Canada versus the USA - longterm employment

[alex12342011]

And another thing I notice, many rich Chinese people (rich immigrants in general) are buying the real estate for profit. Makes it harder for the average Canadian citizen to buy a home.

 

[Arlo1]

And another thing I notice, many rich Chinese people (rich immigrants in general) are buying the real estate for profit. Makes it harder for the average Canadian citizen to buy a home.

We pushed to get the most expensive house in a developing area with a good location for this reason. We can loose our shirts. But as history will show houses only go up in value. If you double a 100k house you profit 100k but if you double a 400k house then you profit 400k. We also use the suite to pay 1/3 of all the bills total.
So its not bad but we are not rich. I plan for solar ~4-5kw after the wedding and a wind generator as well so we will be about energy neutral. We plan to use the grid as a battery for now.... IN BC the electricity rates are on a steady up hill climb so it only makes sense.

But back to the not affording housing thing its true if we waited for 10 years then tried to buy we would be screwed and now as long as we play our cards right the suite can help us when we retire. Having said that the government is the biggest F-up around so they might screw us some how buy the time we retire.... So... Well we are trying ..... What I really wish for is online voting on ALL things effecting my life every person can log in and vote to see how an outcome should be... IE do you want Canada to intervene in Syria YES or NO how about do you think the speed limit on Highway xxx is high or low or do you want the speed limit removed yes or no?
This would help us move forward.

 

[swbluto]

And another thing I notice, many rich Chinese people (rich immigrants in general) are buying the real estate for profit. Makes it harder for the average Canadian citizen to buy a home.

We pushed to get the most expensive house in a developing area with a good location for this reason. We can loose our shirts. But as history will show houses only go up in value.

Wrong, it's that very thinking that lead America to its housing bubble and the GREAT housing crash and, subsequently, the GREAT recession. And, it too, had foreigners plowing money into the USA real estate market only to yank it out and excaberating the housing crash that caused widespread unemployment, shrinking incomes, widespread underwater mortgages and the start of the Fed's money printing program known as QE.

How did that affect household incomes?

What about unemployment rates?

I'm not trying to scare you, but a crash is likely to come assuming your kind of Pollyanna thinking is widespread in the Canadian community. The very idea that a market is invincible is precisely what makes it very vulnerable. If the USA's history is any guide, cities along the coast and the biggest cities will be hit hardest.

 

[iamsofunny]

Thank you for the excellent charts.

Vancouver detached housing prices are already down year over year to average a bargain $1.05 million. In Calgary detached housing is about $550,000 and people are struggling with payments. Income in Vancouver is $45,000 and in Calgary it is $60,000. who in their right mind can make $45,00 pretax = $32,000 after tax to pay $70,000 per year in a mortgage payment?

The Chinese are pushing up the price of housing just like they pushed their stock index from 2000 to 5000, only to have it plummet back to 2000.

Chinese money supply 1996 - 2012 up 13.3x (yes, they increased their money supply over 1300%) and stock market only up 3.4x

Canada money supply supply up 3.1x and stock market up 3.0x

I say, Canada stock market goes up 20% and housing drops 20%.

 

[swbluto]

Thank you for the excellent charts.

Vancouver detached housing prices are already down year over year to average a bargain $1.05 million. In Calgary detached housing is about $550,000 and people are struggling with payments. Income in Vancouver is $45,000 and in Calgary it is $60,000. who in their right mind can make $45,00 pretax = $32,000 after tax to pay $70,000 per year in a mortgage payment?

The Chinese are pushing up the price of housing just like they pushed their stock index from 2000 to 5000, only to have it plummet back to 2000.

Chinese money supply 1996 - 2012 up 13.3x (yes, they increased their money supply over 1300%) and stock market only up 3.4x

Canada money supply supply up 3.1x and stock market up 3.0x

I say, Canada stock market goes up 20% and housing drops 20%.

Oh, yeah. The cumulative size of the chinese economy measured in dollars (Or whatever standard unit of wealth) is far greater than the size of Canada's economy, so as China's economy grows and starts to match the wealth levels of first world countries, chinese investors will easily be able to inundate substantially smaller countries with money affecting prices with it.

They were able to affect the American economy, but the size of the American economy is a bit bigger than canada's (10-15x as big) and the Chinese economy was measurably smaller in 2005-2006, so they could only affect it so much. Still, they definitely affected it, along with other foreign investors, quite a bit. Right now, they're plowing money into San Francisco causing housing prices to skyrocket there.

 

[Chalo]

To get to the subtext of your original question, your prospects are probably best where you have a personal network. In times like these, you get a job not because one place's unemployment is a tad lower than another places, but because you know someone who knows someone. That's actually how getting most worthwhile jobs works most of the time.

A strange city without anyone to help you set anchor is a pretty bad bet no matter what the economic indicators.

 

[swbluto]

*cries uncontrollably*

I knew it, I'm doomed.

Wait...

Let's review that hypothesis...

http://online.wsj.com/article/SB10001424052970204488304574427253799301842.html

When unemployment is high, job-seekers may need to go where the jobs are, "to make ends meet, to get on with their lives," says John Challenger, CEO of outplacement firm Challenger, Gray & Christmas.

While social/relational factors are involved and partially determine LOCAL OUTCOMES for an individual, geographical/industrial/political/cultural factors are also important and determine LOCAL AVERAGES which in turn affects the distribution. A review of any economic/population/resource map will demonstrate the geographic connection.

(I've personally had to draw those as I couldn't find much in the way of those kind of maps online.)

 

[muffinman]

i cant remember if this was asked, but what are your employable skills? what training do you have? and what do you like to do with your free time? also, how old are you?
debating about where is better in theory can go on forever, but in the end you have to act, even if that action is "do nothing"

 

[nerve]

USA

 

[Dauntless]

China has laws restricting how many homes you can buy, which is odd seeing as how they have a bubble economy based on CONSTRUCTION. There are ghost towns built for people who have never come, malls that are empty with marquees for Apple, McDonald's etc. that they can only DREAM of coming and opening a store there.

And I can only dream of a place like that to just go take over and grow into. . . .

Yeah, let's start talking about those job prospects here:

I have a 'Graduate Certificate' in Film from UCLA, meaning I couldn't afford the proper masters program but I did get to take classes such as Meryl Shriebman and James Hosney and can swap stories with the fellow Bruins. (Jack Black had Hosney somewhere else and professes hatred of him, the only known ex-student who doesn't love the guy.)

I have a BA in English with a minor in Theatre, AA's in Broadcasting, Administration of Justice, Sociology and Education. From community colleges I have program certificates in Composites, Theromoplastics, Testing and Inspection, Industrial Design and Business Administration. From our California ROP vocational program I have certificates in Motorcycle Repair, Metal Fabrication, Welding, Machine Shop and Computer Animation. ACK, did I leave something out?

Seems that people look at that education and ask "You don't work fulltime, do you?" Darn, I'm not a freelancer by choice. But just because you have a day rate close to $500 doesn't mean they'll give you a fulltime job paying that in a week. No, I've never had a permanent fulltime position.

So people assume that I could just go get a job teaching high school, but the English Teachers are a dime a dozen, those jobs are the 2nd hardest to get. So they tell me the way I know History, I go to school for THAT---Oops, that's the HARDEST high school teaching job to get. If our overstretched community college system could ever get me the remaining math classes I need for an AA, nearly 40% of HS math teachers don't have that much education in Math, that's the second easiest job to get. But I'm really taking it as prerequisite for Physics, so I can finally understand threads like http://endless-sphere.com/forums/viewtopic.php?f=30&t=53145 By the way, guess what the easiest HS teaching job to get is.

So if I had it to do over again to get started working:

I want to say I'd start out taking math from the beginning, but that was my original plan before my mother sent me to a private HS where no math teacher spoke English. Nor did my freshman English teacher. I wasn't in the mood to take any math when I started college. Others I was in school with just got AA's in math and went and got nice jobs. I could still make plans to go work in television as I was getting a $40k a year job at age 20. Meanwhile today I see people with no TV background getting these jobs I'd love to have after they've worked in a bank for awhile. I hear there's other fields where they like to hire away bank employees for nice jobs.

I wish I could say I'd go in the military right out of college, but I did try just as I'd grown up planning. You see, I had this leg injury. . . .

Then when I apply to city or county agencies where they have a person making video for them, I can never score over 94% in their selection process, because 6 points are for having been in the military. Plus an additional bonus for having been sent to Afghanistan, Iraq, etc. Those people have the potential to score up to 110%.

So, honestly, you get an AA in math, join the army, then when you get out you get a job in a bank while you finish school. As the old saying goes, the world will be your oyster.

And, as Rudyard Kipling would say:

'Yours is the Earth and everything that’s in it,
And—which is more—you’ll be a Man, my son!'

Much better to brag about THAT than to brag that you're a troll that's hunting all the time.

 

[Arlo1]

And another thing I notice, many rich Chinese people (rich immigrants in general) are buying the real estate for profit. Makes it harder for the average Canadian citizen to buy a home.

We pushed to get the most expensive house in a developing area with a good location for this reason. We can loose our shirts. But as history will show houses only go up in value.

Wrong, it's that very thinking that lead America to its housing bubble and the GREAT housing crash and, subsequently, the GREAT recession. And, it too, had foreigners plowing money into the USA real estate market only to yank it out and excaberating the housing crash that caused widespread unemployment, shrinking incomes, widespread underwater mortgages and the start of the Fed's money printing program known as QE.

I for one only stand to loose my credit rating....
Two we have 3 people earning incomes (My income is from 3 sources!) and 2 spare rooms we can rent if needed.
I can also sell some stuff off and make space to work from my garage instead of renting a shop.
Thinking like yours is what will cause people to be stuck renting for ever.
IM not saying my economy is fine. Im saying I have spare money and my bills payed. If shit hits the fan really bad then we walk away from it if we cant sell it. Yes that would suck but without taking a chance I will be 100 and renting and broke! I need a shop and all the other things the house has!
As for the government printing money sweet. That causes inflation so as long as my wage goes up to match or close to it my house gets easier to pay

 

[Arlo1]

I am not sure where you got that graph from but housing prices fell from 07-09 here then since then have made a little up and down but mostly are the same and they are still cheaper then in 2007!

 

[swbluto]

I am not sure where you got that graph from but housing prices fell from 07-09 here then since then have made a little up and down but mostly are the same and they are still cheaper then in 2007!

The graph is the average for all Canadian cities.

I looked at your city and it has a small population (<100,000). Small populations usually imply little population pressure and, correspondingly, relatively stable housing demand so I wouldn't expect prices to fluctuate too much where you are. Then again, I don't know a whole lot about Vancouver's hub cities and their real estate as compared to Vancouver's real estate, so don't quote me on that.

I'd presume the graph would be more representative of the 'big cities' like Vancouver itself, since big cities have the greatest population pressures and, thus, more volatile housing demand (Including speculative demand).

 

[Arlo1]

I am not sure where you got that graph from but housing prices fell from 07-09 here then since then have made a little up and down but mostly are the same and they are still cheaper then in 2007!

The graph is the average for all Canadian cities.

I looked at your city and it has a small population (<100,000). Small populations usually imply little population pressure and, corresponding, relatively stable housing demand so I wouldn't expect prices to fluctuate too much where you are. Then again, I don't know a whole lot about Vancouver's hub cities and their real estate as compared to Vancouver's real estate, so don't quote me on that.

I'd presume the graph would be more representative of the 'big cities' like Vancouver itself, since big cities have the greatest population pressures and, thus, more volatile housing demand (Including speculative demand).

Yeah ~1/2 of Alberta is OIL money... So that will effect it. A double wide in FT.Mac its insane! A normal house is not even realistic! Saskatchewan has some uranium mine thing going and some sort of mini boom from that so might be effecting it. But for the most part I didn't think housing went up in value in most of Canada the last couple years.

 

[swbluto]

I am not sure where you got that graph from but housing prices fell from 07-09 here then since then have made a little up and down but mostly are the same and they are still cheaper then in 2007!

The graph is the average for all Canadian cities.

I looked at your city and it has a small population (<100,000). Small populations usually imply little population pressure and, corresponding, relatively stable housing demand so I wouldn't expect prices to fluctuate too much where you are. Then again, I don't know a whole lot about Vancouver's hub cities and their real estate as compared to Vancouver's real estate, so don't quote me on that.

I'd presume the graph would be more representative of the 'big cities' like Vancouver itself, since big cities have the greatest population pressures and, thus, more volatile housing demand (Including speculative demand).

Yeah ~1/2 of Alberta is OIL money... So that will effect it. A double wide in FT.Mac its insane! A normal house is not even realistic! Saskatchewan has some uranium mine thing going and some sort of mini boom from that so might be effecting it. But for the most part I didn't think housing went up in value in most of Canada the last couple years.

Really? Not even the big cities?

The 'big cities' *probably* comprise at least 80% of all of canada's households, so they'd represent the 'average' canadian house price moreso than some small city in Saskatchewan or any small city in Canda, really, despite the fact there are far more small cities than big cities. I'd be surprised if all the increase in average real estate prices is only in 2 or 3 cities, unless, of course, Canada has only 2 or 3 big cities. (I thought it was more like 7 or 8...)

Anyway, let's take a look at graphs of the various big cities..

Seems to support the price trend of the 'average' canadian household.

 

[Arlo1]

Really? Not even the big cities?

The 'big cities' *probably* comprise at least 80% of all of canada's households, so they'd represent the 'average' canadian house price moreso than some small city in Saskatchewan or any small city in Canda, really, despite the fact there are far more small cities than big cities. I'd be surprised if all the increase in average real estate prices is only in 2 or 3 cities, unless, of course, Canada has only 2 or 3 big cities. (I thought it was more like 7 or 8...)

Anyway, let's take a look at graphs of the various big cities..

Seems to support the price trend of the 'average' canadian household.

My parents in-law live in Ottawa and they don't seem to think prices have gone up that much in the last few years. I will talk more with them in the am about it. Weird..... I have family in Calgary and Edmonton as well and I know the oil money effects them but I didn't think things had jumped that bad lately. The government has made getting a mortgage a lot harder in the last 3-5 years as well.

 

[muffinman]

just for a bit of comparison, canada has 31 cities with a population >100000, versus america with 289.
housing bubbles exist in bc near the coast, alberta, and toronto. not sure about quebec and the east. havent heard much complaints from them. the rest of canada (the majority of it) is fairly stable, with many places somewhat lower in value than 5 or so years ago. not bust type drops though.
arlo is right. also, looking at stats can be misleading, especially if you arent well aquainted with the subject. swbluto, i would likely accept what you say about the state of housing in america, but you cant use the same view to accurately understand the market in canada. we are just too different.

 

[swbluto]

Live long and prosper!

I hope Canada remains the exception as long as possible!

http://www.fool.ca/2013/06/06/a-brewing-canadian-crisis-and-what-americans-learned-about-bubbles/

Two important metrics, one already mentioned in this thread, are: real estate price-to-income ratio and real-estate-price-to-rent ratio.

Anyway, what causes most bubbles is a buildup of speculative demand and bubble fever, as I like to call it. This speculative demand can have a foreign component and domestic component. Assuming there's a ton of Chinese cash infusion which is responsible for the price rise beyond mortgages which have been getting harder to get, that'd mean you guys have a bit of foreign speculative demand.

The reason why speculative demand leads to volatility is because it's fleeting and jittery. It likes to escape when things start looking bad, accelerating and worsening a bust. It has no vested interest in keeping the money invested as the investor doesn't actually live there or, if they do live there, there's little intention of living there for the longhaul come hell or highwater. Once it starts to look bad, sell, sell, sell! (Note, you don't actually need to be an 'investor' to have this mentality.)

I was suspecting that Canada was different because their incomes have been increasing, income derived largely from other 'productive' industries such as oil (And not income mostly derived from increasing home prices, like in the USA). If there was an increase in income to support the higher price levels, then that'd suggest home prices are increasing because people can afford to pay more and demand for housing is healthy. [productive industry as opposed to derivative industries, which are merely industries that take part in sharing the REAL wealth generated by the productive industries. The service economy, for example, is largely a collection of derivative industries and its wellbeing simply mirrors the wellbeing of the greater economy since it's merely sharing the wealth generated by the productive industries.]

However, looking at the graph above of Canada's household incomes, it doesn't seem like it's increased nearly as quickly as housing prices.

Now, if oil prices are sustained, then housing in Calgary should probably remain high. However, history proves oil is volatile and the reason that's the case is because, assuming lack of real world supply factors (i.e., there's no OPEC oil embargo like in the 70s), it's often affected by investment capital in the oil markets and speculative capital comprises at least 65% of the oil markets, currently. Meaning, it's likely to bust somewhere down the road. Using history as a guide, it appears oil booms typically last 4-5 years and this ones been going on for about 4 years.

However, this time could be different. It seems that oil exports have been declining in most major countries despite high oil prices, which may suggest declining net exports among "easy oil" oil sources. If that's driving a longterm increase in the underlying oil supply&demand value, then the price floor of oil may remain high for sometime to come and would be increasing. I'd have to check out net world exports to verify that's actually happening but I don't honestly care that much.

 

[Arlo1]

Part of what allows a bigger housing price to income spread is the low interest rates as well. If they jack the interest rates then there will be a lot of people out of there houses. We mortgaged for 35 years which is not allowed now and all you can get at the moment is 25 years. But I worked the math and some of the current rates would allow us to chop seven years off our mortgage and have the same payments. I have to look into the penalty for renewing early in our mortgage though.

 

[Harold in CR]

Arlo, can't you just pay extra on your present mortgage ? By paying premium only with extra payments, you build equity faster, so, you could qualify for a lower amount mortgage in 5 years or so. It's amazing how much faster a mortgage can be paid off by doing this.

You also have to compare interest rates on savings versus mortgage rates, to see where the money is better placed.

The penalty is usually a lump sum up front, to get a renewed mortgage or a new mortgage. That's where the banks make a lot of money, then, sell the mortgage.

This is the way I understand it, anyway.

 

[swbluto]

Part of what allows a bigger housing price to income spread is the low interest rates as well. If they jack the interest rates then there will be a lot of people out of there houses. We mortgaged for 35 years which is not allowed now and all you can get at the moment is 25 years. But I worked the math and some of the current rates would allow us to chop seven years off our mortgage and have the same payments. I have to look into the penalty for renewing early in our mortgage though.

That's a good strategy, but it's not foolproof.

If housing prices are being jacked up by artificially low interest rates, then deflation could be easily threatened by an increase in interest rates. If this shakes up the market bad enough such that the investors exit the market en masse, then that could potentially cause a crash. For many recent borrowers, this would create a mass of underwater mortgages and many borrowers would find themselves out of a job as the housing crash affects the job markets.

A collapse of speculative demand could also cause a crash. Why there'd be a collapse could be sparked by anything, though usually a downturn or some market fear of some sort is usually responsible.

Not everybody is severely affected, those people who keep their good-paying job and don't have a huge mortgage should do fine and/or take out their equity via refinancing near the peak of the bubble, but there's that 20-40% of borrowers who find themselves caught in a bind and, furthermore, all those people looking for jobs and can't find them. (Like, young folks entering the job markets creating a generation wide legion of the unemployed/under-employed.)

Btw, I'm not blowing smoke out of my arse, I'm describing what happened and is happening in the USA.

What partially caused a collapse in capital inflow into the housing markets in the USA wasn't skyrocketing interest rates, no, it was a collapse in lending. But, still, anything that reduces capital inflows into the markets would have a similar affect on prices.

 

[Arlo1]

Arlo, can't you just pay extra on your present mortgage ? By paying premium only with extra payments, you build equity faster, so, you could qualify for a lower amount mortgage in 5 years or so. It's amazing how much faster a mortgage can be paid off by doing this.

You also have to compare interest rates on savings versus mortgage rates, to see where the money is better placed.

The penalty is usually a lump sum up front, to get a renewed mortgage or a new mortgage. That's where the banks make a lot of money, then, sell the mortgage.

This is the way I understand it, anyway.

No I don't want to because any extra money is batter spent building electric stuff while I have cheep shop space. One day I will likely have kids then free time will change. So for now my extra money goes to building an electric future.

Remortgaging right now would save us an insane amount of money Think 7 years less payments with the same payment amount its really a no brainer. I will be sending an email right now to the mortgage broker to find out the penalties.

 

[Arlo1]

Part of what allows a bigger housing price to income spread is the low interest rates as well. If they jack the interest rates then there will be a lot of people out of there houses. We mortgaged for 35 years which is not allowed now and all you can get at the moment is 25 years. But I worked the math and some of the current rates would allow us to chop seven years off our mortgage and have the same payments. I have to look into the penalty for renewing early in our mortgage though.

That's a good strategy, but it's not foolproof.

If housing prices are being jacked up by artificially low interest rates, then deflation could be easily threatened by an increase in interest rates. If this shakes up the market bad enough such that the investors exit the market en masse, then that could potentially cause a crash. For many recent borrowers, this would create a mass of underwater mortgages and many borrowers would find themselves out of a job as the housing crash affects the job markets.

A collapse of speculative demand could also cause a crash. Why there'd be a collapse could be sparked by anything, though usually a downturn or some market fear of some sort is usually responsible.

Not everybody is severely affected, those people who keep their good-paying job and don't have a huge mortgage should do fine and/or take out their equity via refinancing near the peak of the bubble, but there's that 20-40% of borrowers who find themselves caught in a bind and, furthermore, all those people looking for jobs and can't find them. (Like, young folks entering the job markets creating a generation wide legion of the unemployed/under-employed.)

Btw, I'm not blowing smoke out of my arse, I'm describing what happened and is happening in the USA.

What partially caused a collapse in capital inflow into the housing markets in the USA wasn't skyrocketing interest rates, no, it was a collapse in lending. But, still, anything that reduces capital inflows into the markets would have a similar affect on prices.

I understand but I also did not want to be perpetually renting. I needed something with little work involved in keeping it going so this worked out best. We also live on an island where anyone with money in Canada usually wants to move so that helps our local economy a little. But time will tell it is a long time to think it will all be ok for another 32.5 years but I am not sure we will keep It that long or maybe rent this place out and get another who knows. But for now Im in and not stuck giving my money to another owner to pay his bills.

 

[Lock]

Ooops... I've wandered into the wrong thread on ES... Where's the thread for "Longterm UNemployment"?
:?
L