Calgary Real Estate predictions?

[Sylvanfan]

Originally Posted by hmmhmmcamo

Of course he can lose his savings, but he can't go into negative savings. Home owners can get into negative equity in a real hurry.

You can also borrow to invest and lose that money too. Home owners who end up in negative equity situations have the choice to keep making their payment or take it up the tail pipe then and there and get out. If you invest on margin, and lose it all...no choice, and no place to live either. Like anything you have to be selective with what you buy.

[hmmhmmcamo]

Originally Posted by Mike Vernon

Good point. But you can't live in your stocks and your stocks can't keep you warm at night either

That's why in addition to investing in stocks, he's also renting a place

[hmmhmmcamo]

Originally Posted by Sylvanfan

You can also borrow to invest and lose that money too.

Right, but that's not what we are talking about here. The example given was someone who is investing the difference between rent and what the mortgage/expenses would be.

Home owners who end up in negative equity situations have the choice to keep making their payment or take it up the tail pipe then and there and get out. If you invest on margin, and lose it all...no choice, and no place to live either. Like anything you have to be selective with what you buy.

I think lately the negative equity people have had it a bit easier come refinance time because prices have been rising dramatically over the last few years so there's less risk. But if/when prices start heading the other way (like down in the states) people won't necessarily have that option to just keep making the payments.

[Skyceman]

Originally Posted by Sylvanfan

Taxes will eat into that return, plus you need to time the market to get that type of return. It's not like everyone who put money in the stock market made 15 % so far this year.

It's not taxed if he has it in a TFSA.

I don't think its about timing the market - that's a losers game. If you are diversified, know how to use options and own steady stocks that pay good dividends you can make that in an up or down market.

[Slava]

Originally Posted by Skyceman

It's not taxed if he has it in a TFSA.

I don't think its about timing the market - that's a losers game. If you are diversified, know how to use options and own steady stocks that pay good dividends you can make that in an up or down market.

I'm biased for sure, but we're really talking about two different things. I think that hands down you can make more in stocks than in owning a house. I actually doubt there's much debate about that.

I just know that most people aren't investing what they save for a house. That makes sense to me because if you need tye money on July 10, 2013 and are going to choked if its not all there you are really limited in what you can invest in.

[Sylvanfan]

Originally Posted by Skyceman

It's not taxed if he has it in a TFSA.

I don't think its about timing the market - that's a losers game. If you are diversified, know how to use options and own steady stocks that pay good dividends you can make that in an up or down market.

A TFSA allows you 5 grand a year. So you can make like 750 tax free getting a 15% return on your money? To buy stock, pay the buying and selling fee...than get your return you'd need to be buying smaller cap stocks to pull it off. Essentially you save the tax on $375. Not really significant.

Still with your second point, it still requires timing and above average investing skill in my opinion to use options. If making 15% every single year in the stock market was easy everyone would do it.

If you know what you're doing you can make money playing poker or betting on sports too. There are people who make a great living doing that. But it's very risky.

[Skyceman]

Originally Posted by Slava

I'm biased for sure, but we're really talking about two different things. I think that hands down you can make more in stocks than in owning a house. I actually doubt there's much debate about that.

I just know that most people aren't investing what they save for a house. That makes sense to me because if you need tye money on July 10, 2013 and are going to choked if its not all there you are really limited in what you can invest in.

A one year window is foolish ofcourse. You should only put money into the stock market that you will not need to touch for at least 3 - 5 years.

[Skyceman]

Originally Posted by Sylvanfan

A TFSA allows you 5 grand a year. So you can make like 750 tax free getting a 15% return on your money? To buy stock, pay the buying and selling fee...than get your return you'd need to be buying smaller cap stocks to pull it off. Essentially you save the tax on $375. Not really significant.

Still with your second point, it still requires timing and above average investing skill in my opinion to use options. If making 15% every single year in the stock market was easy everyone would do it.

If you know what you're doing you can make money playing poker or betting on sports too. There are people who make a great living doing that. But it's very risky.

Actually your basing that off a minimum contribution scenario. TFSA's could be as high as $20,000 this year - that is if someone maximized their contributions. And transaction fees at 50%??? I'm not sure how you get those numbers but that's not my experience.

Anyways the point is there are better options then socking all your money into one illiquid asset. If one can rent and be smart with their money - I think its a better option right now. Too many are not diversifying enough and expecting their home to be their only retirement plan which is also very risky.

[Superflyer]

So I saw that BMO dropped their 5 year rate to 2.99 yesterday. Is this normal this time of year? It is only until the end of March but still. I also imagine others will fall in line as well with this happening.

[fundmark19]

They had to promo on about a month ago and then everyone pulled it and now it is back. Interest rates aren't suspected to rise till next spring so 2.99 should be around on and off for most of the year I think.

[chemgear]

Yup, the big five banks are all in.

http://business.financialpost.com/20...-mortgage-war/


Probably not going to help the Bank of Canada's hope of households getting their debt under control anytime soon.

[fundmark19]

Originally Posted by chemgear

Yup, the big five banks are all in.

http://business.financialpost.com/20...-mortgage-war/


Probably not going to help the Bank of Canada's hope of households getting their debt under control anytime soon.

Only BMO is 5 year though everyone else is 4.

[flamesrule_kipper34]

Beware as last time, BMO's 2.99 is a very restrictive mortgage.

First National is offering a 3.09 with a much more lax mortgage, worth considering as well.

[fundmark19]

The restrictions don't seem that bad?

Increase payments by 10% (that is a little low)
lump sum payments 10% a year
You can't switch to another bank. Seems reasonable and why would you at that rate
If you sell you pay penalty. Which all 5 year mtgs do?
You can still port the mortgage if you sell your house. And why wouldn't you at that rate.
You can still refinance with BMO if your situations change

Am I missing something? I guess it would be restrictive for all the 110k plus salaries on CP but for average guy wanting a mtg it seems like a good deal.

[fundmark19]

That makes sense. I don't mind them so far. I have my primary mtg with bmo and and a mortgage with scotia and bmo for my rentals. On my personal I increased my payments from day 1 to 10 percent to help me pay down extra amounts. I haven't come into any extra money to pay down mtg debt since I am paying off wedding debt so I can't comment on restrictions of lump sums

[Superflyer]

I was talking to someone from BMO and they brought up the 2.99 but also mentioned that next week they are going to announce a 3.99 10 year mortgage.

[ranchlandsselling]

I don't think the 10% is all that restrictive. I don't see that many people who agressively pay down their mortgage. !0% a year isn't all that bad. Who pays down their mortgage 50% of the term? Who doesn't have other debt that would be better paid down. Also it's a 25 year amortization. So many people are getting 30 years.

If I used it I just wouldnt sell my place. I'd rent it out and get another place. That's some Cheap money!

[Skyceman]

Canada Housing Market Beginning To Resemble U.S.'s Subprime Mess, OSFI Documents Reveal

http://www.huffingtonpost.ca/2012/01...n_1243668.html

[Travis Munroe]

Originally Posted by Skyceman

Canada Housing Market Beginning To Resemble U.S.'s Subprime Mess, OSFI Documents Reveal

http://www.huffingtonpost.ca/2012/01...n_1243668.html

There was not a whole lot of "fact" in that article.
"Some similarities" , I can find some similarities between the flames and the best teams in the league.
"Balloon and not a bubble", this has been said for quite some time now and is how most markets work.

I keep thinking YVR is due for a heavy correction but then you hear about condo buildings selling out at the blink of an eye.

I believe due to slower growth since the recession, Alberta is safer than most provinces and I think Canada is far from resembling the US housing crisis.
I have hands on experience with numerous people who make great income and still need to go through hurdles to get financing, ie self employed individuals.
While I had no hands on experience with the ease of financing in the US, I hear it was almost impossible to have a bank even question you.

[Travis Munroe]

And dont get me wrong, I am not wearing rose colored glasses.

I just think the title of that article is a bit strong.