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Housing starts brisk in March: CMHC

The Canadian Press

Latest comment posted at 9:06 PM EDT 08/04/08

First quarter housing starts were up about 12.8 per cent compared to the same period last year ...Read the full article

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  1. Paul G from Toronto, Canada writes: Time now for all the Chicken Littles to start posting about the bubble and how it goes 'pop'...
  2. Political Junkie from Canada writes: 24 hours ago the Globe ran a somber and dpressing article about the decline in non-residential construction from fantastic to merely good. This was taken as a definitive indicator for a depression by many readers posting here.
  3. Remembers 1989 from Canada writes: Analyzing these stats is like watching grass grow or paint dry. Let's all regroup same time next year and compare notes.
  4. Scott Weiland from STP from Ottawa, Canada writes: Paul G.

    Save a down payment, and stop renting, you will make money long term.

    Nuff said.
  5. Remembers 1989 from Canada writes: Scott, your analysis makes sense for the majority of us who invest responsibly and buy homes we can afford. However, I fear, that there are many Canadians out there that have purchased homes recently that they can't really afford and are just gambling on the price to quickly rise. i.e. eventhough the bank is being responsible in lending them money - these people are expecting the price gain to pay for their vacations, new cars, etc. So, even if it flattens, they've got a problem. That's speculation, even if it's with your own home. Some will hang on based on what you said about making money in the long term but some will have to sell to get out of that mess.
  6. Sam Walton from Edmonton, Canada writes: The reasons why there are so many rich people in NorthAmerica is simply people work hard, like to take risk and aggressive. I for one have the attitude of get rich the legal way and enjoy life or die a poor sap. I did make a hefty sum during the Real-Estate boom in Edmonton and I did pay my capital gains to the taxman. Yes, I did invest in real-estate again and I am facing the music right now and loosing money every day. Hey I chalk it up as a loss; at least I control my own destiny. In my opinion it’s still better than giving my money to some hotshot portfolio advisor and he/she looses it all. If I didn’t invest in Real-Estate then I would have buy a Beamer or Bens and watch it depreciate at lightning speed at least I can take a capital loss now. Most of us that has our house paid off for can take these chances.

    Again! Get rich the legal way and enjoy life or die a poor sap.
  7. S B from Canada writes: Scott Weiland from STP from Ottawa, Canada writes: Paul G.

    Save a down payment, and stop renting, you will make money long term.

    Scott have you done your homework?

    1-bd condo in downtown Toronto $250K

    Interest on $250K @ 5% = $12500
    Maintenance Fees = $3000
    Prop Taxes = $3000
    Annual Carrying Cost = $18500

    Equivalent rent: $15600/year

    Historical Real Estate Return : 3%
    Historical Stock Market Return: 8%
  8. Terence living in Calgary from Calgary, Canada writes: I imagine that the increased start are from residents upgrading from a starter type residence. Do you think these people will have a tougher time selling their starter home and getting some decent equity to pay for the new $450K house, because they are adding inventory to an existing buyer friendly market? Cause and Effect...
    And I'd be curious to see what the buying trend of the new starter market would be.
  9. RD Lone from Vancouver, Canada writes: @S B: you are ignoring leverage. The numbers can be massaged any way you want but in an apples to apples comparison: stocks vs REITs (real estate stocks with inherent leverage in the structure), they are generally equivalent. Of course many people actually live in their house, so the comparison isn't quite as straightforward. On a nominal basis essentially any non-depreciating asset will make money, eventually - you cannot refute that point even though it's a bad argument. You could have bought gold 25 years ago at the peak and not break even until now, but you made money eventually, so it's a good investment, right?

    Anyway, RE is set up to tumble in Alberta, followed by the predicable lag in SK and MB. This is one of those things were it is impossible to convince someone else despite how obvious it may seem to you (otherwise the bubble would never have formed) - so best of luck to the RE bulls out there.
  10. Remembers 1989 from Canada writes: RD Lone said: This is one of those things were it is impossible to convince someone else despite how obvious it may seem to you (otherwise the bubble would never have formed)

    Love it!
  11. CallofDuty . from Toronto, Canada writes: Had anybody else noticed alot of "For Sale" signs popping up lately?
  12. a salajan from To, Canada writes: CallofDuty . from Toronto, Canada writes: Had anybody else noticed alot of "For Sale" signs popping up lately?

    Yep, followed by SOLD signs. Lots of them.
  13. Rick C from Canada writes: CallofDuty . from Toronto, Canada writes: "Had anybody else noticed alot of "For Sale" signs popping up lately?" Inventories have gone up in Calgary. That is mostly due to the investors/speculators getting out of the market. The big gains in equity have been seen and it's hard to cash flow a property at $2000/mth.
  14. Hornsworth Portswiler from Canada writes: CallofDuty . from Toronto, Canada: it's called the "spring selling season."
  15. Rick C from Canada writes: Remembers 1989 from Canada writes: "eventhough the bank is being responsible in lending them money - these people are expecting the price gain to pay for their vacations, new cars, etc." I completely disagree with your statement that banks are responsible in lending money. Unlike in the US very few Canadians are going to get pinched simply due to their mortgage payment going up at renewal. There are no sub-prime mortgages in Canada. Where some will get pinched is with the HELOC's that have been taken out. Many have borrowed against the equity in their house and invested the money; they'll be fine. Others have borrowed against the equity to pay for rapidly depreciating liabilities such as cars etc. Those are the people that are at risk if/when the housing market corrects. I say the banks are irresponsible because of their methodology in approving HELOCs. The banks will look at someone who makes $50,000/yr and limit the max mortgage they can get to $200-250K. If that property value doubles as many have in Canada over the last few years all of a sudden the banks will give the same person still only making $50-60K/yr an additional $200K line of credit. What happens when they max out the LOC? Their fcked that's what. They didn't qualify for a $500K mortgage because they couldn't make the payments. Their monthly cash flow situation hasn't changed; they won't be able to make the payments simply because they have more equity. The banks know this and don't care. They'll give people enough rope to hang themselves with. In my opinion that is irresponsible.
  16. Rick C from Canada writes: RD Lone from Vancouver, Canada writes: "Anyway, RE is set up to tumble in Alberta, followed by the predicable lag in SK and MB." Doubtful. Inventories have risen as investors leave the market; however migration to Alberta remains strong. There will and has been a slight pullback in RE; but once the inventory is scooped up we'll see moderate price gains as long as the economy remains strong. I don't see prices 'tumbling' anytime soon.
  17. DOUBLE J from Canada writes: Wow these posts are depressing!!!! I think I'll get my harmonica and start riding the railway in search of work. Probably sell my apartments for pennies on the dollar too. Actually no, I think I'll just hang on to them and keep renting them to people like all these negative posters. I especially like renting to professors in my building by my old uiniversity, man are they reliable tennants. Good luck posters, stay on the sidelines and try to time that market just right
  18. Scott Weiland from STP from Ottawa, Canada writes: SB - i have done my homework.

    You should also stop renting.

    Using your math, putting a renter in that condo would help your numbers. Just some advice from a guy who knows finances...

    Good luck SB.
  19. brokeback mountain from Canada writes: buying always comes out ahead because you live in your own investment, you get to enjoy it... yes, the market might go up and down.. but the fact is you are not enriching your landlords.. yes, you are enriching the banks by paying interest.. so be it... even if the market goes down, it really doesnt matter to you 'cause if you don't sell, you have a shelter.. also you can get a line of credit at extremely low interest rate for investing purposes, and the interest can be written off... nothing can beat real estate
  20. Remembers 1989 from Canada writes: Brokeback: I'm assuming you mean "nothing can beat 'Canadian' real estate". And, I'm also assuming that Canadian RE investors were well aware of the differing lending practices in Canada and the US when they invested in Canadian RE prior to 2008!
  21. Remembers 1989 from Canada writes: Brokeback: Or were you referring to British or Australian RE?
  22. Phil King from Canada writes: The main fact that so many seem to forget in the renting versus owning debate is that roughly half the money you pay on a conventional mortgage comes back as equity.

    There are of course cases where renting makes more sense, say a young person with roomates making the rent exceptionally cheap, but as a general rule owning is better in the long run.

    Of course this assumes you have enough money in the firstplace to float the higher maintenance costs.

    Afterall, there is a reason why people rent and it's usually because they can't afford to invest in anything else.
  23. bill k from Canada writes: CallofDuty . from Toronto, Canada writes "Had anybody else noticed alot of "For Sale" signs popping up lately?"

    Yes with many of these home sitting EMPTY and unsold. People are scared as the buyers are gone and the flippers need to sell as the housing bubble deflates. I heard a guy on "hot property" and this guy use his line of credit to buy an investment property and now he can not rent it or sell it for months. POP.......what was that?
  24. S B from Canada writes: Scott Weiland from STP from Ottawa, Canada writes: Using your math, putting a renter in that condo would help your numbers. Just some advice from a guy who knows finances...

    How does a renter paying you $15600 a year in rent offset your $18500 in carrying cost? That's BEFORE principal payments.

    You should recheck your finance textbook.
  25. S B from Canada writes: RD Lone from Vancouver, Canada writes: @S B: you are ignoring leverage.

    Agreed. Leverage does amplify returns....both ways as many in the US are discovering :)
  26. S B from Canada writes: Phil King from Canada writes: The main fact that so many seem to forget in the renting versus owning debate is that roughly half the money you pay on a conventional mortgage comes back as equity.

    Phil, the equity you get back is the principal that you've paid as part of your monthly payments -- ie. your own money.

    The math is simple. For an equivalent home:

    if interest taxes fees > rent, it's better to rent
    if interest taxes fees < rent, it's better to own

    If renting, put the difference in a REIT and you're better off in the long run.
  27. Richard Hawrelak from Sarnia, Canada writes: SB, you sound just like my stock broker ... who I fired.

    In your above rent vs condo buy, why pick a condo? I bought my house in 1966 for $30,000. I still live in it and it has been upgraded reno wise. Today, it sells for $350,000. I paid the mortgage off early and didn;t pay interest. I'm living rent free. Whooppee!. BTW, I'm a long term value stock investor and I'm doing ok there to boot.
  28. Peter Simpson from Vancouver, Canada writes: DOUBLE J you have it all wrong. These posters aren't renters they are landlords like you and I. They post here to convince tenants to continue renting.

    It's very clever really....my thanks to them.
  29. scamp the from Canada writes: Richard,

    I think we really have to distinguish between those that buy a house as a place to stay and those that do it as an investment.

    Take your example: If you had invested 30k in the nasdaq exchange at around the same time (about 100...today its over 2500), you would have about 750 000.

    But you would still need a place to stay :) And that's the best life style investment you can make. Heck, in canada if you have your house paid off, you can live off welfare or a dirt cheap job. That's security, no stock market can give you.

    But as a young person in today's market. I'm not buying. Rent is cheap enough with friends. heck, if I were to buy, the property taxes /maintenance fees add up to more than my share of the rent. I'm waiting till the market drops...which it will.

    The market is just not going to be the same when the boomers pass away. If you look at places like Germany, Italy...they're actually losing population. Which means...housing should get more affordable. This is only going to accelerate in the upcoming 20 years or so.

    I know I'll be a renting until I have my first kid at least.
  30. NOTAFAN OFTHEFEDS from Canada writes: Sales in Calgary are down 40% this year vs last year, yet condo starts are up 280%, single family down 25%. Normally we have 4k homes on the market, the latest stats around 12K. Investment money has found it way into Condo development. The market is going to drop, and the Condo market is going to crash. It is almost as if I just read it in the paper, except it won't happen until next year after they are complete.

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