[Repo]

(02-26-2018 02:59 PM)8ball Wrote:  

(02-26-2018 02:04 PM)Repo Wrote:  

Trumps tax cuts make renting a more reasonable option than it was before. Taking the standard deduction instead of itemizing mortgage interest will make more sense for alot of people including of me, so the idea that mortgage interest can be written off doesn't hold as much weight as it used to. Unless if I am completely misunderstanding the implications of the changes.

Nope, most that itemize will continue to do so especially in states with high house prices.

Why? For the average person, the standard deduction will far exceed any mortgage interest paid, unless if you live in a very expensive home in a high tax area.

[911]

(02-26-2018 01:36 PM)kosko Wrote:  

(02-26-2018 12:50 PM)8ball Wrote:  

(02-26-2018 12:00 PM)kosko Wrote:  

You add on property tax to that $900-1100 mortgage, and it comes in comparison with rent costs. If you say, property tax on average will hit you $5000 per year that is an extra $415 a month you gotta shell out for the price of ownership. This does not include bills and other maintenance costs your house will take. You spread it all out and you are paying the same if not more.

In the states, Property tax up to 10 grand and interest upto loans of 1 million are deductable. The first years of mortage you are paying mostly interest, it takes 5-7 years before your principal > interest for you monthly payment. If you have a high income and pay over 30k of federal tax(which you pretty much have to, to able to afford homes in america's big cities) buying house is not bad idea. You can take the tax refund every year and invest it in a fund, until right before your fixed rate is up(lets say a/r5 or 7), in which case you can use it to pay down the principal. Besides all this, you get to live in a house instead of some shitty apartment.

I have done the math and am so glad i invested in real-estate.

It is definitely more advantageous in the states. FHA/203k HUD loans, for example, don't have an equivalent here in Canada (you can get rehab loans here in Canada but I don't believe the banks give you cash upfront for it you almost get a 'rebate' back). Also, in communist Canada, they tax you much more.

Canadian consumers get the worst of both worlds, communist taxes, combined with crony capitalist bank collusion. The banks have conditioned Canadian consumers to only seek mortgages with variable rates. A 25yr mortgg gets branded "fixed" if the rate is locked in for as little as 5 years. Right now variable rates are around 3%, if you want a 25yr fixed mortgage, you're looking at close to 7%. This spread is outrageous, Canadian banks are basically passing all interest risk to consumers, it's financial rape.

In the US the 30yr fixed rate is just over 4%, which is only about 1% more than the variable rate. In Europe it's even lower, my cousin got a 1.8% fixed 20yr mortgage on a house in the Paris burbs. He's had a great working relationship with his bank, but anyone with a decent profile could get 2%-2.5% long term fixed mtgg.

@Kosko:

Quote:

Also, rental escalations spook is misguided. Unless you live in a broken rental market rent will only rise to a level that can be tied to incomes. There is no added debt step to raise rents like they do property costs artificially. Your landlord in Kansas City can't get away with charging 10k a month for rent; he can only charge the maximum he can to get his unit filled.

Most markets rental rates never increase past the rate of true inflation, again as mentioned about 5-6% per year.

At 6% inflation, your rent will double every 12 years. So let's say you're currently paying $1,500 for your flat, which costs about $360,000 (rule of thumb of gross annual rent ~= 5% typically).

Your rent will exceed your mortgage payment ($1,890) by year 11 on a 25yr fixed 4% mtgg. By year 14-15, you've covered your rent, and the other charges (taxes, condo fees), and have an equity position on the house of about 70%-80% ownership (you've covered half of the original $360k, and captured the additional appreciation on your house over these years, which will be greater than inflation in many markets). You have additional upkeep costs, but also tax credits, I haven't included either but conservatively speaking they cancel each other.

[8ball]

(02-26-2018 05:23 PM)Repo Wrote:  

Why? For the average person, the standard deduction will far exceed any mortgage interest paid, unless if you live in a very expensive home in a high tax area.

The standard deduction is only 12 grand, in a big city the property tax alone can go over the new max of 10k(which is why repubs in california and NY voted against the tax bill). Interest can easily go over 25k. Even with the family standard at 24k it won't cover it.

[Repo]

If your paying over 25k in interest a year your mortgage is over 500k, so I think my statement still holds for the average person not living in a super high cost area.

You seem to be interpreting my statement as if I'm saying everyone will be better taking the standard deduction, which I'm not.

[8ball]

(02-26-2018 05:59 PM)911 Wrote:  

Canadian consumers get the worst of both worlds, communist taxes, combined with crony capitalist bank collusion. The banks have conditioned Canadian consumers to only seek mortgages with variable rates. A 25yr mortgg gets branded "fixed" if the rate is locked in for as little as 5 years. Right now variable rates are around 3%, if you want a 25yr fixed mortgage, you're looking at close to 7%. This spread is outrageous, Canadian banks are basically passing all interest risk to consumers, it's financial rape.
...

Canada is quite strange, i have no clue where all that tax money goes. In the US its pretty self explanatory, it mostly goes to National Defense, the US spends 10 times more than other countries combined. But given Canada's current standard of living, infrastructure and other measures, i don't really see any justification for all that tax. In high tax european countries you tend to have superior infrastructure, large public areas, free education and other free shit. In canada the only difference from the states is socialized medicine which if when you have a job here its a few hundred dollars a month(including dental, vision), the math doesn't add up! People there are getting american quality of life but without the opportunities. Combine that with the shitty weather and terrible exchange rate, it really is the worst of both worlds.

[Dragan]

As a millennial, I'm not eating any avocados... I'm not a fan of the boomers, they wracked up debt as the US got engaged in multiple conflicts. They were able to get cushy jobs because America was expending like crazy in the 70's and 80's. Of course they could find jobs in factories, have two cars, a house and a nice pension without a degree.

I may be slow to buy my first house, but rest-assured, I will have the cash to buy it when I am ready, and will have little or no mortgage. Boomers just know endless consumerism, so I will not be following their path, and I will have what I need to live, and the rest of the money will go to something far more rewarding than endless consuming.

[doc holliday]

(02-26-2018 06:10 PM)8ball Wrote:  

(02-26-2018 05:59 PM)911 Wrote:  

Canadian consumers get the worst of both worlds, communist taxes, combined with crony capitalist bank collusion. The banks have conditioned Canadian consumers to only seek mortgages with variable rates. A 25yr mortgg gets branded "fixed" if the rate is locked in for as little as 5 years. Right now variable rates are around 3%, if you want a 25yr fixed mortgage, you're looking at close to 7%. This spread is outrageous, Canadian banks are basically passing all interest risk to consumers, it's financial rape.
...

Canada is quite strange, i have no clue where all that tax money goes. In the US its pretty self explanatory, it mostly goes to National Defense, the US spends 10 times more than other countries combined. But given Canada's current standard of living, infrastructure and other measures, i don't really see any justification for all that tax. In high tax european countries you tend to have superior infrastructure, large public areas, free education and other free shit. In canada the only difference from the states is socialized medicine which if when you have a job here its a few hundred dollars a month(including dental, vision), the math doesn't add up! People there are getting american quality of life but without the opportunities. Combine that with the shitty weather and terrible exchange rate, it really is the worst of both worlds.

I think most of the tax money in Canada is going to pay for their socialized medicine. I've read that about 40% of the province's budget is going to pay for health care. True that their infrastructure is falling apart just like in the US (take a drive around Montreal to see some third world like infrastructure) and their health care isn't really all that great. The level of taxation in Canada is horrible given what little you get in return for it. Unless you're on the public dole of course.

[Laner]

(02-26-2018 06:29 PM)doc holliday Wrote:  

(02-26-2018 06:10 PM)8ball Wrote:  

(02-26-2018 05:59 PM)911 Wrote:  

Canadian consumers get the worst of both worlds, communist taxes, combined with crony capitalist bank collusion. The banks have conditioned Canadian consumers to only seek mortgages with variable rates. A 25yr mortgg gets branded "fixed" if the rate is locked in for as little as 5 years. Right now variable rates are around 3%, if you want a 25yr fixed mortgage, you're looking at close to 7%. This spread is outrageous, Canadian banks are basically passing all interest risk to consumers, it's financial rape.
...

Canada is quite strange, i have no clue where all that tax money goes. In the US its pretty self explanatory, it mostly goes to National Defense, the US spends 10 times more than other countries combined. But given Canada's current standard of living, infrastructure and other measures, i don't really see any justification for all that tax. In high tax european countries you tend to have superior infrastructure, large public areas, free education and other free shit. In canada the only difference from the states is socialized medicine which if when you have a job here its a few hundred dollars a month(including dental, vision), the math doesn't add up! People there are getting american quality of life but without the opportunities. Combine that with the shitty weather and terrible exchange rate, it really is the worst of both worlds.

I think most of the tax money in Canada is going to pay for their socialized medicine. I've read that about 40% of the province's budget is going to pay for health care. True that their infrastructure is falling apart just like in the US (take a drive around Montreal to see some third world like infrastructure) and their health care isn't really all that great. The level of taxation in Canada is horrible given what little you get in return for it. Unless you're on the public dole of course.

The government in Canada is MASSIVE. Most of our tax dollars go to pay salaries and for other gov expansion programs.

Last year the Inuit of the north switched to Amazon to get their essentials because the Canadian gov was slow, expensive and unreliable. That tells you something.

[MongolianAbroad]

(02-26-2018 06:25 PM)Dragan Wrote:  

As a millennial, I'm not eating any avocados... I'm not a fan of the boomers, they wracked up debt as the US got engaged in multiple conflicts. They were able to get cushy jobs because America was expending like crazy in the 70's and 80's. Of course they could find jobs in factories, have two cars, a house and a nice pension without a degree.

I may be slow to buy my first house, but rest-assured, I will have the cash to buy it when I am ready, and will have little or no mortgage. Boomers just know endless consumerism, so I will not be following their path, and I will have what I need to live, and the rest of the money will go to something far more rewarding than endless consuming.

[Thot Leader]

(02-26-2018 06:29 PM)doc holliday Wrote:  

I think most of the tax money in Canada is going to pay for their socialized medicine. I've read that about 40% of the province's budget is going to pay for health care. True that their infrastructure is falling apart just like in the US (take a drive around Montreal to see some third world like infrastructure) and their health care isn't really all that great. The level of taxation in Canada is horrible given what little you get in return for it. Unless you're on the public dole of course.

And our health care isn't all it's cracked up to be. I'm from Onterrible and I know a number of people who've sought treatment out of the province or even out of the country. The average Canadian taxpayer was weaned on a diet of bullshit socialist supremacy, "ohh those poor American fools having to pay for their own healthcare". In the end we'll be more fucked than California.

[StrikeBack]

Just to keep things in perspective, guys, the original article is about Australia. Our housing market is absolutely fucked beyond recognition. doc_holliday makde a very reasonable point here:

Quote:

I don't see how someone with and 80K salary which is a good salary can justify spending 400K on a house which is what you're looking at in many places, more even.

In Australia, the same person making a 80K salary would be looking at a median of $800K+ for a house. And if they don't want to get surprised visits at night from our new favourite African diversity, they'd need to cough up at least $1.1M.

Renting here is nowhere near that. The vast majority of those investing in properties here are buying liabilities and making a loss even while renting them out. The ROI on property investment here is abysmal especially for newcomers. It's only really awesome if you just migrated here from mainland China and are only investing the amount you robbed from a few millions of your comrades back home.

It's pretty straight forward to grab some numbers on median rent and median house price here and run them through some calculations. You'll find that in pretty much every case, you'll be looking at very red figures. Most of those people are massively negatively geared and only are praying for the house price boom to continue indefinitely. Who are they going to sell their overpriced houses to in the future, I wonder, if young people these days can no longer afford them...

I personally invest in shares here, and properties overseas. When this massive housing bubble pops, and I buy a property, it will just be to live in, not to invest.

[MANic]

^^^ so much this. Particularly in Sydney. Even Lakemba/Bankstown etc. is ridiculously priced. Between the Asians and the boomers, there is precious little hope for many to own.
Fairly interesting point you make about rent given how expensive rental is as well. $750 a week for a literal shoebox. Its NYC level except it lacks the peripheral infrastructure. Staying in a borough, great - Campbeltown, not so much.

How long before a correction and how big will it be in your opinion?

The demand atm just keeps on increasing atm with more and more people streaming in.

[Paracelsus]

^^^^

Something external to Australia will prompt it, if anything. A large worldwide depression or China's economy crashing I can see doing it. But when it does fall to bits I can see an awful lot of pain for a lot of people wider than the real estate market. Half our economy is locked into real estate because our major superannuation funds are heavily invested in the big four banks, which in turn rest hugely on mortgage funding. No Australian government is going to fuck with real estate prices unless it absolutely has to - Labor occasionally talks about removing negative gearing, but the fact they never try to push it through only demonstrates how bad it is. Therefore it'll take some big shock from overseas to fuck Australia's economy; Australia follows the US's lead on most stuff, and since America's content to live on entirely borrowed money, Australia will do the same until it's too late.

I'm not going to predict when. People in Sydney are stupid when it comes to housing.

[Samseau]

The number 1 reason not to buy housing right now is that we're in a bubble. Way cheaper to pay rent now and buy property once prices decline by a solid 50-75% (which is where they belong).

[Laner]

I am in a market where my condo rents for $3600 a month. I bought it 4 years ago for $580k and it would sell for $1.1m today.

Four years ago, buying was a good option. Today, while rent is still very high, its now cheaper than owning.

Timing real estate for me was watching the rental market as much as sales. Having a kid on the way also meant that I did not want to put my family in limbo and risk having a landlord want to sell our rental apt, which happens all the time here. When I gave up my great rental apt, I was paying $1500 a month, my neighbor was paying $2200 and my unit ended up renting for $2400. Thats a huge difference and one that could sink a family and force them into another area of the city.

[Foolsgo1d]

If you're into real estate outside the UK maybe you can shed some light on the behind the scenes price stats from 2007 to now in your area.

Here in the UK I can honestly say that if you were to buy a property now, be it with or without a mortgage you're going to regret it unless you can say adios to the money and you don't care. The term heated just about describes it and this is outside London and the SE.

[Sidney Crosby]

(02-27-2018 12:32 PM)Laner Wrote:  

I am in a market where my condo rents for $3600 a month. I bought it 4 years ago for $580k and it would sell for $1.1m today.

Four years ago, buying was a good option. Today, while rent is still very high, its now cheaper than owning.

Timing real estate for me was watching the rental market as much as sales. Having a kid on the way also meant that I did not want to put my family in limbo and risk having a landlord want to sell our rental apt, which happens all the time here. When I gave up my great rental apt, I was paying $1500 a month, my neighbor was paying $2200 and my unit ended up renting for $2400. Thats a huge difference and one that could sink a family and force them into another area of the city.

It's ridiculous, I know a girl that just paid close to 800K for a 3BR townhouse....... in Langley. A similar place probably would have been around 300k 5 years ago.

[Enoch]

(02-27-2018 06:44 PM)Sidney Crosby Wrote:  

(02-27-2018 12:32 PM)Laner Wrote:  

I am in a market where my condo rents for $3600 a month. I bought it 4 years ago for $580k and it would sell for $1.1m today.

Four years ago, buying was a good option. Today, while rent is still very high, its now cheaper than owning.

Timing real estate for me was watching the rental market as much as sales. Having a kid on the way also meant that I did not want to put my family in limbo and risk having a landlord want to sell our rental apt, which happens all the time here. When I gave up my great rental apt, I was paying $1500 a month, my neighbor was paying $2200 and my unit ended up renting for $2400. Thats a huge difference and one that could sink a family and force them into another area of the city.

It's ridiculous, I know a girl that just paid close to 800K for a 3BR townhouse....... in Langley. A similar place probably would have been around 300k 5 years ago.

The question the investor needs to ask - when will the bubble burst? I just can't see the fed raising interest rates in a meaningful way over the next couple years. Until that happens real estate prices will keep going up.

[Easy_C]

No, but the treasury market is a bid market. Effective interest rates will rise regardless of what they do.

[Laner]

(02-27-2018 06:44 PM)Sidney Crosby Wrote:  

(02-27-2018 12:32 PM)Laner Wrote:  

I am in a market where my condo rents for $3600 a month. I bought it 4 years ago for $580k and it would sell for $1.1m today.

Four years ago, buying was a good option. Today, while rent is still very high, its now cheaper than owning.

Timing real estate for me was watching the rental market as much as sales. Having a kid on the way also meant that I did not want to put my family in limbo and risk having a landlord want to sell our rental apt, which happens all the time here. When I gave up my great rental apt, I was paying $1500 a month, my neighbor was paying $2200 and my unit ended up renting for $2400. Thats a huge difference and one that could sink a family and force them into another area of the city.

It's ridiculous, I know a girl that just paid close to 800K for a 3BR townhouse....... in Langley. A similar place probably would have been around 300k 5 years ago.

The NDP is hitting the industry with a bent toward the millionaires - which essentially means anyone who owns a single family home. They think they are going to be the first people to ever orchestrate a 'slight' market correction without it going overboard and turning into a full collapse. The rich want this to happen and the socialists are too stupid to realize that ALL the big players in Vancouver would love to get even more.

In my last place, a very high end luxury condo tower, when the 2008 correction hit, a 'nice guy, ultra liberal, SJW, etc' bought 4 whole floors. The have gone up 150% now. The rich LOVER corrections in hot markets as it puts a lot of people in negative equity.

Socialists are just completely clueless.

[Sidney Crosby]

I'd at least double the foreign buyers tax and try and close all the loopholes, I would also make the foreign buyers tax cover all of BC.

I bet that would be rather insignificant but at least the province could get the tax revenue to waste on something.

Rich FOBs are too addicted to Vancouver and Toronto, when the foreign buyers tax was introduced that spiked the Seattle market as well.

[Mr. Accuride]

The rent vs. buy debate really depends on many things, but there are rent/buy calculators that can help you make that decision:
https://www.nytimes.com/interactive/2014...lator.html

Generally speaking though, if you can get a fixed mortgage rate that is less than the historical inflation rate, find a place 20% below market that you can remodel and appraise->refi->live out of, or find a place where fixed rate PITI + HOA is < 120 times the cost of the house, then buying is almost always better, or at the very least it won't ever really be a wrong decision. Otherwise you should work it out on the calculator.

[speculator]

(02-26-2018 02:59 PM)8ball Wrote:  

(02-26-2018 02:04 PM)Repo Wrote:  

Trumps tax cuts make renting a more reasonable option than it was before. Taking the standard deduction instead of itemizing mortgage interest will make more sense for alot of people including of me, so the idea that mortgage interest can be written off doesn't hold as much weight as it used to. Unless if I am completely misunderstanding the implications of the changes.

Nope, most that itemize will continue to do so especially in states with high house prices.

Your state and local taxes are limited to only $10,000 per year with the new bill. It includes state and/or local income tax, property tax, excise tax, capital gain tax, etc. Your state income tax alone will be over $10,000 if you earn anything above $100k. Your property tax can't be itemized anymore.

[Simeon_Strangelight]

(02-28-2018 12:26 AM)Laner Wrote:  

(02-27-2018 06:44 PM)Sidney Crosby Wrote:  

(02-27-2018 12:32 PM)Laner Wrote:  

I am in a market where my condo rents for $3600 a month. I bought it 4 years ago for $580k and it would sell for $1.1m today.

Four years ago, buying was a good option. Today, while rent is still very high, its now cheaper than owning.

Timing real estate for me was watching the rental market as much as sales. Having a kid on the way also meant that I did not want to put my family in limbo and risk having a landlord want to sell our rental apt, which happens all the time here. When I gave up my great rental apt, I was paying $1500 a month, my neighbor was paying $2200 and my unit ended up renting for $2400. Thats a huge difference and one that could sink a family and force them into another area of the city.

It's ridiculous, I know a girl that just paid close to 800K for a 3BR townhouse....... in Langley. A similar place probably would have been around 300k 5 years ago.

The NDP is hitting the industry with a bent toward the millionaires - which essentially means anyone who owns a single family home. They think they are going to be the first people to ever orchestrate a 'slight' market correction without it going overboard and turning into a full collapse. The rich want this to happen and the socialists are too stupid to realize that ALL the big players in Vancouver would love to get even more.

In my last place, a very high end luxury condo tower, when the 2008 correction hit, a 'nice guy, ultra liberal, SJW, etc' bought 4 whole floors. The have gone up 150% now. The rich LOVER corrections in hot markets as it puts a lot of people in negative equity.

Socialists are just completely clueless.

That is true to a great degree - crisis are times when those with excess liquidity can buy properties at great discounts or even pennies on the dollar in depressions.

[Foolsgo1d]

(02-28-2018 12:59 AM)Sidney Crosby Wrote:  

I'd at least double the foreign buyers tax and try and close all the loopholes, I would also make the foreign buyers tax cover all of BC.

I bet that would be rather insignificant but at least the province could get the tax revenue to waste on something.

Rich FOBs are too addicted to Vancouver and Toronto, when the foreign buyers tax was introduced that spiked the Seattle market as well.

Foreign buyers (Arabs and Chinese) should have 5 or more times the tax burden on their buys than locals. Those parties are too rich and turn uptown, desirable markets into incredibly risky assets should the bank have to repossess them.

If a bank cannot get a good amount back it will go after the people it deems responsible and foreigners have a tendency to flee abroad back to the motherland until things pick up and come back with completely new identities 5 years down the line.

Failing that, estate agents, brokers and those who valued the property are bent over.