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  Canada Immigration Forum > About Canada > Real Estate & Mortgages > Should we buy a house .... In view of the current volatile situation....
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Should we buy a house .... In view of the current volatile situation....




We have finalized a house.... And are now looking at closing the deal and arranging funds.... In 90 days.....

However, we are now worried whether we should go ahead and buy the house or walk away from it..... To defer the buying decision.....

Please advise..... We have been through one too many recessions....

We believe that anyways we will be paying rent.... And other expenses.... So why not mortgage???? But the mortgage is really the max we can pay at the current levels..... If there is any change.....like increase in interest rates..... Plus, after putting all savings in down payment..... We would be living on a month on month basis.....meaning, begin savings from scratch.....

We simply love the house..... Which has everything we would want in a home.... Location....size....etc....

Will this situation blow over or is this a signal..... I remember the rumblings for months.... Before the Lehman brothers collapse..... And now the S&P ratings.....


 
geetakhanna

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Post ID: 186035 05-08-11 23:30:00
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bhootnath
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Member since: Mar 11




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If this is your first house and you can afford it..sure go ahead. The affordable house where you will live, is recession-proof. There may be ups and downs but since you live there it is irrelevant. As an investment..I would wait rather refrain. Good luck!

 
Post ID: 186045 06-08-11 03:27:30
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dudewheresmycar
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In todays market you should buy a house only if u can afford it..

When i mean affort it u should have sufficient balance in ur accounts to pay mortage for 1.5 years.

Interest rates are unlikely to go up in the current economic scenario, housing prices are likely to go down too considering the low affordability..

I personally think the next recession is round the corner.. i would think twice to buy in the current economic scenerio..

That said if u are renting , buying a house cannot be a wrong choice especially if ur payments including untilities will be equal or slightly more than ur rent.



 
Post ID: 186046 06-08-11 08:43:52
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peacock1
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Member since: Jul 04




Posts: 1040
Location: Woodbridge

Fore fathers advice
Hi,
Our elders always used to advise, it is
When buying house, or precious metals, they are never expensive.

You shall never go wrong, in the long run you shall end up winner

You always have to do your math, before taking any major decisions, however in the hindsight you also tend to get this questions , you are asking.

-----------------------------------------------------------------
mor

Whenever you experience joy, peace, security, equanimity or purity, it is only because you are aligned with ALMIGHTY.

 
Post ID: 186048 06-08-11 09:16:06
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geetakhanna
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Member since: May 10




Posts: 274
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In today's point of time, we can afford this house.... However, if we are on the edge of a recession, then what can one say about job security etc...... Plus, if the value of the property devalues.... We can keep aside a 4-5 month mortgage buffer..... But that's about it....

The mortgage+utilities+taxes will be almost double the rent we are paying right now....


 
Post ID: 186051 06-08-11 10:55:12
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ashedfc
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Member since: Jun 10




Posts: 2153
Location: GTA


It all boils down to the stability of your source of income, only you can answer that question..

For the macro-economic view - massive worldwide inflation is coming. Its already there in emerging markets, as we all can relate to India where there is general price increase, salary increase, loss of value of Rupee, & a corresponding increase in corruption which is directly related to the level of inflation..................... this is expected to come in the western world.

The only difference here is the wage pressure, employees do not have the negotiating power to demand wage increase. So a lot of jobs will be lost, or will be available at reduced pay in the coming future years.

In any inflation: you have to look back at history as to what has done well. And real estate has performed well in most of the cases. This time should be no different. However, the only difference is, this time interest rates are at rock bottom, & the western society is over-leveraged (borrowed to the maximum capacity). So those who can sustain the cost of interest through the entire inflationary phase will be the winner; whereas those who will not be able to pay interest & either will have to force sell or sell at market condition will be loser..

Having said that: There's going to be massive amount of wealth transfer from the ignorant people (who wait till the last moment) to the informed people (who plan ahead & make their moves before the crowd rushes in)

So you know yourself, better than anyone else. You need to do some serious budgeting, calculation, & reach your own conclusion..

My take: A place to live is not an investment (one shouldn't look it that way; its the problem that everybody counts on the principal residence as an investment; no doubt its a kind of wealth, but in my opinion its merely place to live). So if you can digest the cost of carrying the house (mortgage +utilities +tax +expected/ unexpected repairs - if any), than you should be fine. But for an investment/ second home/ rental property - the golden buying time of buying low & selling high is probably over. That doesn't mean one can't buy high & sell higher, but the risks has gotten magnified now.


 
Last edited by: ashedfc on 06-08-11 12:05:34
Post ID: 186055 06-08-11 12:03:45
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JRF
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Member since: Jul 04




Posts: 1852
Location: GTA, Ontario


The cost of owning a house (Mortgage, property tax, maintenance, utilities) are over 50% of your household income, it starts to become riskier. As it grows, it gets much riskier.



Quote:
Originally posted by geetakhanna

We have finalized a house.... And are now looking at closing the deal and arranging funds.... In 90 days.....

However, we are now worried whether we should go ahead and buy the house or walk away from it..... To defer the buying decision.....

Please advise..... We have been through one too many recessions....

We believe that anyways we will be paying rent.... And other expenses.... So why not mortgage???? But the mortgage is really the max we can pay at the current levels..... If there is any change.....like increase in interest rates..... Plus, after putting all savings in down payment..... We would be living on a month on month basis.....meaning, begin savings from scratch.....

We simply love the house..... Which has everything we would want in a home.... Location....size....etc....

Will this situation blow over or is this a signal..... I remember the rumblings for months.... Before the Lehman brothers collapse..... And now the S&P ratings.....


-----------------------------------------------------------------
The cowards never started,
The weak died on the way,
Only the strong arrived.
http://www.youtube.com/watch?v=_yK1i9cLAMM

 
Post ID: 186063 06-08-11 12:54:18
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dan
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Member since: Jan 05




Posts: 449
Location:


Quote:
Originally posted by geetakhanna

In today's point of time, we can afford this house.... However, if we are on the edge of a recession, then what can one say about job security etc...... Plus, if the value of the property devalues.... We can keep aside a 4-5 month mortgage buffer..... But that's about it....

The mortgage+utilities+taxes will be almost double the rent we are paying right now....



Don't forget repairs and renovations. Also don't forget that your mobility in case you want to change jobs in terms of cities is pretty much gone. The transaction costs of buying and selling in the short term are high.

Doubling your rent is a huge shock in the short term.


 
Post ID: 186090 07-08-11 04:49:57
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geetakhanna
Senior Desi
Member since: May 10




Posts: 274
Location:


Thanks to all of you for replying to my post..... It is most helpful when taking such a huge step and making a big decision.....



 
Post ID: 186092 07-08-11 06:42:35
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Iceberg
Senior Desi
Member since: May 05




Posts: 919
Location: GTA and beyond


Don't you think those were the days when your leveraging was almost zero. You bought only when you had the capital. And once you bought a place you pretty much were going to stay there for the rest of your life - in most cases.



Quote:
Originally posted by peacock1

Hi,
Our elders always used to advise, it is
When buying house, or precious metals, they are never expensive.

You shall never go wrong, in the long run you shall end up winner

You always have to do your math, before taking any major decisions, however in the hindsight you also tend to get this questions , you are asking.



 
Post ID: 186094 07-08-11 07:38:13
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