<Buying a home (or anything as matter of fact) is an emotional decision (that is supported by logics to convince oneself that it is a correct decision) ....

Only investors make non-emotional purchases as “return on investment” is their main driver. >


Rajeev is right.

Thanks to all for their valuable inputs;

I am aware of some of the details as mentioned by Rajeev, but got some real good info with his post.
what led to this buy/rent question is the pricing part only.

Rent as suggesed by most of you is around 1300 - 1500 CAD ( which aparently includes everything including maintenace and utitlities cost etc) I will not bearing anything beyond that rental price.
now cost wise(If I buy the condo) is about 200-250k depending on the features and facilities. ( i a giving the price range on what I inquired about and seen the condos listed) where the total monthly bill for me including every thing might be around CAD 1750 - 2000. which is also not beyond my reach.
and so is the dilema.

As Rajeev suggested, in fact older condos are more spacious I saw few of them and liked them, only the location did not fit my requirements. So I dropped them.

I will be moving by Aug end and before the schooling starts. next weekoend again I am coming over to GTA, in search of somo more properties.
One more thing is I am looking at them with a commercial point of view since If I buy I will stay for at least 4 years or more.

let us see how things go.
Thanks again for all your suggestions,
Please do put in your thoughts which I might have to consider.

News Article from Tor Star

Condo market bubble?
Jul. 28, 2006. 06:54 AM
TONY WONG
BUSINESS REPORTER


A correction in the red-hot Toronto area condominium market "cannot be far away," says a leading housing economist.

Buying for investment purposes in the Toronto market has been "far in excess of market needs" and buyers face "very high risks," said economist Will Dunning in his most strongly worded analysis yet of the Toronto market, released yesterday.

Nearly a decade into a robust housing cycle, high-rise sales remain extremely strong, with second quarter sales at an annual rate of 20,800, a record high, said Dunning.

While other housing economists have expressed concern over what they see as a potentially frothy condo market, Dunning, a former Canada Mortgage and Housing Corp. economist, has been among the most conservative.

Price appreciation for condos continues at a good clip — 5.9 per cent year over year — and the average condo rent has increased 2.1 per cent.

But this won't last long, according to the gloomy forecast.

"An onslaught of condo completions is just beginning and I expect that rents will start to fall late in the year with the possibility of price weakness to follow," said Dunning.

Normally, the high-rise market is sensitive to changes in interest rates and job creation, and so the sales trend should be falling. Instead, the opposite is happening, said Dunning.

The high sales volume can only be attributed to investors, says the nine-page report.

Condo buyers have lucked out so far only because the construction industry is at capacity, said the economist.

"The eventual consequences (which include falling rents and rapid exits with negative consequences for prices) have been averted to date only because of construction delays," he said.

In a worst-case scenario, "panic selling could emerge" as investors sell off their condos because of oversupply, says the report.

Not everyone agrees.

Some analysts have said the market is sustainable because prices haven't gone up as far or as fast as in the 1980s, just before the market crashed.

They also say banks are much more stringent and developers have tosell most of their units before construction. Also, high house prices mean condos are now the only choice for some buyers.

But Dunning says the sheer numbers tell the story.

He forecasts 15,910 condo starts this year, with another 16,623 for 2007 and more than 10,000 in subsequent years, meaning buyers will have a lot more condos to choose from.

While the high-rise market gives him concern, Dunning said the low-rise, single-family market is still healthy, despite an anticipated slowing of resale activity and slowing of price growth.

He has revised his home price forecast upward for 2006, and expects the average home to increase by 5.7 per cent this year (compared with a previous forecast of 4.3 per cent) to $355,305. He expects resale prices to move 3.4 per cent higher in 2007 and then level off at about the inflation rate in 2008 and 2009.

One reason is that moving forward, the rate of population growth is expected to slow in the Toronto area as economic opportunities open elsewhere in Canada, such as the Western provinces.

The strength of the Canadian dollar remains a factor for the GTA economy, which has a high manufacturing base compared to other areas of Canada.

With the deterioration of affordability due to higher house prices and rising interest rates, Dunning estimates that sales of existing homes (both condos and low rise) should be 10 per cent lower than current levels.

However, wealth creation from high house prices and a buoyant Bay Street thanks to the stock market has helped create consumer confidence.

"Why haven't sales fallen in response to higher interest rates? I suspect it's because there is so much money being made in financial services and related sectors which is driving the move-up market," said Dunning.

The downside is that if the stock market takes a hit, so does Bay Street, he warned.

"The economic outlook of the GTA may be inordinately dependent on the wealth effect, which is masking developing problems in the local goods-producing economy. A stock market correction would weaken the major economic pillar of the GTA."

http://www.thestar.com/NASApp/cs/ContentServer?pagename=thestar/Layout/Article_Type1&c=Article&cid=1154037039004&call_pageid=968350072197&col=969048863851

Thanks Desi # 1 for posting this article.

I read the whole article.. but could not summarize or conclude it.

Can some real-estate expert interprete this in few points?
Requesitng Rajeev, Amit or Pramod ji to please jump in here.

Thanks

A wordy article, poorly written.

In a line, beware of the bubble, it could burst, leading to sudden fall in prices, and low liquidity even at low prices.

Corollary: Buy at good price. Do not get swayed by glitzy sweet nothings. Buy value, in location, finish and square footage. If you buy at good rate, and live for four years plus, any bubble or burst should affect you only marginally.

If you know that you are going to stay in that area for long time (4-5 years) and you can afford a ok place I think it is a good idea to buy. Even if it does not appreciates much you save on rent.