HawthorneVillager.com

What advantage is there to you renting right now? You're not paying down your mortgage so you eventually own the home and are instead helping someone else own a home. Are you factoring this loss of money in your 10% reduction in a new home price? What happens when, as you say, you rent forever? Lets say you rent for 25 years, you could have owned a home by then. So now youre 45 yrs old and you're still renting and could have owned a home.

I dont buy into renting a home for anything longer than a temporary basis while you save up to buy a home.

How can you not buy into No More Land? In Toronto, the only thing that can be built are condos or you can buy a resale and tear it down and build new.
Mississauga is pretty much all built up, that leaves Oakville, Burlington and Milton as the closest locations in the West with many transportation alternatives into the city (GO trains - Oakville and Milton lines, you have the proximity to the 407, 401 and the QEW)

You still have land in Pickering, Ajax, Whitby and the Shawa in the East. Vaughn is becoming overcrowded as well, however, there is still much land in the north.

Get in now or you will never get in - I dont buy this one etiher. There are always opportunities to get in, people just have to budget and determine what it is they are planning and saving for and also be willing to make sacrifices.

Immigration - Canada is a popular country for immigration, what's not to believe? the GTA has grown significantly due to immigration and will continue to do so for many years to come. With the influx of the new immigrants, there will be limited housing alternatives (they arent building many new apartment buildings in the GTA the last time I looked).

Will interest rates rize, most likely 'Yes'. and I am sure that there are people out there who will be house poor and not be able to afford their mortgages hen they do, but I dont believe that we are in the same position as places such as Arizona, Florida or other parts of the US where the sub-prime rates had the compounding effects that they did. For one, minimum wage in Ontario is higher anlong with wages for many blue and white collar professions that what it is in the US.

Sure, do I think there will be a correction, most likely yes, but if it drops 10% in 5 years time, last time I checked, prices were rising greater than 2% year over year, so all in all, in if they drop in 5 years with a 2% increase, then the overall prices will remain consistent with what they are today.

I hope you just sold because you would have made a lot more than if you sold a year ago...

Anyways, your point:



This is WRONG. Rent is established by supply and demand. Part of demand includes what people can afford to pay but it is by no means the only variable.

Supply is tight (that's the article). In a market with tight supply, prices will go up the point that demand meets supply. They aren't going to sit in a rental market where everyone is clammering for rental properties and keep giving it away cheaply.

Someone will have more money to pay for the unit, someone will have less. Who wins?

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So in 5 years, your house went up $100,000. But you factor 0 appreciation for the length of the mortgage for the house in your example?

So you're saying you make more with $100,000 getting 4% for the next 25 years

vs

$700,000 home in milton for the next 25 years (total cost including interest you pay in the long run)?


You'll end up doubling your 100,000 to $200,000 approximately after 25 years.

The home you think will be only worth $800,000 25 years from now?

Id take my gamble to own a home and having it be worth more than $800,000 in 25 years vs turning my $100,000 into $200,000. But thats me.

To be honest, Im not a renter so I cant follow the logic. Im just following my path of home ownership in the GTA. Good luck with your investments.

Wait a second here, your fuzzy math doesnt make sense. So, in 1982, a New Build at Steeles and Younge was selling for 47K, that same house today would sell for 525K, that is a 1017% increase. We saw a bubble back in the late 80's and 90's where 600K properties were dropping in value to $450K, but in today's market, the same property is selling for 900K+.

Sure the realestate market is cyclical, but long term, most (not all) will make some money. But then again, I am not in my house just to make money. I bought for a number of different reasons. As for gambling on football, that is a total waste of money.......but you can sometimes do well if your parlay comes in.

You are very quick to point to a real estate bubble but you aren't also taking into consideration a stock/bond/money market etc. bubble. You can quickly point out how much "housing equity" was lost during the economic crisis -- but how much investment equity was also lost. There are several seniors about to retire in Canada who saw 50% of their investments lost during that period -- right when they were getting ready to retire. For many, it's a good thing they still have a fully paid off house to fall back on -- a tangible asset that's not just a figure on a piece of paper. They have somewhere to live, rent free vs. scambling trying to pay rent from their depleated investments -- where every dollar they pull hurts their future investment growth.

You see everything is relative -- that's the big joke. In North Korea the goverment decided to devalue the dollar. What was once worth $1000 was now only worth $10 in that country.

Nothing is guaranteed in life. Investments go up and down. Stocks go up and down. Money markets go up and down. Currencies got up and down and yes, even cash goes up and down.

Historically owning a home over the long term will always give you more than you would make on interest with the money sitting in a bank. Anything more (investments) is the very same gamble.

The difference is, a house will always be worth what a house is worth (If housing goes down, likely so will incomes, if housing goes up, likey so will incomes), the money you have in savings/investments is just a number on a piece of paper that can change it's value to a number of influences.

Nortel was once king of all investments! I bet those who bought a house while their friend rented and put all their money into Nortel stocks believes they made a good decision.

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How much taxes are you paying on that 4% growth? If it's not locked into an RRSP you are losing 30-50% right off the top. If it is locked in, it's not very liquid and that puts you in some problems if you need to downsize your life. There are also limits on contributions so if you are only an average middle class person, it's likely you could only invest say 10k a year tax free, the rest would be taxed.

Second you are not taking inflation into account. Is that 4% inflation adjusted or just 4%. If it's inflation adjusted, fine, if not, then you are losing money again. Inflation decreases the value of money and increases the price of items (like houses).

Third, you are not taking rent increases into account. Sure, we have a rent control limit right now but it won't last forever. You should at least forecast that the rent you pay will go up at least with inflation. If you own a home you are slightly sheltered from this and generally over the term of the mortgage, payments represent less and less of your income as raises and inflation take hold.

Fourth, we can look at this situation (probably pretty standard).

New Home, 350k mortgage
10% down, 35k
By the time construction completes and the subdivision is ready, it's worth say $415k (reasonable given historic experience)

415k house, 350k mortgage, 25 years, 3.59% (current best 5 year fixed rate)

Modest 3% inflation adjusted increase in prices year over year (we are seeing what, 6%?)
Let's balance it out for the long term.

5 years in, the house is worth 481k and you have 178k in equity.
10 years in, the house is worth 557k and you have 311k in equity.
15 years in, the house is worth 646k and you have 468k in equity.

So 15 years later, you've built up a potential of 468k in equity using a low year over year increase (compared to historically what we see) and you haven't spent a dime on rent.

How about you look at it the other way, where property tax & maintenance are like rent, and the house is like your investment.

You just turned 35k into 468k in 15 years and I bet your rent was only around 700$ a month (property tax and maintenance). Oh, that $433k is all tax free. You would probably need to make over 565k (taxable investment income) with your 35k in investments to match it.

The benefit is, with investments you can go online, check the stats.. look at those increasing numbers... or maybe even revel in the income statements that come in the mail every month.

With a house, you can sit in the backyard, watch the kids play, enjoy a beer on your deck while the BBQ grills away and not have to worry the landlord might sell and uproot your kids and family one day -- or decide it costs too much money to maintain the house vs. the rent they are collecting.

I'd rather enjoy my investment (even if it's a slightly less return) that look at a piece of paper.

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You are saying there is a ZERO risk investment that pays 4%? I find that hard to believe. I thought the only ZERO risk investments were government invesments - GICs, Bonds. How does 4% work with 3.what percent inflation?



You can't spend a RESP, RRSP has a cap, TSFA has a cap. Anything else is called dodgy accounting.



You are giving a statement that can neither be proven to be correct and also is only basically a guess. Are you saying if all of a sudden, housing goes up, taxes go up, immigration increases, more people are looking to rent, that your landlord will keep rent the same? If so, you are lucky. But we aren't talking about you, we are talking about the masses here correct? You can't say that everyone in the world will have some good hearted landlord who doesn't want to increase rent.. I don't see it. I see rent increasing. Are you saying people paid $1200 for a 2 bedroom apartment in 1970? Are you saying they will continue to pay $1200 for a 2 bedroom apartment in 2025?

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He will do as he always does, warn about taking on more debt because rates are going up. BMO just reported that credit card bills are declining and they are reducing their bad debt reserves accordingly. Almost down to pre 2007 levels. Sounds like most people are starting to listen.

Here's the deal... he can threaten to raise rates -- but why hasn't he then? They can't. The US is keeping rates low and will for a long time to come. If we raise rates now, Canadian dollar value will go through the roof and trade with the US would decrease or flat our stop because Canadian goods and material would simply become too expensive.

So no, rates aren't going anywhere. Until rates do go up, real estate will keep booming -- at a much slower pace -- as prices are nearing the top for the interest rates.

When rates go up, will prices come down? Maybe, maybe not. Maybe the rates will go up to deal with rampant inflation and a strong economy which generally means businesses are making more money and staff are receiving bigger wage increases. Or maybe it will. The reality is, we will have a lot of time to plan for it as I doubt we will see anything more than a percentage point a year for the next 2-3 years.

The US has major issues right now -- big time unemployment, bad housing market and crazy debt -- but they can't get their dollar value down and the last thing they will do is raise their rates. We follow the US.

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this is where your flawed thinking is apparent dabills. rent is not cheaper than to own many times. i own 2 rental properties, both 1100 sq ft condos at $1400 a month each. i know a house or townhouse rents for $1600 and up, how much would $1600 carry as a mtg? the only way you save is if you rent a 800 sq ft apartment in a 30 yr old building at $900/month. even then a mtg. is forced savings. you must pay every month. chances are unlikely you will save the spread when you rent. show me a wealthy person that rents as you claim? doesnt exist. there is and always will be value in land. far ore than renting, tell me your renting due to life choice i can understand, but from a investment perspective your losing. its transparent your convincing yourself of these flawed facts. but there is more people on here than just me that tell you otherwise.

Theres an intangible that hasnt been discussed. In my case, I want to leave a house for each of my children. Its just something I want to do. So renting is out of the question for me in my case.

Since you "guys" started arguing about this topic, my home has gone from $350,000 in 2008 to a current listing price on MLS of approx. $450,000.

Therefore, a growth of 28% or +$100,000 in 2 years (sweet)

So to put this discussion to rest;

Q: "When will Housing prices deline as projected 10%"
A: When we construct a Tardis and to go back in time.

Another thing besides the obvious that if someone is selling books and seminars and presentations based on telling people to stop buying and start renting, they should actually be renting themselves -- is that for the ubber rich business owners/executives, sometimes renting makes better sense for tax purposes. Oh they own properties, things like condos in Span, summer homes in Bermuda etc. but by renting they have greater tax advantages that give them more of their money as take home.

This is a very similar reason why many rich/executives lease cars rather than buy.

I still feel for the average joe, owning is better than renting. Let's talk about the guy and his wife making 60k each instead of senior executive vice presidents of companies with 7 figure salaries and two accountants on payroll.

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I wish I bought 10 houses in milton in 2000. lol