Real Estate

Vancouver housing bubble?

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Feb 15, 2008
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sunshinemoonlight13 wrote: Most normal folks I know, only consider the amount they pay out of their pocket.
Do "most normal folks [you] know" also claim the Dividend Tax Credit when they file their taxes? If they do, by claiming that credit, they are claiming recognition for tax already paid on their behalf by the businesses they own interests in.

I'd be very surprised if any of your "normal folks" would refuse to claim the Dividend Tax Credit on their taxes, based on the dogma you put forth.
The number they write on the cheque to the CRA. Not some shared burden with the corporation nonsense because that money never made it to your pocket.
The money makes it to my pocket over time. But taxes are due at the time that the money is earned.
TodayHello wrote: ...The Banks are smarter than you - they have floors full of people whose job it is to read Mark77 posts...
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Jul 21, 2011
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RMB
Mark77 wrote: As a pro rata share of the taxes paid by the businesses I am a partial owner of. Mines. Banks. Pipelines. Telephone providers. Etc. I even own a small chunk of this website.
The Chinese call this 'Ah Q philosophy'
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zilber wrote: The Chinese call this 'Ah Q philosophy'
I don't know what that means, but its rather bizarre that sunshinemoonlight believes that the burden of the taxes on a business does not fall onto the hands of the owners of the business. As though corporations are entities unto themselves, rather than being the interests of their owners, with the legal shield of limited liability.
TodayHello wrote: ...The Banks are smarter than you - they have floors full of people whose job it is to read Mark77 posts...
Penalty Box
Apr 16, 2012
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so there you have it.

Mark77 has redefined the how taxes are calculated. I look forward to his other redefinitions to come.
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Only in your mind techcrium..... Only in your mind. Fortunately the Government of Canada doesn't view it that way, and credits tax already paid by an individuals' Canadian business as a tax credit on a personal income tax return by way of the Dividend Tax Credit.
TodayHello wrote: ...The Banks are smarter than you - they have floors full of people whose job it is to read Mark77 posts...
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May 17, 2013
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techcrium wrote: so there you have it.

Mark77 has redefined the how taxes are calculated. I look forward to his other redefinitions to come.
Now I even question his claim of owning 7 cars. In that warped world view of his, I'm trying to think of creative ways to explain away his psychosis about owning 7 cars.

-Maybe he includes past rentals (presumably helping pay down part of the costs when he rents for a weekend)?
-Maybe he includes all past cars he owned and sold as cars he still 'owns' (morally of course)?
-Maybe he includes his bicycle?
-Maybe he owns a convertible and that counts as two (top on or off)?
-Maybe he 'owns' shares in Avis or something and figures his percentage of ownership means he owns an equivalent of 6-7 cars worth?
-Maybe he owns 6 cars in video games like Need for Speed and another one in real life to make 7?
-Maybe he figures his million dollar portfolio in XIU.TO entitles him to 6-7 cars worth based on all the collectively pooled assets of all the companies "he owns"?
-Maybe he is projecting ownership of 7 cars in the future when he strikes billionaire status, so he worked out the 'net present value of car ownership' to be 7 cars?
-Maybe he forgot the other 6 cars he was driving was only part of his dream?
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Nov 18, 2007
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Oh I hope he gets into his views on personal assets, that includes a share of every telephone line, pipeline and building in Canada.
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fastlayne wrote: Oh I hope he gets into his views on personal assets, that includes a share of every telephone line, pipeline and building in Canada.
Sure, I'd love to. Earnings growth has been very strong, with a rough tripling of the earnings of the underlying assets (RE rents have grown at what, barely the rare of inflation in most of Canada?). Of course, the stock market was generally overvalued in 2001, the result of the Nortel bubble and Nortel being close to 40% of the index alone. But the excessive P/E valuation and excessive P/B level has now turned into valuations that are significantly below long-term trends.

Banks and financial companies are roughly 35-40% of the market capitalization of Canada's stock market, the TSX (formerly the TSE). Canada's banking sector holds a significant portion of CMHC-insured debt out of the $900B pool of subprime debt insured by the CMHC. This debt is equivalent in quality to government bonds and bears the unconditional guarantee of the Government of Canada against default. While house prices are now falling in Canada causing a significant loss of equity to owners, banks are guaranteed to receive repayment of housing related loans in full. Even as the retail spreads on those loans rise due to poor credit-worthiness of borrowers and falling house prices.

Basically put, the stock market sucked a little over a decade ago. It collapsed. Balance sheets were rebuilt, leverage reduced dramatically. Balance sheets are stronger than ever. A little over a decade ago, the housing market was dirt cheap. It ended up doing well for the past decade. Balance sheets of housing owners have now deteriorated dramatically and the market is built on large amounts of subprime credit. It is primed for significant underperformance.

Pretty simple, eh? Stocks and houses are cyclical and inversely correlated in Canada. Plenty of long term evidence for such. The question is where would you rather be right now? At the tail end of a long expansion with valuations stretched far into the stratosphere, or somewhere else?
TodayHello wrote: ...The Banks are smarter than you - they have floors full of people whose job it is to read Mark77 posts...
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Jul 3, 2011
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Thornhill
Mark77 wrote: The claim that foreigners are bringing lots of money to Canada and buying doesn't stand up to scrutiny either. After all, foreign buying would imply a reduction of leverage, a reduction of credit. This isn't happening as we can see from the stats that come out.

Stats Can tells us that Canada runs a positive balance of international payments, money is generally leaving Canada (ie: more money is flowing out of Canada than is flowing into Canada!):

http://www.statcan.gc.ca/tables-tableau ... 1a-eng.htm
With more funds flowing out than in, it would be a negative account and not a positive account.

I don’t see the purchase and sale of property specifically identified to be able to draw any conclusion as to whether or not we have a positive or negative flow of funds as a result of real estate purchases as that would be bundled under Goods and Services.

Even so, given the size of our banks and that they’re included as reporting entities, the fact that we have a negative position makes it clear to me that non-residents are benefiting more for investment in Canada than Canadians investing outside of Canada.


As for Peeef4, he published all sorts of nonsense, and from one day to the next he couldn’t decide if the $1mm+ market was busting or booming or the under $700k was busting or booming.
Okay sunshine, i'll use an example you might understand. Let's buy a $1M house with $50k on CMHC insurance, ie: a subprime (sic) loan. And say that you find one of the rare markets in which houses are still going up in Canada. $1.0M house becomes worth $1.05M next year.
Wrong again. The increase in equity would be the 1.05m/(downpayment+mortgage payment).
As a pro rata share of the taxes paid by the businesses I am a partial owner of. Mines. Banks. Pipelines. Telephone providers. Etc. I even own a small chunk of this website.
You really do have an absurd view of many things. So, home owners - payors of real estate tax, by default, own the business known as the Corporation of whatever Municipality they live in along with all cities, towns, villages, hamlets and businesses in the Municipality’s portfolio.

Yet, we can’t walk into any one of those businesses and demand: a salary; a desk; a company car; a say on the business plans; a say on the budgets. Not even 5 mins of free parking under city hall, which ironically, we own. Even weirder, we can’t hire or fire anyone either in any of “our” businesses.
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licenced wrote: With more funds flowing out than in, it would be a negative account and not a positive account.
Well, regardless of terminology, the chart shows that more money is leaving Canada than entering. That's the important part. And disproves the rampant 'foreign investment' thesis. The actual reality of what's going on is that Canadians are driving nearly all of the demand for housing using enormous amounts of leverage. This is why you see near perfect correlation between housing prices and mortgage credit expansion, for instance. This is why hitting the CMHC brick wall proved to be like setting off an earthquake in the marketplace, as I predicted earlier. This is why, now that prices are falling, we are sliding into CPI contraction. This is why most of the talk is about BoC policy rate cuts, not hikes.
As for Peeef4, he published all sorts of nonsense, and from one day to the next he couldn’t decide if the $1mm+ market was busting or booming or the under $700k was busting or booming.
His interpretations were problems, but there was no reason to doubt his raw data. Nevertheless, he was harassed out of here despite providing a useful service to the community.
Wrong again. The increase in equity would be the 1.05m/(downpayment+mortgage payment).
Assuming there was a payment into equity, you're sorta right (your formula isn't correct though). Such payment into equity is typically very small for the first few years of a mortgage, and I certainly did not include transactional costs in my quick and simple example. Most buyers will barely pay enough into equity to cover just the Realtor and loan fees in their first 5-year term, BTW. Just the nature of mortgage math.
You really do have an absurd view of many things. So, home owners - payors of real estate tax, by default, own the business known as the Corporation of whatever Municipality they live in along with all cities, towns, villages, hamlets and businesses in the Municipality’s portfolio.
Well this thread really isn't one to discuss the nuances of public versus private property. However, a business owner is a business owner, whether they own a business that is literally one man, or a business that employs thousands. The difference is in whether the owner also serves as a manager. I am obviously not a manager of the businesses I have ownership interests in.
Yet, we can’t walk into any one of those businesses and demand: a salary; a desk; a company car; a say on the business plans; a say on the budgets. Not even 5 mins of free parking under city hall, which ironically, we own. Even weirder, we can’t hire or fire anyone either in any of “our” businesses.
Actually I am entitled as an owner of the businesses, under the Articles of Incorporation, to bring forth a Shareholders' motion at an Annual Meeting, in a form and manner as prescribed. If I can get enough fellow owners to agree with me and vote their shares, then the motion passes. However, generally speaking, the management of most of the businesses I own is competent, and a tripling of earnings in the past decade is just fine with me.
TodayHello wrote: ...The Banks are smarter than you - they have floors full of people whose job it is to read Mark77 posts...
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You have to add in the $300B of 90% re-insurance of 3rd party mortgage insurers (ie: Genworth). Of course, the exact size of the portfolio will fluctuate from quarter to quarter, especially with policy changes, run-off and pre-payments, etc.
I thought CMHC had $900B of insured mortgages! How can I ever trust RFD posts again?
http://canadamortgagenews.ca/2013/01/03 ... consumers/
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Mark77 wrote: You have to add in the $300B of 90% re-insurance of 3rd party mortgage insurers (ie: Genworth).
No we don't. As Canadian taxpayers, we don't backstop Genworth or any other insurer. Their shareholders or "business owners" take the loss on any defaults.

CMHC and Canadian taxpayers have exposure to some $560B in insured mortgages.
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fastlayne wrote: No we don't. As Canadian taxpayers, we don't backstop Genworth or any other insurer.
Yes we do. There is up to $300B of re-insurance of Genworth and other 3rd party insurers. Go read that link or refer to the CMHC reporting.
Their shareholders or "business owners" take the loss on any defaults.
The first 10%. Canadian taxpayers are on the hook for the rest under the re-insurance schemes. So if someone is in negative equity to the tune of 40% and defaults -- the first 10% is charged against the insurer's capital, and the remaining 30% is charged against CMHC's capital.

Obviously the shareholders of the 3rd parties get wiped out first. It might be interesting to note that one of the most prominent ones took steps a few years ago to become a free-standing entity, to shield themselves from sharing liability with their US-based owners. Which, in turn, was a spin-out of an even larger conglomerate.

CMHC and Canadian taxpayers have exposure to some $560B in insured mortgages.
Plus exposure to up to $300B of re-insurance of 3rd parties. You can go look up the exact numbers.
TodayHello wrote: ...The Banks are smarter than you - they have floors full of people whose job it is to read Mark77 posts...

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