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The Fed Gov and BoC have no choice but to keep interest rates at zero and continue to play with numbers to keep the ponzi going so the whole Country doesn't col

• andi999 6y ago
  "A down payment on a Toronto house should take 24 years to accumulate", reading the article this seems to be based on a severe case of dyscalculia. If the apartment costs 1 million and you want to save until you have 6% (which is 60k), and you only save 10% of your annual 170k salary, meaning you save 17k per year so after 3 years plus you have the down-payment. In addition to proper math one also should probably save a bit more per year. Edit: I am basically criticizing the article linked from the comment: https://nowtoronto.com/lifestyle/toronto-real-estate-affordability-down-payment-savings https://nowtoronto.com/lifestyle/toronto-real-estate-afforda... Apart from the calculation wrong I also think the numbers/assumptions are not good
  • jdtbuchanan 6y ago
    Not sure where you got the numbers but to buy a 1m condo in Toronto would require closer to 250k not 60k. And that isn’t taking into consideration the condo will also be up 8-10% next year.
    • andi999 6y ago
      My numbers are from the article linked in the post I answered to.
      • elixirnogood 6y ago
        I don't think you can get a mortgage with a 6% downpayment anymore. Canadian real estate is a scam. Banks would lend to anyone with a 5% downpayment. The mortgages are insured by the government (CMHC), so essentially all the taxpayers are on the hook if the real estate market implodes. Banks will be fine though as usual.
  • DC1350 6y ago
    Anything over a million requires a 20% down payment. Also, prices doubled over the last 5 years so if trends continue then a million dollar home today will take a 400k down payment if it takes 5 years to save
    • ttul 6y ago
      Something makes me think that ain’t gonna happen...
      • winkeltripel 6y ago
        But this is what's been happening. It's happening in the bay area too.
        • jpetso 6y ago
          "Past performance is no guarantee of future results" The housing market can only grow as far as people are willing and able to pay for. Sure, you may have a few international investors distorting the picture, but for the wider masses of homes you still need a strong local base to prop up the average price. My impression is that in Toronto, we went from a market that's affordable enough for lower-to-mid-income households to a market that's only affordable to high-income households. Apparently there are still enough people to finance this. But with another doubling of prices vs. salaries, I feel like even high earners wouldn't be able to buy in en masse, and that's where there's a limit to price growth. Not sure about the exact number, but we're probably not far off from it at this point. There's also the issue with interest rates, which may be able to fall a little further and dip into negative territory when the next regression comes, but we probably won't be able to replicate the decrease in rates over the last 10 to 30 years. And lower rates are really what drove up housing prices in the recent past. Of course, if companies start to approach Bay Area salaries, we'll raise the price growth limit as well. Personally, I don't worry too much about housing options for software developers and more about the gap between us and the low-wage retail, restaurant, underpaid or underemployed rest of the city. Who cares about home ownership when your friends are moving back to their parents in the prairies.
  • hourislate 6y ago
    I understand what your saying and it would be correct if prices were stable. The problem is that prices increase so rapidly and there is severe stagnation in salaries that you can't keep up. In OCT 2019 a Condo in a CO-OP I was looking at was selling for 350k. By Jan 2020 they were selling for 500k. It is not unusual for your 1-2 million dollar house to go up by 10-20 % a year.
  • kitcar 6y ago
    If you're saving using after-tax dollars, savings 10% of 170K top line is therefore not $17K. For interest, according to https://turbotax.intuit.ca/tax-resources/canada-income-tax-calculator.jsp https://turbotax.intuit.ca/tax-resources/canada-income-tax-c... net on $170K is $111,547, meaning closer to $11K / year
    • Terretta 6y ago
      So, 23 years instead of 24? Or 3.5 years instead of 3? Your correction without conclusion doesn’t seem helpful in deciding which calculation is least wrong.
      • andi999 6y ago
        Actually if you really want to save 60k with a net annual salary of 111k, you could do it in prob 2 years (cancel you Amazon account). Ard 6,500 CAD per month should be enough to live by, shouldn't it.
      • kitcar 6y ago
        The math is $1,000,000 is the average price of a house in Toronto[1]. You usually need 20% down for a house at $1M or more[2]. Therefore you need $200,000 downpayment, which at $11K / year is about 18 years, assuming no compounding (which at least today is basically the case currently in Canada with interest rates where they are). It should be noted though that it is pretty rare to reach $175K salary in the GTA before turning 30 (Average household income in Toronto is sub $100K[3]). Therefore for the majority of people it will take more than 18 years to build up that down-payment, which could be where the number in the article came from. [1] https://toronto.ctvnews.ca/average-gta-home-price-to-top-1-million-for-first-time-in-2021-real-estate-board-says-1.5300539#:~:text=The%20Toronto%20Regional%20Real%20Estate,an%20average%20%24929%2C692%20in%202020 https://toronto.ctvnews.ca/average-gta-home-price-to-top-1-m.... [2] https://www.moneysense.ca/spend/real-estate/cmhc-tightens-mortgage-rules-in-latest-response-to-covid-19/ https://www.moneysense.ca/spend/real-estate/cmhc-tightens-mo... [3] https://www.toronto.ca/city-government/data-research-maps/toronto-at-a-glance/ https://www.toronto.ca/city-government/data-research-maps/to...
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• otoburb 6y ago
  >>Feel sorry for the kids who finish a degree in STEM from Waterloo or UoT and end up working for 40k a year. The starting salary for STEM grads seem to be well above 40K CAD, perhaps even >65K CAD [1]. >>A down payment on a Toronto house should take 24 years to accumulate When you pair your linked article with the fact that the GTA has experienced net-positive population growth every single year since 1971[1] then it makes a little more sense why property prices have risen and continue to rise inexorably over the years. I also note that in your linked article a GTA condo downpayment can be accumulated within 4 years at the assumed 10% savings rate for a HHI of $124K CAD, and that's a 2-bedroom condo. If a new grad wants a starter property in the city then perhaps start with the purchase of a studio/1-bed. [1] https://www.canadastudynews.com/2017/11/30/stem-graduates-earn-more-and-find-employment-statistics-canada-reveals/ https://www.canadastudynews.com/2017/11/30/stem-graduates-ea... [2] https://www.fin.gov.on.ca/en/economy/demographics/projections/ https://www.fin.gov.on.ca/en/economy/demographics/projection...
  • waterlooman 6y ago
    >If a new grad wants a starter property in the city then perhaps start with the purchase of a studio/1-bed. This lacks the history on what people used to be able to purchase, not just in Toronto but in all of Southern Ontario, and now even as far away as the Maritimes. The purchasing power for the average Canadian to afford things that actually mater (like housing), is dropping like crazy. Allow me to give you my own anecdote. 12 years ago, I purchased a "starter home" in Waterloo for $249,000 in the neighborhood I grew up in. Detached with a single car garage, on my "new community college grad" salary of 47k/year with 25k of savings that I had. Today, with say a 60k/year salary, a new grad in my city could afford to live in a small "starter condo", a huge downgrade to ones expectations who wants to raise a family. The standard of living and affordability has objectively dropped for young people today. Last week a house on my street that is actually smaller than mine just sold for $780,000. I wonder what their mortgage is like? But according to some people, hey you can still get into the market! Just buy a condo! Now lets get to the meat of the issue. Why is this happening (and in many Western countries)?. Economic crashes are literally a built in guaranteed feature of our money system, but our government has found a way to kick the can down the road through mass immigration. As long as they can bring in half a million people in every year willing to take on debt, they think they can avoid a market correction, and they aren't wrong, they have avoided a correction for 12 years now thanks to the people they bring in on a daily basis in Canada. But this was not without a great cost, even if they can continue this nonsense for another 10 years, they have destroyed the purchasing power of your average Canadian to afford things that actually matter, like housing. I would argue that they found a way to avoid a crash by substituting that with a gradual decline of our standard of living. They stole from the young to pay for their pensions and nest eggs to avoid facing the music. Unfortunately, in many forums you can't bring up the elephant in the room if you are against mass immigration for its many downsides (including wage stagnation), you get denounced as a racist, or you get attacked by people who want this ponzy scheme to continue because after all, the economy now depends on it! They would rather you blamed the city for not building more condos (that noone wants to live in), and NIMBY's. But don't you dare bring up mass immigration.
• dugditches 6y ago
  There is work outside the cities in other fields. However, with all the people leaving the cities(it was an issue even before current 'work at home' situation, but even greater now) they push out local buyers. Wages outside the cities have stayed fairly stagnant(asides min. wage). And buyers simply can't compete with 'big money' coming from people having sold their property in a city. A quick glance at this makes one woozy. It feels after the '08 crisis just about everyone lost their lunch. However this modern crisis, it feels like upperclass got out ahead while lower classes simply lost. https://img.take-profit.org/graphs/indicators/money-supply-m0/money-supply-m0-canada.png https://img.take-profit.org/graphs/indicators/money-supply-m...
• randomdata 6y ago
  > You also have to take into consideration that there is no where else to find any work but in the big cities. Where does that idea come from? Even before COVID-19 the job data was indicating that the hottest job markets were in (certain) small town/rural areas and that gap widened further once COVID-19 hit. The big city, especially Toronto with it being on lockdown for many months now, is where you're more likely to struggle to find work.
• bentlegen 6y ago
  I can’t speak for every industry, but many Bay Area technology employers have set up satellite offices in Toronto and Waterloo and are paying significantly higher wages (note: I represent one of them). This is having a net effect of driving wages up; I see it in the candidates we lose to other companies who are doing the same. Consider looking for a new gig. Also, Sentry is hiring in Toronto: https://sentry.io/jobs https://sentry.io/jobs.
  • dheera 6y ago
    Maybe they should consider doing an early cap on property taxes and property values before it becomes like the Bay Area where even if you work at Google you can't afford a house. There is rent control where I live, but no buy-house control, and there's almost nothing available below $2M USD.
    • DC1350 6y ago
      Google doesn't have an office in Toronto but Amazon employees don't make enough to buy houses. It doesn't matter though because most people in Toronto now make more money on real estate appreciation than they make from their jobs. Real estate gains are tax free so a modest 10% home price increase (it was 30% last year) is like earning at least an extra 150k pre tax
      • dheera 6y ago
        That's kind of sad though. It seems people own houses to sell them, instead of owning houses to own them. I feel like the whole point of owning a house is to customize it into a fairytale home of your dreams and never want to sell it. Otherwise I'd just rent.
        • fakedang 6y ago
          In the current environment, it's cheaper to borrow and buy to sell.
    • bobthepanda 6y ago
• alexashka 6y ago
  > The whole damn situation is a mess with no way out. I think there are definitely ways out, just not ones that please everyone involved. I for one don't even understand what Toronto as a city does (I've lived here for 20+ years). What valuable services does Toronto provide? I see bank skyscrapers downtown, some tourist attractions and a whole lot of people sitting in offices that need not be downtown, doing dubious work that largely need not be done or that can be automated with a bit of effort. Am I way off here? For me, it's not just real estate that's gone mad, it's the world economy that enables this crazy existence of cities that produce nothing and yet millions of people live in them.
  • frongpik 6y ago
    It offers the rich from China and other countries a safe place to park their money. Office workers are just decorations to make this place look legit.
    • alexashka 6y ago
      That's been my impression as well, but it feels like a terribly inefficient setup. It's almost like trying to write software with every member of the team spending 9/10 of their time jockeying for power, with the product being an afterthought no one gives much credence to. That's what living has felt like thus far - people are completely engulfed in making sure they get theirs (work at FAANG on these forums), followed by making sure their kids get theirs. At some point, there's got to be someone who says hey, you know this rat race is human made and we can totally try something else right?
• bawolff 6y ago
  Live in canada. Have stem degree. I might not be raking in that sweet fb in silicon valley level of cash, but i certainly make more than 40k
• rayhendricks 6y ago
  These same kids can come to the United States and get paid decently with a currency that is 25% more valuable and generally lower taxes (also look at Chicago vs Toronto condo prices...), that is how a government creates a brain drain of young professionals.