Financial advisor warns against pinning one's hopes on housing

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The continuous price increases in the high-demand housing markets of Vancouver and Toronto might be attractive to those who are looking to sell at a profit later down the line, but a prominent financial advisor cautioned against putting all of one’s eggs on the real estate basket.
 
In a contribution piece for HuffPost Business Canada, finance blogger and author Garth Turner described the dire situation faced by many young adults who are considering investing in Vancouver and Toronto homes.
 
“The liquid assets among 35-year-olds who have been working for seven or eight years is breathtaking. There aren't any. Instead, all the cash has gone into lifestyle, a soul-sucking condo or repaying student debt,” Turner wrote.
 
Turner noted that the case of real estate bloggers Firecracker and Wanderer—who many youngsters have celebrated as examples of “digital nomads” (i.e., millennials making it big in continuously reselling homes)—should be viewed as the exception rather than the norm.
 
“All kinds of people from all kinds of places were in touch with me because (of course) I can double people's money without any risk while they sleep. Piece of cake,” Turner lamented.
 
“Missing from the [reports] was the fevered level of saving these two crazed beavers exhibited as I worked with them, the way they Hoovered up every scrap of cash from every source and jammed them into their portfolio ETFs, the insane budgeting they engaged in and the fact they lived on less than the average lichen,” he added.
 
The financial advisor emphasized that as with any other sector, real estate is subject to market forces that can make it either surge or crash in the flicker of just one key development—even more so nowadays, as housing is now one of the major engines of the Canadian economy.
 
“In an age of peak house, shoveling your cash into a dead-end condo or staggering under an epic mortgage for a slanty semi held together with bug spit, is not a strategy. It's a financial death sentence,” Turner warned. “Once markets turn (and they are), real estate can become illiquid and depreciating while the debt placed upon them doesn't shrink by a single dollar.”

Related Stories:
Keeping a cool head a must amid overheated markets – analysis
Cooling down the housing market could harm the economy - CIBC

 
  • Paul Brown on 2016-08-19 11:36:52 AM

    Garth Turner predicts housing market crash for last two decades already. Eventually he will be right. It's the same if I would predict the stock market crash and got it right twice in 1996 and 2009. And the next stock market crash would be in 2017. Lets see who's right.

  • Mortgage Guy Geoff on 2016-08-23 9:47:00 AM

    Agreed Paul. I'll go one further...I predict the Leafs will win the Cup again. One day.

    My prediction and Mr. Turner's prediction share a similar probability.

    The key point is in the first sentence of the second paragraph "...finance blogger and author Garth Turner..." Fear mongering sells books. Calm, rational, logical thought doesn't.

    'nuff said.

  • BJ on 2016-08-24 12:19:14 PM

    Totally agree - Garth Turner was saying this 18 years ago when I first got into the mortgage business - back then I believed him. A modern day PT Barnum.

  • Richard Oliver on 2016-10-13 10:28:56 PM

    Garth is a broken clock......that is still wrong twice a day.

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