Canadian Couple FIREs at 30, Comment Section Gets Flooded With Hate as Usual

[RonMcCord]

http://www.cbc.ca/news/business/kristy-shen-bryce-leung-1.3724450

[GuitarStv]

http://www.cbc.ca/news/business/kristy-shen-bryce-leung-1.3724450

I remember reading their story a while back on CBC.  They advised that buying a home in Toronto was a terrible idea.

It was interesting to me because I also live in Toronto, and just finished paying off my expensive home yesterday.  The value of our home has increased by 70% over the past five years, significantly outpacing the growth of my mutual funds.  We're planning to the house and using that equity to feed our retirement accounts in a couple years.

I honestly think that either approach can work well if you're motivated to save, and are disciplined.

[RetiredAt63]

The overall message is save, don't overspend.  Of course most people don't want to hear that.

And congratulations for being mortgage-free in the Toronto housing market.  That is a BIG DEAL!!!!!

[PizzaSteve]

After reading them, I conclude that the story comments were not as hate filled as the follow-up story implied.  A bit of whining that their income level made them an 'exception...impossible to recreate' or doubting them, or claims that 'it was too hard for the working poor to be frugal' or that the couple 'were self centered' people who should contribute more before indulging in the good life, but not really rising to the level of hate speech.

[nobodyspecial]

Featured on Garth Turner's blog http://www.greaterfool.ca/page/12/

Garth is worth reading - unless you are a Vancouver realtor - his message is that people are idiots who don't save enough and buy too much crap. And he doesn't mince words in telling people.

(The comments section is like Fox news when they forgot to take their medication) 

[thriftyc]

http://www.cbc.ca/news/business/kristy-shen-bryce-leung-1.3724450

I remember reading their story a while back on CBC.  They advised that buying a home in Toronto was a terrible idea.

It was interesting to me because I also live in Toronto, and just finished paying off my expensive home yesterday.  The value of our home has increased by 70% over the past five years, significantly outpacing the growth of my mutual funds.  We're planning to the house and using that equity to feed our retirement accounts in a couple years.

I honestly think that either approach can work well if you're motivated to save, and are disciplined.

I suggest selling your house now - the bubble could burst at any moment.  Already seeing signs in Calgary and Vancouver, beginnings of it in Toronto as well.

[GuitarStv]

http://www.cbc.ca/news/business/kristy-shen-bryce-leung-1.3724450

I remember reading their story a while back on CBC.  They advised that buying a home in Toronto was a terrible idea.

It was interesting to me because I also live in Toronto, and just finished paying off my expensive home yesterday.  The value of our home has increased by 70% over the past five years, significantly outpacing the growth of my mutual funds.  We're planning to the house and using that equity to feed our retirement accounts in a couple years.

I honestly think that either approach can work well if you're motivated to save, and are disciplined.

I suggest selling your house now - the bubble could burst at any moment.  Already seeing signs in Calgary and Vancouver, beginnings of it in Toronto as well.

Yeah, I've been hearing people say the same thing for the past fifteen years or so.  The housing market in Toronto is completely different from that in Calgary, and completely different from that in Vancouver.  A bubble in one market really would have little to no effect on any of the other markets.  Toronto's a big city.  It has a huge number of jobs in a wide variety of fields.  It has a steadily increasing population, with no signs of slowing.  There is limited space for new housing development.  Prices have risen significantly over time . . . but they're rising because there is demand for housing.

Since purchasing my home five years ago, my mortgage payments have been less than the cost of renting a similarly sized place.  My house also makes 3-4 grand a year from the solar panels we've got on the roof . . . which more than covers the total taxes paid each year.  If our home took a 40% hit in value tomorrow I'd still come out ahead.  If our home dropped enough in value tomorrow that we would have lost money on the house I'd be happy to keep living in our neighborhood . . . because it's a great place to live.  I get that spouting doom and gloom about Toronto's real estate market has been a popular past time for years now, but can you explain to me how selling my home makes any kind of sense in my scenario?

[marty998]

http://www.cbc.ca/news/business/kristy-shen-bryce-leung-1.3724450

I remember reading their story a while back on CBC.  They advised that buying a home in Toronto was a terrible idea.

It was interesting to me because I also live in Toronto, and just finished paying off my expensive home yesterday.  The value of our home has increased by 70% over the past five years, significantly outpacing the growth of my mutual funds.  We're planning to the house and using that equity to feed our retirement accounts in a couple years.

I honestly think that either approach can work well if you're motivated to save, and are disciplined.

I suggest selling your house now - the bubble could burst at any moment.  Already seeing signs in Calgary and Vancouver, beginnings of it in Toronto as well.

Yeah, I've been hearing people say the same thing for the past fifteen years or so.  The housing market in Toronto is completely different from that in Calgary, and completely different from that in Vancouver.  A bubble in one market really would have little to no effect on any of the other markets.  Toronto's a big city.  It has a huge number of jobs in a wide variety of fields.  It has a steadily increasing population, with no signs of slowing.  There is limited space for new housing development.  Prices have risen significantly over time . . . but they're rising because there is demand for housing.

Since purchasing my home five years ago, my mortgage payments have been less than the cost of renting a similarly sized place.  My house also makes 3-4 grand a year from the solar panels we've got on the roof . . . which more than covers the total taxes paid each year.  If our home took a 40% hit in value tomorrow I'd still come out ahead.  If our home dropped enough in value tomorrow that we would have lost money on the house I'd be happy to keep living in our neighborhood . . . because it's a great place to live.  I get that spouting doom and gloom about Toronto's real estate market has been a popular past time for years now, but can you explain to me how selling my home makes any kind of sense in my scenario?

There's an unhealthy view taking root on this board sometimes with selling good performing housing because "oh my god it costs so much".

I'm in a similar situation... If I sell, it would cost me more to rent, and I'd never be able to buy back in as prices continue to rise.

[scottish]

Wait - GuitarStv, you make $3-4K every *year* from your solar panels?

[ender]

It was interesting to me because I also live in Toronto, and just finished paying off my expensive home yesterday.  The value of our home has increased by 70% over the past five years, significantly outpacing the growth of my mutual funds.  We're planning to the house and using that equity to feed our retirement accounts in a couple years.

The SP500 dividend invested return over the past 5 years has been about 104%.

Not directly an apples-apples comparison since with a mortgage you were likely leveraged, and so your effective return probably was higher than 70%, but something to think about still ;-)

[okits]

http://www.cbc.ca/news/business/kristy-shen-bryce-leung-1.3724450

I remember reading their story a while back on CBC.  They advised that buying a home in Toronto was a terrible idea.

It was interesting to me because I also live in Toronto, and just finished paying off my expensive home yesterday.  The value of our home has increased by 70% over the past five years, significantly outpacing the growth of my mutual funds.  We're planning to the house and using that equity to feed our retirement accounts in a couple years.

I honestly think that either approach can work well if you're motivated to save, and are disciplined.

I suggest selling your house now - the bubble could burst at any moment.  Already seeing signs in Calgary and Vancouver, beginnings of it in Toronto as well.

Yeah, I've been hearing people say the same thing for the past fifteen years or so.  The housing market in Toronto is completely different from that in Calgary, and completely different from that in Vancouver.  A bubble in one market really would have little to no effect on any of the other markets.  Toronto's a big city.  It has a huge number of jobs in a wide variety of fields.  It has a steadily increasing population, with no signs of slowing.  There is limited space for new housing development.  Prices have risen significantly over time . . . but they're rising because there is demand for housing.

Since purchasing my home five years ago, my mortgage payments have been less than the cost of renting a similarly sized place.  My house also makes 3-4 grand a year from the solar panels we've got on the roof . . . which more than covers the total taxes paid each year.  If our home took a 40% hit in value tomorrow I'd still come out ahead.  If our home dropped enough in value tomorrow that we would have lost money on the house I'd be happy to keep living in our neighborhood . . . because it's a great place to live.  I get that spouting doom and gloom about Toronto's real estate market has been a popular past time for years now, but can you explain to me how selling my home makes any kind of sense in my scenario?

It hinges on how dependent you are on your current home equity to retire.

If your house comprises 25% of your NW, no big deal.  You'll make it on the other 75% of your assets and a few more years of work or side gigs in ER, if needed.

If your house comprises 75% of your NW but you could keep working to pad your retirement stash, then no problem (if you can live with the risk of a housing correction).

If your house comprises 75% of your NW and you're 68 years old and too ill to work anymore but expect to maintain an $80k/year lifestyle in retirement (funded by your home equity) then SELL and lock in your gains now.  You don't have the time or ability to recover from a housing correction.

Toronto RE has been a winner for a long time, but a house is still an undiversified, illiquid, (and sometimes leveraged) asset.  There is always a risk of those characteristics biting you in the ass. 

[nobodyspecial]

If you are buying a house in Vancouver where you have to have a separate loan for the deposit and the mortgage payment is 90% of your  take-home because your $2M house is going to be worth $4M by the time the mortgage gets renewed - and interest rates  never go up.

Then perhaps it's a risky strategy.

[GuitarStv]

Wait - GuitarStv, you make $3-4K every *year* from your solar panels?

Yes, under the 20 year micro FIT contract we have with the Ontario government we sell solar power back for $0.54 per kWh.  It seemed like a pretty good deal at the time.

[nobodyspecial]

I was reading a recent article in the WSJ (I believe) talking about the foreign home buyer tax impact already hitting with home sales dropping off rapidly and prices beginning to decline.  I don't actually have any reason to check prices in Vancouver so I can't say how accurate the picture painted by the article was, but it sounds like the regulation is beginning to cause a real estate market correction in Vancouver.

Looks like it -  although the drop could be temporary.

It's an interesting economics experiment. Foreign buyers who are effected by this are <1% of the market (it doesn't actually apply to Chinese buyers who have residency) and the tax isn't even going to raise enough to cover it's own admin.

But if enough people believe it will kill the market then they don't have the fear-of-missing-out and stop bidding up prices, so prices drop, so people wait for a bigger drop, so prices ....

Either it was a brilliant piece of behavioral economics by the local government, or a completely unforeseen side-effect of a bit of racist electoral pandering.

[nereo]

If you are buying a house in Vancouver where you have to have a separate loan for the deposit and the mortgage payment is 90% of your  take-home because your $2M house is going to be worth $4M by the time the mortgage gets renewed - and interest rates  never go up.

Then perhaps it's a risky strategy.

I was reading a recent article in the WSJ (I believe) talking about the foreign home buyer tax impact already hitting with home sales dropping off rapidly and prices beginning to decline.  I don't actually have any reason to check prices in Vancouver so I can't say how accurate the picture painted by the article was, but it sounds like the regulation is beginning to cause a real estate market correction in Vancouver.

What we've seen so far is a slight correction after new legislation came into effect limiting foreign buyers in Vancouver.  As always, correlation may not be causation (i.e. it's possible that the drop would have happened even without these new rules).  Interestingly, the legislation in Vancouver might actually fuel more foreign investment in the Toronto market (as housing-investors shift from Vancouver to Toronto).
That said, there's a difference between "a correction" and "dropping off rapidly".  Housing prices in Vancouver dropped slightly in August, but were still up 11% year/over/year.  Toronto continues at it's insane pace of +17% year/over/year.  This, despite new requirements for larger down payments.

[MrsPete]

Eh, all I hear is sour grapes.  Some people like to attack and belittle the successful ... when, in reality, they feel they themselves could've/should've taken a step down the same path. 

[nobodyspecial]

Eh, all I hear is sour grapes.  Some people like to attack and belittle the successful ... when, in reality, they feel they themselves could've/should've taken a step down the same path.

You mean the attacks on the FIRE couple, or sour grapes about people that took a massive gamble on a mega-mortgage in the Vancouver housing market which happened to pay off (assuming they remembered to get out at the top) ?

[RobFIRE]

Thanks for link, I'll read the article and browse the blog mentioned, could be interesting pieces. I don't think I'll look at the story comments, other people's snap judgement negative views (often mix of ignorance and jealousy) aren't of much interest to me.

On property prices, I don't know about any Canadian markets, no specific interest in those, but sounds maybe similar to London UK where typical prices have also been pushed up by foreign investment. A couple of general points though:

First of all, I would rather we went back to a world thinking of their primary residence as a place to live and a home rather than another investment vehicle i.e. housing value should be the cost to build it (spread over the 100+ year lifetime of a property) and maintain it i.e. not too high, rather than the "investment value". So I would much rather, and think it would be better for a lot of lower and middle income households, if property prices were much lower than they are in the UK, these parts of Canada mentioned etc. (I'm not saying a big crash would be good, it would have been better if prices had not gone up more than salaries. So as can't change the past it would be better in future if house prices remained flat for a while and only then went up at no more than salaries. And I mean salaries of low and middle earners, not average or top salaries inflated by the top 1%).

Second of all: if you do think property is a good investment (I agree over medium/long term that property and rents should be a good and relatively stable return. I mean better than cash and gilts/treasury bills, perhaps a bit less volatile and a bit lower return than equity), then you can do it through a property fund (I own no property but have a reasonable amount of money in a property fund). That way you have the property investment exposure, you are more diversified and crucially, its value or fluctuations don't affect the roof over your head etc. And if you really think property is a good investment yet only own a smaller/lower value property, you can gain some leverage by keeping a mortgage on the smaller place and having the capital in the property fund too (I don't do this and would only think it advisable for those with higher incomes or other savings i.e. a risk not worth taking for those with lower net worth).

[RetiredAt63]

First of all, I would rather we went back to a world thinking of their primary residence as a place to live and a home rather than another investment vehicle i.e. housing value should be the cost to build it (spread over the 100+ year lifetime of a property) and maintain it i.e. not too high, rather than the "investment value".

Theoretically that is the Canadian tax philosophy.  Mortgage interest is not tax deductible because it is not interest for an investment.  There are no capital gains or losses for sale of a primary residence.  Of course in markets that just keep going up because of demand, people do come to see their houses as investments.  The rest of us just hope to sell at a price that means our housing costs have been reasonable while we were in that house.

[GuitarStv]

i.e. housing value should be the cost to build it (spread over the 100+ year lifetime of a property) and maintain it i.e. not too high, rather than the "investment value"

You're missing out on the valuable part of a house in your calculation . . . which is the location.  Location matters!  You can buy a large house for less than the cost to build it in Detroit, difficult to do this on Long Island.