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Recent musing of newly wed Millennial couple complaining about $$$

^ I’d like to see his list of when mortgage insurance isn’t a bad thing.

This space available.

hpracing007 wrote:

We need debtors prisons.

Nope, just need to stop the easy extension of credit by setting up an easy path to default on unsecured credit.  

my credit card pay 2% cash back on everything! i have mint so i keep track of all my spending like crazy. i check it before i sleep all the time. lol

i dont carry that much cash either, i have this banging phone wallet that can carry credit card, license, as well as 2 bills, so i always have a 20 on it. when i go running, i can also fit a key on top of all that. im really just waiting on the day, where my phone can serve as the key to my car/house.

Matt Likes Analysis wrote:

i blame it on credit card culture. nobody uses cash anymore. i don’t. why would i carry cash. i get paid to use cards.

the problem with credit card culture is people spend $5, $10, $20, $50 without even thinking about it. so they do it a few thousand times a year and go, hey where’d that $50,000 in discretionary income go?

I love my cheese. I got to have my cheddar.

With mortgage insurance, you just pay a higher interest rate in return for having to pay a lower down payment, right? I guess if you have a really high opportunity cost for that capital somehow, it might make sense? I doubt that it is priced in the borrower’s favor of course.

In any case, if you can only afford the house with this sort of arrangement, it might be better to not buy that house…

“The aliens on Mars cloned Hillary Clinton.” - Turd Furgeson

but its a nice house and all the cool rich people live there and it will keep going up

"You want a quote? Haven’t I written enough already???"

RIP

yeah because duh this time is different

Nerdyblop wrote:

im really just waiting on the day, where my phone can serve as the key to my car/house.

With one of those bluetooth door locks and newer cars, it’s already possible to use your phone as a door key and car key.  Our new car can be started from anywhere using an app on the phone – not sure I like that idea.

Imperfect hedge wrote:

Nerdyblop wrote:

im really just waiting on the day, where my phone can serve as the key to my car/house.

With one of those bluetooth door locks and newer cars, it’s already possible to use your phone as a door key and car key.  Our new car can be started from anywhere using an app on the phone – not sure I like that idea.

You don’t even need bluetooth. I can unlock my car from anywhere in the world, check my oil, and my tire pressure. Newer cars come with a free onstar app that will allow you to do this stuff from your phone.

Free advice for those AF youngsters who haven’t settled down and gotten married…

if having children is part of your life plan, start saving now.

el_macca17 wrote:
In a sense, Toronto has never seen the long cold winter because our housing didn’t crash during those years - we clearly haven’t learned the lesson from our southern neighbours. 

It drives me crazy. When I was back in the motherland last summer people are so happy that house values have done nothing but go up and to the right over the past 5-7 years, but it’s insane because so little of it is based on fundamentals. Even in my hometown (1 million population), average house prices are up to like $300k, or about 6x average income, and they think it’s great and have a holier than thou attitude that what happened in the US in 06/07 could never happen there. 

krazykanuck wrote:

el_macca17 wrote:
In a sense, Toronto has never seen the long cold winter because our housing didn’t crash during those years - we clearly haven’t learned the lesson from our southern neighbours. 

It drives me crazy. When I was back in the motherland last summer people are so happy that house values have done nothing but go up and to the right over the past 5-7 years, but it’s insane because so little of it is based on fundamentals. Even in my hometown (1 million population), average house prices are up to like $300k, or about 6x average income, and they think it’s great and have a holier than thou attitude that what happened in the US in 06/07 could never happen there. 

the canadian housing market is likely to have less disastrous real estate declines due to superior employment insurance and welfare benefits geared towards the average homeowner (i.e. a house with kids). also, toronto has less income inequality than many global cities so the more spread out the income is the less risky the housing market is. obviously if it gets so insane that we’re at tokyo levels overnight, we can come way down but prices are fairly reasonable now, outside of metro Vancouver.

the problem with using price to gross income ratios is they ignore major differences between entitlement payments and the cost of goods. the website below does a better job at truly judging affordability as it takes home size and local prices into account. Toronto is the 136 most expensive major city in the world and the least expensive in the G8. London, Rome, Paris, New York, Moscow, Tokyo and Frankfurt are all less affordable than Toronto. Toronto is a top immigrant destination and increasingly looks more attractive than the other english speaking capitals (New York, London) due to political uncertainty. Why it sits at the bottom of the list is dumbfounding. Just because real estate prices are going up doesn’t mean they’re automatically unaffordable.

https://www.numbeo.com/property-investment/rankings.jsp

where i live, a toronto suburb that the entire world deems wildly expensive, the price to income ratio is 5x versus 3.5x long-term but the cost of borrowing is 1/4 of historical levels so the carrying cost is almost 50% less than the historical average. tough to see how this is wildly overvalued given the housing market is wildly more affordable than most of history on a carrying cost basis. if interest rates go back up to 8% from 2% currently you’d probably see a 40% decline but going to 8% would be quite the paradigm shift and the stock and bond markets would probably lose 40%+ as well. also, you get to lock in the low interest rate for the most interest-intense 5 year period so any future increases are less impactful than the original mortgage period.

i’m not saying put all of your money into Toronto area real estate but the global peanut gallery needs to do a better job comparing apples to apples rather than just doing a price to gross income screen and concluding Toronto and Vancouver are the most expensive cities ever.

I thought you’re in KW?

correct. according to toronto guys, that’s a suburb. i mean, it’s an hour drive so by NYC standards i might as well be midtown.

That’s 1 hr if you live in Kitchener proper and speed and have zero traffic lol. KW is still the boonies to most Toronto proper folk. Spent a few years there and it’s grown significantly but lol, not a suburb.

Yeah, I grew up in GTA West. I didn’t think of it as a suburb either until Toronto folk recently started calling it a suburb. I think suburbs now go as far West as KW as far north as Barrie and as far east as peterborough. Anything commutable. The definition is anything commutable to the core. It is quite normal now to buy a house along the 401 in the tri cities and commute to TO so a lot of the new home buyers are treating it like a traditional suburb. Don’t know why you’d put yourself through that commuting hell though. Might as well just get a job in town if you can. My point stands. Even if you look at Brampton prices which are 7-8x income (?), they are at about average when you incorporate 3-4% interest rates over the life of the loan and you get to lock in 2.7% for the first five interest-intense years. 

Matt Likes Analysis wrote:
i’m not saying put all of your money into Toronto area real estate but the global peanut gallery needs to do a better job comparing apples to apples rather than just doing a price to gross income screen and concluding Toronto and Vancouver are the most expensive cities ever.

I’m going to put 0% of my money in Toronto area real estate at these prices and stick with the “global peanut gallery” as you call them. To each their own, you have a clear interest in continuing to believe that the market you’re invested in isn’t wildly overvalued. Only time will tell as the market plays out, but I think it’s overvalued and I don’t see how people make viable personal finance decisions if you’re buying a house at 5x your income, but I tend to err on the side of being conservative. My house market value to gross income is something like 2x, and was 3x at the time I bought, the change in that multipler being that my income has grown at a faster % than the value of the house.

I went to the above link and am curious what table you’re looking at and sorting by to get “136th most expensive”

krazykanuck wrote:

Matt Likes Analysis wrote:
i’m not saying put all of your money into Toronto area real estate but the global peanut gallery needs to do a better job comparing apples to apples rather than just doing a price to gross income screen and concluding Toronto and Vancouver are the most expensive cities ever.

I’m going to put 0% of my money in Toronto area real estate at these prices and stick with the “global peanut gallery” as you call them. To each their own, you have a clear interest in continuing to believe that the market you’re invested in isn’t wildly overvalued. Only time will tell as the market plays out, but I think it’s overvalued and I don’t see how people make viable personal finance decisions if you’re buying a house at 5x your income, but I tend to err on the side of being conservative. My house market value to gross income is something like 2x, and was 3x at the time I bought, the change in that multipler being that my income has grown at a faster % than the value of the house.

I went to the above link and am curious what table you’re looking at and sorting by to get “136th most expensive”

price-to-income. i’m not arguing toronto is the greatest deal ever. you can probably make more money and have less vol in montreal or halifax or detroit. i’m arguing that if toronto is going to be a global city, which it is becoming and which it clearly wasn’t 30 years ago when it traded at an average of 4x price-to-income, it should be in the league of other G8 cities that trade at 10-25x price-to-income, adjusted for size. you can’t compare toronto today to toronto in 1980. would you compare las vegas today to las vegas in 1920? places change. places grow.

toronto is the only G8 city where you can buy a 4bd detached house in the downtown core for $1-$2 million. that would cost you $5+ million in most other G8 cities and you’d have a commute that is 3x the distance/time. some G8 cities don’t even have houses like this available anywhere but the suburbs or outer boroughs. the problem with the “peanut gallery” is they are comparing a 2000 sq ft toronto condo to a 400 sq ft paris condo as if they are equal. in paris, five people typically live in a 2000 sq ft condo. as Toronto grows and gets denser, those 2000 sq ft condos will have five people in them and their prices will come close to reflecting that of 2000 sq ft condos in paris today. this is inevitable if toronto remains one of the top locations for immigrants globally.

does detroit or memphis or chicago have better price-to-income ratios? of course. are they seeing massive inflows of immigrants and are therefore becoming global cities the same way toronto is? no. that’s the wild card. that’s why toronto prices can continue to grind upward over time. toronto prices will likely have higher vol than cheaper cities but it will not necessarily have lower returns over time, even at these elevated prices.

Toronto cannot be home to AMZN. Way to many issues with the city.

I suspect that frankybarnes is Palantir.
-JBrowntown

Claim: Doxxing soapbox from liberal who begged AF to help remove online presence ironic.
TRUE
- FactCheck

Palantir ...resurfaced as frankybarnes. Sad!
-ohai

Matt Likes Analysis wrote:
toronto is the only G8 city where you can buy a 4bd detached house in the downtown core for $1-$2 million. that would cost you $5+ million in most other G8 cities and you’d have a commute that is 3x the distance/time. 

does detroit or memphis or chicago have better price-to-income ratios? of course. are they seeing massive inflows of immigrants and are therefore becoming global cities the same way toronto is? no. that’s the wild card. that’s why toronto prices can continue to grind upward over time. toronto prices will likely have higher vol than cheaper cities but it will not necessarily have lower returns over time, even at these elevated prices.

And that’s great for wealthy individuals from China and the like who can value shop for $2m houses in Toronto vs $5-6m in NYC/London but I fail to see how that’s a good thing for your everyday Canadian. Just because it compares favorably to Tokyo doesn’t mean it isn’t overpriced in local terms. The thing with rising real estate prices in general is that if you’re selling and rebuying in the same area you’re selling at an inflated price to continue to buy at an inflated price. Only a good thing if you don’t have to reinvest those funds into the same asset class. Just my Loonie’s worth of thoughts.

To be clear, despite my vested interest, I am talking objectively. I recognize the fact that you don’t actually monetize it and it positively effect your life if prices go up and you remain invested for your lifetime. You do get to own though, when owning could be a problem in future. I have four kids and would prefer prices remain below average (they are about average currently btw, based on carrying costs) so they can easily own in or around toronto one day. That said, what is good for the average Canadian is unrelated to market forces. We have numerous examples of cities becoming beyond the reach of average people. It is a natural result of capitalism. More and more capital chases a limited stock of land/property in the most in demand locales. And overpriced in local terms compared to what? Winnipeg? Windsor? Halifax? Calgary? Montreal? There’s only one global city and financial capital in Canada. Are you suggesting we compare New York and San Francisco to Chicago or Detroit? People go where the action is. The action is in G8 financial capitals and apparantly Vancouver. If you say Vancouver prices are insane, I’ll agree wholeheartedly. Toronto on the other hand has good reasons and has some catching up to do versus other global financial capitals. 

analystdude wrote:
But what’s the fun of waiting until im 50 to drive a Bimmer? I want it now! - every underemployed Millennial ever

Not remotely true.

Millennials would say, “Beemer”, not “Bimmer”.

Jerks.

Simplify the complicated side; don't complify the simplicated side.

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