Sex & Real Estate

November 8th, 2010 · 2 Comments · Weird Landlord News

The bulls and the bears are fighting again… I made my prediction of a 10% drop in real estate prices in Toronto a while back. I’m also predicting rents will increase slowly over time as more tenants stay tenants for longer as they save to buy a house. Investors also have to put more money down and will have a very difficult time buying multiple properties.

So where’s the fight?

Well Vancouver Real Estate Anecdote Archive does an awfully good job of documenting the foolishness in Vancouver’s real estate market. It’s stupid things that people think and do with real estate. It’s mostly about homeowners and speculators. I do my own bit to fight the madness on this blog with posts such as Your Personal Residence is an Expense.

So Vancouver Real Estate Anecdote Archive did a Transcript of an interview with Don Campbell at BNN with 15 disagreements about what he said.

Here’s the Sex

Then Chris Davies did a post – Bubble Blogging = Masturbation. Unfortunately he’s comparing apples to oranges. There’s a big difference between buying a million dollar personal residence and buying income properties. It’s interesting to note however that REIN has recently changed its direction by encouraging its members into the multi-residential market. It’s absolutely no wonder either, once you hit that $1,000,000 threshold the price per unit is much more reasonable.

VREAA Fights Back

They tell Chris Davies to attack the argument not the person/blog and even immortalizes Chris Davies in their Hall of Bull. Their post is titled – Chris Davies, REIN member, Guys like Don and I don’t care if prices go up or down or sideways you can make money with real estate in any economy. Chris Davies is far from a neophyte real estate investor though, he’s a property manager, so he’s knows the rental market and had good contacts for contractors and so on.

Chris Davies picks on Garth Turner

Then Chris Davies calls Garth Turner, author, former MPP and Greater Fool Blogger the chief wanker. That’s just not nice. I like Garth’s writing and I’m going to HouseAggedon in a few days, to check it out. Going to a speech doesn’t necessarily mean that I agree with everything that person says, but rather that I want to hear their points and make up my own mind.

I Don’t Agree With Anyone

Garth Turner & Don Campbell & Chris Davies both have valid points about the real estate market and on other points they suffer from fullocrapitis. Quite frankly I’m nowhere nearly as optimistic as Dan or as pessimistic as Garth.

My belief is that, as usual, smart savvy investors will make out like bandits and the guys who buy Bre-X after consulting with friends at the water cooler will lose, lose and lose some more. Unfortunately a full 50% of investors are of below average skill. They’ll be slaughtered.

Neither Dan Campbell or Chris Davies will be part of the bloodshed. The mistake is in assuming that other people have the same skills they do and that’s just not true. Garth says folks should sell their houses and invest in the stock market, unfortunately the market eats these same people alive for breakfast. I don’t have a real answer either, except to say if you’re one of the people who seems to lose money when you something different!

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2 Comments so far ↓

  • Jordan

    Garth is a pessimist but it’s an oversimplification to say that he recommends selling your house and buying stocks instead.

    His point, as I understand it, is that we are at or near a peak in house prices in Canada, and that too many people have too much of their savings tied up in their homes. These people are destined to lose money as if house prices decline and many will lose their retirement savings. So he recommends that those with expensive homes but no other retirement savings cash in on their un-realised capital gains and use the proceeds to put together a more balanced portfolio of assets, including stocks.

    The corollary to this is that it doesn’t make sense to buy a home if you need to drain your retirement savings just to make a 5% down-payment, or are maxed out every month at “normal” interest rates.

    Garth gets distracted at times but I think his central message is pretty consistent.

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