Federal Government & Politics II

[Truenorth00]

Originally Posted by Innsertnamehere

30-year mortgages are the literal standard south of the border...

Where they get to write off mortgage interest and are part of the largest and most liquid mortgage market in the world allowing them to fix the rate for the life of the mortgage.

Originally Posted by Innsertnamehere

and indeed in much of the world.

They also have multi-generational mortgages elsewhere. By your logic, we can aspire to that too.

Originally Posted by Innsertnamehere

A 30-year old signing on for a 30-year mortgage still pays it off at 60, before retirement.

Ah yes, a whopping 5 years to save up for retirement is not a recipe for a whole generation of retirees living on cat food. Added bonus too, at the same time they are paying those mortgages, they also have all the child rearing expenses.

Originally Posted by Innsertnamehere

Lots.

Stats say otherwise.

So, just how old is the average first-time home buyer?

According to a 2021 report from the National Association of Realtors, the typical first-time home buyer was 33 years old. This was the same as in 2019, but up from 32 years old which was the median age of first-time buyers in 2018 and for the two years prior.

The median age has been growing older over time. In the 1970s and in the 1980s, it was 29 and it has been ticking up since then. There are many potential factors that could explain this, including the rising costs of homeownership, the fact that young people face a number of other financial burdens related to educational costs, and the fact that people are getting married and having children later on.

In fact, delayed household formation could be a major reason for the fact homeownership is happening later, as 60% of recent home buyers were married couples according to NAR's 2021 report. By comparison, just 19% were single females; 9% were single males, and 9% were unmarried couples.

https://www.theglobeandmail.com/inve...e-home-buyers/

[theman23]

Originally Posted by casper

I don't think we are scaping the bottom of the barrel. The foreign student visas program was being abused Some entrepreneurs found a way to make a quick buck at the expense of the students and the communities. That was fixed.

[lio45]

Originally Posted by P'tit Renard

It also turns out the majority of these NPRs don't have the ability to buy a home at these exorbitant prices, and likely will never given their poverty wages.

True, but it doesn’t matter, they still totally prop up, and even boost, real estate values via cap rates. A typical Toronto shoebox condo may seem totally overpriced to you at first sight, but if you put 10 desperate Indentured Servants packed like sardines in it, it suddenly becomes a reasonably-priced income-generating asset

[lio45]

Originally Posted by YOWetal

It keeps rents high so the slum lords can shove people in each bedroom and continue to outbid anyone else. So yes it helps keep prices high.

Well, looks like you beat me to pointing this out (see post above)

[Innsertnamehere]

Originally Posted by Truenorth00

Where they get to write off mortgage interest and are part of the largest and most liquid mortgage market in the world allowing them to fix the rate for the life of the mortgage.



They also have multi-generational mortgages elsewhere. By your logic, we can aspire to that too.



Ah yes, a whopping 5 years to save up for retirement is not a recipe for a whole generation of retirees living on cat food. Added bonus too, at the same time they are paying those mortgages, they also have all the child rearing expenses.



Stats say otherwise.



https://www.theglobeandmail.com/inve...e-home-buyers/

I guess I just don't see the problem with giving people another option. Nobody is forcing them to take it.

And if you are waiting for a paid off mortgage to save for retirement, again.. you are getting some terrible financial advice.

People can make their own choices. I don't see how giving them a 30-year mortgage option on an insured mortgage hurts it.

The problem we have right now is that the market can't support the mortgage payments on the cost to construct new housing. Something needs to change. We either make it so people can afford that new housing through easier financing, or lower the cost to construct. Or both.

This is (in my eyes) a small part of solving an extremely complex puzzle.

Besides, as it stands, the change is only for insured mortgages on new construction homes. This is an exceedingly small proportion of the market. Most new home buyers are not first home buyers.

[YOWetal]

Originally Posted by acottawa

Most people aren’t particularly afraid of buying on the way down. They want a house for immediate needs and living their lives. There are hundreds of thousands of people who are under housed and would be happy to buy on the way down.

Houses crash where demand is weak. I could see that happening in some of the super-commute cities like Smiths Falls or Acton, but not in otherwise desirable places to live. Even in the US housing “crash” peak to trough to old peak was 5 years, and the bottom of the trough was the price from 3 years before the peak.

In the Anglo-American world I can't think of any cases were a crash happened and people just paused and said now is the time to buy.

It certainly can crash where demand is strong. Waterfront condos in Miami were some of the hardest hit though agree distant housing that never made sense would be the hardest hit.

[WarrenC12]

Originally Posted by Innsertnamehere

The reality of mortgages is that if you have a rate under 5% or so, it makes 0 financial sense to pay it off. It's actually bad advice to tell a millennial to pay off their mortgage if they have a 4% rate, which we are rapidly approaching. They are better off staying as leveraged as possible and putting that cheap money into investments to earn a return.

Well, sort of. Paying a mortgage is a guaranteed after tax return of your mortgage rate. Paying off a 5% mortgage can be great advice for high income individuals who have maxed other tax advantageous investments.

[acottawa]

Originally Posted by WarrenC12

That is incorrect.

https://apnews.com/article/auto-sale...a4ca814c2827d2

Overall vehicle sales up 5.1%, EV up 3.3%.

[lio45]

Originally Posted by WarrenC12

Well, sort of. Paying a mortgage is a guaranteed after tax return of your mortgage rate. Paying off a 5% mortgage can be great advice for high income individuals who have maxed other tax advantageous investments.

That’s only true for very unimaginative and very risk-averse people. I’m with Innsertnamehere, it’s undoubtedly stupid to not use leverage when you can, unless you have a good reason such as mental health / acute aversion to risk.

Paying off a 5% mortgage literally means admitting you don’t consider yourself able to generate significantly more than 5%/year with your liquidities, which is a really low bar.

[acottawa]

Originally Posted by YOWetal

In the Anglo-American world I can't think of any cases were a crash happened and people just paused and said now is the time to buy.

It certainly can crash where demand is strong. Waterfront condos in Miami were some of the hardest hit though agree distant housing that never made sense would be the hardest hit.

It happened in Canada in the 08|09 recession. Prices fell 9% and recovered pretty quickly.

[WarrenC12]

Originally Posted by lio45

That’s only true for very unimaginative and very risk-averse people. I’m with Innsertnamehere, it’s undoubtedly stupid to not use leverage when you can, unless you have a good reason such as mental health / acute aversion to risk.

Paying off a 5% mortgage literally means admitting you don’t consider yourself able to generate significantly more than 5%/year with your liquidities, which is a really low bar.

5%, after tax, guaranteed (zero risk), is not a bad return. Dunno what to tell you. Many mortgages are higher than that.

[WarrenC12]

Originally Posted by acottawa

https://apnews.com/article/auto-sale...a4ca814c2827d2

Overall vehicle sales up 5.1%, EV up 3.3%.

Pure EV sure. It's one quarter. Notably:

Toyota reported a large sales increase, 20%, for the quarter, and said combined sales of its hybrids and lone electric vehicle rose 36%

Tesla blamed one time events. Time will tell, but EVs are here to stay and will continue to make up more and more of the vehicle fleet.

[YOWetal]

Originally Posted by acottawa

It happened in Canada in the 08|09 recession. Prices fell 9% and recovered pretty quickly.

9% is not a crash. We are twice that already in most areas. Interest rates went from 5.5 to 2.5%. The temoparry freeze was mostly fear we would be like the US and while we did have job losses those that remained had better affordabilty than they had in decades.

[acottawa]

Originally Posted by WarrenC12

Pure EV sure. It's one quarter. Notably:



Tesla blamed one time events. Time will tell, but EVs are here to stay and will continue to make up more and more of the vehicle fleet.

So what part of my statement that American EV market share is falling this year is incorrect?

Is musks full embrace of fascism the “one time event”?

[acottawa]

Originally Posted by YOWetal

9% is not a crash. We are twice that already in most areas. Interest rates went from 5.5 to 2.5%. The temoparry freeze was mostly fear we would be like the US and while we did have job losses those that remained had better affordabilty than they had in decades.

Crash is the Liberal talking point. There is no reason to believe normalizing immigration will lead to a crash, particularly if combined with a drop in government spending which would allow interest rates to come down.

[YOWetal]

Originally Posted by WarrenC12

Pure EV sure. It's one quarter. Notably:



Tesla blamed one time events. Time will tell, but EVs are here to stay and will continue to make up more and more of the vehicle fleet.

That is one prediction but then if true why do we need to mandate their sales?

Originally Posted by acottawa

Crash is the Liberal talking point. There is no reason to believe normalizing immigration will lead to a crash, particularly if combined with a drop in government spending which would allow interest rates to come down.

There is no evidence government spending is much of a factor in recent inflation and the need for higher interest rates and certainly even huge cuts wouldn't lead to much drop in rates barring it triggering or excaerbating a recession.

[jonny24]

Originally Posted by casper

I don't think we are scaping the bottom of the barrel. The foreign student visas program was being abused Some entrepreneurs found a way to make a quick buck at the expense of the students and the communities. That was fixed.

There is no shortage of people in other streams (with qualifications) that want to come to Canada and are waiting.

The provincial government in BC just made wholesale changes to zoning (overriding municipal governments). That should drive the cost down.

Sounds like realtors are attributing the condo crisis in Toronto to tiny condos. The market for sub 400 sq ft condos. If that market crashes while the rest of the market stays stable that may not be a bad thing. Those are mostly of interest to investors.

We've been told it's been fixed. But if you believe everything they announce is a done deal, well.....

[lio45]

Originally Posted by WarrenC12

5%, after tax, guaranteed (zero risk), is not a bad return. Dunno what to tell you. Many mortgages are higher than that.

As I said, 5% guaranteed is okay if you suffer from aversion to risk. I actually know a guy who got fed up and liquidated his entire real estate portfolio right before everything doubled (around 2018-2019) and was pissed at himself when someone else flipped what had been one of his bigger buildings during the pandemic for >2x what he had sold it for, but you can't have it both ways.

My advice to him was either work on developing a thicker skin, or move to having only super-easy investments. His choice

With what I know now though, I'd never accept to make only 5%, given that it's cake to be a private lender on real estate at 10%+. I agree that it's not everyone who'll be comfortable doing that, though. But in my case, I'll forever accept everything I can borrow at 5%, that's for sure. Most people who are on this forum are likely dynamic, smart and young enough to beat 5% easily so they shouldn't be in a hurry to get rid of their residential mortgages.

[P'tit Renard]

Originally Posted by lio45

True, but it doesn’t matter, they still totally prop up, and even boost, real estate values via cap rates. A typical Toronto shoebox condo may seem totally overpriced to you at first sight, but if you put 10 desperate Indentured Servants packed like sardines in it, it suddenly becomes a reasonably-priced income-generating asset

That's assuming these desperate indentured servants are employed though (even if precariously so). We're already seeing the GTA (aka ground zero of the student ponzi scheme) reach unemployment levels of 7.9%, and that's even before the economy has really turned sour. I wouldn't be surprised if the GTA sees 10%+ unemployment by 2025 given current population growth rates and lack of hiring.

Highly indebted, unemployed NPRs won't even have the spare cash to pay for the $500-800 bed sharing arrangement in a shitty Brampton basement. That's unless we're willing to let NPRs take advantage of Canada's welfare programs to keep up cap rates...

[P'tit Renard]

Originally Posted by Innsertnamehere

I guess I just don't see the problem with giving people another option. Nobody is forcing them to take it.

And if you are waiting for a paid off mortgage to save for retirement, again.. you are getting some terrible financial advice.

People can make their own choices. I don't see how giving them a 30-year mortgage option on an insured mortgage hurts it

I personally don't think 30-year mortgages are the issue if offered as a payment option, but why the hell are they insured. Why is the Trudeau government so obsessed with massively increasing its exposure to the CMB MBS markets, effectively socialising risk while privatising gains.

30-year mortgages should not be insured, and should not be guaranteed by the government. Taxpayers shouldn't be forced to borne the risk of these extended period mortgages.