Author Topic: Garth Turner - Real Estate in Canada  (Read 335415 times)

Liberty

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VAL9000

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Re: Garth Turner - Real Estate in Canada
« Reply #21 on: February 29, 2012, 05:52:14 PM »
http://business.financialpost.com/2012/02/29/canadas-home-prices-drop-for-second-straight-month/
This is probably just seasonal weakness.  Look at the chart - those markets demonstrate weakness from November through about March every year.

I think this was a better deal in most US states because the creditor of the mortgage can't go after you personally. The way I understand it, in Canada they can. Unless they spend all that HELOC money on intangibles, they'll get repossessed.

This is exactly right.  Mortgages are non-recourse in the US, which is why "it's different" in Canada.  You have to declare personal bankruptcy to get out of your poorly devised home ownership plan.  The result is that downward price trends are throttled because home owners can't just walk away like they did in the US.  I think RE prices will be forever buoyed by two things that people are loathe to do: one declaring bankruptcy and two selling at a loss.

enoch01

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Re: Garth Turner - Real Estate in Canada
« Reply #22 on: February 29, 2012, 06:24:06 PM »

Mortgages are non-recourse in the US, which is why "it's different" in Canada.  You have to declare personal bankruptcy to get out of your poorly devised home ownership plan.  The result is that downward price trends are throttled because home owners can't just walk away like they did in the US.  I think RE prices will be forever buoyed by two things that people are loathe to do: one declaring bankruptcy and two selling at a loss.

Wait until the stigma wears off once people start looking at the economics of their situation.  Or maybe you were being sarcastic, sorry if I couldn't tell.

VAL9000

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Re: Garth Turner - Real Estate in Canada
« Reply #23 on: February 29, 2012, 06:35:11 PM »
Wait until the stigma wears off once people start looking at the economics of their situation.  Or maybe you were being sarcastic, sorry if I couldn't tell.

No, I'm serious.  I think that real estate prices correct downwards more slowly because of the bankruptcy requirement and an unwillingness to sell at a loss.

If the economics of their situation dictate a change in lifestyle, you will see the impact in credit card debt, auto loans, rv loans, lines of credit, etc. well before you see the impact in housing.   It's like Maslow's hierarchy of needs for debtors :P

Liberty

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Re: Garth Turner - Real Estate in Canada
« Reply #24 on: February 29, 2012, 06:44:57 PM »
http://business.financialpost.com/2012/02/29/canadas-home-prices-drop-for-second-straight-month/
This is probably just seasonal weakness.  Look at the chart - those markets demonstrate weakness from November through about March every year.

Possibly. Possibly not.

Quote
This is exactly right.  Mortgages are non-recourse in the US, which is why "it's different" in Canada.  You have to declare personal bankruptcy to get out of your poorly devised home ownership plan.  The result is that downward price trends are throttled because home owners can't just walk away like they did in the US.  I think RE prices will be forever buoyed by two things that people are loathe to do: one declaring bankruptcy and two selling at a loss.

States in the US that had that exact same legal system didn't fare much better than others (Arizona and Nevada among others, iirc). Garth Turner has addressed that point fairly convincingly, IMO. I suggest you read a dozen of the most recent posts and see how it tickles your fancy, as most of the counter-arguments that I heard everywhere are addressed.
« Last Edit: February 29, 2012, 06:50:35 PM by Liberty »
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alertmeipp

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Re: Garth Turner - Real Estate in Canada
« Reply #25 on: February 29, 2012, 07:02:18 PM »
Wait until the stigma wears off once people start looking at the economics of their situation.  Or maybe you were being sarcastic, sorry if I couldn't tell.

No, I'm serious.  I think that real estate prices correct downwards more slowly because of the bankruptcy requirement and an unwillingness to sell at a loss.

If the economics of their situation dictate a change in lifestyle, you will see the impact in credit card debt, auto loans, rv loans, lines of credit, etc. well before you see the impact in housing.   It's like Maslow's hierarchy of needs for debtors :P

You don't need ppl to throw away their houses to get prices coming down quickly. When there is no bid, a few sell will do the wonder.

Liberty

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Re: Garth Turner - Real Estate in Canada
« Reply #26 on: February 29, 2012, 07:16:22 PM »
I think the lesson of the past few years is that when people speculate and take on an unsustainable level of debt and leverage, there's absolutely no way to make the risk disappear. The law of economic gravity won't be suspended. Problems will find a way to come to the surface one way or another, and the longer it takes, the worse it'll be.
« Last Edit: February 29, 2012, 07:48:00 PM by Liberty »
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SharperDingaan

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Re: Garth Turner - Real Estate in Canada
« Reply #27 on: February 29, 2012, 07:23:00 PM »
"So what do we short, guys" You don't. Park your $ in Canada's. If/when a particular property falls far enough for you - buy it.

Liberty

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Re: Garth Turner - Real Estate in Canada
« Reply #28 on: February 29, 2012, 07:51:11 PM »
"So what do we short, guys" You don't. Park your $ in Canada's. If/when a particular property falls far enough for you - buy it.

I wonder what a RE crash would do to the Canadian dollar, actually. Might be a better deal on foreign exchange rate after such an event, if it were to take place.
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Uccmal

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Re: Garth Turner - Real Estate in Canada
« Reply #29 on: February 29, 2012, 08:33:18 PM »
I haven't read Turner's blog.  Did see him speak many years ago.  He puts on a hell of a show and makes alot of money on the circuit.  Worth considering why he says what he says. 

I recently went through the circus of getting a Heloc, for an addition, and a renovation.  My mortgage is held by a mortgage company, that doesn't do Helocs.  We went to TD where all of our brokerage accounts are held.  They assessed the house, conservatively, IMO, wanted to see pay records, tax assessments, the first lien mortgage paperwork.  They ultimately agreed to give us a HEloc up to 80% of their assessed value minus the first lein mortgage owing.  Imo, it was pretty stringent.  We got no credit for the assets in the brokerage account which would cover the HEloc by at least 3 x in a down market. 

IMO, the big 5 will not lose much in a housing downturn.  I really have no idea where people are getting this speculative money from.  I am guessing it is financing through developers, and non-bank mortgage companies, and of course the CMHC. 

There seems to be an overbuild of condos in Toronto.  Ultimately, there may be a correction but it will in no way equal what happened in parts of the US.  The market is so tiny, and so much of the population just does not participate.  Prices have risen faster than average the last few years but not enough that you could make money flipping properties.  Prior to the recent runup prices here were stagnant from 1990 until 2003. 

As for housing as an investment, it is just not something that ever turned my crank.  The frictional costs are too high, and I am not keen on being a landlord.  For me the house we live in is a place to live, not an investment.  I never hoped to do better than inflation.  If the shit hits the fan in a big way it is nice to have a roof over your head thats mostly paid for. 
GARP tending toward value