Why Save?

[kevman]

This ones for chemgear!

Macleans: What’s the use of saving money?

Welcome to the world of ultra-low interest rates, where profligacy is richly rewarded and saving is, well, for suckers. Those who’ve opted to be austere with their personal finances have found themselves on the losing end as governments and central bankers have worked to get people to borrow and spend in the wake of the global recession.

I especially like this part...

He’s convinced Canada’s housing market is a bubble that will eventually burst, and when it does, policy-makers will rush to people’s rescue. “My fear is that most people in Canada are now debtors and not savers, and so governments will enact policies to help them because they make up most of the population,” he says. “Savers may get screwed on the way down, too.”

[ThisYear]

Spend spend spend .... or invest in a hard asset. Our family theory, if you aren't in debt you aren’t advancing.

[Ozy_Flame]

The guy giving the quotes sounds bitter. He should take on $1 million of liability/debt and the unhappiness will go away.

[darklord700]

Everyone who doesn't own a house says we have a housing bubble.

[troutman]

What would Jesus do?

[Cowperson]

Welcome to the world of ultra-low interest rates, where profligacy is richly rewarded and saving is, well, for suckers. Those who’ve opted to be austere with their personal finances have found themselves on the losing end as governments and central bankers have worked to get people to borrow and spend in the wake of the global recession. I especially like this part...

Quote:
He’s convinced Canada’s housing market is a bubble that will eventually burst, and when it does, policy-makers will rush to people’s rescue. “My fear is that most people in Canada are now debtors and not savers, and so governments will enact policies to help them because they make up most of the population,” he says. “Savers may get screwed on the way down, too.”

In my early, poverty-stricken 20's, when two nickels to rub together would have been a step up in the world, I was looking for a place to live in Grande Prairie and visited this older, retired military guy. He was a balding chap wearing a stained, sleeveless, white undershirt and pants held up by crossed suspenders while the tiny basement apartment he was renting smelled of grease and sweat . . . . . and he was trying to sub-let a tiny bedroom in this tiny basement apartment he didn't even own to get some extra money to survive.

And I knew right then and there in that moment I would never, never, ever in a million years be in that guy's position at his age.

That guy and his placement in that scene has been motivating me ever since. Scared the crap out of me.

That's why I save.

The person quoted in the article is a fairly myopic, short-term thinker and probably deserves his fate. Cycles come and go, time marches on, good times will return and so will bad times at some point. You have to march through all that in a consistent manner.

Cowperson

[OilKiller]

Way to bring the thread back to reality Cow...thanks. Now I'm depressed.

[chemgear]

Originally Posted by darklord700

Everyone who doesn't own a house says we have a housing bubble.

Interesting stuff from the Globe & Mail today, too bad they couldn't get a median to median comparison.

http://www.theglobeandmail.com/repor...rticle2183671/

I am lucky enough to be making (quite a bit) more than 2 times the median wage in the US; I guess everybody else in Canada is as well.

[GreenLantern]

Just when I thought I was doing it allll riiiight... CowPerson smashes me back into reality.


WHYY!!!!!!!

[bizaro86]

Originally Posted by chemgear

Interesting stuff from the Globe & Mail today, too bad they couldn't get a median to median comparison.

http://www.theglobeandmail.com/repor...rticle2183671/

I am lucky enough to be making (quite a bit) more than 2 times the median wage in the US; I guess everybody else in Canada is as well.

While I doubt the median Canadian makes anywhere near 2X the median American, I don't think national statistics have much meaning for the real estate market, especially with respect to affordability.

The median Vancouver income is buying (or not, probably) a Vancouver house, and a Saskatoon income needs to be able to buy a house in Saskatoon. An overheated market in one place could mask a depressed market in another place, even for decades, since real estate is fundamentally a local market. (Not many people move their houses interprovincially, and you can't move the land).

It's the old one hand in scalding water, one in ice, and having a nice average temperature to go with the burns/frostbite.

[chemgear]

^ I don't disagree. I just find it (like most things like this) very interesting.

[seattleflamer]

Originally Posted by chemgear

Interesting stuff from the Globe & Mail today, too bad they couldn't get a median to median comparison.

http://www.theglobeandmail.com/repor...rticle2183671/

I am lucky enough to be making (quite a bit) more than 2 times the median wage in the US; I guess everybody else in Canada is as well.

Looking at that graph makes you wonder if Canada is in a RE bubble generally speaking with Vancouver in absolutely ridiculous territory.

It is very localized of course but Vancouver must skew that graph upwards disportionately. As long as the Chinese economy hums along, Vancouver is ok. I read in the G&M that almost all 7 figure RE transactions in Vancouver are from HK or China which tells if you own in Vancouver, you better hope China keeps on keeping on...

[The Yen Man]

I swear the guys from China are using the Canadian housing market to launder their money from China. I hear stories of Chinese investors buying up condos in Vancouver and Toronto using boxes of cash, and purchasing multiple units (like 6 or 7) in one sitting.

I guess as long as they're siphoning money out of China and investing it in Canada, then it's not all bad? But I don't see how this situation can continue without pricing the average joe who just wants to buy a place to live right out of the market.

[seattleflamer]

Are you implying it is ill gotten wealth or is it legitimate money for diversification/investment? My only experience is a family friend who diversified from selling their factory in China. I wouldn't doubt that much is laundered, however....just don't know.

[THE SCUD]

I suggest everyone do as I have and email your MP to get some laws on foreign property ownership. What the yen man explains is litterally all that's

1) keeping vancouver real estate 'bubbly'.

2) stopping honest Canadians (asian, brown, black, yellow, aqua) from owning a reasonably priced home in the lower mainland. Somethnig liek 74% of a Vancouverite's wage goes to living costs. Impossibly dumb.

I fear that once even the offshore asians find Vancouver real estate too high, that they will port that bubblage over to AB.

[Lobotroth]

Originally Posted by OilKiller

Way to bring the thread back to reality Cow...thanks. Now I'm depressed.

Had the opposite effect on me, I feel pretty good after reading that.

[bizaro86]

Originally Posted by THE SCUD

I fear that once even the offshore asians find Vancouver real estate too high, that they will port that bubblage over to AB.

That's starting to happen, but it hasn't made the news yet. I've gotten a few calls this month from people asking for advice about how their mainland/HK relatives can buy/rent out condos here in Calgary.

[chemgear]

Originally Posted by bizaro86

While I doubt the median Canadian makes anywhere near 2X the median American, I don't think national statistics have much meaning for the real estate market, especially with respect to affordability.

Just for giggles and because the numbers always interest me, it looks like the greater vancouver area accounts for ~ 9% of the total sales in Canada so far this year. Even if they are are a half million higher in price (house, condo, etc. all blended) they would only skew the pricing by about $45,000 higher on that plot.

I guess you could try to slice off additional cities off the total pie, but then you'd dig down back to the detail of the demographia report that came out a while back. They looked at local wages to housing and that said most cities in Canada are "moderately to severely unaffordable."

Then again, all this is just interesting numbers - and I'm kinda derailing the thread.

[The Yen Man]

Originally Posted by seattleflamer

Are you implying it is ill gotten wealth or is it legitimate money for diversification/investment? My only experience is a family friend who diversified from selling their factory in China. I wouldn't doubt that much is laundered, however....just don't know.

Honestly, I have no idea. Maybe laundered is the wrong word, perhaps unethical might be a better term. You have the Chinese right now throwing ethics out the window in pursuit of the all mighty dollar. And then all these newly rich people just buy up all the property here in Canada, and screw us regular Canadians over in the process.

Now, I'm Chinese and I'm proud to be one. But even I can see that these actions by Chinese investors are not good for the average Canadian. The government really does need to step in and implement some sort of cap or something to curb all this craziness.

[chemgear]

^ China has been trying to curb their own (threat of a) bubble for the last few years. Just look at the news articles about those crazy cities that are completely empty.

They have been raising downpayment minimums for second houses and even suspended mortgages for third homes on top of raising interest rates. I think they raised down payment minimums to 60% from what I recall (it's been a while.)

Anyhow, given the restrictions I assume they are looking to put their money down where they can - like Vancouver.

EDIT: This is an older article but here ya go:

http://www.bloomberg.com/news/2011-0...ces-climb.html