Real estate woes

entitlement generation Great Reset It's Probably Nothing 37 Comments

Why worry? There’s no problem here that can’t be solved with infinite amortization.

“…he owns 8 condos in toronto. half of them he told me are negative geared.”

37 Replies to “Real estate woes”

  1. Carter and Trudeau 1 will be outdone by Biden and Trudeau 2.

    Carter was in over his head and Trudeau was an ideologue in zero checks and balances Canada.
    They did real damage.
    But this repeat will really take the cake.

    Biden is crooked, demented and evil.
    Trudeau 2 has dad’s ideology.(Pierre or Fidel interchangeable)…math doesn’t matter………debts take care of themselves……print baby print……..it’s good to be a dictator…..
    And mom’s brains and mental instability.

    Prepare for anything.
    The inmates are in charge of the asylum has never been truer.

    Sadly, prepare for Canadians, is the same old get on your knees with ass up as Canadian politicians and media distribute their regular rousting.

    Pussy country.

    1. Most women love the idiot, half of the men will vote for him because they were told by women.

      Most of the plebeians couldn’t care less.

      If there was an election today, the idiot would win.

      This is what this country is today.

      2. You seem stunningly unaware of the many, many thousands to millions of voters which hate him. You seem completely ignorant of the fact that it’s only the slavishness of Jugghead which keeps him in office.

        1. cghCOLON
          And you seam stunningly unaware that many , if not most, don’t vote for the leader, butt the ideology. And you are stunningly unawares that you are totally lacking in self awareness, just like a lot of posters in here, IDIOTS, is an insufficient description!

        2. I am absolutely aware of the great number who hate him.

          They are very easy to spot by their complete inability to do anything to change things.

          Trembling in fear, covered in dust, with ass up and frozen by some strange CanKnobian Ground Hog Day stupor, comforted only by whine.

          Yep.Purty easy to spot.

          Paperweights mostly.

        1. But you forget!

          We have elections.

          By the end, as always, your unbiased, non partisan, non fake Canadian Media will have spread Poilievre poison for 30 plus days to the point PP will look in the mirror and hate himself while his kids run screaming from him.

          Not that it matters.

          Vote Conservative. Get Liberals. Every time.

          Twas always thus twill always be.

        2. And don’t forget… You are assuming that we are going to have a fair election count…

          That is…

          …If we even have an election. The twerp might just as well go ahead and declare yet another emergency, and invoke the EA again. My bet is it will be a declared climate emergency.

  2. Ah crony capitalism isn’t it grand.
    Gov + banks + no integrity + stupid people should equal economic collapse.
    Instead they all put each others head up each others a– and still manipulate things so they don’t end up jumping from high places.
    Like I said the ORC’s here bother me, not the ones thousands of miles away.
    Lets hope someone drops the cup with the ball under it sooner rather then later.

    1. Serious question, isn’t crony capitalism just another form of fascism? My understanding is that fascism is big government and big business colluding where one is directing the other. How is that different from crony capitalism?

  3. Infinite amortization means you just pay interest, no principal.
    Closed mortgage rates are now about 7%, open about 10%.
    3% mortgage with 25 yr amortization payment is about equal to 5% mortgage with 40 yr amortization.
    At 7% with 40 yr amortization, monthly payment is up about 30%.
    At 10% with 40 yr amortization, monthly payment is up about 80%.
    If move to pay interest only at 7% (infinite amortization), monthly payment still up 23%. At 10% interest, payment is up 75%.

      1. Don, you are looking at high ratio (CMHC) which you have to purchase insurance on. Go to the other side of the table you linked to, this guy has investment properties. The LOWEST rate in BC is 6.14-7.19% depending on term. Also, these will be closed mortgages (limited repayment). If the guy has 3 of the 8 for sale, likely in an open mortgage to avoid prepayment fees and that rate is higher still.
        https://www.cibc.com/en/interest-rates/mortgage-rates.html

    2. Infinite amortization actually means one of 2 things to a mortgagee. Dependent on each bank and contract language. The individual has NO say in the matter.
      Either:
      1. Variable payments are increased, by the bank’s determination, to cover the current interest and portion of capital. PAIN NOW.
      2. Variable payment stays the same, but, the ratio of interest increases dramatically, up to 100%, or more, of the payment. Bank can determine whether to then choose to increase the payment, as per above, or, add the difference in interest payable, to the mortgage owing. PAIN LATER.
      Many banks have made the choice for clients of Pain Later. The banks don’t want to own YUGE amounts of underwater assets. The mortgagees, in effect, are on heroin. It feels real good now, but, it’s going to be a world of pain at renewal time.

    3. Infinite amortization can also lead to negative amortization depending on the structure of the loan. Some people have a variable rate and a fixed payment which drives the mortgage to infinite amortization in the first place. The bigger problem created by the fixed payment is where the payment no longer covers even the interest cost. Some lenders will increase the payment to meet the interest-only costs of the loan, while others will roll the excess into the principal amount creating a negative amortization. It’s sort of a reverse mortgage, but you pay the lender for the privilege. It is thought that 17% of all mortgages are at this point now.

  4. With the rental demand currently going through the roof, the guy with 8 condos would have no problem renting them for higher and make the payments.

    1. If he’s cash flow negative on them, he probably has tenants already, who won’t move if they are in rent controlled condos

      1. Condo units have no rent controls. It is all contract law, limited by the Condo corp’s rules as far as I know.

        1. You can’t raise rent in Ontario more than 2% per year unless you sell it. With inflation running at more than 2% in real estate, you can see how that puts you under water very quick.

          It’s like a perfect trap for sucking in investors and then fleecing them. Low interest rates, infinite price increases over the last ~40 years, 100% rental rates, people will rent a doghouse. So you suck them all in for 40 years, and then raise the interest rates?

          So then they all default, and the banks get all that juicy property. Then the banks consolidate because the weaker ones die, and at some point you get one company owning all the rental properties in Canada. That one guy will be “too big to fail” so will be propped up -forever- by the government.

          Something similar to this has been done three times in South Korea since WWII, they’ve had to re-issue new money because of explosive inflation and bank failures. That’s why little old Korean ladies and Indian ladies have gold jewelry. In case everything turns to sh1t again, all of a sudden. Seed money for a re-start.

          I wonder if that’s really how they think it will go here? That they’re all crooked has become obvious, unlike previously where we thought they were honest. A step in the right direction anyway.

        2. That’s incorrect.
          Recently, BC overrode existing strata rules, eliminating rental restrictions. It was a very public issue here. Because of “housing shortages”.
          They would be better off banning AirBNB, bigger impact on the housing shortage, but that’s a discussion for another day.

    2. Because passing the buck so someone else’s ox gets gored always solves the underlying problem!

  5. this mtg business, the ‘dont actually own’ part, well all dovetails nicely with my prediction (which predated the famous quote(?) )” you will own nothing and be happy” (did he actually say that?)

    anyways, we are coming to a time when the names of the deeds, patents, licenses, registry, etc
    are very limited and in many cases is a corporation.
    ‘clothes on their back’ is coming back (pun intended).
    do we rent cars? furniture? accommodation? machines? land for cash crops? etc?

  6. The supply side of housing is severely and structurally restrained by 3 levels of government and generally supported by home owners with equity (in the hottest markets) and given that the demand is increasing but only for those who can’t afford housing, again in the hottest markets, prices will ease only to the extent that people with equity will sell and exit the hottest markets. I can see progressives like Chow or Calgary’s deranged Mayor going full soviet and get into “projects for refugees”, or perhaps mandated home “sharing”. As we get into serious recession within a year or two, prices will ease as many mortgages will be under water along with their bank owners. Boomers still alive will find things getting crowded as homeless children and grandchildren move in.

      1. uhuh. and the RTA residential tenancy act being a provincial creation, be very prepared Tranna that answers the call and vis magic wind up with a brand new family in your living room . . . . .
        it aint like before a phone call and theyre told gotta leave, not protected by the regulations and conditions in the Act so gotta move out of someone else’s home.
        not anymore. according to the local cops, a violent tenant who threw a paperweight at my crotch, knocked me on the floor, destroyed 3 and damaged another 2 doors was . . . . . .
        exempt from criminal code because of (exact quote) “occupancy rights”.
        l brought this newfound knowledge to some half dozen namby pamby homeless advocates.
        a typical response was “write a letter to the prime minister”
        anecdotal and common. this is where we’re headed folks.

  7. With the country’s population growing by 1 million hosers every 2 years – and by design – it just seems like a Ponzi scheme to me.
    Not just housing, but all of it.

    1. And Pierre hasn’t mentioned much about immigration has he?
      And yeah it’s a shell game.

  9. ?.. Bringing in 500 000 people a year creates demand that keeps prices up.. Then you raise interest rates to bring prices down.. But it doesn’t work anymore.. That’s because of demand and location..

    Im sure Dildo, Newfoundland is a beautiful place with nice boutique jobs and or government jobs but the real money and opportunity is in southern Ontario.. Toronto the GTA.. That place is gridlocked with traffic.. Where you live makes or breaks your life.. Or you can pretend 20 hours a week in your car is no problem.. Working 6 weeks a month?.. The demand is brutal..

    Fine fine move the money somewhere else but doing so will raise the cost of doing business.. Infrastructure, shipping, talent pool and wages to entice people to have Dildo on their drivers license.. Mexico is sounding pretty darn good..

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