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Originally posted by rahul_singh23

Everything starts from a correction.It takes lot of effort to get out from denial when you are in deep hole.
There are few friends who bought in 2005-2006 in USA and still having negative equity and paying religiously and some in AB/BC who bought in 2007-2008 are in same boat. They still do not agree their decision was financially wrong but you can say all crap like place to live, place for kids, place for toys, place for connection. But 6 figure principal loss or 8-10 years behind mortgage closing is a financially wrong decision. It's not a correction. Some of them can not move even with a good job offer.

You need to do your own research than expecting someone gives black/white ans.
Every bubble starts busting from correction. RE takes long time than stock market to get correct.

Calculate your rent, mortgage interest, CMHC fee, realtor commission, closing cost, lawyer fee, mortgage break conditions, negative equity factor, moving cost and other miscellaneous cost and figure out what works for you. Renting/owning/investing? or doing same in US when RE is so cheap in some part of country?
Are there any other vehicle for you to make more sense like rrsp, resp, tfsa, etf, daily trade or mutual funds?

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Originally posted by bhootnath

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Originally posted by rahul_singh23

Everything starts from a correction.It takes lot of effort to get out from denial when you are in deep hole.
There are few friends who bought in 2005-2006 in USA and still having negative equity and paying religiously and some in AB/BC who bought in 2007-2008 are in same boat. They still do not agree their decision was financially wrong but you can say all crap like place to live, place for kids, place for toys, place for connection. But 6 figure principal loss or 8-10 years behind mortgage closing is a financially wrong decision. It's not a correction. Some of them can not move even with a good job offer.

You need to do your own research than expecting someone gives black/white ans.
Every bubble starts busting from correction. RE takes long time than stock market to get correct.

Calculate your rent, mortgage interest, CMHC fee, realtor commission, closing cost, lawyer fee, mortgage break conditions, negative equity factor, moving cost and other miscellaneous cost and figure out what works for you. Renting/owning/investing? or doing same in US when RE is so cheap in some part of country?
Are there any other vehicle for you to make more sense like rrsp, resp, tfsa, etf, daily trade or mutual funds?

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May be you only have those friends, I have seen my old age superiors who were about to retire lost all their income that they had invested in 401K, Roth IRA all kinds of IRAs. whereas all my friends who bought the new houses in 2006/2007 here in Canada are enjoying the benefits of it..even if markets corrects by 50% they still are comfortable. They have comfortable amount invested in RRSP and some in RESP. They donot want to move because their life is settled and comfortable. I have also seen some of my friends who were in denial of RE rising and instead invested in oil, gold and yeah..silver, stock etc. took huge losses when oil was at around $60 a year and half back..because it is easy to sell those things. People who waited for last couple of years already lost big chunk if they did not buy a property either as primary residence or as an investment. Although it is difficult to say what happens next but the people who are in denial there is never a good time to buy a property. In 2007 when I bought a house, everyone was saying marked is going to go down wait for some time...thanks to God that I did not deter then..otherwise I would still be in a rental condo and waiting for market to correct. After 3 years i.e in 2010 other friend bought a house, even I was kind of one of them to tell him that the market is overpriced, but he took the decision and already enjoying a big rise in price.

I don't know where some folks just brings some graphs..like silver was going to go $100 gold to $5000 and RE just going to hit the rock bottom...

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The reality is NOBODY knows where the real estate market in toronto will go. The fact that everybody is giving you a different opinion (and examples from completely different geographies) should be proof enough that people are just projecting their own experiences. It is impossible to time the market.

Small and temporary corrections don't impact homeowners who have stable jobs and bought a house to live in, not a property to make an investment. If you fall in this category, you should be fine.

What you might be worried about is the worst-case scenario where prices collapse. A lot of "bad stuff" would have to transpire simultaneously for this to happen (economic collapse, wars, global instability, huge scandals etc. etc.) It is hard to plan your life around these kinds of scenarios, and the reality is that if the worst-case scenario does indeed materialize, we'll all find ourselves in the same boat, so I don't see the point in worrying about that.

If you don't feel secure financially and can comfortably hold out in a rental apt. for the next year or so, it might be worth waiting. The downside is you'll play a slightly higher price next year OR may need to move further away from GTA. On the other hand, if you have a stable job, some emergency funds and want to live in your own house, you should consider purchasing. If the market dips a bit near year, this won't impact you.

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In 2007 when I bought a house, everyone was saying marked is going to go down wait for some time...

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Are you there?

I don't know which area/what type of house you are talking about where you get an apartment for rent where it will just cost 100,000 for 10 years of rent.
Average2 bedroom condo costs $1400*12=16800 so for 10 years it will be 168000. Now even after speding that money what you have at the end of 10 years..ghanta..babaji ka. so for 10 years you are taking a loss of $168K.

If you buy a house now and corrects by 20% it becomes $400K. lets say it never appreciates. What will be the worst case scenario..?you will be paying around 90K for years in expenses including bank interest whereaas you would have paid $84K in the rent during those 5 years..your loss will be of $106K during initial 5 years..but as years pass by the loss on rental house will keep piling whereas the expenses on house will be lowering as interest charged will be less n less. At the end of 25 years you will have house fully paid...where as for 25 years you will be paying rent and nothing will be there for you.
Simple calculation if you buy the similar condo which you are currently renting for $1400 per month.
the total you will be paying if you buy a condo fo $300K that never appreciates: $450K
The total rent you will pay for 25 years: $420K
After 25 years for the same price you will have your own house if you buy. you will have a ghanta if you rent.

So for a 500K House you will put 20% say $100K. Now over the next 5 yearseven if house appreciates by 4% annually it becomes around $608 less annual expenses including mortgage interest $90K. Total gain of $18K+5 years of rental money for similar condo approx $1400 i.e. $84K so the total benefit of $102K. That too on the downpayment of $100K you doubled the investement. Just increase that number by 1 or 2 % and then see the difference. May be when I get time, will create a spredsheet that will show the benefits of owning a house even if correction occurs. (Not condo though)

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Originally posted by web2000

It has already seen the boom period and chances of correction cannot be overlooked in future. So if there is a correction of 20% then $500,000 house will reduce to $400,000.


cost analysis for owning or renting always holds true.

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Originally posted by san-hugo

20% downward correction in GTA is highly unlikely. After all it is demand -supply equation. Demand continues to soar for reason best known to chinese and sheikhs !

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Originally posted by bhootnath

I don't know which area/what type of house you are talking about where you get an apartment for rent where it will just cost 100,000 for 10 years of rent.
Average2 bedroom condo costs $1400*12=16800 so for 10 years it will be 168000. Now even after speding that money what you have at the end of 10 years..ghanta..babaji ka. so for 10 years you are taking a loss of $168K.

If you buy a house now and corrects by 20% it becomes $400K. lets say it never appreciates. What will be the worst case scenario..?you will be paying around 90K for years in expenses including bank interest whereaas you would have paid $84K in the rent during those 5 years..your loss will be of $106K during initial 5 years..but as years pass by the loss on rental house will keep piling whereas the expenses on house will be lowering as interest charged will be less n less. At the end of 25 years you will have house fully paid...where as for 25 years you will be paying rent and nothing will be there for you.
Simple calculation if you buy the similar condo which you are currently renting for $1400 per month.
the total you will be paying if you buy a condo fo $300K that never appreciates: $450K
The total rent you will pay for 25 years: $420K
After 25 years for the same price you will have your own house if you buy. you will have a ghanta if you rent.

So for a 500K House you will put 20% say $100K. Now over the next 5 yearseven if house appreciates by 4% annually it becomes around $608 less annual expenses including mortgage interest $90K. Total gain of $18K+5 years of rental money for similar condo approx $1400 i.e. $84K so the total benefit of $102K. That too on the downpayment of $100K you doubled the investement. Just increase that number by 1 or 2 % and then see the difference. May be when I get time, will create a spredsheet that will show the benefits of owning a house even if correction occurs. (Not condo though)

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