Canada's 'housing bubble' deemed close to bursting

[esquire]

Originally Posted by SpongeG

you can a condo for $44,000 in Detroit

thats like 1970s prices lol

1970s? I used to live in a nice 1 bedroom downtown Edmonton condo, 550 sf, that was worth $60,000 in 2002, or USD$46,900 at current exchange rates. There were certainly cheaper options at that time.

[lio45]

One can argue it's 2021 prices too. You can likely offer ~$50k USD and get something like this:

https://www.realtor.ca/real-estate/23534506/136-mystery-lake-drive-unit-10-saint-john

[thewave46]

Originally Posted by lio45

Is there any reason that I'm missing why banks wouldn't finance such a condo? You don't need $44k, you need ~$10k at most.

The only reason I could think of is that it is in Detroit and if the owner defaults on it, it'll be nigh impossible for the bank to unload for more than the outstanding mortgage is.

I don't know if that's actually the case.

[lio45]

Originally Posted by rousseau

Why not go for this instead and save yourself from letting $6,600 a year in maintenance fees evaporate into the ether? Guaranteed you'll get a better resale value out of it as well.

I'm not a fan of condos either, but in all fairness, the maintenance fees don't evaporate into the ether, or at the very least, most of them don't. (I prefer to control my maintenance costs and long-term maintenance schedules myself, which is why so far I've avoided investing in condos.)

[thebasketballgeek]

Originally Posted by yaletown_fella

It's possible, on a minimum wage job, to save $44,000 by the time you are 30 if you are very frugal and save $3600 per year from the age of 18. Of course, you'll be buying your clothes from Walmart/thrift stores and making your all of your own meals with ingredients from No Frills and/or Food Banks.

I agree that getting approved to borrow the funds for renovation is more difficult and I agree the majority of these young "influencers" who travel are almost always bankrolled by their parents.

I mean if your gonna be that frugal might as well put those savings on the S&P 500 fund and save 5 years of time. Hell if you have high risk tolerance just get some crypto or day trading and it will probably take even less time. It’s certainly doable but I doubt most people are using those strategies when saving in their late teens early 20’s.

[lio45]

Originally Posted by thewave46

The only reason I could think of is that it is in Detroit and if the owner defaults on it, it'll be nigh impossible for the bank to unload for more than the outstanding mortgage is.

I don't know if that's actually the case.

Why not? If it's worth ~$45k on the free market right now, you're almost guaranteed to be able to unload it for at least ~$35k in the future.

We don't know that one actually needs $44k in cash (unless the video says it; I haven't watched), just that that one lady could and did pay cash for hers. My guess is that there's no reason one can't get a mortgage on such a property.

[thewave46]

Originally Posted by lio45

Exactly. And that so-called "problem" isn't a problem for everyone; in fact, it's a problem for some and a windfall for others.

(That's a common situation: if for example you control oil drilling rights that you bought for cheap a long time ago in an oil-rich region, skyhigh oil prices that make some people who drive a lot feel extreme "pain at the pump" are of course a huge headache for some but they're great for you, etc.)

And way too many Canadians find that "problem" to be awesome for them, especially if you only consider the subset that reliably votes in elections, for it to be meaningfully addressed anytime soon by the people in charge.

It's actually a non-problem or non-benefit for most homeowners.

To most, the current value or purchase price of a home is irrelevant. Most of the homes in this country are owned outright, or the principal of the mortgage is agreed upon and is being paid down.

It's a growing subset of people who are on either side as you mention. One one side, the low-asset 'losers' who are predominantly young and have less political power. On the other side, the 'winners' who are older, wealthier and by extension, retain much more political sway due to that and their demographic numbers.

I'm curious how it all comes apart in a morbid way.

[thewave46]

Originally Posted by lio45

Why not? If it's worth ~$45k on the free market right now, you're almost guaranteed to be able to unload it for at least ~$35k in the future.

We don't know that one actually needs $44k in cash (unless the video says it; I haven't watched), just that that one lady could and did pay cash for hers. My guess is that there's no reason one can't get a mortgage on such a property.

Oh, I agree. It's the only speculative reason I could think of.

[lio45]

Originally Posted by thewave46

I'm curious how it all comes apart in a morbid way.

It won't be easy for a mob to put my head on a pike, I'm resourceful

[Nite]

Originally Posted by Al Ski

Lack of supply is not a problem.
But we all know that.
What we have is an speculator/investor/commodification problem.
But again, we all know that.
The World Has Millions Of Vacant Homes, And 1.3 Million Are In Canada: OECD
https://betterdwelling.com/the-world...canada-oecd/#_

Your conclusions disagree with all creditable studies done by federal, provincial governments and independent organizations. who all say the root cause is supply.

[SpongeG]

Originally Posted by lio45

Why not? If it's worth ~$45k on the free market right now, you're almost guaranteed to be able to unload it for at least ~$35k in the future.

We don't know that one actually needs $44k in cash (unless the video says it; I haven't watched), just that that one lady could and did pay cash for hers. My guess is that there's no reason one can't get a mortgage on such a property.

she has two units in the same building, one serves as her own workout and office space ($42,000) and one she lives in, she paid cash for both at different times. Her combined fees on both units is just over $1000 per month. She spent over $50,000 renovating one of the units. One unit was asking $65,000 and because she offered cash and a quick sale she got it for $44,000.

The neighbourhood looks nice, there is a Le Labo store and some trendy high end branded shops.

[SpongeG]

Originally Posted by Al Ski

And how many people have $44,000 CASH in Detroit? Or in Canada, for that matter (and not mommy and daddy cash)?
And she only owns 2 units!
"OMG! I spent sooo much more on renovations!"
You really have to put this stupid video into perspective.
This is obviously a person with no money worries, shilling for real estate.
She "Just decided to travel!"
Yeah, you meet a lot a lot of these people while travelling. Mommy and daddy have them covered.

A lot of youtubers make really good money. Just from estimates of what they can make as figured out by what is known for ad revenue some can make $50,000 a month. That is just youtube ad revenue. That doesn't include sponsorship deals. I've watched some explain without giving actual figures have deals with many brands who pay them $1000+ per month just as a sponsor. As well they get free merchandise, Article furniture is constantly giving away free furniture that gets a mention in a video.

The Sorry Girls who are from Toronto are very successful iwth 2.1 million subscribers and both have bought homes and have done extensive renovations. The low estimate is from youtube alone they make $8000 per month. They also have a production staff to pay. As well as multiple sponsorship deals.

These kids these days know how to hustle and make money.

[lio45]

Originally Posted by Nite

Your conclusions disagree with all creditable studies done by federal, provincial governments and independent organizations. who all say the root cause is supply.

Well, that's a truism so it's pretty useless; it can be said of pretty much anything out there that ample supply of it would cause the price of it to fall.

The Dutch tulip craze wouldn't have happened if everyone back then was drowning in tulips. Bitcoins wouldn't be worth anything if anyone could create new ones at will. The price of tomatoes would fall if there were a glut of tomatoes on the market. If Toyota's factories magically came up with two 2022 Corollas for every living human on the planet, then you couldn't give Corollas away (whereas they're currently worth $20k-$25k+), etc.

It's a bit similar to how a lack of money is the root cause of pretty much any problem you can think of: most real-life problems aren't problems anymore if given unlimited money. In the real world though, that's not useful advice, despite being true. And sure, if you managed to drown Toronto and Vancouver in astronomical new quantities of glass-and-steel-bitcoins, eventually you'd hit the point where there isn't enough capital on the planet that's interested in investing in those to keep the prices high, and prices would go down. (Not sure that that would have much of an effect on the price of housing (rents), which is already low at the moment in those cities.)

[lio45]

Originally Posted by SpongeG

One unit was asking $65,000 and because she offered cash and a quick sale she got it for $44,000.

Really? $65k? Then you can get an even cheaper condo than hers, as of right now (November of 2021), in this Canadian city:




(link above)

[SpongeG]

yea but you have to live there

[SpongeG]

this place has properties under $50,000 if you're desperate. Hines Creek, AB. there is even a church for $58,000 that could be converted.

[lio45]

Originally Posted by SpongeG

there is even a church for $58,000 that could be converted.

"Built in 1956 and is all original inside." Even the water heater looks like it's from 1956! Really cool

[lio45]

Originally Posted by SpongeG

yea but you have to live there

One could say the exact same of Detroit vs more typically desirable American cities.

Originally Posted by SpongeG

this place has properties under $50,000 if you're desperate. Hines Creek, AB.

I wouldn't automatically call anyone who buys a $50k Detroit condo/Saint John condo/Hines Creek house "desperate". Very possible that they have lots more investments than you and travel/enjoy life more than you do

[Al Ski]

Originally Posted by yaletown_fella

It's possible, on a minimum wage job, to save $44,000 by the time you are 30 if you are very frugal and save $3600 per year from the age of 18. Of course, you'll be buying your clothes from Walmart/thrift stores and making your all of your own meals with ingredients from No Frills and/or Food Banks.

I agree that getting approved to borrow the funds for renovation is more difficult and I agree the majority of these young "influencers" who travel are almost always bankrolled by their parents.

Well yeah, I guess you could theoretically save $3600 per year on a minimum wage job if you are willing to sacrifice your entire young adulthood to the purchase of a commodity. You're going to have to be 100% dependant on your parents until the age of 30, miss the formative years of adulthood but hey - you'll have finally 'succeeded' and be in deep debt for the rest of your life.. bravo! You win!

You'll be a social misfit at parties because you'll have never been to one and will have no idea how to behave but..

This dystopian scenario, this is what we've been conditioned to accept in our bizarre worship of commodified home ownership.

[Al Ski]

Originally Posted by Nite

Your conclusions disagree with all creditable studies done by federal, provincial governments and independent organizations. who all say the root cause is supply.

Like the OECD?

A listed Airbnb is not an inhabited residence - as an example.

Anecdotally, I have one friend who owns 6 houses another who owns 5.

They both contributed to society at one time, now they just flip houses.

Neither one of them has any idea what they're doing and I don't know their leverage but they're all in on the FOMO.

This will end and it's not going to be pretty.

The fact that this insanity has been going for so much longer than anticipated is simply going to make the negative impact so much worse.