Our government is two-faced when it calls for ‘prudence’, as it has long been punishing those demonstrating that virtue. This poster’s exasperation is shared by many. The idea of him, as a careful saver, at any point in future being asked to bail-out those who have caused this predicament with their imprudence, is outrageous; a moral crime. -vreaa
rp at VREAA, 5 Apr 2010 at 10:40 pm, in response to the prior post by painted turtle -
“This has been going on a lot longer than 10 years. A majority of households own property, so being frozen out is particularly acute. If you’ve been saving money and waiting to buy with minimal risk, it’s like they have ripped the ladder up. In my case my wife and I saved over 20% of pretax income for years, preparing to start a family. We could never put down more than 10-20%. SFH prices went up by more than we made year after year. We now have enough savings to live for 5 years with no income at all, yet it is loose change in the property market. Never going to buy. The central bank now sees fit to erode our savings by setting interest rates below the rate of inflation. Get some guy who can barely service his debt to buy another plasma TV. Good times! Your only hope to beat inflation is by paying fees to the financial industrial complex – another ponzi scheme with non-stop BS. “Invest now” at P/E=22! They can stuff it. I will not soon forget this. It is very clear that this country has nothing to offer me. It has gone completely beyond stupid. They’re now stealing from me to prop it up, so don’t expect any help later! We’re 30 years old and scaling back. We’re going to work less, pay nothing in taxes, and spend more time with family. If costs go up we’ll cut back. If opportunities appear we’ll move. I have no idea who is going to pay for all these retirees. It won’t be me. The problem is there’s no incentive to work more. Nobody is going to triple my income, and extreme risk is a no-no for families, so we’re out of the game. Meanwhile the important things in life could easily pass us by. I realized years ago that my most valuable commodity was time, and with kids my life is now moving at warp speed. I can never do enough. It’s time to knuckle down, and take care of priorities.”
I completely sympathise with this person. Prudence is punished and stupidity is rewarded. Then our government has the temerity to admonish us to save more. Why? It’s the fools who are willing and able to borrow infinite quantities of money (guaranteed by the CMHC)
I disagree with CMHC’s policies.
However, I would say this person couldn’t catch up with house prices because they didn’t invest properly. Its not enough just to save, one must try to generate a return on the savings.
To over generalize, 20 years ago, the TSX was at 3,700 vs 11,000 today + dividends. That works out to about 10% return per annum on average. I don’t think vancouver house prices over the same period grew by much more than 10% per year. Alternatively, a house costing $370,000 in 1990 is probably going for $1,100,000 today. or less.
I was 10 years old in 1990. The objective mistake of my lifetime was working hard, saving money, and going to school. Graduated debt free just in time to see the housing market run away from me. Going to school was the biggest mistake I ever made. Bothering to save money was the second.
Unlike my parents (also poor) I refuse to pass bad advice or wishful thinking on to the next generation. I tell the unvarnished truth.
that is the whole issue with bubbles, they can go on and on and on. Of course the problem is that you don’t know when they will burst, and houses being illiquid means they are hard to turn into cash