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May 20, 2015
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Scarborough, ON

$988k?

I see people listing their detached houses, around 15+ years old for over $900k. The area is around Steeles and Brimley. The houses in question are not that big (around 2500 sq).

I see more listings than ever in my area. Are people finally cashing out? Or are they trying to move to a bigger house?
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Sep 24, 2006
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2500 sq ft is not big? I guess it's all relative. I lived the first 20 yrs of my life in a 1000 sq ft apartment....

KnowledgeHungry wrote: I see people listing their detached houses, around 15+ years old for over $900k. The area is around Steeles and Brimley. The houses in question are not that big (around 2500 sq).

I see more listings than ever in my area. Are people finally cashing out? Or are they trying to move to a bigger house?
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May 1, 2012
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That's pretty cheap. It's below a mil in that area? It's still Scarborough though...

2500sqft is plenty big, what exactly is it that you deem big?
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Apr 11, 2008
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Oddly enough, S&P 500 is still up significantly for the year in Canadian dollar. Can't say the same thing about Canadian house prices in US dollar.
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Archanfel wrote: Oddly enough, S&P 500 is still up significantly for the year in Canadian dollar. Can't say the same thing about Canadian house prices in US dollar.
Apples to oranges comparison. Why would you compare Canadian house prices in USD terms when the S&P 500 is down 5% for the year in USD terms?
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Archanfel wrote: Oddly enough, S&P 500 is still up significantly for the year in Canadian dollar. Can't say the same thing about Canadian house prices in US dollar.
oddly enough that has nothing to do with S&P..you would be out ahead more if you just bought US dollars
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gomyone wrote: Apples to oranges comparison. Why would you compare Canadian house prices in USD terms when the S&P 500 is down 5% for the year in USD terms?
The point is short term values are rather pointless for both asset classes.
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Archanfel wrote: The point is short term values are rather pointless for both asset classes.
...true. But given that stocks are inherently more volatile than real estate (as we have just witnessed), the temptation to sell stocks in the short term happens more often than not. So short term value changes are more relevant to stocks (and by extension, less relevant to real estate).
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Archanfel wrote: The point is short term values are rather pointless for both asset classes.
nope... because it shows the volitiliy of equities compared to RE and that if/when RE prices "fall" to a deemed reasonable price level ..those who were preaching to invest as better choice until RE prices were within their reach would be dealing with severely deflated investment values. So it debunks the theory or at least the actual implementation of it
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LandKing wrote: nope... because it shows the volitiliy of equities compared to RE and that if/when RE prices "fall" to a deemed reasonable price level ..those who were preaching to invest as better choice until RE prices were within their reach would be dealing with severely deflated investment values. So it debunks the theory or at least the actual implementation of it
Agree with you on that.

Really, if people are worried about short term volatility of equities, they are not investing, they are gambling.

Equities can not be used to accumulate short term wealth, that includes down payment. If you can't afford the down payment, you can't afford the down payment, no amount of equity investments can help you.

Equity investment is the better choice for long term income generation since it has lower carrying cost, higher yield and far higher returns (leverage aside).
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Archanfel wrote: Agree with you on that.

Really, if people are worried about short term volatility of equities, they are not investing, they are gambling.

Equities can not be used to accumulate short term wealth, that includes down payment. If you can't afford the down payment, you can't afford the down payment, no amount of equity investments can help you.

Equity investment is the better choice for long term income generation since it has lower carrying cost, higher yield and far higher returns (leverage aside).
agreed.... there is a place for equity and RE. RE is a defensive position that provides tax free capital gains, pays a dividend in form of shelter and is a long term asset that also acts as a hedge against inflation.
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LandKing wrote: agreed.... there is a place for equity and RE. RE is a defensive position that provides tax free capital gains, pays a dividend in form of shelter and is a long term asset that also acts as a hedge against inflation.
I think of it as a pure consumption to shut my wife up. Worth every penny. :)
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Aug 24, 2015
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North York, ON
LandKing wrote: nope... because it shows the volitiliy of equities compared to RE and that if/when RE prices "fall" to a deemed reasonable price level ..those who were preaching to invest as better choice until RE prices were within their reach would be dealing with severely deflated investment values. So it debunks the theory or at least the actual implementation of it
Its not a theory, it's a proven fact that investing in the long run beats real estate. Only fools would leverage to their eye balls to buy an overvalued primary residence and call a good investment.

To point to equities volatility of the last few days is pretty damn disingenuous.
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Firethemall wrote: Its not a theory, it's a proven fact that investing in the long run beats real estate. Only fools would leverage to their eye balls to buy an overvalued primary residence and call a good investment.

To point to equities volatility of the last few days is pretty damn disingenuous.
Diversification - you should "invest" in both. Over the long term you are better off doing this than plunking all your capital solely in one or the other...
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Firethemall wrote: Its not a theory, it's a proven fact that investing in the long run beats real estate. Only fools would leverage to their eye balls to buy an overvalued primary residence and call a good investment.

To point to equities volatility of the last few days is pretty damn disingenuous.
By your rationale ..there is no place for bonds or fixed income

And your fact is wrong as shown in past while and few years

Even disregarding the tax free gains from a home and the dividend it provides as a shelter... Your supposed fact long term is completely meaningless

Because humans do not live forever ...it doesn't matter that equities could have overall higher gains (but reality lower after tax and shelter costs).. The volatile nature of it makes it much different from RE

Tell the people who are retiring now or back in 2008 that long term equities are better...doesn't matter ...

Its like saying blackjack has a payout rate on average of 98% ...do most get that? No... Does that mean people on average lose 2% of their buy in when they play blackjack? Lol

why would you not leverage to buy a long term asset (much longer than anybody would hold a stock ) that's tax free with low interest rates?
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LandKing wrote: By your rationale ..there is no place for bonds or fixed income

And your fact is wrong as shown in past while and few years

Even disregarding the tax free gains from a home and the dividend it provides as a shelter... Your supposed fact long term is completely meaningless

Because humans do not live forever ...it doesn't matter that equities could have overall higher gains (but reality lower after tax and shelter costs).. The volatile nature of it makes it much different from RE

Tell the people who are retiring now or back in 2008 that long term equities are better...doesn't matter ...

Its like saying blackjack has a payout rate on average of 98% ...do most get that? No... Does that mean people on average lose 2% of their buy in when they play blackjack? Lol

why would you not leverage to buy a long term asset (much longer than anybody would hold a stock ) that's tax free with low interest rates?
You do not need to live forever. For people who retired in Dec 2008, over the 30 years they invested in S&P 500, they would have an annual total return of 10.807% or 2072% overall. For people who retired yesterday, they would have an annual return of 10.610% or 1960% overall. 30 years annual returns have surprisingly little volatility. Even right after the great depression, 30 years annual return would be above 5%. In 1930 for example, it's 9.874%. In 1931, it is 7.381%. And that's all in US$. The future may not be the same as the past, but the same goes for houses.

Also, people don't sell or buy all their stocks at once, which further reduce volatility, although it also tends to lower the return a little.

Having said that, PR is far more than an investment, it's a life style choice. I am fairly sure people living in a basement apartment (you could have one without a window for $300 in Toronto) all their live would come out ahead of somebody who bought a large house that is under unitized, but nobody would do that. I think we can all agree that children are very bad investments with massive volatility, 9 out of 10 times they wouldn't pay you back even if they do become successful, but we still have them.

Also, for the vast majority of people, PR forces them to save.

Therefore, I agree with you, there is a place for both and I would say PR is of higher priority because most people can't really invest long term without a PR to anchor their lives.
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Apr 20, 2011
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LandKing wrote: By your rationale ..there is no place for bonds or fixed income

And your fact is wrong as shown in past while and few years

Even disregarding the tax free gains from a home and the dividend it provides as a shelter... Your supposed fact long term is completely meaningless

Because humans do not live forever ...it doesn't matter that equities could have overall higher gains (but reality lower after tax and shelter costs).. The volatile nature of it makes it much different from RE

Tell the people who are retiring now or back in 2008 that long term equities are better...doesn't matter ...

Its like saying blackjack has a payout rate on average of 98% ...do most get that? No... Does that mean people on average lose 2% of their buy in when they play blackjack? Lol

why would you not leverage to buy a long term asset (much longer than anybody would hold a stock ) that's tax free with low interest rates?
In addition to that, those making huge gains by gambling on equities would be taxed up the wazoo compared with their own home
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Archanfel wrote: You do not need to live forever. For people who retired in Dec 2008, over the 30 years they invested in S&P 500, they would have an annual total return of 10.807% or 2072% overall. For people who retired yesterday, they would have an annual return of 10.610% or 1960% overall. 30 years annual returns have surprisingly little volatility. Even right after the great depression, 30 years annual return would be above 5%. In 1930 for example, it's 9.874%. In 1931, it is 7.381%. And that's all in US$. The future may not be the same as the past, but the same goes for houses.

Also, people don't sell or buy all their stocks at once, which further reduce volatility, although it also tends to lower the return a little.

Having said that, PR is far more than an investment, it's a life style choice. I am fairly sure people living in a basement apartment (you could have one without a window for $300 in Toronto) all their live would come out ahead of somebody who bought a large house that is under unitized, but nobody would do that. I think we can all agree that children are very bad investments with massive volatility, 9 out of 10 times they wouldn't pay you back even if they do become successful, but we still have them.

Also, for the vast majority of people, PR forces them to save.

Therefore, I agree with you, there is a place for both and I would say PR is of higher priority because most people can't really invest long term without a PR to anchor their lives.
the taxation of equities and the required diversion towards rent payments regardless of market behaviour would also lower returns on equities..e.g. the annual return of 10.6% would assume there was zero tax implication during accumulation/reinvestment and at ultimate withdraw

e.g. I dump my money into equities and withdraw the proceeds towards rent.. i would need a large buffer to account for volatility to ensure I always have rent payment or i would be selling my stocks/capital at a loss to pay rent ..add in the taxes on top of that for any gains before i can pay rent.

buying a home also allows the person to leverage their home to access credit on their asset at a reasonable interest rate (to invest in equities if they wish).

they are quite different asset classes with very different dividends and tax implications in addition to the very valid lifestyle choice you mentioned as well. I can increase the value of a home by renovating (dump 40k in it via HELOC..get 60k more tax free in increased value)..and if/when market downturn exists..the dividend is same and there's no forced selling of assets to pay for shelter

the tax free capital gains on a home really gives a boost for RE
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LandKing wrote: the taxation of equities and the required diversion towards rent payments regardless of market behaviour would also lower returns on equities..e.g. the annual return of 10.6% would assume there was zero tax implication during accumulation/reinvestment and at ultimate withdraw

e.g. I dump my money into equities and withdraw the proceeds towards rent.. i would need a large buffer to account for volatility to ensure I always have rent payment or i would be selling my stocks/capital at a loss to pay rent ..add in the taxes on top of that for any gains before i can pay rent.

buying a home also allows the person to leverage their home to access credit on their asset at a reasonable interest rate (to invest in equities if they wish).

they are quite different asset classes with very different dividends and tax implications in addition to the very valid lifestyle choice you mentioned as well. I can increase the value of a home by renovating (dump 40k in it via HELOC..get 60k more tax free in increased value)..and if/when market downturn exists..the dividend is same and there's no forced selling of assets to pay for shelter

the tax free capital gains on a home really gives a boost for RE
I think I stated this in another thread. The tax free capital gains are not all that important in the grand scheme of things. Capital gains are never taxed heavily in Canada. A 20% saving on tax would mean less than 1% annual return. In the mean time, RE has other taxes and costs.

Renovation would only help just before you sell your place and even then, it's not a given. You also pay 13% taxes on renovations. Earlier renovation would only make you more comfortable and tends to depreciate very fast. Yet they are not avoidable either. Every 20 years, you got to fix the roof, the furnace, the AC etc... Usually you don't get it back during sales.

Rent only make sense if it's relative cheap comparing to house prices. Unfortunately, it is right now in Toronto, much due to stupid government regulations. Taxes wouldn't change that equation much especially for 2500 square feet houses. They are often cheaper to rent than 1000 square feet apartments, yet they cost a lot more to own.

Dividends of stocks are typically pretty stable (as long as you don't chase high dividend stocks) and are taxed much lower than normal incomes. Renting is also way more flexible, you can just move to a cheaper place when things get tough. Much harder if you own the house.

The whole discussion is academical anyway. Most people on this forum will buy a primary residence sooner or later and they will buy stocks too. It's far more interesting to discuss investment REs, but the equation there is quite different.

What I do find interesting is that people mix house and land. To me, they are separate beasts. Houses always depreciate whereas land tends to appreciate. Therefore, I'd rather buy a 1500 square feet house on a larger lot or in a better location than buying a 6000 square feet house on a tiny lot out in the suburbs. However, people don't think that way, which makes me think it's more of a life style choice than an investment decision.

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