Debut Episode of The Mortgage and Real Estate Show
This morning I had my first Live broadcast for the Mortgage and Real Estate Show for my good friends at Royal Lepage Foothills Real Estate here in Calgary.
Today’s topics include a discussion around all this negative talk on the blogosphere, particularly led by the likes of Garth Turner about an impending housing shock, when people buying homes today have to renew their mortgages in five years time, you will be shocked at the results.
As well we have a discussion about the effect the recovery will have on Calgary Real Estate and the Calgary mortgage market.
June 24th, 2009 at 9:16 pm
[...] how about this guy? He’s just some mortgage broker with a webcam in Calgary, but he scares me nonetheless. He is so [...]
Garth…is this you? Wow, thanks for all the fun I had today sifting through people who have nothing better to do then take cheap shots. Did you actually watch the whole video? Don’t think so? I actually have been a regular reader to your blog and you have inspired me to come up with strategies and service plans to ensure our clients who are deciding to head into this uncertain market to do it with people like us who will have a plan to protect them long term?
Your job is to tell people NOT to buy, even though weirdly enough you have bought a lot of real estate lately, and my job is to help those who want to buy to do it smartly, and to have protection.
Next time you are in Calgary, I think it would be serious fun for you to be a guest on my show. Let me know, point-counterpoint. I’m not kidding.
- Greg
June 24th, 2009 at 9:33 pm
I think what you are missing is that most poeple are not getting pay increases and a lot of poeple are facing pay cuts.
Please post your reference to this blanket statement? Not withstanding the current recession, Income ALWAYS goes up check Stats Canada or any number of resources on the web, ask your parents if you make more then they do after the recessions past?
- Greg
June 24th, 2009 at 9:44 pm
Shit, this is SO low budget. 99cent vhs porn has a higher budget than this rubbish.
LOL, I hope it is, but sadly I will have to take your word for it you as you seem to be an expert in 99 cent VHS porn…hilarious.
June 24th, 2009 at 9:57 pm
I believe Garth Turner. I am sure you will though have some silly, misinformed followers.
Have you seen some of the followers Garth Has? Even he thinks many of them are crazy wing nuts who believe the world is about to end.
I hope you are wrong, my loyal followers see me as a Mortgage Broker who is trying to inform the public to be prepared if you are going to buy. Not sure it is useful or my job to tell people not to buy a home. But we do help people make solid financial choices and service their debt long term if they are going to get into it.
- Greg
June 24th, 2009 at 10:19 pm
Nice post but I’d love to know how your math is working with respect to the increase in payments for a “$450,000 house” if rates should double from 4.4% to 8.8% at renewal time. You say $617 a month? According to my math, if the buyer put 25% down and financed the balance over 35 years their payment would increase nearly $1,000. Of course, 25% down payments are fairly rare, aren’t they?
I’m curious if you could comment on what percentage of your clients are buying homes which take them to, or close to their maximum allowable TDS ratio.
Thanks.
I will post the Math soon, but as a hint, that SURPRISINGLY every commenter didn’t consider, is that mortgages have principal repayment throughout the term? Therefore comparing what the payment difference would be using the starting mortgage amount is a mistake. check back tomorrow for the correct math.
As to your question, sadly many young people are in fact surprisingly coming in with purchase contracts that are maxing out their GDS and TDS ratios. even up to 35 years. I honestly thought more people would have learned from the lessons of those who bought in the tail end of the last boom. At our office we employ our “Inflation hedge mortgage strategy” to help those people cushion their impending payment shock.
- Greg
June 24th, 2009 at 11:04 pm
You mention rates will only be 200 bps higher max in 5 years… Are you willing to put that in writing and pay out me out any extra amount beyond that to make me whole? I thought not… Stop the hype… People like Garth Turner are the only ones coaching people to be responsible… Shills such as yourself are just trying to line your own pockets while you can…
June 24th, 2009 at 11:30 pm
fing liar freak
Once again, not sure where the lie is? I will post the math soon.
- Greg
June 24th, 2009 at 11:32 pm
Thinktom in BC has been doing this for quite some time.
June 24th, 2009 at 11:36 pm
how can you freaking lie that much and live with yourself man..how?
Opinions are different then lies. I will post the math on my statements in the video soon. Stay tuned
- Greg
June 24th, 2009 at 11:53 pm
You’re kidding right? I live in Calgary and I all I have to say is that I hope you’ve got cash.
Going to The Ship for a pint because I’m not house poor and over-leveraged.
June 25th, 2009 at 5:20 am
Many intelligent scholars forecast the crisis we are now facing…..your name was not one of them, Garth Turner’s was.
Actually many of the things Garth has predicted have not happened if you have been a long reader of his blog. For the record I think Garth is very intelligent, I don’t agree with most of his commentary but nonetheless I respect both his right to his opinion and the freedom for him to express it.
I wish he would be slightly more transparent however given his strong views. He tells everyone not to buy real estate but then he has bought many properties lately with all the money he got from selling books to anxiety riddled people who think the world is ending. Let’s see the details of these transactions and justify why he is not a “Greater Fool”?
Send me the link to your blog so I can see your viewpoints on the market.
- Greg
June 25th, 2009 at 6:13 am
Great Show.! Great Analysis
Too bad you are such a scheister. Why are you encourging people to get into debt and ruin there lives.
I think you are a slimy piece of shit. Enjoy your bags of cash.
Make sure youre coffin is big enough to take it with you.
Jim Tuba
You are amazing. Did you actually watch the entire video? Probably not. The irony of your wrath is that I am not encouraging people to go into debt, I don’t have to people are prepared to that on their own. I in fact implore all our customers to ensure they are well prepared if they are going to embark on this road. We ensure people ca afford the homes they are contemplating and if they are maxed out then we wrk them ongoing to ensure that they stay ahead of changes in the market and for certain ensure they do not run into a major payment shock in the future. Watch the video again and try to pay attention longer, you will see it.
- Greg
June 25th, 2009 at 6:33 am
You are so full of shit with this crap. What do you have to back up your market projection. You are living in a dream world trying to convince hard working people to piss away their money on a losing asset. The gravy train has left the station. The days of never ending rising house prices are gone. Stop bull shitting people to make a few more bucks.
I Will post the math behind my statements. Please keep your comments clean, and preferably a little more constructive to the importance of this ongoing conversation, or just go somewhere else. Thanks
- Greg
June 25th, 2009 at 6:33 am
Anybody talking up Canadian RE is either a liar or a dellusional nitwit..this is the same propaganda that was being spewed in the US..even back in 07, how things have turned..Canada is no different, it will come around..make sure you stack up on KD and water as the tsunami is coming..believe it.
June 25th, 2009 at 7:21 am
Upto 200 basis points after 5 years ?!?!
You don’t really explain in your analysis why it only be 200 bps. Expecting versus the global majority point of view.
This leads me to believe that your education is only a slice of the core problem. You don’t look at the situation from a macro pt of view. This is a flaw in your analysis. You can fool those that aren’t educated and misinform others…which is a dangerous play on your end.
In anycase, you implore others to buy houses now in the face of high unemployment rates. Yes, taking advantage of low rates does seem the way to go…but What is a couple going to do when they lose their jobs? How are they going to pay for their mortgage even if rates were to drop further.
R
I, as anyone (including you) can not accurately predict future interest rates. I believe based on research and following a couple economists religiously (Benjamin Tal from CIBC) that long term interest rates will be in the 6.50% range in five years. More importantly as I said in my video we believe that we need to ensure people are aware of that and that they are prepared. That is why we use our inflation hedge mortgage strategy to help people NOT have a payment shock that they can not handle.
As to me imploring people to buy houses I don’t think that is true, I am simply hoping that those who are going to buy houses to be careful, make sure you can afford the home you are going for, and work with a mortgage broker who will protect you by working with you on a ongoing basis?
Unemployment is a lagging indicator and in my market (Calgary) we still lead the country in employment participation. I honestly believe that in pockets of the country, ie Calgary unemployment will begin to level off. If people are genuinely concerned about losing their job they are likely not in the market anyways?
Finally, for those that unfortunately lose their job unexpectedly how could I or anyone possibly counsel them years before that event happens? Other then to tell them to not do anything and live in fear everyday that you MIGHT lose your job someday?
- Greg
June 25th, 2009 at 7:46 am
i want to have a sip of what you are drinking.
Always a No Room Americano you buying?
- Greg
June 25th, 2009 at 8:45 am
Greg,
You are not speaking the truth.
If you believe what you say, you are dumb, dumb, dumb…
Just know you are hurting a lot of people and you will turn out to be oh so wrong.
“Mortgage broker of the year?” You have got to be kidding me..all that means is that you do anything: lie, con etc. to get as many clients as possible-not admirable and respectable at all actually. Nice picture, very funny!
Just because you don’t agree with someone why do you say “You are not telling the truth” Before you make blanket statements about people you don’t know do some research. I will post the Math behind statements later, stay tuned.
In the meantime send me the link to your blog where I can learn your insights on the market instead of your cheap shots from a person who doesn’t even have the courage to rebut intelligently. Nice.
- Greg
June 25th, 2009 at 8:49 am
Greg, what you are doing is as misleading as Garth is (he has to sell books right?). He is to one extreme and you are on the other. Its common sense that interest rates will double because they are so low right now. When that happens, we better hope the employment numbers are better than they are now. There is going to be a steady drop when money is no longer so cheap. You must admit that?
BTW, I build custom homes (1-2 per year) and plan to build and sell before next June. This market is good until the BOC raises the rates.
I am not sure why my commentary is one extreme, in fact I think this and many comments are ironic. I actually said in many previous posts (I hope you read them?) and believe that buyers should be most careful entering this market and in fact our standard procedure, as also mentioned in the video, that we qualify our buyers as if rates are what we believe they may be in 5 years, and set their payments at this rate. Sadly, some of our clients can not or will not do that, so as an alternative we will on each of their subsequent annual reviews, (yes we do these, banks often don’t) we ensure that they increase their payments incrementally every year so that in 5 years when their mortgage renews they are prepared.
As for the math behind my statements I will post this evening my calculations.
- Greg
June 25th, 2009 at 5:41 pm
You,sir, are perfect example why a lot of RE agents have a smelly reputation.
Get the commish however and wherever, eh?
Actually no. sadly, you do not know my business model, but suffice to say you don’t reach the success that we have as a team by looking after your own interest. Send me the link to your blog so I could research your views?
- Greg
June 25th, 2009 at 8:09 pm
Hi Greg,
I have a few issues with what you said in the video.
1. If payments on a house go up 7000 a year after the first amortization is up (I think this is very much a possibility), you honestly believe the average income will have risen by that much? The average income in Vancouver is 42K a year. Even with a couple both earning that much their incomes would have to rise 8.3%. And that means everyone income. If the average income rose 8.3% in 5 years, surely there will be people whose rise more and peoples who rise less. The people who have their income rise slower will be in trouble when they are up for renewal. Even if incomes do rise that much (I doubt it, most people are taking pay cuts or getting laid off right now) everything else that they buy (food, gas) would have to stay at the same price in order for them to afford the payment increase.
2. Inflation: I am not entirely convinced that we will see this hyper-inflation everyone is talking about. I can understand why people think this, but i have also read very interesting arguments for the deflation case. Basically it says that all the money being injected into the economy is simply filling massive holes of debt left over from the housing bust in America. In fact the lack of spending from major institutions is actually greater than the amount of money being injected into the economy. I am not convinced one way or the other quite yet. If you are saying that there will be large inflation in the next few years, then as you said, rates will go up. I dont know how you are assuming 6.5% interest rates in 5 years, but that seems very low to me if you are also expecting very strong inflation. I know that the 18% interest rates in the early 80s were an anomaly and short lived, but it did happen. 10-15% interest rates are not out of the question and if that does happen (it could, I am not saying it will) there will be huge amounts of homes going into foreclosure.
I never said that i expect large inflation, I said there WILL be inflation. For the record I think it will be slightly higher then the Bank of Canada bench mark of around 2%. Your comment of 10-15% rates will cause foreclosure is obvious. This would be a very bad situation, but also unexpected.
3. A huge point you don’t mention is the housing crisis in the states. We do not have the same mortgage problem as them, but our house price to income ratio is still leaps and bounds above theirs (especially in vancouver, where i live), and their prices are still falling in most regions. What makes canadian real estate so special compared to american? How is the average $700K home affordable to the average person living in vancouver?
The housing crisis in the US was not relevant to this post or video. Different factors were in play, other then to say many people are suggesting the higher then expected surge in Real Estate lately may cause a US style crash because when people renew their payments will be unaffordable. I was simply pointing out that one, if that happens people should be prepared. Set your payments higher now, or over time.
Basically I think you see what you want to see because you work in real estate. Also you dont help your job by telling people prices will fall for the next 3 years. Then again I am hoping prices go down because I hope to buy my first home within the next few years, but I will not be doing so at todays inflated prices.
I see what I believe but after all it is just my opinion, you have yours I have mine. People decide who they agree with, simple really. BTW I don’t recall saying prices will fall for three years, when quoting me please be accurate.
- Greg
June 25th, 2009 at 8:10 pm
I think the fact that you actually think incomes always go up over time indicates how little value your advice has.
In real purchase value, incomes have stagnated and even decreased over the last 20 years (stagnation between the 70s and 80s, increased briefly in the 90s, and back to a downward trend since 2002). If I ask my parents, they’ll say I make 10 times what they did.
Except they could afford a house in Calgary on a single paycheque without relying on a colossal down payment to spare them from being house poor, while also enjoying a middle class lifestyle. To live the life they had in the 60s, I’d need to make 4x as much as I make now, which would put me squarely at the half million mark in income.
June 25th, 2009 at 10:15 pm
Do people’s incomes always go up if their high paying jobs are outsourced to China or India and they can’t find a job anymore?
Maybe you’re the one who needs to check out the facts before making blanket statements. And maybe you need to get an education on what is really going on in the world today.
I didn’t realize the facts are that everyone’s job is being outsourced to India and China. What will we all do? I guess move to India or China to get a job?
- Greg
June 25th, 2009 at 11:38 pm
Hi Greg,
Congrats on getting Garth Turners attention, I think it is positive that Garth is bringing attention to an alternative view, and obviously that someone with an alternative view is willing to take him on. I personally have commented on a couple of his blogs only to be blocked due to making logical arguments that were against his beliefs (I did in fact back these up with numbers which is why I believe he deleted them).
I have read several of Garth’s books and he does make many valid common sense points. It is clear that in an economy where jobs are being lost, that incomes will not rise. This is basic common sense, all long term income stats aside. Remember, there are fluctuations in long term data and there have been 5 year periods where income has in fact stayed steady or even decreased drastically. Take for example the average combined family household income from 1982 to 1987, which dropped from $66,800 to $59,200 in 2007 dollars. In fact, for each five year period starting the four years prior, you would have ended up with a lower average income at the end of the five year period, disproving your theory that incomes always rise and will inherently do so over the next five years. Incomes could stay stagnant in much the same way for the next five years, not rising as predicted. (This data is for Alberta and was pulled from raw statistics Canada data, which any
economics student or economist knows how to find).
It is apparent that Turner is somewhat of a fear monger in his delivery. However, having a voice like Turner’s to bring balance is a good thing, and who knows he may just be right. Just look at Peter Schiff who took a beating for going against the grain and ended up being spot on (you can find video clips of the beetings he took on youtube).
Unfortunately, all of our crystal balls remain fuzzy at the best of times, and making predictions on either side of the debate is gutsy. I envy you for having the guts to put yourself out there like you have. (On that note I do understand your views, and his as well).
I am curious however, where the 200 basis point interest rate increase comment came from. In a prior comment you attributed it to Benjamin Tal, but obviously you have other data on this which I think many of us would like to see posted. Having sat through the same seminar sponsored by Firstline that Tal presented at, and that you have definitely been quoting from almost in its entirety, including your comments about the money multiplier, I have a hard time remembering Tal commit to any specific increases in rates. He did say several times that rates would certainly rise, however he was very careful not to give a number when prompted several times. He did use a rate of 6.5% in an example, but again was adamant that it was not a prediction but an example. (I took notes on this and starred and noted next to the 6.5% ‘example not prediction’, as he made this clear).
Anyways, I guess that was just a long winded way of requesting to see the interest rate rise prediction data posted for all of our benefit (unless of course it was hypothetical, but you definitely make it sound as though you have data to back it up, “I believe based on research and following a couple economists religiously (Benjamin Tal from CIBC) that long term interest rates will be in the 6.50% range in five years.”)
I do agree with much of what you have to say with respect to your strategy, but I do believe you may have opened yourself up to the attacks that have been made.
Kind regards,
Nolan Matthias
Nolan, thanks for your support, as to the income comment your point is well taken. I meant to emphasize that buyers should be aware of a potential payment shock and prepare for it, but may have been too cavalier on my opinion with respect to incomes always rising. Thanks for calling me on that.
As to my opinion on 200 basis points it was taken from Benjamin Tal’s latest presentation in Calgary where I heard him say his opinion of 150 to 200 basis points. Ultimately all of us have only opinions when it comes to future interest rates, but Mr. Tal has been very accurate in the past and I like the way he backs up his opinions in laymans terms.
- Greg
June 25th, 2009 at 11:58 pm
Also note the comment I left on Garth’s blog here. It appears he is no longer blocking me, on this particular blog at least.
“Hi Garth,
Just wanted to post the comment I left for Greg Williamson in response to his video blog which you posted a response to here. Knowing Greg’s reputation and professionalism, I do not believe that he in any way was trying to be misleading, and that you took a shot at him as opposed to having a logical discussion. The more professional thing to do would have been to debate respectfully and let individuals make up their minds on their own, however that does not sell books does it? You must remember that Greg has a business to run, he sells mortgages, just like you sell books. There is no way to tell which of you will be right, but you both have the right to give your advice. Ultimately I believe both of will be wrong in the majority of your predictions, but only time will tell. In the mean time I think you should both keep your comments respectful.
Kind Regards,
Nolan Matthias”
June 26th, 2009 at 4:54 pm
http://cuer.sauder.ubc.ca/cma/data/ResidentialRealEstate/HousingPrices/housing-pri-calgary.pdf
Check the link if you’re looking to buy in Calgary. This is the chart that no one wants you to see….
I have seen this as part of the full report and as I recall they were using really old data? Even this chart shows the house prices falling in 2008 we already knew that? The house prices in Metro Calgary are actually rising in the past 60 days, largely driven by increased demand from first time home buyers and significantly low inventories.
- Greg
June 26th, 2009 at 5:25 pm
Hi Greg,
I’ve heard the crap things a number of people have said, and I’m disgusted with the absurd comments (and I’m sure emails) you’ve had to put up with.
I think you’re doing a great job, being very tolerant and you’re not off base in your assessments. Garth Turner is just out there trying to sell his book, and he’s scoring points at your expense.
One ray of light; you’re getting a lot of links off this, which will help your site rank higher in the future!
Cheers, and keep on doing what you’re doing.
Chris
Thanks for taking the time to share your support. I plan to keep going, I am passionate about ensuring both customers, and my colleagues who serve them, have a forum to share ideas on how we can best serve people who are committed to embarking into this uncertain market
- Greg
June 26th, 2009 at 7:39 pm
What do Realtors and Politicians have in common?
…They both provide intangible solice for those who require it.
…Lets see what you accomplish Greg…good luck.
Garth is a hype…his blog is Real Estate but he inserts blogs on Politics…his politics.
…Garth also inserts half written emails from average Joe’s, then expects his “blog pack” to sycophant themselves all the way up his rear end.
He also doesn’t understand the difference between a “Refugee” post POV with an “Immigration” post POV.
…He’s stuck with a “Centre of the Earth” mindframe.
There are many things he writes that are germane but overall they don’t balance his own “gestalt”.
…Hopefully your counterpoint will help Canadians in these difficult times.
ftr…I believe it is time for Canada to split into two…right down the Manitoba/Ontario borders.
…I have more views if anyone is interested.
N jr.
June 26th, 2009 at 7:51 pm
Some of these comments are truly awful. You should be ashamed of yourselves. Try adding a does of reality to your comments and act like an adult. There are real people on the other end of the computer screen.
While I don’t agree with everything that has been said in the video. No one can predict the future.
June 26th, 2009 at 8:02 pm
Holy shit Greg!
If you could get half of these fucking lunatics 25% as mad about crime, poverty, or something else important you could single handedly fix most of the worlds problems. That won’t happen of course because that would actually benefit someone else and these selfish pricks don’t care about anyone but themselves. Why do that when you can just kick the shit out of people who want to buy a house, and anyone else willing to help them with that? I mean, that is just so evil. I love how not a single one of these wack jobs was willing to leave their name. Oh, except for Tony Hunt, the $.99 porn specialist. Funny stuff.
What a pathetic display of ignorance!
“Its common sense that interest rates will double because they are so low right now.”
Where did this fucking fool get his common sense?
“I believe Garth Turner. I am sure you will though have some silly, misinformed followers.”
Oh, wow! That’s really deep!
“Are you willing to put that in writing and pay out me out any extra amount beyond that to make me whole?”
I know you are but what am I. Jesus Christ, you’re a stupid prick.
“I think you are a slimy piece of shit. Enjoy your bags of cash.
Make sure youre coffin is big enough to take it with you.”
Jim, blow your tuba out your fuckin’ ass. You’re an idiot and you’ve got a brown spot on your nose from sniffin Garth’s pooper. The only difference between you and Garth is that you’re about as dense as a bag of shit.
I love this one the most, “BTW, I build custom homes (1-2 per year) and plan to build and sell before next June.”
It’s okay for me to quickly build and dupe some poor prick, but Greg, you’re misleading! A tip for you househunter. You might want to consider an agent because you’re obviously pretty fucking stupid.
Greg, do the world a favour and clean this shit up will ya? There’s nothing noble about letting idiots run loose in your web space.
Howard my wife and I had a good chuckle thanks. As for cleaning up my blog, you should have seen some of the comments I couldn’t let through LOL. Anyway I believe that blogs are there to engage in useful commentary. Even though we may not all agree we should get a voice, whether it is my blog or any other. I don’t delete comments where people disagree as long as they are respectful (I know some of the ones I let through were borderline) and if someone proves me wrong I have to show that to maintain the integrity of the ongoing conversation, which I might respectfully add I have seen from comments from others that Garth doesn’t take that position on his blog, I guess because he feels he couldn’t let down his people by admitting he may be wrong sometimes?
- Greg
June 27th, 2009 at 4:39 am
“I will post the Math soon, but as a hint, that SURPRISINGLY every commenter didn’t consider, is that mortgages have principal repayment throughout the term”
Greg, it’s great getting different point of views. I can appreciate the effort you’re putting into this video blog.
Now with the above statement about principle… Here’s what I get (if we started today) with a $450k @ 4.4% and generously at 35 years: payments = $2,101.87
Year Interest Paid Principle Paid Remaining
2010 $23,053.46 $2,169.01 $857,564.05
2011 $22,987.57 $2,234.90 $832,341.57
2012 $22,917.55 $2,304.93 $807,119.10
2013 $22,842.99 $2,379.48 $781,896.63
2014 $22,763.46 $2,459.02 $756,674.16
Total principle paid = $14,091.39
Take that off the $450,000 = $435,909 left.
Refinanced at 8.8% after those 5 years, I show payments = $3,444.88 at 30 years. Am I working this out wrong?
I await your SURPRISING math!
I am not sure I am following your calculations, as the amounts remaining seem wrong? Anyway use a mortgage calculator from any number of sites and you can plug in the numbers above (remember to take the down payment and add the CMHC insurance to get your starting amount) and then ask to see an amortization table and you will see the amounts owing after every year. Here is a link to one I have used before.
https://www.rbcroyalbank.com/cgi-bin/mortgage/mpc/start.cgi
- Greg
June 27th, 2009 at 11:08 am
I think this is an interesting post, with some valid retorts. It is my opinion that real estate is a good buy. That now is a good time to buy real estate in Calgary, Vancouver or Edmonton. Not a great time, not the end all be all, pricing will never fall again time, but a good time none the less. However, with certain conditions, as is always the case.
First, do not overextend yourself. If you can reasonably afford a $400k mortgage then do not go looking at homes in the $450 neighborhood. In fact if you can control yourself buy the ugliest house on the block in a good neighborhood for $350.
Second expect higher payments (interest rates will double – or more) and make sure you can afford them without expecting a $7,000 pay increase, which is highly unlikely.
And Third, in the real world, not the 2006 world, real estate is a long term investment. If you are expecting to buy and sell in a year and make hundreds of thousands in profit your better off at the craps table in Vegas. This is not a black and white issue. In reality it is 12 shades of grey. You can make money, you can lose money and you can skew the statistics in a thousand different ways to have it show what you want.
Chris
June 28th, 2009 at 10:18 am
” I didn’t realize the facts are that everyone’s job is being outsourced to India and China. What will we all do? I guess move to India or China to get a job?
- Greg”
——————————————————-
No… we can all become realtors or mortgage brokers.
June 28th, 2009 at 10:38 pm
Hey Greg
Great Blog! Very interesting to read the passion and thoughts of the various bloggers on here. Though each person believes their view on real estate / the economy / jobs / inflation etc etc to be correct, one must realise that no matter how one tries, someone’s own personal belief is always biased. People who rant and scream that others are stupid or misleading are only doing so because they can’t stand back and see both sides of an argument.
Keep up the good work and report what you believe in and let others make up their own minds on whether its valid or not
totally encompasses my beliefs and passion about this blog, thank-you
- Greg
June 29th, 2009 at 10:54 am
Hello everyone,
As a Mortgage Agent who works on Greg’s team I can tell you with great care he analyzes and focuses on all view points. His opinions are backed with many years of experience and with proven results. I joined his team because of the great views and his focused and professional approach to our industry.
Many of the people on this blog making obscene or inflammatory comments are likely the same people who were breathing down their bankers or brokers throats wondering where their approval is and why they couldn’t get approved for more or at a lower rate.
We teach responsible lending and offer not only assistance on the lending side but partner with great financial planning, insurance and other industry partners to protect not only your home but your financial future.
Garth doesn’t live in the real world and if your not careful you could be renting one of the houses he owns and lining his pocket.
Garth can you tell me what the average increase in home values have been in the last 10, 15 and 20 years? The point is responsible decisions on what you can afford in a home will reap rewards for you. What is this crazy example of a lady with $800000.00 sitting around? I have seen hundreds of clients Net worths and I would say around the 1 or 2% of the population has that sitting around to invest or sitting in equity. What a terrible example and not reflective of the true situation Canadians are in.
Take responsibility for your own destiny, make informed decisions and don’t throw all your collective decisions into one man’s opinion. Yes Garth Turner is very educated and experienced and his opinions hold valid points but he is in the business of selling books and apparently people with negative view points are biting hook, line and sinker.
We are in the trenches everyday and we see exactly who has made money and have live, real stories and data on success following sound financial strategy in real estate.
If you are planning to buy and flip you are dreaming, if you plan to make a good economical decision to buy and follow good financial strategies you will see rewards.
Negatives of renting I did not see discussed.
1) What security do you have against the owner selling and sending you packing?
2) Do you personally know the landlord? perhaps any repairs or items wrong with the property are not looked after. I only say this because I have had many clients with this complaint on rising rent costs and problems with their landlord. Don’t think rentals are the perfect living conditions for you. There are pitfalls.
3) You likely will not get all your damage deposit back. Another amount of money you can throw in your calculation for money going down the drain.
4)Unless you have a large amount of money earning you interest for investments then how is your money working for you. You are paying the same for rent as a mortgage don’t kid yourself about that, I hear it everyday from real live clients. At least there are some forced savings with a home as you paying down principal. Rent goes directly into paying down someone else’s principal or lining their pockets if they own the property at low borrowing amounts or free and clear. Talk to people who have owned property for a good length of time. They are covering all their expenditures on rent roll alone. The money they make they are investing and making more.
5) Your availability decreases on the property you can rent because of landlord guidelines. No pets, no smoking, and restricted use of property. If you think your neighbors don’t know you are a renter think again. Try and have a backyard party or gathering and see how fast the complaints come in. No one wants renters around and will find any excuse to get them in trouble. I have seen it on my own street and other stories from friends and family. Their is a stigma.
6) If you can invest while renting and paying your same monthly bills or close then you can certainly invest while owning. Pay yourself first and you should be able to do that if you don’t extend yourself and make a good informed decision up front. Your rent amount is only set for a certain time, your landlord can give notice and increase that as cost goes up for them. YOu can either suck it up or put a deposit on a new place and start the process all over again.
Anyway I hope all viewers of the BLOG can step outside their comfort zone and just listen and think about what is being said. These are opinions and it is a learning forum and perhaps you can learn something from listening to other viewpoints.
Regards,
Jason Dodd
June 29th, 2009 at 3:23 pm
Just to correct the math on your June 27th post from Juneberg. this is mortgage software calculations using a mortgage based system recognized by lenders across the country.
Mortgage Amount: $ 450,000.00 Payments Displayed: 1 – 60
Interest Rate: 4.400% Payment Frequency: Monthly
Initial Amortization Period: 35 Year(s), 0 Month(s) Initial Payment: $ 2,090.86
——————————————————————————–
Period Total Paid Interest Principal Balance
Year 1 1 – 12 $ 25,090.32 $ 19,510.27 $ 5,580.05 $ 444,419.95
Year 2 13 – 24 $ 25,090.32 $ 19,262.03 $ 5,828.29 $ 438,591.66
Year 3 25 – 36 $ 25,090.32 $ 19,002.76 $ 6,087.56 $ 432,504.10
Year 4 37 – 48 $ 25,090.32 $ 18,731.96 $ 6,358.36 $ 426,145.74
Year 5 49 – 60 $ 25,090.32 $ 18,449.13 $ 6,641.19 $ 419,504.55
Totals: $ 125,451.60 $ 94,956.15 $ 30,495.45
although it doesnt come out as clear as on my system the payment is actually $2090.86
Interest paid down is actually $30495.00 by year 5 and not $14091.39 as described.
ending balance at year 5 would be $419504.55 and not $435909.00
At 30 years remaing and 419504.55 remaining at new term with interest rate at 8.8% your payment would be $3268.20/monthly
Additionally in the first 5 years if you put $100.00 a month extra on your payments at 4.4%(the minimum with almost every lender for prepayment privileges) you would shorten your amortization by 2.6 years which would obviously save you thousands of dollars in interest. Not to mention if you took our advice and priced your mortgage at 5.5% levels which would increase your mortgage payment by $300.00/monthly you would erase 6.7 years of your amortization. Your 5 year balance would be at or near the $400000.00 level and your payment would be subsequently lower at that time. This considering a POSSIBLE worst case scenario of 8.8%. although the last 15 years have not indicated our rates be at that level.
June 30th, 2009 at 8:37 am
Hi, I am fan of no one in particular and not likely to take sides here. Am on the lookout for a house and has a degree in Economics and Finance.
Are you willing to provide your guarantee in writing that when I purchase a house I will not lose any money. If you are so so sure about that, then I propose you do it.
If you can’t do it, then stop doing cheap politics and admit that you are in this as a salesman who does what they do best…SELL and use cheap tricks to do so
My position as any blogger has is to tell you my opinion, and defend it. It is your job as the reader to decide who you connect with. For what it’s worth, if you are buying a house, then just make sure you put as much thought and effort in choosing your mortgage planner and their corresponding strategy for you as you would if you were choosing someone to manage an investment of the same amount.
For instance if you were getting a $400,000 mortgage, ask yourself, how would I think and act if I was INVESTING $400,000. put that same pasion and expectation into the person managing your debt as well. Thanks for your comment
- Greg
June 30th, 2009 at 6:37 pm
I enjoy Garth’s blog, but I have noticed he doesn’t tell us how to make the profits he’s making as he closes on yet another property. I am of the same belief that RE is in for a big crash, but people, including Garth, are making on it while I am not. Reminds me of what I said 4 years ago when I saw a 23 year old unskilled rig worker, buy a $500,000.00 home. “what does he know that I don’t”. It was foreclosed on this year.
July 1st, 2009 at 1:44 am
Hi Greg,
I appreciate what your doing and agree with much of what you are teaching. I look forward to how your project unfolds. I also find much, not all of what Garth is writing valuable as well.
My comment however is to the many negative comments that are on this blog. It’s one thing to disagree with Greg but disagree with an educated opinion. Greg has clearly stated he willing to explain himself and has done a great job so far, have some respect with your comments for those who are emotionally charged rather than logically disagreeing.
This site is a tool for coaching and educating. On that note keep up the good work Greg!
Thanks for your support, glad you enjoy the site
Greg
July 2nd, 2009 at 6:44 pm
Hi Greg,
I actually found your blog through Garth’s, and wanted to say that I do see you trying to paint a balanced picture here. (Especially considering your business relies on people buying houses!) Your focus on affordability and thinking of the future is exactly what the industry should be striving toward.
And I agree that Garth comes off as far more polarized than you, although even he has stated that it’s impossible to say that buying real estate is a bad idea for *everyone*. (As you say, he’s bought some himself lately.)
Anyway, regardless of the (ridiculously) abusive comments, you should really thank him. I’m sure he steered a number of other people here who likewise appreciate your analysis.
Of course, none of that is to say I agree with all of your opinions. Particularly I think the talk about Calgary being unique is perhaps a bit naive – every region seems to believe that, just for different reasons, be they Olympics, ocean, immigration, size, isolation, etc.. Also about incomes rising in the near future, for reasons mentioned by other commenters. But as you say, that is the nature of opinions, and I appreciate that you are trying to present the full picture as you see it.
July 2nd, 2009 at 6:54 pm
Oh, I should also say that I strongly disagree with Jason Dodd’s rather extremist views of renting. In particular:
“If you think your neighbors don’t know you are a renter think again. Try and have a backyard party or gathering and see how fast the complaints come in. No one wants renters around and will find any excuse to get them in trouble. I have seen it on my own street and other stories from friends and family. Their is a stigma.”
Sounds like a neighbourhood I wouldn’t want to live in, as a renter or an owner! No one I know – or care to – judges people based on whether they rent or own the place that they live in.
Sometimes owning makes sense based on your personal situation, expectations of the future, and comparison of the costs of ownership vs the costs of renting, and sometimes it doesn’t. Saying either option is always better just doesn’t make sense; nor does the following statement:
“You are paying the same for rent as a mortgage don’t kid yourself about that”
Well, that would depend entirely on what you pay in rent vs what the sale price of the home was, interest rates, property taxes, etc. It is this balance that determines the long-term relationship between housing prices and rental rates. When the short-term prices or rates deviate from the mean, one or the other may be more attractive.
July 7th, 2009 at 12:22 pm
I agree Nathan that my comment about renters might have been a little extreme, it was fueled by the disrespect I had seen on the BLOG from previous responses. I think you do have to calculate where your community is in respect to rent. If you are looking at any strong communities with nice homes, schools and ammenities you could be looking in the $2000.00 monthly range(Calgary) not including utilities, phone and any other items not included in rent.
My intent here is to bring up another side that was not discussed in regards to negatives of renting since many bloggers were singing praises of Garth’s advice on renting.
REnting is a necessary and good strategy for some people but for those who can afford their mortgage and handle the always eventual ups and downs of markets should seriously consider buying.
Thanks for your response and for keeping me in check.
Regards,
Jason Dodd
July 7th, 2009 at 3:43 pm
No problem Jason. Thanks for the reply.
October 25th, 2009 at 5:07 pm
My first house in Calgary was purchased from the original owner. He purchased that home in 1981 for 98000$. I purchased it in 1997 for 130000$ tax assessed @127k. He built a garage and developed 2 of the 4 levels of the house.That same house in 1985/86 would have sold for no more than 70k.Today that same house tax assessment is 330k.
I think people that purchased recently will face the same situation.
We may not see a crash but years of no price gains at best.
I personally don’t think rates can go up but at the same time I will lock in mine for 5 years as soon as it comes due.
I sold property in Calgary in July 07 and have been looking to get back into the market. I think I will wait a few years to see whats gouing to happen. Right now Arizona is looking pretty tempting to me.
Just my 2 cents