Yes.. Govt. created artificial bubble by providing cheap (low interest rate) and easily available money and people or business that should not in place start competing with financial responsible people/businesses because they have nothing to loose. Some businesses/people made good money when we were in rapid growth period.
North American dream" If you work hard and play by rules then no one can stop you and you will reach your dreams"
RE experts bubble dream" We will buy and sell homes to each other then you never need to work because house price never go down"
When Interest rate goes up and its not easy for everyone to get approval from bank what will happen. People who can bid for 500K home with cheaper rate will be qualified for 350K home. It will bring prices down.
I sold home in US before moving to Canada in 2005 after 2 yrs of ownership.
Chandresh: I never said owning house is always bad but it’s all about timing, timing and location. You made right decision at right time and you are a smart man. I agreed that was the right time ( 5 yrs back) to buy in Calgary but things start getting bad in rapid growth period ( after 2005). Do you think this is a right time to invest or buy in RE in Canada? In US, yes.
I think we all understand difference in investment, risk and gamble. People who bought 5+ year is a good investment after that lot of smart people flipped home with risk. I think after 2007 we are sitting on gamble RE market in Canada.
How many people have right mix of investment with RRSP, RESP, savings, GIC, Real Estate, index funds, TB, IRA, Roth IRA and stocks?
What are going to say who is paying 50+% after tax to keep mortgage payment of deprecating RE when he/she bought at the peak bubble time with low interest rate? That is gamble portfolio.
We already seen low interest rate (sub-prime) US movie then why are we not learning. That surprises me most.
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Mish Mailbag: How Does One Tell If Houses Are Overpriced?
http://globaleconomicanalysis.blogspot.com/2009/09/mish-mailbag-how-does-one-tell-if.html?ref=patrick.net
Rahul, I think you are getting mixed up with low or high price of RE and affordability, and then combining it with interest rates. Yes, RE prices are related to interest rates, but not always inversely proportional.
We have seen in the recent past that when interest rates started going down because of recession, the RE prices went down too. I am carrying a below prime mortgage, but my house and RE in general had gone up when the increased mortgage rates and stopped giving sub-prime. So the inverse relationship has not held true in recent past. The way the market is going on now, people are not able to buy the property they want - even though the mortgage rates have gone up in last one year. So infact, with rising interest rates, RE prices are rising too.
Just 5 months ago, I had thought of investing in a condo and I had started looking for one - today it has gone beyond my budget (for extra investment). I have now decided to buy a house for myself which is going to be bigger than present one (and the present one is reasonably big) - becuase I feel two years down the road I will not be able to buy a bigger house since there would not be many left as a proportion to total houses available.
And what if the prices crash after I buy a house - it hardly matters to me whether after buying, the house becomes over a million or under a quarter million - because I have to live in one. If I decide to change, I will get a new one at market price which could be high or low, but at the same time I will sell my house at a high or low price too.
Timing the RE market is for investors - not for people who want to live in the houses - just remember that. Location is again for an investor - not for a person who lives in that. I might prefer living in an industrial area where there are no shopping malls, no conveniences etc - and most people would not buy a house there - but if I can walk to my office from there, I would prefer that location, or if due to location, I can get twice the size of a house in town, I could prefer that too! An investor will have to think of timing and location, nor a person buying for himself.
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Chandresh
Advice is free – lessons I charge for!!
Quote:
Originally posted by chandresh
Timing the RE market is for investors - not for people who want to live in the houses - just remember that. Location is again for an investor - not for a person who lives in that.
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Dimple2001
I think the immigrant population often views real estate as an investment more than anything. The reason for this is that as new immigrant, you may not be able to afford your "dream home" so you settle for a "starter home" till you can graduate to a "semi" and then perhaps to a "detached" after which if you have made up your mind to live in Canada, you could not care less what happens to the RE market.
More often than not, till you move into your dream home, you are always hoping your current RE "investment" will be something you see grow...
What baffles me is why this is even being discussed to apocalyptic lengths...people have owned houses through many an upswing and downswing.
Looks like someone on this forum has zero confidence in getting through tough time This pessimistic philosophy of his can be applied to ANY area...not just RE
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If you have a gun, you can rob a bank.
If you have a bank, you can rob everyone.
- Bill Maher
For surviving in tough times.. People need skills and competency so they can sustain cut throat competition with limited opportunities. Debt does not make people tough and stronger.
But I got it.... it's always a right time to buy. Debt does not matter. House price never goes down. Higher Interest rates will not effect RE price. Canada is different. Financial conservatives are killing economy. Low interest is not a sub-prime. Over-priced RE makes people stronger, tough and optimistic. RE is not a bubble and will not be. Immigrants, oil price and Olympic will save this bubble.
I can understand people get upset everywhere when we talk about RE price down or crash because a big population has 70-80% investment only in one asset - Home. Let see how long this so called optimistsm can run because bubble has only one prescription – bust.
Quote:
Originally posted by blorean
Looks like someone on this forum has zero confidence in getting through tough time This pessimistic philosophy of his can be applied to ANY area...not just RE
Quote:
Originally posted by rahul_singh23
Yes…. IIT, MS, 12 yrs IT experience in North America definitely a waste in term of confidence. May be I need a Realtor course.
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If you have a gun, you can rob a bank.
If you have a bank, you can rob everyone.
- Bill Maher
It does not matter I am obsessed with the downside or not.
Please justify why House price will not go down in future?
Why our low interest rate (sub-prime) bubble is is different than USA?
How many buyers are buying within their means? Can they really afford home if they stay in then means?
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Luxury townhome in my neighborhood was selling 575K ( by builder) in late 2007. Now same kind of house just 3 door away is on sale for 524K (sale by owner).Yes, I have seen both the homes and exactly same. If interest rate did not hold by govt. it might be more than 50K loss.
How do you justify 50K absolute price loss in 2 yrs if someone bought within their means?
It takes a long time in mortgage payments to cover that 50k principal. It takes more than 2 yrs to save 50K after tax if someone is really in saving mode.
A lot of people stopped paying mortgage in USA even they can afford mortgages. Why? Their house price is lower than their RE debt.
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