Worst time to buy now..
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Quote:
Originally posted by Big Vee
First, for those that think the market is in a bubble or those that value homes or properties based on 2, 3 or even 4 yrs ago are dreaming. Just because a home sold for $ 100k two years ago and now sells for $ 500k does not mean we are in a bubble. The same house that sold for $ 100k two years ago sold for only $ 5k 20 years ago. So what? The price of a property is what people are willing to pay for it and similar properties.
BV
Big Vee, I just don't understand your above statement.
Ideally if the real estate appriciates in line with the national average its normal. If it rises an extra 40% every year, its surely a bubble ( more demand than supply).
OK i buy a house for $500K during the peak ( actual value $200K based on national average increase over years). As per you , I should get it for my family to live and not for investment. Ok I will do it. If the bubble bursts , the house is now worth far less than $500K .After few years , if my family size increases or for whatever reason ( moving etc) I might need to sell my house. Now I need to sell it for loss ( not calculating the high interest percentage i paid over initial years) or I need the market to peak again. Its crazy.
My suggestion is, buying a house is good. But know its actual value (+- reasonable value) when you buy. Don't buy when the prices are inflated.
( I just can't believe a crappy condo in Edmonton costs $400K , while a nice better condo in Toronto costs only $250,000) Now tell me if the prices are right or inflated ?
I saw some new houses in Toronto earlier this year, it costs around $350,000 in the Markham area. I moved recently and saw similar grade houses but 2 years old in Edmonton, guess how much it costs ? $900,000
I just call it Looting..... What else ?
TK A;
Sorry, I could not find the answer using Search, Why Business card's are being used during discussion forums ?
Why is it being allowed?
Location: Canada-Glorious and Free
Posted on: 26-07-07 20:28:43
Quote:
Originally posted by diabolo1974
Big Vee, I just don't understand your above statement.
Ideally if the real estate appriciates in line with the national average its normal. If it rises an extra 40% every year, its surely a bubble ( more demand than supply).
National average CPI is just one of those indicators that tells the "national" economists something about the general Canadian economy. National average is well and good if you can live in Toronto and work in Edmonton. Or say work in Edmonton; live in Toronto and shop in Halifax. But you cannot. Housing markets and the prices are regional. Infact, and I hope the realtors can add to this, but appraisals are based on your neighbourhood. So we have prices going up by 15% in some areas of TO and dropping by 5% in others. National average is not an indicator of anything but other national numbers. The case is real in Edmonton. Everything in Edmonton costs more - the concrete truck driver is paid more than in TO and so on... . That is why the Condo costs more in Edmonton. The question is .. is this a bubble? I do not think so. Oil is never going to go below $65 a barrel EVER!. So the demand for workers etc...is always going to remain. Although I have to say that I do not define a bubble as that. Demand and supply always (bubble or not) plays a part in the pricing. For me - a bubble is created when speculators enter the market in the hopes of making a quick buck. A price hike because people can afford more and are willing to pay more (for themselves) is not a bubble.
Quote:
Originally posted by diabolo1974
OK I buy a house for $500K during the peak ( actual value $200K based on national average increase over years). As per you , I should get it for my family to live and not for investment. Ok I will do it. If the bubble bursts , the house is now worth far less than $500K .After few years , if my family size increases or for whatever reason ( moving etc) I might need to sell my house. Now I need to sell it for loss ( not calculating the high interest percentage I paid over initial years) or I need the market to peak again. Its crazy.
Good example. But like I said - it is the concept of relative equity. You sell for less and you can buy for less. So using your numbers; a house that cost $ 500k is now $ 200k. But say you are upgrading to a bigger house like you suggested. The house that cost $ 600k will now be $ 250k only. So what you have done is just transferred your "profit / loss" into the new house. As long as you have the income stream to support the mortgage - you are fine. It really does not matter what your HOME is worth. I can tell you the first home I bought dropped about one-third (33% !!) in one year from the time I bought it. So you can see that I bought in the so called boom. But another year after that I upgraded to a bigger and better home. How ? Not because I am loaded (LOL) but because of that principle I am trying hard to explain.
Quote:
Originally posted by diabolo1974
My suggestion is, buying a house is good. But know its actual value (+- reasonable value) when you buy. Don't buy when the prices are inflated.
( I just can't believe a crappy condo in Edmonton costs $400K , while a nice better condo in Toronto costs only $250,000) Now tell me if the prices are right or inflated ?
I saw some new houses in Toronto earlier this year, it costs around $350,000 in the Markham area. I moved recently and saw similar grade houses but 2 years old in Edmonton, guess how much it costs ? $900,000
I just call it Looting..... What else ?
Well - you can call it looting. But if you were on the selling side - I am sure you'd be happier than a desi with satellite.
BV
Quote:
Originally posted by Big Vee
Good example. But like I said - it is the concept of relative equity. You sell for less and you can buy for less. So using your numbers; a house that cost $ 500k is now $ 200k. But say you are upgrading to a bigger house like you suggested. The house that cost $ 600k will now be $ 250k only. So what you have done is just transferred your "profit / loss" into the new house. As long as you have the income stream to support the mortgage - you are fine. It really does not matter what your HOME is worth. I can tell you the first home I bought dropped about one-third (33% !!) in one year from the time I bought it. So you can see that I bought in the so called boom. But another year after that I upgraded to a bigger and better home. How ? Not because I am loaded (LOL) but because of that principle I am trying hard to explain.
Come-on ... Tell me this. I owe the bank $400K of the $500K house. I sell it for $200K and get the $250K house. I still owe the Bank $ 450 K , for the house worth $250 K. If it rises again to $600K I will be fine, otherwise I am in deep trouble.
I agree its all relative when you are looking for a place to live and have income to sustain, but Why would I like to do that. Also If I move to different city with so such speculation, I am in deep trouble.
Best thing is to identify the bubble and be out of it. But I don't know how to do that for sure. But my feeling is that Edmonton a nd Calgary are in a bubble.. But because of the Oil and the economy , they might not have a hard landing... just a soft landing pretty soon.
Quote:
Well - you can call it looting. But if you were on the selling side - I am sure you'd be happier than a desi with satellite.
BV
Ofcourse
. Anyway we are talking about " Right time to Buy" . Ofcourse seller will try to maximise the profit. In such market conditions, its the buyer who is always taken for a ride.I don't agree with your forecast that Edmonton and Calgary is not a bubble.
Just see the madness here. I personnally know a few speculators. Media and real estate agents are also into it. Everyday the inventory is rising but prices are also rising. Real Estates agent keep giving statements " Prices will rise further " & "Demand is very high" & "We have the lowest level in our inventory "etc. They are trying to encourage innocent immigrants, first time buyers etc . There are so many houses , near my place that haven't been sold for months. Its just that prices are too high and majority has been forced out of the market. Now tell how long can the speculators hold ??
I agree that the demand is increasing day by day. Economy is good, Income is good. But the prices are just too high. New houses and condos are coming soon. I hope it doesn't become like Miami.
diabolo1974 you are right.
Calgary and Edmonton having more than 10K (each city) house in market which is highest inventory people saw in last 8-10 yrs. There are lot of ads all over the place with reduce price. I know one house was sold in 650 in last winter and next house which is 100% same like previous one is in market from last 3 weeks with 630K and there is no one came even to see.
Rent and ownership all are good and bad with different timings. Right now buying home is not good idea anywhere in Canada if you getting foreclose property that is different thing. 3-4 yrs back owning was better than renting.
I rent a condo which price is 380k in market and paying rent $1300/month. That condo was 399K 3 months back. If you do all calculation then renting is better. Think like that way if mortgage rate after 5 yrs will be 10% then how many people can afford the current loans.
1. We should buy home depend upon one person income. You never know one has job or not.
2. Keep 6 months money away for rainy days.
3. Calculate that you can afford mortgage with 12-13% interest rate with same salary in future.
4. Add all the bills, insurance, taxes, maintenance cost.
How many can really afford home? I know few people their living standard is in mess just for paying house payment. They have so much tension all the time at job if they loose what will happen. It sounds like u can not live peacefully then why in that credit mess? They think 3 times for car oil change or eating outside.
There is no doubt that we are currently doing better than our southern neighbours, But numerous factors could negatively impact on Canadian real estate in the coming months.
1) The Canadian dollar could reach parity with the US dollar before the end of 2007. Aside from giving another argument to those cheering for a single North American currency (I am not one of them), this rise is already hurting exports with our largest trading partner to the south in the form of a reduced trade surplus. We can seriously reduce our expectations for future balanced federal budgets if this trend continues and produces a recession in the US next fall. Canada may have already lost 250,000 good-paying manufacturing jobs in the past two years, due to this rise.
2) The Bank of Canada has announced that current economic growth and inflationary pressures could incite them to raise rates within the near future. Following this announcement, fixed-term mortgages grew by more than 0.5% and have now crossed the 7% mark (they were still under 5% about 15 months ago). This should hurt the national real estate market in the long term, as I suspect housing and rental affordability indexes will continue to deteriorate, while housing prices and interest rates will continue to go up for a while.
3) 40 year mortgages have been introduced to Canada in 2007. This encourages overly indebted Canadians to lower the monthly amount they pay for a house, but will make them poorer over their lifetime as the average total interest cost for a 40 year amortization is roughly 50% higher than a 25 year amortization, depending on future interest rates. This measure is sure to make private banks billions in additional profits.
>>>Source http://www.zimbio.com/Toronto+Real+Estate/articles/278/Update+Canadian+Real+Estate+Bubble+II
All this talk about bubbles on the forum....digging up some old posts
Quote:
Originally posted by faisal on May 26, 2004
http://www.canadiandesi.com/read.php?TID=3191&page=2
Are the property prices going to be the same as they are now? Aren't they a weak bubble which can explode anytime?
snip
Are we at the peak already since some time?
snip
How many people will be able to hold on to their houses after the rates go up?
The 'weak bubble' hasn't yet 'exploded' (sic)
Prices have risen further since 2004
There have been 8 rate increases since 2004, and home owners have by and large been able to 'hold on to their houses'.
Quote:
Originally posted by Loser on Jun 20, 2006
http://www.canadiandesi.com/read.php?TID=13541&page=1
It will crash by the end of the year. The prices are too much.
'Crash' by the end of the year?
Quote:
Originally posted by rahul_singh23 on Aug 8, 2006
http://www.canadiandesi.com/read.php?TID=13541&page=1
Wait for some more time. It starts shaking all over Canada. Here in Vancouver people already start feeling scared who is holding few apartments just for sale.
We're still waiting for the 'shaking'.
Quote:
Originally posted by rahul_singh23 on Aug 9, 2006
http://www.canadiandesi.com/read.php?TID=13541&page=2
Correction started already in condo market. Matter of time when realtor and media will agree that it's time for correction or bubble burst.
Almost a year later.......where's the correction?
Rationalizing all of this:
Quote:
Originally posted by jughead on Aug 10, 2006
One thing I have noticed here is that people who have bought recently keep believing and telling that the price will still go higher, while people who missed the boat say that the market is due for a crash! Wishful thinking both!
So true.....
PS: I'm not a Realtor.
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