Vancity: Vancouver cost of living could trigger mass exodus

[Soundy]

Originally Posted by Ulic Qel-Droma

he does make a point with this statement.

i bet they don't have threads like these in the Ferrari and Lamborghini forms.

LOL!!!

Bet they do! After all, how can you afford the gas for your supercar, when it costs so much to keep a garage over its head?

[Soundy]

Originally Posted by Mr.HappySilp

Lets all produce poisonous mike powder for our babies to use, lets all produce fake eggs, cancer causing cooking oil, let's sell rotten meat as new and the list goes on. Or better yet let's hire thousand of workers and make them work for next to nothing and if they go on strike I just have to police beat them till they listen coz I have the gov paid off.

Or what about the corruption going on where gov officials take brides from developers and manufacturers to turn a blind eye. If anyone go against it let's just lock them them or beat them to death. How about let's see apartments that's lacking the building code so that it will fall any sec.

But hey who cares about others as long as I am making the money I can totally discard human life and who cares about polluting my own country coz I got the $$$ now when my own country is all polluted and the air quality is so bad people have to wear a gas mask out, I will just move to Canada and start the cycle again.

CharlesInCharge, is that you??

[underscore]

Originally Posted by Tapioca

I threw out that number earlier in the thread too, but it all depends on what the couples's expenses are outside of the mortgage.

If the couple is early in their child rearing years, 1/3 or 1/2 of one spouse's salary could easily be eaten up by childcare costs. With the tax system now, it almost makes sense if one spouse stays at home because of income-splitting.

If the couple doesn't have some kind of RRSP plan or pension plan, they should aim to save 10-15% of their net income. They also need to save for their kids' RESPs which would be 5 grand a year (if they want to get the maximum grant). Insurance is also another thing they need to think about - residence, life, and critical illness. Insurance could easily be several hundred dollars a month if they have pre-existing medical conditions, or a family history. Finally, vehicle costs will likely be several hundred dollars a month, even if they lease something mundane, like a Toyota Rav 4 or Kia Sorrento. Or, I guess they could squeeze in two convertible car seats into a 1990s Honda Accord.

Maybe, just maybe, people can't have everything. If you have high insurance or childcare costs don't take out a lease on a brand new vehicle, don't max out their RESP's (what the hell kind of post-secondary are you planning for them here at $5k/year?) don't have one parent completely quit working just to raise the kids. Of course it'll be hard to make your mortgage when you reduce your income and max out all possible expenses.

Yes it's a bummer when you can't have everything you want but that's part of life, people better get used to that.

[4444]

Originally Posted by sonick

Unbiased eh? You probably just 'forgot' to check off 'adjusted for inflation' then...

Without inflation = $2.9m
With inflation = $373,395

WTF, the house in the article i was comparing to is the EXACT same thing, $15K 1960's money to $1M today's money.

i was comparing apples to apples

[4444]

Originally Posted by underscore

You skipped the main point of my post, which is that next to nobody buys a house cash. So that $15.5k from 1961 would have to be borrowed, and what you would be paying to borrow that money would outweigh what you are gaining from investing that money. On top of that, a mortgage isn't just an investment, everyone needs to live somewhere.

right, and i said it was a vast over simplification, but the returns from S&P500 far outweigh the real estate. less so when you take those factors into consideration.

also consider that in 1961 you'd have had to have saved a larger % down payment (no >100% mortgages then), so that could have been invested, and the rest would have been invested over time.

this, of course is on the assumption that rent was < than ownership cost then, which may or may not have been true.

the thing is, people are stupid, they don't understand simple time value of money or economics - they will read the line about $15K house going to $1M and think its the best thing ever. i'm just showing a glaringly easy alternative.

it's not a perfect comparison as there are those considerations, but it's just there to show the other side of a multi faceted consideration.

but to your point, you mentioned borrowing rates, which are usually closely tied with inflation, so let's say borrowing rate = inflation, given S&P500 has historically gained real return of 6%, you're still way better off (over the long run), you have real spending power of +6% each and every year (less the spread on the debt, which will be <6%)

[CharlesInCharge]

Before committing ones working life to purchasing real-estate, its best to first invest in a crystal ball so you'd know when the next crash is going to happen.

Ive yet to read a reason as to why real estate prices doubled in a span of 5-7 years a decade ago... the system will always keep people in a hamsters wheel... foreign investors or not.

[Harvey Specter]

Article talking about been house poor in Canada which a lot of Vancouverites can relate to;

They look like the family that has it all. Louise Edgerton, her partner, John Camus, and her 10-year-old daughter, Fianna, joke around while making brownies. They move around with ease in the gleaming white kitchen of the new dream home they designed themselves.

But for Edgerton, one financial setback could change everything. "I am discouraged, because I don't see the light at the end of the tunnel. It's a little bit of a house of cards that could fall down at any time," she says.

The family is house poor, or as Edgerton puts it, "house rich and cash poor." They live in Lachute, Que., about an hour outside of Montreal, far from the housing hot zones of Toronto and Vancouver.

Edgerton estimates she and Camus spend 43 per cent of their combined income paying down their $418,000 mortgage and covering other fixed housing expenses. Once they pay the rest of the bills and buy groceries, "there is nothing left," she explains. She describes their existence as living "hand to mouth."

'Nobody talks about it'

Edgerton says she knows they're not alone. "I don't feel we are the only couple who are in debt and wondering how the hell we will get out of this."

"It's the dirty little secret," she concludes. "Nobody talks about it."

With skyrocketing house prices in some regions and the lure of ultra-low interest rates, more Canadians are living closer to the edge. But, naturally, many don't want to talk about their own house of cards.

"There definitely is a lot more going on than we see," says Laurie Campbell, CEO of Credit Canada Debt Solutions.

"Add the cost of running a vehicle to the cost of having a mortgage, the cost of raising a family [and] a lot of people are struggling. It could be your next door neighbour, it could be somebody at work, it could be one of your family members and you know nothing about it."

According to Statistics Canada, Canadians' debt-to-income ratio in the fourth quarter of 2014 was at an all-time high of 163 per cent. That means for every dollar of disposable income in a typical year, Canadians carry $1.63 of debt.

Living on the edge

Campbell says that many, like Edgerton and Camus, are surviving now, but the big question is what happens if there's an unplanned setback — from a job loss to a rise in interest rates.

"It worries me immensely that so many of us have allowed ourselves to live on the edge like this and not realize what happens should something out of daily life take a different turn," she says.

Unexpected turns are exactly what drove Edgerton and Camus this close to the edge.

Last year, just a week after they signed the deal to start building their house, Camus lost his sales job at a construction company. Then, the day before they moved in, their contractor handed them a surprise $27,000 bill for extra costs. The couple were forced to tap into their line of credit to pay for it.

So far, they've managed. Edgerton still runs her own website design company. Camus recently found a new, largely commission-based sales job at a car dealership. "I feel we can handle what we are dealing with right now," he says.

The tipping point

The two also say they live frugally, cutting out the extras and halting contributions to their retirement fund and an RESP for Fianna. But Edgerton's main concern is what happens if there's another financial emergency. "Should any bad luck happen, we are going to be in trouble," she believes.

If enough people living house poor reach their own tipping point, it could affect the value of the housing market, says Campbell.

"If the housing market goes down and those individuals have to sell, we're going to see a lot of houses on the market, which will further reduce the house market in general," says the debt counsellor.

Some housing experts say there's no need to panic. Yesterday, the Canada Mortgage and Housing Corporation reported that the country's housing markets, overall, will remain stable, though they may slow down over the next two years.

Hanging on to the Canadian dream

Camus is also sanguine about his own situation. He believes he and Edgerton won't get to the point where they have to sell their home.

With his new job, he expects his financial situation will improve. "I don't share the same stress levels [as Louise], because I do think our situation will get better."

He adds, "Owning a home is a question of pride for me."

Canada has among the highest home ownership rates in the world; owning a home is one of the ultimate Canadian dreams. And it's perhaps why so many people choose to live house poor rather than sell their home. And it's probably why some people, no matter what their circumstances, won't give up their home without a fight.

"I want to say, no matter what happens, we'll just deal. That's what we've always done. But, you know, how long can we keep that up?" asks Edgerton.

https://ca.news.yahoo.com/real-estat...090000545.html

[4444]

Originally Posted by CharlesInCharge

Before committing ones working life to purchasing real-estate, its best to first invest in a crystal ball so you'd know when the next crash is going to happen.

Ive yet to read a reason as to why real estate prices doubled in a span of 5-7 years a decade ago... the system will always keep people in a hamsters wheel... foreign investors or not.

did you miss the global financial crisis of 2008 and the resulting quantitative easing (pouring of cheap and easy money into the system).

where do you think that money went - into building up companies, like it was intended? no, of course not, it went partially to that and the rest has gone to hard and financial assets, real estate, art, equities, bonds - safer havens

CiC - i thought you were just crazy, turns out you're also an idiot.

[CharlesInCharge]

Vancouver housing prices doubled before 2008.

You're like the biggest mainstream regurgitator that replies to my posts... and you've always been wrong or backwards because your so gullible in what the news and probably your peon friends tell you.

Now run to your news sites and tell me why prices doubled from the year 2000+

[Mr.HappySilp]

Originally Posted by EmperorIS

lol you need to get your head out of the western propaganda machine

the shit you said shows you know very little of China let alone its economy. Yes, China have its problems with labor issues but literally so did every growing nation in the world. Its not like these Chinese companies purposely produce bad products to get people sick, but to stay competitive they had to cut down on certain cost.

Is it right? No. But they don't have a choice. China has to stay cheap in order to keep growing. China almost didn't even have a middle class 20 years ago so there will be sacrifices during people's upwards mobility. Same thing happen in Europe and the same thing happened in North America.

You can't think outside the box because you were taught to see China/communism as the evil nation that wants to take down western society and this translate on to how you view foreign Chinese investors.

Not every Chinese nationalist coming here stepped on its own people to get here. In fact, it is more than likely its WESTERN companies hiring Chinese workers on a razor thin margin to produce their products that is forcing them to keep wages and quality of life down.

Learn a thing or two first before you start judging with prejudice glasses. Western companies are likely just as evil as you see the Chinese companies, they just know how to hide it better.

Learn a thing or two? Sorry buddy but I have had first hand experience how people do business in China. In their world no know cares how you get rich as long as you get rich no one gives a shit how you got there. There are no rules in running business in China is who you know that counts.

[4444]

Originally Posted by CharlesInCharge

Vancouver housing prices doubled before 2008.

You're like the biggest mainstream regurgitator that replies to my posts... and you've always been wrong or backwards because your so gullible in what the news and probably your peon friends tell you.

Now run to your news sites and tell me why prices doubled from the year 2000+

i will remind you of the dotcom bubble which burst in 2001.

do you know what happened after this event? money started becoming VERY easy and much cheaper to get in the US. This had an effect on the cost of borrowing in Canada, whilst not quite as easy as the US (the difference can be seen, partially, by the US crash in 2008 vs. no material crash in Canada, though that is in part due to the emergency rates brought in in Canada), Canadian real estate started going up.

The cost of debt and the prices of properties are inversely related.

if i was a mainstream regurgitator, as you put it, i'd be saying it's because Vancouver is special, it's different here, CHINESE MONEY!!!!

instead, i'm intelligent and well read, hence why i state the factual economic basis for the change in prices. Now, admittedly, some of the China money, it's special here, etc. will have a small, limited, local, certain portion of the market effect, but by and large it is fundamentals that drive pricing long term, not a conspiracy theory, not aliens, not anything else.

ironically, you tell me to run to news sources - i don't need to quote news sources, what i state is known fact. yet, you always provide links to cracker jack sites as back up to your crazy assertions.

having said all this - you are partially correct, the system is keeping the masses down, the rich have disproportionately gained from the financial crisis, this is beyond debate. my solution - become one of the 1% (or 5% will do, to be honest) by virtue of hard work, smart investing, and intelligent spending, not by screwing others over. or you could juts complain about it and say it's some crazy Illuminati thing.

and, it's "you're gullible", i don't have a gullible.

[CharlesInCharge]

So because lots of citizens got scammed in the United States... losing mucho money! you say...

money started becoming VERY easy and much cheaper to get in the US. This had an effect on the cost of borrowing in Canada,

this spurred the Canadian banksters to also start lend out so much money that in a span of 5-7 years it caused an unstable doubling in the cost of housing?

but, but, its not an Illuminati thing... and its not like they collapsed wtc7 containing the Enron and WorldCom investigation files... no (that was due to Bin Ladin's fluke luck taking down a building not struck by a plane but got pulverized at free-fall speed due to debris raining down from the other collapsed freefall buildings)

Canada is not under the control of international shadow banking Illuminati's because that would be a crazy assertion.
So why did the Canadian bankers just start lending out money like crazy? For what reason?

You are so well read and intelligent like you claim, lettuce all patiently await for you to wake up in the morning and share your great wisdom.

[Ulic Qel-Droma]

this is becoming the next real estate thread with a billion pages of poor people whining, and rich people justifying.

[4444]

Originally Posted by CharlesInCharge

So because lots of citizens got scammed in the United States... losing mucho money! you say...

this spurred the Canadian banksters to also start lend out so much money that in a span of 5-7 years it caused an unstable doubling in the cost of housing?

but, but, its not an Illuminati thing... and its not like they collapsed wtc7 containing the Enron and WorldCom investigation files... no (that was due to Bin Ladin's fluke luck taking down a building not struck by a plane but got pulverized at free-fall speed due to debris raining down from the other collapsed freefall buildings)

Canada is not under the control of international shadow banking Illuminati's because that would be a crazy assertion.
So why did the Canadian bankers just start lending out money like crazy? For what reason?

You are so well read and intelligent like you claim, lettuce all patiently await for you to wake up in the morning and share your great wisdom.

canadian central bank rates tend to follow those of the US, this is done for two reasons, 1) usually there will not be a desire or need to manipulate relative rates for purposes of changing the FX rate, and 2) the US is the largest trader with Canada - Canada's economy, to some (large) degree, echoes that of the US

the above will have an effect on variable mortgages, based on the BoC rate.

fixed 5 year mortgages are priced based on bond yields - these tend to reflect growth expectations in the market, with other factors also considered. When bond yields move in the US, they tend to move in Canada, this is because Canada and US have a constant relative risk profiles, so if bond yields rise in the US, they will tend to rise lockstep in Canada, as otherwise an investor would just take their investment money to the US and buy US bonds rather than Canadian, and vice versa

the above is simplified, CiC, on account of your small brain, but on account of a very stable relationship between the US and Canada in relative bond yields, overnight rates, economies, etc. (in the long run), take it as gospel that whatever the US will have a significant effect on what happens in Canada. Perhaps not 1:1, perhaps the FX rate will fluctuate, perhaps there is a slight, temporary, whatever, shift in relative risk, performance, etc. (commodity cycle since 2008, for one) - but long term, know this will survive as long as Canada is so reliant on the US economy, something that may never change due to the geographical, social, and political alignment of the two nations.

CiC - you mad, don't be, the Illuminati will save you (whatever that means)

[CharlesInCharge]

So when Canadian labourers are trying to save up for a house, specially those that dont want a life mortgage and to pay $100,000+ interest to the banks... they have to prey to the bond yield gods in the United States (the same country that schemed on a governmental level, defrauding over a trillion of American citizens monies in the housing crisis) for those gods not double the housing rates in Canada... call me stupid but sounds like there's a shadow ruling elite pulling the strings for booms and depressions.

I have video of George Bush promoting Enron before the burst, and Im sure most have seen him at the 911 site condemning terrorist when he was in fact one of them...
http://www.revscene.net/forums/69670...-shelters.html

So in conclusion you want me to believe x + y + variable - shift in relative risk x performance = everythings going to be alright?
I got your variable bond yields BoC rate right here.
*grabs crouch.

[4444]

Originally Posted by CharlesInCharge

So when Canadian labourers are trying to save up for a house, specially those that dont want a life mortgage and to pay $100,000+ interest to the banks... they have to prey to the bond yield gods in the United States (the same country that schemed on a governmental level, defrauding over a trillion of American citizens monies in the housing crisis) for those gods not double the housing rates in Canada... call me stupid but sounds like there's a shadow ruling elite pulling the strings for booms and depressions.

I have video of George Bush promoting Enron before the burst, and Im sure most have seen him at the 911 site condemning terrorist when he was in fact one of them...
http://www.revscene.net/forums/69670...-shelters.html

So in conclusion you want me to believe x + y + variable - shift in relative risk x performance = everythings going to be alright?
I got your variable bond yields BoC rate right here.
*grabs crouch.

what?!

i explained the economic support for the link between US and Canadian borrowing rates, the timeline from 2000 to today re: house prices being driven (in my opinion) by cheap debt - and somehow this is a conspiracy theory?

there's no conspiracy, those in power will do what is best for them. you can only hope that trickles down to you, the average citizen - if not, you voice your displeasure by voting them out.

you think the US has some conspiracy against canadian workers? no, it's just that the US has the biggest economy which happens to be the main driver of the Cdn economy. if somehow the Canadian cost of debt was related to the egyptian cost of debt, i'd be with you on this one, but for now, you're on your own little cracker island.

[CharlesInCharge]

Im investing my future in Iran, a free country unlike Canada... but who knows maybe you or your children will be in the hot middle eastern trenches one day trying to get a piece of Iran for your ZioAmerican over lords. Thus the role of a cog that will wake up one day, be drafted into a world war, and think how did this happen.

[4444]

this explains it all.

Originally Posted by CharlesInCharge

Im investing my future in Iran, a free country unlike Canada... but who knows maybe you or your children will be in the hot middle eastern trenches one day trying to get a piece of Iran for your ZioAmerican over lords. Thus the role of a cog that will wake up one day, be drafted into a world war, and think how did this happen.

[Hondaracer]

TLDR; Canada isn't safe, don't trust the government, bubble will burst, but invest in Iran

[Soundy]

Originally Posted by CharlesInCharge

Im not Tic Tac... but I would like my fail button back.

[underscore]

Originally Posted by Harvey Specter

Article talking about been house poor in Canada which a lot of Vancouverites can relate to;

If their mortgage takes 43% (considered the top end of acceptable), how the hell are groceries and housing bills taking up the rest? It sounds like these people are spending money on other things and then wondering why they're broke.

Originally Posted by 4444

right, and i said it was a vast over simplification, but the returns from S&P500 far outweigh the real estate. less so when you take those factors into consideration.

<snip>

but to your point, you mentioned borrowing rates, which are usually closely tied with inflation, so let's say borrowing rate = inflation, given S&P500 has historically gained real return of 6%, you're still way better off (over the long run), you have real spending power of +6% each and every year (less the spread on the debt, which will be <6%)

The returns do outweigh real estate assuming the real estate was being purchased strictly as an investment with cash and you let it sit empty for some reason. If you start to factor in borrowing any of that money or renting out/living in the property during ownership it becomes vastly more complicated but I somewhat doubt sticking the value of a house into an investment for 54 years still comes out on top.

[godwin]

Well besides the fact that it is a legal grey area to invest in Iran right now.. Iran is starved for cash. You can get some crazy returns (with some crazy risks).

However I know a few hedge funds (closest one I know is in the Bay area) already getting their prospectus ready whenever the embargo is lifted in the next few months.

Again little guys will get trampled.

Originally Posted by Hondaracer

TLDR; Canada isn't safe, don't trust the government, bubble will burst, but invest in Iran

[godwin]

Actually most med grads I know usually buy their first place a few years out of university.. and in Vancouver. A lot I know buy around the Womens and Childrens (Fraser, Oak, King Ed area).. Doctors are the sector bankers roll out the red carpet for. 1/2 mill credit line during med school days? done... Free everything service.. done.. they want you to get you in debt.

Lawyers same thing, but since it is not as controlled and have shortages they are not as conveted, but they like prefer closer to downtown for obvious reasons.

Because of income splitting a lot of people "who use their brains", one spouse will stay at home and they can afford to and the tax benefits work that way. Once your combined income is about 150k you should listen to a good financial and more importantly tax advisor. You shouldn't use brute force at this stage because the payoff is a lot less.

As long as you are on the straight and narrow in those professions.. ie no affairs / divorces / drugs.. the banks will back you even if you have crazy debts because you are not going anywhere.

Originally Posted by FunkyColdMedina

The problem is that there ARE people who "use their brain", i.e., new doctors, lawyers, who are making six figure incomes who can't afford to live here.

[Tapioca]

Originally Posted by underscore

Maybe, just maybe, people can't have everything. If you have high insurance or childcare costs don't take out a lease on a brand new vehicle, don't max out their RESP's (what the hell kind of post-secondary are you planning for them here at $5k/year?) don't have one parent completely quit working just to raise the kids. Of course it'll be hard to make your mortgage when you reduce your income and max out all possible expenses.

Yes it's a bummer when you can't have everything you want but that's part of life, people better get used to that.

The government gives you $500 if you contribute $2500 to an RESP per child so it makes sense to max out your contributions because there aren't many programs that allow you to get free money. $5000 was based on the average of two kids per family. $2500 X 18 years is $45,000 which may not necessarily be a lot of money considering the cost of any post-secondary program today, let alone in 19 years. I'm sure a lot of people here have had crippling student loan debt and probably wished that their parents could have given them a head start (we're talking about education - not cars, or house down payments).

Even if you buy a used minivan or wagon (like a mid-200s Suburu) to shuttle your kids to doctor's appointments, swimming lessons, etc., you're still paying 1000-2000 per year to keep that car on the road in maintenance and unexpected repairs (like an automatic transmission rebuild, or head gasket). Of course, you could wrench yourself, but then you would need a second car (as a runner to get dealer-only parts if you break something along the way) and ample space, tools, and most importantly, time.

I guess my point is that it's not hard to see where the money goes, even when families make prudent decisions.

[godwin]

Not to mention, a lot of financial institutions match your contribution if you open an account with them (at least for the first few years).. since they know it is a gov source it is a stable source, they want your business.

But it is fair on the new car lease and living within your means.

Originally Posted by Tapioca

The government gives you $500 if you contribute $2500 to an RESP per child so it makes sense to max out your contributions because there aren't many programs that allow you to get free money.