[interested]

I'm not suggesting that the real estate board's assertion is legit, but is it possible that the land transfer tax is discouraging moving up the "property ladder" since it increases the transaction costs significantly beyond the first purchase?

Get ready Jeff for the further spin. Toronto pays about $0.85 tax /$100 valuation vs. suburbs at around $1/$100 and much higher in Durham. So the LTT is quickly made up by the tax savings of about $0.15/$100 x $500K average home or $750/year.
Also, more services offered in the city than in the suburbs. The Toronto LTT is more than made up for by this.

I am not saying this is incorrect reasoning Jeff since over the course of the decade, the differential in the LTT is made up by the savings. However, it is a tax on those who elect to move or buy property and gives the rest of Torontians who stay put a free pass.

I agree with rbt, this coming out now is just another excuse by the whole real estate industry/developers/realtors/home builders etc. to try and place blame anywhere but at their own feet. When things were inflating unreasonably people paid lip service to this issue but it did not stop the "boom" from continuing so why is it the cause of the boom stopping?

Again, one can't have it both ways.

 

[AKS]

If this article is any indication, rental rates here might increase.

http://www.theglobeandmail.com/repo...ught-by-rental-credit-squeeze/article4392820/

Americans caught by rental, credit squeeze

One night last spring, David Hall returned home to his studio apartment outside Boston to learn that his monthly rent had spiked from $725 (U.S.) to $995.

It would be much cheaper for the maintenance manager to buy a nearby starter house than to stay put. But his mortgage broker told him that while his credit score was good, it was not high enough to meet banks’ tough standards, he said.

“I know if I walk into a bank, they are just going to laugh at me,†Mr. Hall says. “So I’m stuck.â€

He is not alone.

Five years after the housing bubble burst, the United States is in the midst of a housing affordability crisis. Home prices have fallen a third from their peaks, but many Americans cannot benefit because they cannot get a mortgage.

With credit tight, many consumers have no choice but to rent. Others who can afford to buy are also renting, because they view real estate as a lousy investment. As demand has increased, rents in some cities have jumped by double-digit percentage rates.

Rents rose 1 per cent to record highs in the second quarter from the prior period, according to real estate research firm Reis.

Just 4.7 per cent of U.S. apartment units are vacant, the lowest level since the fourth quarter of 2001. Low vacancies are likely to push rents even higher, Reis said.

People with lower incomes have long struggled to find affordable housing, but many in the middle class are now hurting, too.

Most personal finance experts recommend allocating no more of 30 per cent of family income to housing, but nearly 40 per cent of Americans are paying more than a third, according to the U.S. Census Bureau’s American Community Survey.

In New York City, one-third of households are spending more than half their pay on rent.

“We have falling incomes, rising rents and nothing but substantial upward pressure on those rents,†says Chris Herbert, director of Harvard University’s Joint Centre for Housing Studies. “And nothing in the cards suggests it will turn around anytime soon.â€

Today’s housing market is a buyer’s paradise.

It is now cheaper to buy a home than it is to rent in virtually every major city in the United States, according to John Burns Real Estate Consulting.

But for many in the renter class, buying even a modest home is impossible because financing is so hard to secure.

Lending for home purchases hit a 12-year low of $404-billion last year, down from $1.4-trillion in 2006, according to trade publication Inside Mortgage Finance. That means mortgage credit is tighter than it was even before the housing boom.

This year, lending is expected to drop even more, according to Inside Mortgage Finance.

A recent Morgan Stanley research report states that the average credit score is 762 for a consumer securing a mortgage backed by government-sponsored enterprises like Fannie Mae. But 65 per cent of Americans have scores below 750.

In other words, a disproportionate number of mortgages are going to people with unusually good credit. A perfect score is 850, and anything below 660 is considered subprime.

“Basically, access to credit for borrowers with less than spotless credit is severely limited,†the Morgan Stanley report states. “A good chunk†of U.S. households are “cut off from mortgage credit on this count alone.â€

For people who can get mortgages, rates are at their lowest levels in several generations. Add that to the cheap home prices, and houses are at their most affordable since at least 1970, when the National Association of Realtors began tracking this metric.

Normally, high affordability translates into higher sales. And the housing market is showing some signs of recovery – the S&P/Case Shiller index of home prices had its third consecutive monthly gain in April. Last week, the NAR said pending home sales had matched a two-year high in May.

But any recovery has been tepid. The NAR said existing home sales had declined 1.5 per cent to a seasonally adjusted annual rate of 4.55 million in May from 4.62 million in April. That is 34.2 per cent above the July, 2010, bottom of 3.39 million, but far short of the 5.5 million pace that the NAR considers healthy.

“Home sales have just barely picked up from their cyclical lows, and that’s because there are still constraints to borrowing,†said Moody’s Analytics economist Celia Chen.

Part of the lender pullback has to do with the stringent regulations Washington put in place after the housing crash, says Michael Fratantoni, vice-president of the Mortgage Bankers Association. These rules put more of the losses from bad mortgages onto lenders, instead of investors or government-sponsored enterprises.

Then there is the climate of unstable home prices and a shaky labour market: “There’s a risk that even a borrower with moderately good credit may fall behind,†Mr. Fratantoni says.

Consumers who cannot buy must rent, and that is where many Americans are feeling the pressure. A rent index from real estate data provider Zillow shows year-over-year gains for 70 per cent of the U.S. metropolitan areas, while its home value index rose in only 7.3 per cent.

In the 12 months ended in May, rents rose 14 per cent in San Francisco and 11 per cent in San Jose, Calif., according to Zillow. Last year in Minneapolis, they spiked 11 per cent even as home values sank 8 per cent.

Only a few years ago, landlords in cities like San Francisco and New York were tossing in a month or two of free rent, sometimes with parking, to lure tenants into signing leases.

Today, applicants are showing up at apartment viewings with copies of their unblemished credit reports and letters of recommendation from bosses and prominent friends, in the hopes of snatching up a place to rent.

Equity Residential, one of the biggest apartment owners in the United States, has more renters with high credit scores than ever, vice-president of operations David Santee said on an April conference call with analysts.

Demand for apartments is also higher because many potential buyers in their 20s and 30s want to stay flexible – home ownership is not as attractive as it was to earlier generations.

Still, plenty of people would prefer entry into the ownership class.

Last spring Rosemary Wynder, a physician order specialist, found her rent shooting up. She decided to buy a house.

But a bank glitch in February had caused one late car loan payment, dinging her credit score. The Utica, N.Y., resident has been unable to straighten out the mistake, and five banks have rejected her for a mortge.

“I’ve been crying,†says Ms. Wynder. “I’ve been praying.â€

 

[interested]

I ran into such a case in my last sale. The buyer low balled me, I wrote back saying I won't entertain such a low offer, because my property is worth more than that. I did not give a counteroffer, I just said no because of XYZ. He raised the price significantly. We got the deal done. Aggravating for me, yes, but at the end, it paid off. I'm not saying its always like this, but there is always a chance that particular buyer is just finishing for a good price. You can't fault someone for trying it. I would do the same. Why offer full price when you can get it for less, if the seller is willing to play.

I think agents are saying to try to "shock" the seller with a high price right off the bat or you won't get to buy anything. But when you do this, how do you know you paid the best possible price? You really don't. I for one rather give -5% off the asking, and see where the chips fall. As the housing market continues to downturn, I will even risk bidding an even lower price. Doesn't mean I'm not serious. But I don't like overpaying. If the seller feels insulted, they really need a better agent to calm them down and to do the negotiating for them. Agents should know there is usually room to negotiating. Afterall, its called an "opening offer" for a reason. A lot of cases, there is room to go up. If not, you only really used up 15-30 min of the sellers time (agent will spend more, but that's the nature of their job).

With all the indicators saying the market is slowing, agents, sellers, and buyers have to adjust. You shouldn't expect it to be all bidding wars, with bids 95% of listing called "insulting". I remember years ago where ads from agents proudly proclaiming they got 95% of listing price.

Great post Xenoblitz.

I agree. However, I do not consider 5 or even 10% an insulting bid. But 15-20% is unrealistic unless you are in a full buyers market. I told my agent not to bother me with bids like this and to reject them out of hand but to her credit or perhaps to cover her rear end she said she had to. I told her I would give written authority to her to reject out of hand any offer at 5% below asking.

Please appreciate I don't enjoy the barter game. I set a realistic price, in fact fair market value so 20% below that bugs me personally. For a lot of us, apart from the very greedy, we expect to get a fair value for what we sell. One could quibble up or down 5% what market value is in most cases but 20% is silly. Please note if the person was doing what you suggest, he/she would come back with a more realistic offer if they were prepared to and wanted the property anyhow.

I predict as you do that when the market has turned (next year) and people realize that last years prices were unrealistic, the sellers will start to experience some of the frustration we have heard about from the buyers these past years. It will be equally unpleasant.

 

[rbt]

I'm not suggesting that the real estate board's assertion is legit, but is it possible that the land transfer tax is discouraging moving up the "property ladder" since it increases the transaction costs significantly beyond the first purchase?

Okay, but why did that only take effect this year, and only downtown.

 

[interested]

If this article is any indication, rental rates here might increase.

http://www.theglobeandmail.com/repo...ught-by-rental-credit-squeeze/article4392820/

Americans caught by rental, credit squeeze

One night last spring, David Hall returned home to his studio apartment outside Boston to learn that his monthly rent had spiked from $725 (U.S.) to $995.

It would be much cheaper for the maintenance manager to buy a nearby starter house than to stay put. But his mortgage broker told him that while his credit score was good, it was not high enough to meet banks’ tough standards, he said.

“I know if I walk into a bank, they are just going to laugh at me,” Mr. Hall says. “So I’m stuck.”

He is not alone.

Five years after the housing bubble burst, the United States is in the midst of a housing affordability crisis. Home prices have fallen a third from their peaks, but many Americans cannot benefit because they cannot get a mortgage.

With credit tight, many consumers have no choice but to rent. Others who can afford to buy are also renting, because they view real estate as a lousy investment. As demand has increased, rents in some cities have jumped by double-digit percentage rates.

Rents rose 1 per cent to record highs in the second quarter from the prior period, according to real estate research firm Reis.

Just 4.7 per cent of U.S. apartment units are vacant, the lowest level since the fourth quarter of 2001. Low vacancies are likely to push rents even higher, Reis said.

People with lower incomes have long struggled to find affordable housing, but many in the middle class are now hurting, too.

Most personal finance experts recommend allocating no more of 30 per cent of family income to housing, but nearly 40 per cent of Americans are paying more than a third, according to the U.S. Census Bureau’s American Community Survey.

In New York City, one-third of households are spending more than half their pay on rent.

“We have falling incomes, rising rents and nothing but substantial upward pressure on those rents,” says Chris Herbert, director of Harvard University’s Joint Centre for Housing Studies. “And nothing in the cards suggests it will turn around anytime soon.”

Today’s housing market is a buyer’s paradise.

It is now cheaper to buy a home than it is to rent in virtually every major city in the United States, according to John Burns Real Estate Consulting.

But for many in the renter class, buying even a modest home is impossible because financing is so hard to secure.

Lending for home purchases hit a 12-year low of $404-billion last year, down from $1.4-trillion in 2006, according to trade publication Inside Mortgage Finance. That means mortgage credit is tighter than it was even before the housing boom.

This year, lending is expected to drop even more, according to Inside Mortgage Finance.

A recent Morgan Stanley research report states that the average credit score is 762 for a consumer securing a mortgage backed by government-sponsored enterprises like Fannie Mae. But 65 per cent of Americans have scores below 750.

In other words, a disproportionate number of mortgages are going to people with unusually good credit. A perfect score is 850, and anything below 660 is considered subprime.

“Basically, access to credit for borrowers with less than spotless credit is severely limited,” the Morgan Stanley report states. “A good chunk” of U.S. households are “cut off from mortgage credit on this count alone.”

For people who can get mortgages, rates are at their lowest levels in several generations. Add that to the cheap home prices, and houses are at their most affordable since at least 1970, when the National Association of Realtors began tracking this metric.

Normally, high affordability translates into higher sales. And the housing market is showing some signs of recovery – the S&P/Case Shiller index of home prices had its third consecutive monthly gain in April. Last week, the NAR said pending home sales had matched a two-year high in May.

But any recovery has been tepid. The NAR said existing home sales had declined 1.5 per cent to a seasonally adjusted annual rate of 4.55 million in May from 4.62 million in April. That is 34.2 per cent above the July, 2010, bottom of 3.39 million, but far short of the 5.5 million pace that the NAR considers healthy.

“Home sales have just barely picked up from their cyclical lows, and that’s because there are still constraints to borrowing,” said Moody’s Analytics economist Celia Chen.

Part of the lender pullback has to do with the stringent regulations Washington put in place after the housing crash, says Michael Fratantoni, vice-president of the Mortgage Bankers Association. These rules put more of the losses from bad mortgages onto lenders, instead of investors or government-sponsored enterprises.

Then there is the climate of unstable home prices and a shaky labour market: “There’s a risk that even a borrower with moderately good credit may fall behind,” Mr. Fratantoni says.

Consumers who cannot buy must rent, and that is where many Americans are feeling the pressure. A rent index from real estate data provider Zillow shows year-over-year gains for 70 per cent of the U.S. metropolitan areas, while its home value index rose in only 7.3 per cent.

In the 12 months ended in May, rents rose 14 per cent in San Francisco and 11 per cent in San Jose, Calif., according to Zillow. Last year in Minneapolis, they spiked 11 per cent even as home values sank 8 per cent.

Only a few years ago, landlords in cities like San Francisco and New York were tossing in a month or two of free rent, sometimes with parking, to lure tenants into signing leases.

Today, applicants are showing up at apartment viewings with copies of their unblemished credit reports and letters of recommendation from bosses and prominent friends, in the hopes of snatching up a place to rent.

Equity Residential, one of the biggest apartment owners in the United States, has more renters with high credit scores than ever, vice-president of operations David Santee said on an April conference call with analysts.

Demand for apartments is also higher because many potential buyers in their 20s and 30s want to stay flexible – home ownership is not as attractive as it was to earlier generations.

Still, plenty of people would prefer entry into the ownership class.

Last spring Rosemary Wynder, a physician order specialist, found her rent shooting up. She decided to buy a house.

But a bank glitch in February had caused one late car loan payment, dinging her credit score. The Utica, N.Y., resident has been unable to straighten out the mistake, and five banks have rejected her for a mortgage.

“I’ve been crying,” says Ms. Wynder. “I’ve been praying.”

This too is a distorted market but in reverse of here. People deserving who should get credit can't and hence landlords are usurping their position. As market conditions relax, the market will be able to buy, renters absolute numbers will decrease, more homes will be purchased (at higher prices) and the benefit of being a landlord reduce back to historic or reasonable levels.

Assuming we do not have as big a correction as occurred in some US markets...those with 300% 6 year increases in prices vs.50% in Canada approximately, the distortions should not be as great with people waking up to 25% rent increases. Besides, we already have tenant protections though clearly they do not apply to the later stock from 1991 onwards I believe but the reality is that rents are not skyrocketing out of site and I would not expect a huge increase though some will be necessary to justify the prices people are/have paid to purchase real estate (condos in particular) for the purposes of being a longer term landlord.

 

[CN Tower]

RealNet Canada Inc. will release June preconstruction sales figures next week, but sales in the first five months of this year are 22 per cent below last year’s levels in that market, and May’s figure was 37 per cent lower than a year earlier.

Correct me if I'm mistaken, but I believe there were more than 28,000 new condo sales in the GTA in 2011. Let's assume that 2012 comes in at 30% less than 2011, so that's just under 20,000 new condo sales.

If this great city can sell 20,000 in a year, with tighter mortgage restrictions and some softening in investor demand from off shore purchasers I have tremendous faith in the GTA new condo market's enduring strength! Where else in North America (the world?) do you see a market selling 20,000 new condos in a year?

The media spin is just out of control. It could just as easily have read that Toronto (GTA) is on track to again lead North America is new condo sales! (another reason to cheer!)

 

[AKS]

Assuming we do not have as big a correction as occurred in some US markets...those with 300% 6 year increases in prices vs.50% in Canada approximately, the distortions should not be as great with people waking up to 25% rent increases. Besides, we already have tenant protections though clearly they do not apply to the later stock from 1991 onwards I believe but the reality is that rents are not skyrocketing out of site and I would not expect a huge increase though some will be necessary to justify the prices people are/have paid to purchase real estate (condos in particular) for the purposes of being a longer term landlord.

US seems to be tipping from one side of the scale to the other. But I think some issues in the US might be mirrored in Canada as well, just less severely. Many people complain of loose lending policies here and Flaherty is starting to tighten it a bit by decreasing amortization. This is starting to take effect in the market now. But if credit runs thin, banks will have to tighten lending policies more. I don't know if we are any where near credit running dry, but if it happens, we might be in a similar state as US. Rental prices probably won't hike up as high as US, but it will head up. If people can't buy a home, they will have to rent. Which will decrease rental stock and drive up rental prices. With the current rental prices, pre-con is hard to justify. As indicated, there's less pre-con sales so many buildings won't get built. I realize we are getting a lot of units coming on line in the next few years and it will take time to absorb. When it does get absorbed, vacancy will be very low.

 

[interested]

Correct me if I'm mistaken, but I believe there were more than 28,000 new condo sales in the GTA in 2011. Let's assume that 2012 comes in at 30% less than 2011, so that's just under 20,000 new condo sales.

If this great city can sell 20,000 in a year, with tighter mortgage restrictions and some softening in investor demand from off shore purchasers I have tremendous faith in the GTA new condo market's enduring strength! Where else in North America (the world?) do you see a market selling 20,000 new condos in a year?

The media spin is just out of control. It could just as easily have read that Toronto (GTA) is on track to again lead North America is new condo sales! (another reason to cheer!)

I think it is the trend and speed of the slowdown CN Tower that is the issue. I do appreciate that 2011 was a record year so any slow down is going to appear magnified even if we just went back to historical growth rates.


That said, things are slowing very rapidly and I believe that June will confirm this as far as new constructions sales. I believe the issue psychologically is that if we were on pace at 28000 at the beginning of the year and end up at 20,000; but that 20000 is due to 12000 in the latter half (or 1000 units/month vs 2200units/month, the feeling will be that things have massively slowed. This in turn could result in people sitting on the fence and not purchasing (other than a few end users) as investors would anticipate better prices to follow and would fear being unable to unload the properties. Then fundamentals which have been ignored.... the negative cash flows will take front and center stage.

 

[interested]

I guess they are writing about us in the Wall Street Journal again.

Nothing new in the article.

http://blogs.wsj.com/canadarealtime...fter-months-of-warnings/?mod=google_news_blog

uly 6, 2012, 2:20 PM ET

Toronto Condo Sales Drop Off Sharply, After Months of Warnings

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Derek Shapton for The Wall Stree

By Paul Vieira

Last month, Finance Minister Jim Flaherty said he was tightening mortgage rules to take out some of the steam in some of Canada’s frothier real-estate markets, naming in particular–and several times–Toronto’s condo market.

If recent sales data from the Toronto Real Estate Board is any gauge, the steam was already coming out–fairly quickly, at least based on June sales. Sales fell 18% in the month from the year-earlier period, according to data released this week.

The drop comes as Mr. Flaherty, economists and analysts have all piled on in recent months warning of a possible bubble amid a blistering salvo of new condo tower construction in recent years.

Here’s the break down:

June sales of condos in Toronto, Canada’s largest city, dropped 18%, to 1,996 units, from last June, the Toronto Real Estate Board said. Prices of condo units advanced 2%, to an average 342,044 Canadian dollars ($337,188). Sales of detached, single-family homes rose 7%.

Overall, total home sales in Toronto–with a metropolitan population of 5.8 million–declined 5.4% in the month of June from the same year-ago period.

The Toronto Real Estate Board didn’t provide a reason for the decline in condo sales, and a representative wasn’t immediately available for comment.

The decline coincides with a June 21 decision by Canadian Finance Minister Jim Flaherty to tighten rules on mortgage eligibility–the fourth tightening in as many years. One of the reasons Mr. Flaherty said he decided to take further action was concern about red-hot sales activity and signs of overbuilding in the Toronto condo market. The move was also meant to contain how much debt Canadian households take on, given indebtedness is at record-high levels when measured against disposable income.

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[Kenny]

Cautious buyers send Toronto condo sales plunging


Sales were down 5.4 per cent from a year earlier, with downtown sales dropping while those in the surrounding areas held steady – a phenomenon that the real estate board attributes to the City of Toronto’s land transfer tax.

From the comments:

"Honey, let's move to Lawrence Park. I found a gorgeous georgian home there that I love. and it's close to where we want to send the kids to school and we have so many friends close by. It's $2,500,000 and in our budget."

"No, no, I refuse to pay an additional 1.25%! We are moving to Brampton and that's the end of it!"

 

[KA1]

What happened to KA1?

Hi folks,

A good news and a sad news.

First the good news. I am back.

Now the sad news. I am back only for a short while -- just to answer some of your posts. I plan to go back to my hiatus.

To start with, I am really touched with your posts asking about my whereabouts.

As I had said in one of my posts a while ago, we -- at least I -- are here to make some serious commnts and some not so serious comments. It is just like sitting with friends in a bar except that here there is no beer and, more important, no 'salty' peanuts. At times, I have purposely made 'slightly stinging'comments -- or jabs, as Interested would describe them -- just to elicit some response and keep discussions going. I have called Redfirm a 'spring chicken' and Interested some one who is ' perinially wrong' without any objections from them. At the beginning, when I had made some comments on CDR 108's post, he took objection to it. However, now he understands intentions behind my comments. He is now quite relaxed. Look at his latest post about me.

However, someone by the name Daveto had appointed himself as the chief of the 'Morality Squad' of this Board. In response to one of my jabs at Interested, he took upon himself to answer my post and called me a 'troll'. In response, I had sent him a PM basically stating that some of the comments are make with tounge-in-cheek and as long as Interested, or any one else, does not take offense to it, then, it should be alright. He had completely ignored my PM. He was very serious about his self-appointed role as a Chief of 'Morality Squad'. A little later, he took upon himself to respond to another of my posts by calling me 'odious troll'. Instead of responding to his post with equally insulting choicest English words, I decided to throw insult back at him the best way I know. I completely denied his existence and ignored his comments with the contempt they deserved.

As I said in one of my posts, I come to this thread to take a break and relieve 'boredom' of my full time profession of 'Bean counter'. Interested, by his own admission, is a retired individual. He has been making frequent posts on this thread and other threads as well. This way, he stays out of the path of his wife and keep his marriage going. We all got along well with each other.

Since I am fortunate enough that I can relieve my boredom in some other ways, for example, dreaming of the day that I will be moving in my unit on the 62nd floor of AURA, I had decided to take a hiatus and to not tounnecessarily aggravate someone to the point where he has to use the words like 'troll'. After I have answered posts of Redfirm, CDR108 and Interested, Iwill go back to my hiatus.

Redfirm, I am ok. Thanks for expressing your concerns.

 

[KA1]

maybe he's been camped out at Yonge/Gerrard watching his home rise up ?!?

CDR 108, no, I don't have to camp out to watch AURA rise. I live in RoCP1. One of the rooms I have converted to the office. From the window, I can see each bucket of concrete going up.

Main reason for not making a post is that I am involed in serious discussions with Porter Airlines. I take about 6 round trips a year to Ottawa -- business trips as far as CRA is concened, going to see my son is the 'unofficial' reason . I am trying to convince Porter to make a pit stop near my unit in AURA, drop the ladder and pick me up and drop me back rather than me having to go all the way to the airport and then coming back.

 

[livingrealty]

Really? The LTT which hasn't changed since 2008 caused a decrease in sales between 2011 and 2012?

It's no surprise people have a low opinion of real-estate agents. Look at what their representatives say in the media.


Perhaps sales are slower downtown because they are the highest priced and most likely to be at the margin of what people can afford? I know prices in the building I current live in are well above what I would pay for a condo unit.

I thought that was a pretty lame explanation too. Funny how this wasn't mentioned when the LTT first came out. When people are getting outbid by tens of thousands, the LTT amounts to absolutely nothing. People are starting to come to their senses.

 

[KA1]

Ka1 left the site a while ago. I believe he still reads it. Maybe he will post again?

It would be interesting to hear if he still shares the positive view he espoused previously.

Interested, I am, by nature, an incorrigible optimist. That's the reason I am in life where I am now.

You have to look at the individual and the background from where that individual comes. I am a graduate of the 'school of hard knocks'.

I was not even a fully developed 'spring chicken' living in London, England, when in 1965, Government of Canada seduced me into coming to Canada. Believe it or not, in those days, Government of Canada used to give ads in the local papers '' come to sunny Canada''. I landed in Bloor & Bathurst area --Barton Avenue to be exact -- with only
$ 400 in the pocket. In England, I had studied, in the evenings, courses related to advertising and marketing. Upon seeing ads in The Star about bookkeepers, I had also sudied bookkeeping for a few months. Upon arrival,I had applied for a clerical job advertised in The Globe and Mail by an Advertising Agency. Letter had to be mailed to a Globe and Mail box number. I posted my letter in the evening. Next morning, postal union had called a strike. Being in Canada for only 2 weeks, and no one to look for any help, I found a clerical job in the accounting department of a multi-national company. Later, when the strike was over, I was asked to contact the advertising agency. I have been in the bean counting business since then. Of course, I had to study hard in the evenings and weekends to get my designation. Thanks to the Head of the Postal union, I am now in the 'bean counting' business.

Working as a clerk, I met a colleague, a nice 'senior' lady who advised me ' to always look at the donut and not the hole'. And I have followed that advise throughout my life.

As I had said quite sometime ago, in reply to a post from CDR 108, houses in the Bloor & Bathurst area -- now called Annex -- were going for around $ 23,000.00. Individuals were screaming 'murder' and 'bubble' when the price of a house went up by $ 500.00.

I do pay too much attention to ROI and ROC and other technical non-sense -- as long as I get my 'reasonable' share of the 'Donut'. I am in for a long haul. In the past few years, house/condo prices have been going up at 'unsustainable' pace -- 10/12% per year. This has now come down to 2.3%. I am quite comfortable with this increase of 2.3%. This 2.3% of, say, $ 500,000 comes to $ 11,500.00. That small piece of a donut is fine with me. I do not have to have a spectular ROI. Even if there is a negative return in the short term, it will go up eventually. Note my comment about prices in 1965. I have lots of patience. And, of course, I do not speculate or gamble -- buying multiple properties by, say, 5 or 10% down and 30/35 years amortization or buying a property in soon to become a 'slum' otherwise known as City Place. At one time, I lived in St. James Town -- a chick/groovy place to live, meet and enjoy the company of your 'sweet' things.

To, once again, answer your questions, yes, I am still positive over the long term.

 

[interested]

Interested, I am, by nature, an incorrigible optimist. That's the reason I am in life where I am now.

You have to look at the individual and the background from where that individual comes. I am a graduate of the 'school of hard knocks'.

I was not even a fully developed 'spring chicken' living in London, England, when in 1965, Government of Canada seduced me into coming to Canada. Believe it or not, in those days, Government of Canada used to give ads in the local papers '' come to sunny Canada''. I landed in Bloor & Bathurst area --Barton Avenue to be exact -- with only
$ 400 in the pocket. In England, I had studied, in the evenings, courses related to advertising and marketing. Upon seeing ads in The Star about bookkeepers, I had also sudied bookkeeping for a few months. Upon arrival,I had applied for a clerical job advertised in The Globe and Mail by an Advertising Agency. Letter had to be mailed to a Globe and Mail box number. I posted my letter in the evening. Next morning, postal union had called a strike. Being in Canada for only 2 weeks, and no one to look for any help, I found a clerical job in the accounting department of a multi-national company. Later, when the strike was over, I was asked to contact the advertising agency. I have been in the bean counting business since then. Of course, I had to study hard in the evenings and weekends to get my designation. Thanks to the Head of the Postal union, I am now in the 'bean counting' business.

Working as a clerk, I met a colleague, a nice 'senior' lady who advised me ' to always look at the donut and not the hole'. And I have followed that advise throughout my life.

As I had said quite sometime ago, in reply to a post from CDR 108, houses in the Bloor & Bathurst area -- now called Annex -- were going for around $ 23,000.00. Individuals were screaming 'murder' and 'bubble' when the price of a house went up by $ 500.00.

I do pay too much attention to ROI and ROC and other technical non-sense -- as long as I get my 'reasonable' share of the 'Donut'. I am in for a long haul. In the past few years, house/condo prices have been going up at 'unsustainable' pace -- 10/12% per year. This has now come down to 2.3%. I am quite comfortable with this increase of 2.3%. This 2.3% of, say, $ 500,000 comes to $ 11,500.00. That small piece of a donut is fine with me. I do not have to have a spectular ROI. Even if there is a negative return in the short term, it will go up eventually. Note my comment about prices in 1965. I have lots of patience. And, of course, I do not speculate or gamble -- buying multiple properties by, say, 5 or 10% down and 30/35 years amortization or buying a property in soon to become a 'slum' otherwise known as City Place. At one time, I lived in St. James Town -- a chick/groovy place to live, meet and enjoy the company of your 'sweet' things.

To, once again, answer your questions, yes, I am still positive over the long term.

Interesting look into your past Ka1.

No one I am sure can fault you for seeing the "meat" of the donut rather than the "hole".

I see only one flaw in the argument about the long term Ka1 for real estate. Unless we are talking the Very Long Term, since it is my belief that there are 2 scenarios likely to take place neither of which is bullish for real estate, I am not sure that 2-3% escalation going forward is what will happen say over the next decade.

If the 2-3% is the return on your capital and you are satisfied with that (via rent) then I think this is fair. As for capital appreciation however, if interest rates stay where they are, it is because the economy is poor. I believe that the continued 2% rises may well turn negative or go at least to "zero" for increases (which after inflation is actually negative) but lets just talk in terms of nominal return of zero.

If interests do go up, I can see price pressure and actual decreases.

I do not see a scenario of interest rates going further down and if this occurs, God Forbid, Canada will become Japan 2 and I need not remind you that Tokyo has not yet come close to recovering it's peaks from around 20 years ago or at least so is my understanding.

Since I believe a painful deleveraging has to occur before growth can occur further, I am hoping for the 2nd scenario that the real estate "holds" its value (not allowing even for inflation). I say this since I am not convinced if deleveraging occurs there will be many other asset classes that do much better. I am not as wise as some on the forum to have figured out how to invest with relatively low risk if we are in a deleveraging cycle.


On a final note, I hope you decide to come back to the forum and give us the benefit of your views and even jabs. Hopefully all now understand if there was any misconception that you were acting tongue in cheek when giving the gentle prods.

That said, since I have been "perennially wrong" let's hope my track record remains intact for all of our sakes. Unfortunately, I do not believe this to be the case. As they say, even the broken clock is right twice a day.

Cheers Ka1.