Author Topic: Garth Turner - Real Estate in Canada  (Read 486524 times)

wisdom

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Re: Garth Turner - Real Estate in Canada
« Reply #780 on: March 20, 2016, 03:24:04 PM »
The way I look at it - why is there a compulsion to buy when things don't make sense. It is different if you understand the math, yet choose to buy because you feel it meets your emotional needs.

 Upto an individual whether they believe the emotional benefits are greater than the potential risks.


JBTC

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Re: Garth Turner - Real Estate in Canada
« Reply #781 on: March 20, 2016, 06:51:51 PM »

A lot of pools have come up where  investors pool their funds and lend at 12-14%. They net around 7% after costs. Often the 20% down payment required by the regulators is in fact borrowed from these sources as well which I believe leads to under reporting of the real issue. Individuals are also active in this market. Everytime you hear an ad from a fund or broker that you will be approved as long as you have equity in real estate, this is the source. My understanding is no regulator has any idea about the size of this market.


This is bad. These people will dump when the tide turns.

Would be good to know the size of this market indeed.

Out of curiosity - do they belong to certain ethic groups, or are they everybody?

JBTC

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Re: Garth Turner - Real Estate in Canada
« Reply #782 on: March 20, 2016, 07:17:36 PM »
So we can't compare real estate prices across different countries, but it is OK to compare their debt levels?

I would prefer to compare with historical numbers - Canadian median houses have over the long run been $10k cheaper than the US. Today we are on average $200k higher.

Our median house used to be 2.5x income, today it is  lose to 6x.

Median house to median household income used to be under 5x in Vancouver and now it is over 12x.

Debt to gdp for Canada was 60%, today 100% and increasing faster than GDP.

Every single number you compare with historical stats, it is way off. It is always possible that Canada has solved a problem the Americans and Europeans were not able to = more leverage leads to ever inceasing prosperity or we have reached a higher plateau.

I remain a skeptic.

wisdom,

Thanks for pointing out a seeming inconsistency on my part. But let me make myself clear.

I don't encourage blind comparisons, not housing prices, not debt.

I listed the debt data to suggest one thing - just like Canada, many other countries also have the highest debt level now in their entire history. Not suggesting Canada is not bad; it's worse than most. But this fact helps think about what other factors than Canadian housing might also be at play.

Out of all countries, I cautiously mentioned we may need to look at Australia, because of the relative similarity. Australia is worse than Canada in ramping up debt and housing prices, and is holding up for now. But even they are different. For example, Australia allows negative gearing. But let's see.

I would not think Denmark is comparable to Canada. I have no clue about what's happening there. But it does us good when we are aware (not comparing) of such debt levels. Denmark and Sweden are among the most prosperous nations on the face of the planet. Maybe they collapse tomorrow, but how are they even sustaining their debt levels? Can some of you live in the Nordic countries help us out?

My general approach - the more data the better, generally respect the differences in the world, not in a hurry to conclude, but when data is overwhelming, conclude and invest accordingly.

Charlie Munger said it best - All reality must respect all other reality.

Our job is to gather these realities and make them respect each other.

JBTC

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wachtwoord

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Re: Garth Turner - Real Estate in Canada
« Reply #784 on: March 21, 2016, 04:17:23 AM »
I would not think Denmark is comparable to Canada. I have no clue about what's happening there. But it does us good when we are aware (not comparing) of such debt levels. Denmark and Sweden are among the most prosperous nations on the face of the planet. Maybe they collapse tomorrow, but how are they even sustaining their debt levels? Can some of you live in the Nordic countries help us out?


Especially Sweden is making the worst socio-economic choices imaginable and I'm expecting an enormous collapse. Norway is already writing contingency plans for closing the border with Sweden (and break the Geneva convention! something huge) if that happens.
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Liberty

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Re: Garth Turner - Real Estate in Canada
« Reply #785 on: March 21, 2016, 06:58:05 AM »
Out of curiosity, how are people playing this? Short Canadian banks? Canadian development companies?

I'm renting.

Would you ever buy? 
Under what condition in this country would you enter the RE market?

Sure. I'll buy when I find a house here at a price that I think makes sense. I'm just buying one house, so I'm not basing this on broad market indicators or anything like that.
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gary17

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Re: Garth Turner - Real Estate in Canada
« Reply #786 on: March 21, 2016, 09:35:44 AM »
It will be interesting if any of this will lead to some break on the rapidly accelerating bubble lol

http://www.theglobeandmail.com/news/british-columbia/bc-premier-vows-to-end-shadow-flipping/article29289313/

wisdom

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Re: Garth Turner - Real Estate in Canada
« Reply #787 on: March 21, 2016, 10:47:49 AM »
Impossible to know what will be the trigger. Be prepared for things to stay irrational for longer than anyone can imagine. Have no expectations and it is far easier to deal with any outcome.

JBTC

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Re: Garth Turner - Real Estate in Canada
« Reply #788 on: March 21, 2016, 06:07:51 PM »
It will be interesting if any of this will lead to some break on the rapidly accelerating bubble lol

http://www.theglobeandmail.com/news/british-columbia/bc-premier-vows-to-end-shadow-flipping/article29289313/

The governments can always do plenty. It's curious why they haven't done much. Maybe they are not worried enough.

In other hot markets, government actions can often slow the market meaningfully.

But for anyone hoping for a crash, it's best to let the speculators run wild and prices go as high as possible.

scorpioncapital

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Re: Garth Turner - Real Estate in Canada
« Reply #789 on: March 21, 2016, 06:37:24 PM »
It's very hard to have major bubbles in a highly regulated economy (Canada may be in the middle of the socialism spectrum but it leans more that way than say the US). This is because pretty much the only thing you can do is squeeze your citizens and most times they just take it.