-c...rvey-2019.html

Not sure why some almost seem to welcome rates taking off and a crash. We got a wee little taste of what would happen in 2008. We are getting another today.

The “damage” won’t be limited to just the people that are house poor. Banks will take beatings, choke off credit ( liquidity crunch). People won’t be able to borrow, nor will small businesses etc etc. Or if their still able, their rates will be much higher...meaning.....2008 on steroids......now couple that with many who doubt have it so good, being sacrificed today. Forced to live on rice and water. Many more, who are holding on today.....The snowball grows and gains momentum...

others won’t spend, etc the economy will go into a massive tailspin. Seniors will see their savings and pensions wiped out, and so on. We don’t live in a bubble and the ripple effects of a housing crash will touch near everyone.

Maybe 20 years ago, or when we were young and starting families renting was more viable. Have you guys checked the rental markets?
They aren’t that much better. Why pay $1500 for a closet, in a sketchy hood. When $2,000 or $2,500 is your mortgage and land taxes.

Will say, if it happens. No one to blame but ourselves. Our greed, our keeping up with the Jones’s, especially Boomers...Our lack of forsight going back to around 2000. Not diversifying etc etc etc..

Might also want to recall one boatload of people for whom their homes are their retirement funds. Thanks to greed in PS, greed in private and stagnant wages and more...Maybe you all want to pay to house and feed them post crash...


just rewards perhaps, because Boomers and their own wants, screwed it up, but it could make Greece look good.

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Originally Posted by greatwhite

I doubt if houses will fall by that amount, you cannot build a house for less then 200 thousand excluding the land. Just to replace my house which was built in 1973 the cost would be approx 275000 with material and labor.

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Build cost at the moment is 8nsane, material prices have nearly doubled in the last couple years. If you can have a house built at $300 a foot, you're doing damn good. Most are now hitting the $375-$400 a square foot range.

Sent from my SM-G973W using Tapatalk

lol. Literally just saw and read this.
The article should have delved into how much debt he had to take on.
$330,000 to refurb a garage into a 1 bedroom rental. He initially listed it for $2,200/month. No bites, so he dropped to $1,800/month. Why? Because demand>>>>>>>>supply. Why?

~In 2018, Sadler lived in a three-bed, one-bath rental at Broadview and Danforth, paying $2,400 a month.
~1.1 million for a small house ( My old stomping grounds, I can picture what 1 million bought). Even with $250,000 from his father ( likely the Down Payment)...So call it $700,000 mortgage. Plus $330,000 ( his fathers $$) from somewhere to convert the garage. Ultimately, robbing Peter to pay Paul..or 6 of one, 1/2 dozen of another

$1,800 per month to rent this......
https://torontolife.com/real-estate/...ebfISkhbZHq_mk


And if it crashes........................
He's 1 grain of sand, that would start the mother of all landslides that few would side step.

If prices drop 47%., the banks will be owning a helluva lot of homes

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Originally Posted by trimmer21

So,what does everyone think of this? I was just talking with my daughter (real estate agent). Her clients,5 years ago,bought a house in North York in a middle class neighborhood for $779K,just got in under the wire and mortgaged the property up the wazoo at almost 75% of the value,including a huge second mortgage from the Bank of Mom&Dad. They struggled to make the payments and taxes which took almost 90% of their combined income,so,for 5 years,they're literally living hand-to-mouth. They list their house for sale last week,daughter shows them an older house south of Peterborough for $510K that needs some work,but,nothing immediate. She lists their house at $1.4M and it sells unconditionally in a week. The kids pay cash for the house and there's lots left over for renos. This stuff is typical according to my daughter. The kids are sacrificing like crazy in the short term and making out like bandits in the long term. Kids are smart. We don't give them enough credit.

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Well, that’s an impressive success story and good for them. A hike in interest rates will make stories like that one and many others go another way and end up in a scenario like JBen said. I could never live like that. I saved hard after college and put down a healthy (30%) down payment on my first house and killed the mortgage in 5 years (no kids, wife or vehicle payments) and never owed anything to anyone since - and even doing that I was careful how much I spent on my current house. Later on I was happy I did. I’m quite envious of newer houses with far more room and nicer finishes, but the lack of mortgage stress is immeasurable. Not bragging here - but if more people lived BELOW their means they’d be better off IMHO.

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Originally Posted by dean.f

This is what blows my mind, I have coworkers who drive 2 hours 1 direction in perfect weather and traffic. Imagine the vehicle costs and the toll on health and family. Come winter time or cottage season traffic they spend half their life during the week driving. I opted to suffer up front and pay more on the mortgage to live driving junkers and have no internet or cable for a few years and I'm sure glad I did because commuting 3-4 hours daily and replacing my vehicle every couple years would get old quick.

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This is definitely a 'I want it and I want it now'. I have friends that lived in Oakville/Burlington and wanted to 'cash out' and move down the QEW to Niagara - Grimsby and Beamsville and buy a bigger house for less money. One of these guys is a TO copper and worked shifts so the drive/traffic was not that bad most days (other than beating the out of truck). The other guy works at TD Bank downtown and from his house in Burlington which was close to the GO station still had a 1Hr 15min commute..........after he moved to Grimsby it went to almost 1Hr 45min (with no traffic issues).

This is a personal decision - is your bigger house worth the additional windshield time, cost, stress? For me it is not. I do not commute (home office based) I just need to be close to an airport but my wife works on 'pill hill' in Mississauga. But just looking at the financial situation - a home in Oakville/Burlington will appreciate more than a house in Cambridge or Beamsville so I cannot justify doing that move until I am close to packing it in (work not life). Even if both houses appreciated the same 50% of $1.5M is more than 50% of $700k so if you wait 10yrs you will have more buying power when you decide to make that move.

Not bragging here - but if more people lived BELOW their means they’d be better off IMHO.
You nailed it, every house needs 2 70 inch TV's every person has a 5G cell phone with unlimited, more toys than Santa Clause could ever hope to make. But, that's their wish and problem when stuff goes over the cliff. Bought our house in '83, mortage free in 87, raised 2 boys in it, and definitely don't have the need to heat or clean any more than we did at the start. I didn't buy toys until I was around 35 and even then pretty modest.

Not bragging here - but if more people lived BELOW their means they’d be better off IMHO.

No argument that is part of it. I think especially for the upper midddle class. Those lower down the food chain, it gets blurred. How much of it is living beyond their means by choice and how much because is "cost of living". Which is really, driven by those who have more.... Just look at what cars cost these days....let alone appliances, etc, etc, etc.
Look at how much rent is...Kind of hard to leave the Credit card alone, when X cost Y because others want to paid Z and buy ABCD and rent is $2,000/month and the median duo income for the have nots is 80k.

Not sure what you do Fisherman. So I'll use 41000 to "illustrate" the next thing. 4100 would likely not own his house, be able to afford vacations, or a boat or what ever 2 cars are in his driveway. If the masses weren't in debt, fueling the economy, creating the need for his products/services and putting food on his, your and my tables.

Some comnenting here I know are or were public servants. No mountains of debt, no economic growth, no income or corporate taxes, no paychecks and no pensions.
"food for thought"

My sister got so fed up with the Go Train commuting and the GTA ...she gave up a good Bay St job, took an $80k cut and moved up to Kitchener. Ended up living 5 minutes from work and had more money in her pocket at the end of the month than she ever did in the GTA.

For some people it's all about the income more than the quality of life. I always figured I'd rather mix paint at a hardware store and live in a small town than sit in traffic for 3 hrs a day and work in a cubicle...no matter what the material goods it would entitle me too.

It is all about cash flow. My first home back in 1984 had a first mortgage at 10 7/8% that we assumed from the previous owner and topped it up with a second mortgage at 13%. Wife and I budgeted and walked into it based on our modest income and made a good go of it. Sold the sports car and kept expenses to a minimum. Interest rate relief came and 3 houses later have been mortgage free for the last 28 years.

The shock will come to many this year when the interest rates rise once again. A lot of people will be hurting as loss of and / or lack of rise in income will not keep up with the inflation. This will be on a massive scale hence the Global Reset. No worries though. Our benevolent government will step in and help / for a price......

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Originally Posted by JBen

Not bragging here - but if more people lived BELOW their means they’d be better off IMHO.
Not sure what you do Fisherman. So I'll use 41000 to "illustrate" the next thing. 4100 would likely not own his house, be able to afford vacations, or a boat or what ever 2 cars are in his driveway. If the masses weren't in debt, fueling the economy, creating the need for his products/services and putting food on his, your and my tables.

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I did my 25 in the Military from '70 to '95, didn't stand at the bar every night when I was a single rat, saved a pile of money with excellent ROI on the (RHOP) reg home ownership, packed over 20K in there, the girlfriend at the time was doing similar. When we bought we had about $40k for a $50k house, 4 year mortgage, one car, no boat's, trains, planes, or snowmobile or holidays to the other side of the world. 1 TV. Once the debts were gone, we started living but not crazy, I'm retired now and have my toys to play with.

Fisherman, I'm not suggesting otherwise.

Economic growth, relies on spending. Whether that's consumers buying things, or companies spending to expand, or governments spending on infrastructure, and/or employee's, like you in the military. In the link below is a chart that represents household debt since around 1990. Worded differently, what occurred in both 2008 and 2020. People aren't spending, people aren't keeping up with the Jones, and the economy is in the toilet.

Other than governments, "everyone" spent far less. Everyone decided not to buy big screen TVs, not to take vacations, not to redo their kitchens. Not to use credit.

For all the comments about people living beyond their means. Fact is, doing so, put food on your table and money in your pocket and pension....large.
Whether your a government employee, "car salesman, real estate agent, insurance broker, teacher, electrician/tradesman, roofer, whoever


https://creditcardgenius.ca/blog/deb...e-ratio-canada

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Originally Posted by dean.f

This is what blows my mind, I have coworkers who drive 2 hours 1 direction in perfect weather and traffic. Imagine the vehicle costs and the toll on health and family. Come winter time or cottage season traffic they spend half their life during the week driving. I opted to suffer up front and pay more on the mortgage to live driving junkers and have no internet or cable for a few years and I'm sure glad I did because commuting 3-4 hours daily and replacing my vehicle every couple years would get old quick.

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There is an opportunity that was created by COVID. Many have realized they can work from home, which means the 2 hour drive is a non-issue ... so it creates the option of selling for big $$ in the city, and moving to cottage country with far less debt. But I agree, if you look at the cost of using a car to travel hours back and forth to work (which is basically throwing money into the fire) ... you're better off using that expense and getting more mortgage, and hopefully that gets you closer to work. At least then you have put the expense into subsidizing equity.

Couple more minutes.
"Household debt of 176". That's $1.76 owed on every dollar of disposable income. Which is a persons income after cough.......taxes.

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Statistics Canada added that annual trends show that lower income households tended to have a higher debt to disposable income ratio.

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https://www.cbc.ca/news/business/sta...debt-1.5609510

At what point, given stagnant wages and taxation, are the peons "forced" to use credit more.
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Mark, the option to sell high and buy low by moving out of the city. Might not be much of an option anymore. I'm not sure if it still holds true now, but back in the summer/fall, real estate prices were seeing the most growth, outside the city.

I know for a fact, two bungalows on my street have sold for over 1 million in the since summer. With one of them going 300,000 over list. A couples mtg payments/land taxes will be lower, but most all other expenses will be higher. Living outside the city isn't cheaper, the lifestyle is. I also know, people were lined up outside a sales center for the past couple weekends for a new subdivision. That hasn't even started yet...........Then it's just a matter of jobs/incomes taxes etc.

Which brings us to this.
https://www.huffingtonpost.ca/entry/...b6df63a91656a9

and jobs

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Originally Posted by canadaman30

If prices drop 47%., the banks will be owning a helluva lot of homes

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Maybe not the banks but the top 1 percent

Just watched a video from the UK they are buying up all the cheap pubs that have gone under.

The top will own everything soon enough.

Sent from my CLT-L04 using Tapatalk

What do they say? Something like property is never a bad investment. Buy a couple of properties during the fire sale and set your ‘inheritors’ , up for the future. Done every day in the stock market. Buy low, sell high. Capitalism at its finest.

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Originally Posted by fishermccann

What do they say? Something like property is never a bad investment. Buy a couple of properties during the fire sale and set your ‘inheritors’ , up for the future. Done every day in the stock market. Buy low, sell high. Capitalism at its finest.

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As it should be. Watch and wait. When time is right snap stuff up and pay cash. Other than my first house this is how I acquired all the property I currently own and the same way I will make future acquisitions. Best deals are during nasty recession and throw in an ugly divorce and things only get better.

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Originally Posted by Species8472

As it should be. Watch and wait. When time is right snap stuff up and pay cash. Other than my first house this is how I acquired all the property I currently own and the same way I will make future acquisitions. Best deals are during nasty recession and throw in an ugly divorce and things only get better.

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I hope to one day be in the position to do the same. It's a consistently successful method for regular folks to accumulate wealth.

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Originally Posted by dean.f

I hope to one day be in the position to do the same. It's a consistently successful method for regular folks to accumulate wealth.

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Should add that when interest rates are low it doesn't always make sense to pay cash if you can do better in the market. In those cases I just make sure I always have enough cash/liquidity to pay off mortgage in the event rates go up.

This thread reminded me of this ............ The Big Short :)

https://www.imdb.com/title/tt1596363/

Some considerable differences between the US and us. But "yep".
And I can't help but wonder, if people have forgotten or perhaps, given we barely felt it in 2008, unlike the US and Greece. That some think we will somehow be special �� Should a bonafide crash occur here.

Tidbits
The US dwarfs us, they have built in shock resilience. The difference between a house with 10 employed people and 1....given we are so much smaller, it would be worse. Another fact some seem to have forgotten the big cities in the US largely escaped it......it's the inverse here.

Household debt in the US was 170%. We are pushing 180%.

Mortgage debt alone is somewhere around 1.6 trillion. If property values crash, that's potentially 800B or more wiped out.

How much cash do people think Banks actually have.................have fun getting it.

MPAC.
Have to assume property tax revenue...look around today. Do we think Munis are flush......so lay off most of our cops and firefighters?

It would largely crush younger people. People,, those who plan get rich off it, will need supporting the tax pyramid in their doddering old ages...careful what wish you for

Etc and Et al
Anywho, given demand isn't likely to dry up......

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Originally Posted by fishermccann

What do they say? Something like property is never a bad investment. Buy a couple of properties during the fire sale and set your ‘inheritors’ , up for the future. Done every day in the stock market. Buy low, sell high. Capitalism at its finest.

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Exactly.......
Us the tax loop holes to avoid the capital gains tax and now you are cooking with gas!

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Originally Posted by dean.f

This is what blows my mind, I have coworkers who drive 2 hours 1 direction in perfect weather and traffic. Imagine the vehicle costs and the toll on health and family. Come winter time or cottage season traffic they spend half their life during the week driving. I opted to suffer up front and pay more on the mortgage to live driving junkers and have no internet or cable for a few years and I'm sure glad I did because commuting 3-4 hours daily and replacing my vehicle every couple years would get old quick.

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I do the 2hr one way every weekday. Home by 5pm. Vehicles love long trips, keep oil changed every 10,000 or so. Im on my 3rd commuter car, over 600k on the first 2. No toll on my health, gas cost is not unmanageable and surprisingly traffic (non existant) and weather have little bearing on my commute time. I have been doing it for almost 20 years, that's a lot of Coast to Coast A.M. lol..

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Originally Posted by contaucreek

I do the 2hr one way every weekday. Home by 5pm. Vehicles love long trips, keep oil changed every 10,000 or so. Im on my 3rd commuter car, over 600k on the first 2. No toll on my health, gas cost is not unmanageable and surprisingly traffic (non existant) and weather have little bearing on my commute time. I have been doing it for almost 20 years, that's a lot of Coast to Coast A.M. lol..

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Well from what everyone I know tells me, it's worth it to live where they do. With acreage at the premium it is now, I'll likely have to do the same at least for a few years. Health wise I was considering the stress of city gridlock daily, when I work in the north I can usually tolerate a 2hr commute but I've only done it short term. Considering if I'm in the city my commute has been up to 3.5hrs in the snow (for a 40 minute fair weather commute)

That's impressive what makes and engines?

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Originally Posted by contaucreek

I do the 2hr one way every weekday. Home by 5pm. Vehicles love long trips, keep oil changed every 10,000 or so. Im on my 3rd commuter car, over 600k on the first 2. No toll on my health, gas cost is not unmanageable and surprisingly traffic (non existant) and weather have little bearing on my commute time. I have been doing it for almost 20 years, that's a lot of Coast to Coast A.M. lol..

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Cavalier's, 2.2, '02 and '04 Next was a 2006 HHR, totalled by a red light runner after 6 months now another HHR 330k and doing great, 2.4's in the HHR's. All were bought used or very used.

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Originally Posted by Species8472

Should add that when interest rates are low it doesn't always make sense to pay cash if you can do better in the market. In those cases I just make sure I always have enough cash/liquidity to pay off mortgage in the event rates go up.

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100%. Borrowing money is not a bad thing ... in fact could be quite the opposite, if you make calculated investments with that money.
THAT is how most people can get themselves into some wealth ... I like the strategy I heard the Chinese use. It goes something like this ...
instead of buying a Ferrari, buy something that will generate income and pay for the Ferrari.

If you are young, you wont understand the housing boom and bust cycle I personally watched for last 40 years...its coming, this cycle of walk aways and higher interest rates. Anyone old enough understands this.

As I wrote about selling my townhome in Sept for 480K (when I only paid 194K), that person will more then likely loose this home - but I made out like a bandit and became Mortgage free, and turned that investment into a country property, that yes I paid more for..but…. its paid for - and will not suffer the same hit in loss in city.

So win-win for me. I had friends in 80's who played the buy sell game over a couple of years finally getting the 750K, then interest rates went up (with payments), and home prices dropped 30-40%, and they had higher payments with negative equity...and they walked away from 200 to 300K equity

My first house in 1985 was a mortgage walk away. They stripped the entire house before they left, door knobs, light fixtures, intercoms in 4 rooms, all removed. It was more work, but what a deal.

I was in Calgary back in the late 70's when they got hit with a 'bubble' burst...the Banks were left holding hundreds of mortgages.

Once they Emergency Benefits stop and Banks start collecting their monthly payments again I can see more than a few people walking away.

Another reason why I wouldn’t bet on a crash. Over the last year there’s already y been a large exodus. Have prices dipped at all? And once immigration comes back....

https://m.huffingtonpost.ca/entry/ca...LzVADCS50iLw34

I wonder how much property this guy own's in Toronto and Vancouver



https://www.cbc.ca/news/politics/men...visa-1.5872287

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Originally Posted by JBen

Another reason why I wouldn’t bet on a crash. Over the last year there’s already y been a large exodus. Have prices dipped at all? And once immigration comes back....

https://m.huffingtonpost.ca/entry/ca...LzVADCS50iLw34

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Wait until the government stops paying everyone lol.

The government is only cushioning the fall. .

Sent from my CLT-L04 using Tapatalk

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Originally Posted by 3030

I wonder how much property this guy own's in Toronto and Vancouver



https://www.cbc.ca/news/politics/men...visa-1.5872287

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Maybe plenty

Bill Gates owns the largest amount of farm land in the USA lol. He just keeps on buying it up .

Sent from my CLT-L04 using Tapatalk

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Originally Posted by fishfood

Wait until the government stops paying everyone lol.

The government is only cushioning the fall. .

Sent from my CLT-L04 using Tapatalk

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A ton of variables to consider. Given most of the job losses, and those being hit the hardest by far are low income. How many do you think have mortgages of 300,00-600,000? Largely a non factor Im thinking...

Interest rates.
A big concern. But what would most likely have to happen before they start soaring. A booming economy???

Could a crash happen?
Sure. Never say never. But those betting on it.......

But if it happens, there are so many variables and scenarios. Find a deep dark cave and pray you aren’t caught in a landslide. Just read the first post.

25% unemployment
4 med sizes financial institutions toast...

What do we think banks will be doing? Making it easy to borrow $ so they can lose more???

Etc.

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Originally Posted by JBen

Not bragging here - but if more people lived BELOW their means they’d be better off IMHO.

No argument that is part of it. I think especially for the upper midddle class. Those lower down the food chain, it gets blurred. How much of it is living beyond their means by choice and how much because is "cost of living". Which is really, driven by those who have more.... Just look at what cars cost these days....let alone appliances, etc, etc, etc.
Look at how much rent is...Kind of hard to leave the Credit card alone, when X cost Y because others want to paid Z and buy ABCD and rent is $2,000/month and the median duo income for the have nots is 80k.

Not sure what you do Fisherman. So I'll use 41000 to "illustrate" the next thing. 4100 would likely not own his house, be able to afford vacations, or a boat or what ever 2 cars are in his driveway. If the masses weren't in debt, fueling the economy, creating the need for his products/services and putting food on his, your and my tables.

Some comnenting here I know are or were public servants. No mountains of debt, no economic growth, no income or corporate taxes, no paychecks and no pensions.
"food for thought"

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Debt makes the world go around - moderate debt is healthy for an economy but deep debt is unhealthy for an economy due to it's crippling effect. Debt makes each one of us wake up every morning and go to work to make a better life. It makes us want to perform better at work to sell more and get a bigger bonus, a better raise, and aspire one to apply for that next job that will offer more room for development. Personally I do not see this in the public sector. In the public sector it seems that things operate in a vacuum - compensation is based more on tenure than performance. The same thing would happen if we had no mortgage, truck payment, or kids in University - there would be no incentive for us to give 100%. Meh.......I'll show up and coast across the finish line after my extended lunch.

In my day job I primarily deal with large end users, PUC's, Municipalities, and large contractors that need to be compliant to CSA Z462, operate more efficient, safer & eliminate unwanted shutdowns, and mitigate risk. Cheap money help with some customers but most customers it is all about ROI or fear of doing nothing (risk mitigation). In my side hustle (electrical) COVID has helped drum up demand tremendously. People that were putting off home renovations or upgrades are now going ahead with them because they are now working from home, schooling from home and STUCK at home. Fueled by rising house prices and low cost of borrowing has but most trades in high demand and short supply - which everyone knows inflates prices of both labour and material.

Interesting facts from the BMO on house prices:

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BMO Uncovers Simple Reason Canadian House Prices Now 46% Higher Than U.S.

In fact, at this point, the cost of a house is 46 per cent higher in Canada than in the U.S., when adjusted for purchasing power and exchange rates, Porter found.

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“A much more fundamental answer may simply be that on balance Canadians have made a collective choice to allocate more resources to (and thus ‘consume’ more) housing than other countries,” he wrote.

In other words, we pay more for housing because we’re willing to ― because it’s worth it for us.

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That may have to do with the fact the average resale price of a house jumped 17 per cent over the course of 2020, to a record high of $607,280. If the worst economic shock in decades can’t stop the housing market, what can?

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However, he notes this type of consumption comes with a big asterisk: debt. Amid soaring house prices, Canadians have become among the most indebted people in the developed world.

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from: https://www.huffingtonpost.ca/entry/...b6d64153ac675b

4100
I wasn’t referring to our own personal motivations or the rat race :) What is “debt”, no matter the form or by who, other than additional spending. Public sector is by far “the worst”. See debt and deficits :)

Look at CNs balance sheet. All kinds of credit. It helps lay track, buy cars etc. Which inturn employs people, who in turn spend....”on you”. Hire you.

if we were to magically eliminate 40 years of debt spending, especially the last 20. Your life, my life would not be what they are.

As much as we mention debt, the Jones. All that “spending” has fueled economic growth. A lot of it.
R/E alone is 9% of GDP. Consumer spending, be it mtg debt, or vehicles, or TVs....has kept the economy going... lol, since 2010 growth has been under 2%. How much debt have Canadians piled on...

As for housing in the US.
If a person loses a job there, or moves there. How many big cities are there to choose from to find work. Make a life for themselvesHousing in the US is trending down, here soaring.
Porter said it.

Population growth ( higher than US). Fewer places to live and work. It’s not rocket science.

Appetite
Sure, has to be some of it.
See people being sold on white picket fences, and the “American dream”.. but also since around the 90s the stark realization that if the majority want to retire someday....

See also these trends since around 2005.
https://financialpost.com/real-estat...y-to-pay-debts

Why might a crash wipe affect everyone....Debt makes the world go round.

And for the lower middle class. The tax base and single largest numerical component......

Let them eat cake