Calgary Real Estate predictions?

[Dan02]

Originally Posted by Sylvanfan

Okay...so how the hell does the average person owe $41,000 in debt on assets that aren't worth anything?

Seriously...there are a lot of people on this forum claims to be debt free and seemingly have a lot of assets. To have $41,000 grand in worthless consumer debt...thats a lot of booze, tobacco, gambling, or travelling. I probably rack up $600 a month on my credit card in purchases...but I also pay it off every month as I buy most of my essential stuff using the credit card. Would that mean I have $7200 a year in personal worthless debt? I just don't see how those numbers could be accurate. No way everyone owes what is basically the equivilent of a brand new Lexus in debt.

Aren't they more refering to national debt levels spread out amoung the population then each persons actual debt?

But I'll bite anyways, toss in some student loans, a stupidly expensive wedding, a couple failed business partnerships, subsequent divorce, poorly timed investments and a vehicle which manages to suffer multiple mechanical failures every year and yeah 40k+ isn't that hard to ring up at all :P

[Wookie]

I'm wondering if it has something to do with Canadian banks not needing a bailout by the government.

I could be completely out to lunch - but assume the US is below us. What were they before everyone walked on their house/debt/car and the US government had to assume all that bad debt from the banks?

If we're all 40k in debt and we start walking on lets say 3/4ths of it. Suddenly we're only 10k in debt.

Suddenly the government has to step in and take on 990 billion in bank "assets" which have essentially gone bad.

Maybe then we look a lot like the US/UK and whoever else?

[username]

I read this totally different as in:

Debt - Assets = 40K

That would make sense to me, that the "average Canadian" is 40K in debt if you include mortgages. Most people I know probably owe about 100K more on their mortgage than they have equity, then you add back investments, vehicals, etc it's probably about 40K for the average person.

I refuse to believe that the average Canadian is 40K in debt without taking a mortgage into consideration. It's almost not even possible in my eyes.

[Cowboy89]

Originally Posted by Winsor_Pilates

It's partly just the reality of a listing getting older, but I think there's definite truth to things slowing down.
All of the new developments we are selling in BC got really slow all of the sudden about 2-3 weeks ago. Everyone sort of stopped looking for homes at the same time. I think fear or rates, fear of general investment and in our case fear of HST are all to blame.

Does any of the slow down have to do with the tighter mortgage restrictions taking place on April 19th? I think it would be ironic if the prices got bid up by people who would not have qualified under the new rules. The very people who would be most sensitive to a negative equity scenario are the ones causing a blip in prices that creates exactly that on their purchases. Ah well Sheeple.

[Cowboy89]

Originally Posted by chemgear

This can't be a good thing:

http://www.financialpost.com/news-se...tml?id=3013137

We're worse than the Greeks AND the Americans? Seriously?

Anyone who doesn't have any consumer debt who feels they are being left behind as people drive fancy new cars, live in big McMansions, and seem to have all the latest gadgets should clip this article and save it. The reason why things are more expensive than you figure they should is because people are using OPM (Other People's Money) to buy them and bid the price up.

I also recall an article from the Globe from about 6-8 months ago that investigated with the Land titles office to see how large a mortgage people who live in million dollar plus homes in a few Canadian markets have. Typically it seemed that quite a few homes even in those high price ranges have hefty mortgages on them leaving under 10% in home equity. Meaning that even in 'high income' situations people are still living beyond their means.

Everyone wants to live like a rock star, very few want/or even really have the ability to pay for it.

[chemgear]

Originally Posted by username

I refuse to believe that the average Canadian is 40K in debt without taking a mortgage into consideration. It's almost not even possible in my eyes.

That number is rather mind boggling for sure, but I doubt they are making it up. It's like the whole "50% of marriages fail" thingy (besides the thought if they don't fail but are crappy anyhow, so that number should actually look worse.)

Or have you seen the crackshacks people have been buying in Vancouver for million dollars? Or why on earth would you buy a new house given the metrics and fundamentals at this stage?

You/I wouldn't do it . . . but there are more than enough people that would! I'm afraid I probably don't have a high opinion of the general population - if you then toss free money at them, I'm guessing the results are fairly predictable.

[Cowboy89]

Originally Posted by fotze

IF people were only as smart as us here.

To steal a joke: Debt's like crack cocaine. No one admits to buying crack, but yet so much of it gets sold. Hardly anyone admits to credit card debt, but yet there it is.

[Sylvanfan]

Originally Posted by fotze

IF people were only as smart as us here.

Yeah, considering a guy like me with what is pretty much a high school education has managed to keep my self well below these so called national averages, it totally makes sense that the rest of the population who make a better income and have a better level of education on average would be so much worse off.

[Sylvanfan]

Originally Posted by Cowboy89

To steal a joke: Debt's like crack cocaine. No one admits to buying crack, but yet so much of it gets sold. Hardly anyone admits to credit card debt, but yet there it is.

Yeah, but is a credit card debt that gets paid every month the same as one that doesn't in these stats? Last month I had about $2500 charged up on my credit card one day because I had to repair a vehicle and bought tires. It's been paid off, but did it statistically count as being $2500 in worthless consumer debt?

[macker]

Basically what is happening today is the shifting of debt from the private balance sheets to the public balance sheets. This doesn't deal with the underlying problem....debt.....The policy changes are behind the curve and it is likely to catch up at some point. It took 6 months to reach a decision on how to help Greece and a Trillion bailout didn't really calm the markets. What started as insolvency in the private sector is spreading to the public sector.

[macker]

Originally Posted by Sylvanfan

Yeah, considering a guy like me with what is pretty much a high school education has managed to keep my self well below these so called national averages, it totally makes sense that the rest of the population who make a better income and have a better level of education on average would be so much worse off.

You sound like the http://en.wikipedia.org/wiki/The_Millionaire_Next_Door

[Cowboy89]

Originally Posted by Sylvanfan

Yeah, considering a guy like me with what is pretty much a high school education has managed to keep my self well below these so called national averages, it totally makes sense that the rest of the population who make a better income and have a better level of education on average would be so much worse off.

I don't think it's about education or even income levels at all. I personally know some well-educated high earning investment bankers and corporate finance guys that drive luxary cars and live in large expensive houses that they cannot realistically afford long term. Also what about people with degrees and experience in fields completely unrelated to money. You wouldn't believe the ignorance of financial knowledge and action in many 'smart' people. The larger the income the larger the debts that can serviced. That's all that means.

Personally I think it's just simply part of the human condition to screw tomorrow and live for today. The readily expandable amount of debt products just enabled people to lever up more. There's also an acceptance of defaulting on debt in younger generations that did not exist in the WWII generation. My grandparents used to say that back in the day writing an NSF cheque used to be a lifetime of embarassment. I helped my dad volunteer for a Little League baseball association by collecting and cashing cheques for league fees and such and the NSF rate had to be like 5-10%. Seriously 5-10% of cheques written by people in upper middle class nieghborhoods didn't have like $80 in their chequeing accounts! Also we had some people remedy the situation by just writing me a new cheque knowing that it wouldn't clear either. No shame!

[username]

Originally Posted by fotze

There are an extraordinary amount of Land/Range Rovers on Calgary streets. Aren't those $80 k vehicles. no old people ever seem to drive them. What do these dudes do?

Look at Aspen Estates, hundreds of brand new $800k+ homes, where are all these additional really rich people coming from. Seems nuts.

You're right there are, however if you minus the asset value from the debt used to purchase are you really going to be left with 50K in debt? Especially since these types of expensive assets require large down payments.

I just don't see where the debt - assets = 40K can come from? I don't.

[DionPlett]

I've been wondering about real estate values myself the last little while. When I bought my house in 2007 it had increased in value 150k from the time it was built in 2005. I'm wondering if I shouldn't sell it because I actually think that the value could drop by pretty close to that same 150k.
I also have more than 40k in consumer debt but I could sell my house and be debt free but you still have to live somewhere. It's a bit of a dilema right now for me but I think that once you get to a certain stage in your life, have a house and vehicle, you're going to have debt at some time.
The recession effected me quite a bit as far as my income goes. How common is it for people to sell out and become debt free and basically start over again.

[Sylvanfan]

Originally Posted by Cowboy89

Seriously 5-10% of cheques written by people in upper middle class nieghborhoods didn't have like $80 in their chequeing accounts! Also we had some people remedy the situation by just writing me a new cheque knowing that it wouldn't clear either. No shame!

Considering you get dinged about $20 for NSF cheques from your bank IIRC that's pretty bad. Waste $40 trying to pay for an $80 expense.

[Pastiche]

Sylvan sounds like a guy who will be wealthy in the end.

I subscribe to a litany of personal finance blogs and the golden rule of wealth accumulation is spend less than you earn. If you can do that consistently you will come out ahead later in life.

If I was Sylvan I wouldn't be sweating too much unless you really feel the need to keep up with the Jones'.

[Sylvanfan]

Originally Posted by DionPlett

I've been wondering about real estate values myself the last little while. When I bought my house in 2007 it had increased in value 150k from the time it was built in 2005. I'm wondering if I shouldn't sell it because I actually think that the value could drop by pretty close to that same 150k.
I also have more than 40k in consumer debt but I could sell my house and be debt free but you still have to live somewhere. It's a bit of a dilema right now for me but I think that once you get to a certain stage in your life, have a house and vehicle, you're going to have debt at some time.
The recession effected me quite a bit as far as my income goes. How common is it for people to sell out and become debt free and basically start over again.

Well it depends on a couple of things. If your personal debts are at a point where you can not keep up the payments than you are living beyond your means. In that case maybe you should consider downsizing your house and using the proceeds to clear off your debts. Depending on your personal situation and what type of place you need, for example do you have kids, pets?

The way your post is worded it sounds like you bought it for the 2005 price and when you moved in the value of the house had gone up by 150k. So if your house did drop in value by $150k than you wouldn't be in a negative equity situation. So long as your mortgage payment is similar to what your rent would be and you're not at risk of being in a negative equity situation I don't think you're too badly off.

[DionPlett]

[QUOTE=
The way your post is worded it sounds like you bought it for the 2005 price and when you moved in the value of the house had gone up by 150k. [/QUOTE]

No, the previous owner got the increase, I've since gained a bit of equity myself. I'm still thinking I could lose that initial increase because nobody really knows what's going to happen.

[Cowboy89]

Originally Posted by Sylvanfan

Considering you get dinged about $20 for NSF cheques from your bank IIRC that's pretty bad. Waste $40 trying to pay for an $80 expense.

What they would do is write 2-3 of NSF cheques while taking many hounding phone calls in between cheques to stretch it out to the end of the three month season and then once their kid has already played a full season they stop answering phone calls or the doorbell. At some point since these are the parents of people who play on your kids team the league just eats it and they effectively dodge a $80 liability but rack up $40 NSF fees and terrible damage to their credit. But such is the life of a deadbeat.

[metal_geek]

Originally Posted by DionPlett

I've been wondering about real estate values myself the last little while. When I bought my house in 2007 it had increased in value 150k from the time it was built in 2005. I'm wondering if I shouldn't sell it because I actually think that the value could drop by pretty close to that same 150k.
I also have more than 40k in consumer debt but I could sell my house and be debt free but you still have to live somewhere. It's a bit of a dilema right now for me but I think that once you get to a certain stage in your life, have a house and vehicle, you're going to have debt at some time.
The recession effected me quite a bit as far as my income goes. How common is it for people to sell out and become debt free and basically start over again.

Don't know how common it is but I did just that... Only I had to move to a small community to do it...

Basically sold everything, paid everything, paid cash for a small house in a small community. The only expenses I have now are the utility bills, insurance kinda stuff. It allowed me to start my own business and not have to worry about how I'm gonna keep making my payments for things. I have to make very little to come out ahead now that I'm not working for my stuff... I'm making roughly 15% of the income yearly I was making in calgary and at the end of the day I come out with more money in the bank then I ever did in calgary..

I have infinatly less stress, and my desire for things has basically disappeared. Living with very little stress free is worth way more then living with everything you want and full of stress...

I'm never owing a cent to anyone again, If I can't pay cash for it I don't need/want it