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Housing costs

I'm with Admiral Beez.

His question: "What does all this mean?" Requires some thought and an answer.

My answer:

It means that too many parents, students and employers unthinkingly have bought into the theory that everyone need to go to university.

Where are the skeptics?

The only ones who are going to benefit from this massive OVER-education scheme are those employed by the universities and those contracted to build massive new facilities.

Another quote worthy of some serious thought: "The most important thing is self-education. Learning is up to you." - Tony Bennett

Do any of us know a student who decided to use the free Public Library to educate him/herself?
The amount of free knowledge available in this world is simply amazing - and the tuition savings is just a bonus!

Of course my suggest may involve ambition and hard work.

Those attributes appear to be as rare as skepticism.
 
The way I feel - typically only a small percentage of what you learn in post-secondary education gets used even in a job in your field of study, yet you typically still won't have all the skills and knowledge for a decent job in your field of study without prior work experience or training from your employer. I think in many cases internships and training new hires makes more sense but employers are often not interested in doing that.
 
Speaking of kids these days and house prices. Riddle this thought exercise: If a house cost $6000 in 1930 and $600,000 now that is a 100 times price inflation over 85 years. That means that a person who is 30 years old could theoretically expect to live to a day when their $600,000 house will cost 39 million dollars. What are the taxes on a $600,000 house now, like $4400? So the taxes on that house will be like $284,700 per year in 55 years.

And that is why old people get forced out of their homes.
 
TrickyRicky said:
Speaking of kids these days and house prices. Riddle this thought exercise: If a house cost $6000 in 1930 and $600,000 now that is a 100 times price inflation over 85 years. That means that a person who is 30 years old could theoretically expect to live to a day when their $600,000 house will cost 39 million dollars. What are the taxes on a $600,000 house now, like $4400? So the taxes on that house will be like $284,700 per year in 55 years.
And that is why old people get forced out of their homes.
Click to expand...

The "true" property tax value will be paid by the new owner and not the current house owner.
 
TrickyRicky said:
Speaking of kids these days and house prices. Riddle this thought exercise: If a house cost $6000 in 1930 and $600,000 now that is a 100 times price inflation over 85 years. That means that a person who is 30 years old could theoretically expect to live to a day when their $600,000 house will cost 39 million dollars. What are the taxes on a $600,000 house now, like $4400? So the taxes on that house will be like $284,700 per year in 55 years.

And that is why old people get forced out of their homes.
Click to expand...

Your example has a 5.8% annual growth rate. That's less than inflation. Small numbers become big over time but that doesn't mean what you think it means.
 
"The "true" property tax value will be paid by the new owner and not the current house owner."

? Under current value assessment your property is re-assessed every 4 years. So yes you do pay near to the true value. 90 year old seniors in downtown Toronto (although the government gives them tax breaks to offset the burden if they apply) have to pay more in property tax then they had in annual salary in their earlier working lives.

"Your example has a 5.8% annual growth rate. That's less than inflation. Small numbers become big over time but that doesn't mean what you think it means."

I'm just doing a thought exercise but I'm not sure what you mean animatronic.
 
If you take a simplistic classic freemarket view of real estate then the cost of housing is just a matter of supply and demand. Housing prices are going up in relation to income as a result of more people wanting to buy houses. So then we need to ask - why do more people want to buy houses now than in the past? I think one of the big parts of that answer is easy mortgages. Most people can't pay $400,000 up front for a house but they can afford to pay $2500 per month for the next 30 years. The result is more people can buy a $400,000 house which increases demand for houses, which drives up the price. That also affects the rental market, because the rental market is tied to the property owner's need to pay for their mortgage and other costs. If you made mortgages harder to get, more housing would end up in the hands of the rich, but housing costs would come down.
 
TOareaFan said:
Surprisingly (to me) the average inflation rate since 1930 is over 15%/year

http://inflationcalculator.ca/
Click to expand...

It should be surprising - because it is completely wrong. If inflation had averaged 15% a year since 1929 then $100 in 1929 would be over $16 million today! The correct figure is average annual inflation rate of about 3%. So $100 in 1929 is about $1265 today.

I don't think there was even any single year between 1929 and today when the rate of CPI inflation was as high as 15%.

Looking at that website, they are using the right data, but their annual inflation calculator is wonky.
 
I just brought up the future big numbers thing because speaking of housing costs I swear I have seen financial planners giving dudes advice who want to retire early on $50,000 per year and live modestly. What? If you don't have kids to help you pay that's not going to work too well when $50,000 is one month's rent!

For a number of reasons I don't think the previous century's record will accurately predict future inflation (I think it will be much lower in the future); however, you never know. As a student I used to pay $410 per month in a shared rental house in downtown Toronto and cheap pitchers of beer where $6.50. That was in 1999.
 
Ahhh I still remember renting out a bachelor apartment right by U of T for $450/month back in 1997. Yikes, was that really 18 years ago? :eek:
 
My old downtown apartment was about $1400 month in 1993. Same apartments, but slightly made-over, are now advertised "starting at $2650."
 
My parents bought their 3 bedroom, 2-floor semi in 1987 around Donlands/Danforth for $91,000 in 1987. Bare-bone homes on the street are now starting in the low 600s, with prices into the late 600s and early 700s for full renos.

Keep in mind their interest on their mortgage was around 20% when they first bought.
 
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mjl08 said:
Keep in mind their interest on their mortgage was around 20% when they first bought.
Click to expand...
A 20% mortgage in 1987? That doesn't sound right, was closer to 10% in 1987, during the boom. It was about 1981/1982 they hit 20%.
 
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