How do young people get their start in life today? - Page 4
Old 03-26-2012, 08:54 PM   #61 (permalink)
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My friend is a wireless technician and he just went up there about 5 months ago. He gets $30/hr and it's his first job in industry. I'm going to have the same qualifications as him once I'm done school which is the end of May. How is it up there?
From what I've heard there isn't much of anything. So there's nothing to blow your money on. Makes saving that much easier.
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Old 03-26-2012, 08:58 PM   #62 (permalink)
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From what I've heard there isn't much of anything. So there's nothing to blow your money on. Makes saving that much easier.
Ha. Not entirely true. Gambling... booze... hookers... drugs.... it's all there in Fort Mac for the undisciplined person to get caught up in.

If you're smart you can save a ton of money... but if you're dumb (and there ARE guys there who simply live paycheque to paycheque in spite of the fact that they make a great salary) you can blow through it easily.
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Old 03-26-2012, 09:00 PM   #63 (permalink)
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When I bought a house it was with another couple. We looked at insane mortgage rates, and they were a blessing in disguise. We paid off that mortgage in five years, because we couldn't stomach the money we were just shoveling into the bank's coffers. We put down the maximum available to go against the principle every year. That was a much better head start than going into long term debt for myself. It afforded me the freedom I valued over anything else.
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Old 03-26-2012, 09:12 PM   #64 (permalink)
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To me this is the biggest fallacy plaguing our economy now. There are a few things:

1) You are still paying interest and taxes on your mortgage. Those are non-recoverable costs even if you sell the asset.

2) You have to factor in the "cost of capital". Yes you are getting an asset but you could have used that money to invest in other assets.

3) It may be an asset but what is the nature of the asset? This is not a fixed item that will guaranteed bring you a return, you could gain or lose here.

4) What is the nature of the additional risk associated with that return? If the housing market bursts you don't only lose your asset value but you still have to pay for the full value as per your initial purchase price. Unlike the US, you can't walk away from the house and forego the mortgage balance outstanding.

5) You must take into account the hidden costs of owning: Maintenance, Land Transfer Taxes, Agent fees, insurance, legal.

In the past, owning has been a fantastic idea because of the stability and good (whopping from the mid 80's to 2000's) return on the appreciation in value.

Now we have hit a time where real estate prices aren't appreciating. They had to fix the interest rates to prevent people from being unable to keep up with the payments they would owe. They do this to prevent a crash from the huge real estate bubble we are currently under.

Real estate is not going to generate a good enough return to justify the increased risks associated with it (in my mind anyways).

People buy homes in Canada and the US because it is the "(North) American Dream".

These days, I don't see what's so great about it. Personally, I think it's one of those old pieces of advice that everyone gives their kids that was very true a generation or two ago that is no longer the case.
My wife asked me to post this: "I agree with everything this guy said." Figures.
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Old 03-26-2012, 09:24 PM   #65 (permalink)
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Not really sure that I buy the whole "house prices aren't appreciating" thing.... just the other day I was reading about someone who sold their home for $400K OVER the listed price lol... It all goes back to what they say about real estate though... location, location, location.
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Old 03-26-2012, 09:26 PM   #66 (permalink)
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Not really sure that I buy the whole "house prices aren't appreciating" thing.... just the other day I was reading about someone who sold their home for $400K OVER the listed price lol... It all goes back to what they say about real estate though... location, location, location.
Yeah, I read that too....follow where that money was coming from though.

Real estate in the GTA is imo, in a bubble.
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Old 03-26-2012, 09:32 PM   #67 (permalink)
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Yeah, I read that too....follow where that money was coming from though.

Real estate in the GTA is imo, in a bubble.
True enough... but that's certainly an advantage that places like Toronto and Vancouver will continue to enjoy.

I can't see that changing any time soon unless immigration laws are altered or Toronto ceases to be a major financial centre for some reason.
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Old 03-26-2012, 09:42 PM   #68 (permalink)
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I disagree with Reni. Interest rates being what they are, now is the time to take on debt.

And there are some markets out there where buying makes sense and real estate is going to appreciate for the next few decades.

If I was ready to settle down in London, I would buy a home in a second because of the low prices/low interest rates.

And when you have a family, like Trane or myself, it's different. Renting sucks...it's kind of yours but definitely not yours. And the older my son gets the more I feel like doing stuff around the house. Like fixing my own plumbing...or building a shelf. The Landlord won't let me teardown a wall and make a big ass mud room..etc.
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Old 03-26-2012, 09:54 PM   #69 (permalink)
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I disagree with Reni. Interest rates being what they are, now is the time to take on debt.

And there are some markets out there where buying makes sense and real estate is going to appreciate for the next few decades.

If I was ready to settle down in London, I would buy a home in a second because of the low prices/low interest rates.

And when you have a family, like Trane or myself, it's different. Renting sucks...it's kind of yours but definitely not yours. And the older my son gets the more I feel like doing stuff around the house. Like fixing my own plumbing...or building a shelf. The Landlord won't let me teardown a wall and make a big ass mud room..etc.
Yep.

Something else to consider as well is that when you own you have the possibility of refinancing if you need money in an emergency down the road (and no, I'm not talking about new cars and vacations and such).

With renting the money is just going up in smoke.
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Old 03-26-2012, 10:00 PM   #70 (permalink)
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Buy, but buy with an eye on how fast you can pay off the debt. And don't add further debt on top of it. It's too easy to just accept the debt that never goes away, and eventually it will become onerous where a house owned outright allows for saving from that point on. Of course only so much saving, since Reni is right about all the associated costs. There is something nice about owning our own place. If you can keep things in balance it is not a bad way to go. But at the same time it feels like the personal value inherent in home ownership is starting to feel like something that is slipping away as something that will be attainable in years to come. I get the same feeling from car ownership. There are so many money pits to watch out for now, you just have to wonder whether we're reaching a point where the perceived value doesn't match the many costs.
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Old 03-26-2012, 10:56 PM   #71 (permalink)
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Ha. Not entirely true. Gambling... booze... hookers... drugs.... it's all there in Fort Mac for the undisciplined person to get caught up in.

If you're smart you can save a ton of money... but if you're dumb (and there ARE guys there who simply live paycheque to paycheque in spite of the fact that they make a great salary) you can blow through it easily.
This is what all my instructors say.
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Old 03-27-2012, 03:55 PM   #72 (permalink)
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The interest rates are low so that you'll keep buying so that the bubble won't burst. Buying just because the interest rates are low is letting the banks, in some sense, trap you. This is exactly what happened in the US: the interest rate was kept artificially low to keep the bubble from popping, home owners took out mortgages because they were "great deals", then the interest rate rose, property values dropped, and the great deals ended up being homes where you owe twice as much as they're worth.

Toronto and Vancouver's bubbles will pop (the markets are slowing to some degree already). Economics will catch up eventually.

The only way that I can understand buying a house right now is if you absolutely cannot survive otherwise, or if you can pay it off within 5-10 years. For me, the risk is too high.
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Old 03-27-2012, 09:30 PM   #73 (permalink)
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The interest rates are low so that you'll keep buying so that the bubble won't burst. Buying just because the interest rates are low is letting the banks, in some sense, trap you. This is exactly what happened in the US: the interest rate was kept artificially low to keep the bubble from popping, home owners took out mortgages because they were "great deals", then the interest rate rose, property values dropped, and the great deals ended up being homes where you owe twice as much as they're worth.

Toronto and Vancouver's bubbles will pop (the markets are slowing to some degree already). Economics will catch up eventually.

The only way that I can understand buying a house right now is if you absolutely cannot survive otherwise, or if you can pay it off within 5-10 years. For me, the risk is too high.
I don't agree entirely with what you said there....

The US market went into the tank because mortgage brokers were irresponsible and outright fraudulent with some of the deals that they made.... and buyers were flat out stupid, living WAY beyond their means (ummm.... if you make $40K you really can't afford a $500K house with zero down... sorry to break it to ya).
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Old 03-28-2012, 12:10 PM   #74 (permalink)
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Ok... What I said wasn't a slam against Newfoundland (which is a beautiful province IMO). I have a good friend who's living there right now (from Pouch Cove to be specific) who's told me this. She's 25 and has been looking for over a year now.

The current national avg. for unemployment rate is 7.4%.

Newfoundland's is 12.9% which is the highest in the country.

Alberta & Saskatchewan are at 5%.

Ontario is right around the national avg.


Newfoundland's unemployed to job vacancy ratio is also 7.8:1 which is second only to P.E.I. (9.4:1).... the national avg. is 3.3:1 (Alberta & Sask's are under 2:1).


Things may not be as bad as they were 10 years ago but they're certainly not rosy compared to the rest of the country. Not sure why you're getting so upset about this.
Whats her name, I bet you i know her. Does it begin with an "A".

To be Honest, I didnt realize unemployemtn was so high here. I live in St. John's and the job rate is better here and getting better every year.

One advantage people have on the mainland is the ability to travel. Being stuck on an island you have to fly a plane to get to another province for work.

It also keeps the crazies out/in
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Old 03-28-2012, 04:25 PM   #75 (permalink)
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I had a brother-in-law out west that insisted my wife and I were crazy to pay in full for a car when there is 0 percent financing. He just couldn't get his head wrapped around it. He was a car salesman himself. He just figured anyone that passed up zero percent was an idiot. He also was unable to answer his phone, or his doorbell, due to being hounded by creditors. And he ended up dieing of cancer, after nothing but financial stress for most of his life which certainly could have helped to bring the disease on.

As for buying a house being too risky - I think just about any kind of investment is oo risky nowadays. The system is broken. But going into buying a home, that you look at as a home more than an investment, not going overboard on the mortgage, and having your eyes wide open as far as the loss that could be incurred, is not such a bad thing. If you take a bath on selling after prices take a dive, there is always the benefit of being able to buy at lower prices. But staying away from the full-on effects of the trap that is being set with those low rates is the main thing. Most people end up getting way in over their heads because they can.
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Old 03-29-2012, 12:16 PM   #76 (permalink)
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My wife asked me to post this: "I agree with everything this guy said." Figures.
Sweet, now tell me some stuff she doesn't like about you so that I can pester you even when you are on here mwahahah

The thing about interest rates that people are getting into now, don't you realize that those rates are reflective of the market conditions?

Rates are low because housing is overvalued.

When rates are high housing is typically undervalued.
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Old 03-29-2012, 05:13 PM   #77 (permalink)
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I don't think the pricing adjustment will be as severe as some people think. Nor do I think we'll face something like what happened in the U.S.

1. We have a highly regulated world-class banking system, far less riskier than what is in place in the U.S.

2. We don't have numerous sub-prime lenders giving away risk-free mortgages to bums because they're guaranteed by the government, the same mortgages in turn being sold twice over to investors because the sub-prime lenders were given AAA credit ratings.

3. Given 1 & 2, people with the mortgages in Canada, on average, are still able to easily service their debt. (low interest rates help)

That being said, yes, the economy is in the pooper, and yes, that's why their are low interest rates.

Their will be a pricing adjustment (in some markets)

Their is always uncertainty, but the difference right now is there is a lot of paranoia.


So if you have a solid job, and you're growing roots, I don't think buying a home is a bad decision.

As far as investments...some real estate asset classes have been performing pretty well. I would be wary of the condo market, it's saturated with overseas investors and their is a lot of jumping around. Toronto & Vancouver are outside my vision anyways which might explain my relative optimism overall.

I don't think KW will have much of a pricing correction. Real Estate market has risen significantly but increasing demand with limited supply due to municipal regulations.

You can get cheap real estate in London, and solid rents.

Last edited by bjjs; 03-29-2012 at 05:15 PM.
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Old 03-29-2012, 05:14 PM   #78 (permalink)
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Sweet, now tell me some stuff she doesn't like about you so that I can pester you even when you are on here mwahahah

The thing about interest rates that people are getting into now, don't you realize that those rates are reflective of the market conditions?

Rates are low because housing is overvalued.

When rates are high housing is typically undervalued.
There's another aspect to it as well - the overall deregulation of the financial sector. When I bought my first house, rates were at 13.75, and we rushed into an overvalued market, because it looked like the rates were just going to get higher. That was the trap set then. The big difference was that banks were careful about lending, and expected to get their money back. Now that's not their primary concern. Sometimes it's not a concern at all. If they can get people locked into debt for the rest of their lives, then they have a constant flow that will far exceed the principle. And elsewhere they went so far as to take all the debt and make bets on it. The ways banks operate is just so fundamentally different today. And that in turn doesn't help the housing market attain proper values. That said, bjjs is right about Canada being somewhat insulated from the worst practices, and buying outside of the worst priced areas is a different situation.

Last edited by LX; 03-29-2012 at 05:17 PM.
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Old 03-29-2012, 05:54 PM   #79 (permalink)
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I don't think KW will have much of a pricing correction. Real Estate market has risen significantly but increasing demand with limited supply due to municipal regulations.

You can get cheap real estate in London, and solid rents.
I can attest to that. Boy do I miss that city for the prices.
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