Everyone knows that in GTA overall the prices have gone up.
But you need to do your math right.

To see if you have made/lost money on your property you should take into account the mortgage + interest you paid since you bought the property.

For example

Price Bought : 100K
Mortgage + Interest Paid in 1 Year : 40K
Total Paid till Now : 140K

Sales Price Now : 150K

Gain / Loss : 10K

Generally people take into account just the purchase price and the sales price.

You will be surprised to see the numbers once you take into account the Mortgage + Interest. It is true some people have a bigger / lower Mortgage but then your initial down payment is less/more. So it is all absorbed.

I tried my best to sum last couple of years. I personally think RE experts have more business when people can afford home and there will be more transaction in market than only million $ transaction. Most people are sheep and they follow the trend because analyzing job is offsite to govt., media, RE boards, banks and experts. Most buyers are more concern about stainless steel appliances, granite countertop, front yard/back yard then understanding global credit/financial crunch and whole chain of first time buyer to china/Middle eastern bank who owns your mortgage. Wall Street bank is riding off mortgage bonds at 22 cents/dollar just 2 weeks before.

Let do little homework here and you will see repetitive trend so GTA is not too far:

2005 US: House price was on peak and price can not go down. It's right time to buy.
Experts "People should not look affordability as in long term you will make money like ATM."

2006 first half: California, Miami, Los Vegas, Denver were going down. But that okay we live in NJ, NY, Atlanta or Seattle so we are safe.
Experts" Most of the US cities are safe and house price can not go down because bla..bla.... It's right time to buy."

2006 2nd half: All over USA price going down but Canada is different. Our price can not go down. That is peak activity time in housing market and people are scared as they will price out forever and some greater fool wants to become RE tycoon overnight.
Experts" All rich Asian wants to live in BC and they will buy all condos. 2010 winter Olympic is coming and no-one will go back. Alberta is oil rich and lowest unemployment rate (3.3%) in country. Saskatchewan province is next AB soon. Grain/food price are going high so Manitoba is better off. GTA have largest immigrant location so price will go high. Northern Canada price will go high too as rich Chinese girls will live there in -50C temp to become white before world beauty contest. It's right time to buy."

2007 first half: World wide credit crunch. UBS, CitiBank, CIBC, RBC are writing billion $. Inflation, energy price, auto and finance sector are in bad shape. EU is facing same problem like US has. Calgary and Edmonton has highest listing but price are stagnant. It seems like selling house is not easy now but price are stagnant so that is good news.
Experts: "RE is cyclic and we will see price gain in fall. All inventories will evaporate soon so buyers what are you waiting that is good time to buy as there are lot of product in market". It's right time to buy home.

2007 2nd half: There is little price drop in AB and some BC cities. Listings are highest in history of Calgary and Edmonton.
Experts: "RE is local so not going to affect most of Canada. We can see some price down in western Canada but GTA is immune and in long term we will see price rise". It's right time to buy home.

2008 1st half: GTA has highest listing but price are stagnant. It (GTA) seems like selling house is not easy now but price are stagnant so that is good news. Western Canada especially AB is going to be California/Miami of RE crash in Canada. There is already 10-15% price down here and listings are too high.
Experts: " Western Canada is going to see price down in 2008 and first half of 2009 but it will come back soon as fundamentals are very strong, unemployment rate is too low." It's right time to buy.


What do I predict? But I am not expert so please don't take this too serious.


2008 2nd half: Price will stagnant and inventory will be high till Oct as lot of people does not want to miss 40yrs mortgage opportunity. Nov/Dec will be actual change in whole Canada RE market. GTA will see price down and inventory high. AB will be worse and consumer confidence will tumble and lower sale in mall.
Experts " We already reach the bottom of RE price and 2009 look optimistic and right time buy at lower price otherwise be ready to pay higher price in 2009"

2009: Things are getting worse and weather is not helping experts too. There is news break in media/experts and no-one knew before that" Canada is having RE bust and we are heading same way as US was in 2007-08". Experts agree that it makes sense and they are not surprise with RE bust. House price are too high, common man can not afford these houses, there are too much over build all over city, credit crunch is increasing and mortgage rates are high.
Experts "We can see lowest bottom price in our life time now and it's time to buy"

2010: A lot of people having mortgage more than their house value. They can not refinance their home as explained by experts to them couple of yrs back. Foreclosure market is starting now and time to buy. Lot of people's refinance is due in 2010 and they will surprise as they can not afford home with new rates because they already living paycheck to paycheck with lowest interest rate.
Experts: "It's time to buy as there are lots of good products in market and seller is desperate to sell at any cost before he thinks about foreclosure".

http://www.reportonbusiness.com/servlet/story/RTGAM.20080811.whousing0811/BNStory/Business/home

The next wave of mortgage defaults

http://money.cnn.com/2008/08/12/real_estate/prime_defaults_price_drops/index.htm?postversion=2008081208


Third of new U.S. homeowners in negative equity

http://www.financialpost.com/story.html?id=718555

Quite agree with Rahul.

Very well said.

Patience is the name of the game for buyer!

Worries about credit losses weigh on Wall Street

http://www.reuters.com/article/hotStocksNews/idUSLC59987420080812


Cheers!

Bank Stocks Drop Anew Amid Worry Over Falling Home Prices

Stuck with a growing glut of foreclosed houses, banks and investors are shedding them at increasingly steep losses, potentially adding to the banking industry's red ink this year.

Banks are selling foreclosed homes in some cases for less than half the price they fetched two or three years ago. The cuts are coming as the U.S. banking sector, slogging through its worst crisis in decades, bites the bullet out of fear that prices will keep falling.

Financial stocks fell sharply Tuesday, following J.P. Morgan Chase & Co.'s warning late Monday that it expects "a continued decline in U.S. housing prices." ...


Complete story

http://online.wsj.com/article/SB121858407824434917.html?mod=hpp_us_whats_news

Economy seen slowing more sharply: Philly Fed

http://www.reuters.com/article/hotStocksNews/idUSNAT00427520080812

Cheers!

Prices are down 38% from last year, based on Trulia.com from California's multiple listing services, and the state of the housing market has had a formidable effect on homeowners' net worths: with home equity at just 19% of home value, it's the most depressed housing market in the country. At this time last year, homeowners had 57% of their home's value in equity.

Big cities have been similarly bled as home prices have dropped. Sales prices are down 7.7% nationally, according to the National Association of Realtors, with losses of over 20% in places like Los Angeles and San Diego. Indianapolis homeowners hold only 26% of their home's value in equity, residents of Atlanta and Minneapolis-St. Paul own a dismal 27%, and the beaten-down Sacramento, Calif., market has left homeowners with only 28% in equity.


"Most mortgages made between the fall of 2004 and the fall of 2007, the majority of them are underwater," says Mark Zandi, chief economist at Moody's Economy.com, describing negative-equity situations in which more is owed on the home than it's worth.

"There are 9.6 million homeowners underwater, and most of them are those that bought from the end of 2004 through the end of 2007 in places like California and Florida and Nevada."

Price declines, one of the leading causes of equity drops, occur for a wide range of reasons, whether because of basic supply and demand, poor access to credit for potential borrowers, a sliding local economy where buyers have less to spend, or an appraised value inflated by overeager underwriters.

In Las Vegas or Phoenix, where prices exploded in the early 2000s, builders rushed to manufacture as much inventory as possible and lenders were less than judicious with credit. As prices started to fall in 2006, homeowners began walking away from resetting rates, homebuilders couldn't find buyers, and all the jobs that had been created by the construction frenzy melted away.

Price declines, resetting rates and job losses are the leading determinants of foreclosures, which totaled 739,714 in the second quarter of 2008, according to RealtyTrac, an Irvine, Calif.-based brokerage.

Complete story

http://www.forbes.com/2008/08/05/equity-cities-foreclosure-forbeslife-cx_mw_0805realestate.html



Rank City Number of homes in foreclosure

1. Las Vegas foreclosures 20,856
2. Phoenix foreclosures 14,246
3. Chicago foreclosures 12,948
4. Sacramento foreclosures 12,353
5. Detroit foreclosures 11,610
6. San Diego foreclosures 9,378
7. Miami foreclosures 8,965
8. Los Angeles foreclosures 8,536
9. Stockton foreclosures 7,801
10. Bakersfield foreclosures 7,514

Source: RealtyTrac August 12, 2008

Bubble, Bubble, Toil And Trouble

Wishful thinking didn't make subprime the first and last bubble to shatter the balance sheets and income lines of the nation's leading financial institutions.

The meltdown of Wall Street balance sheets continues. The auction-rate note imbroglio--newest of the disaster bubbles, if you will--is already costing major firms $55 billion. Wait until the toll starts building in other consumer paper-like securities backed by credit card receivables. Citigroup (nyse: C - news - people ) just reported a loss, and JPMorgan Chase (nyse: JPM - news - people ) expects write-downs of several hundred million dollars per quarter into the foreseeable future.

Complete story

http://www.forbes.com/markets/2008/08/11/financial-subprime-leveraged-oped-cz_rl_0811croesus.html




When US, Japan, UK, France, Germany, China, India economies are shrinking and in recession, failed to understand how Canadian economy can escape which is dependent on USA.

Any bail out by US Govt. of top financial firms like Fraddie and Fannie etc..will lead to additional tax burden on taxpayers which further reduces spending and further delay economic recovery.


Cheers!

Krazzyfour.. Thanks for posting nice stuff specially "........failed to understand how Canadian economy can escape which is dependent on USA."

Vancouver-I was talking with one of my friend who lives in downtown Vancouver (Yaletown area) and he feels like more than 40% condo own by speculator and no-one is buying them. It may reach like Miami style crash there where 30% people are living in building and paying $600 condo fee to cover services.

Calgary- Lot of people is putting their home/condo on rent as they are expecting price rise in 2009. So rental market is getting good here. There will be no excuse oh.. I am buying as I can not get rental place here. 600K home you can rent in $1800/month.


Here's one more comparsion:
----------------------------------------------------------
While it is pre-determined that the bull will die, he still fights till the very end, much like we have seen RE bulls in US.

I remember reading the US RE bubble blogs in 2006 and you should have seen the perma-bulls there. Much more vicious and arrogant than the Canadian variety. They were convinced that RE only goes UP, and that all the bubble posters were the few hundred "losers" in the entire United States that didn't get the concept that "here is different", "we're running out of land", and "RE only goes UP!"

Well, the median price of a home in California is down over 30% YoY right now, and in some communities in the suburbs of Sacramento, San Diego, San Francisco, and Los Angeles median prices have plummeted over 50%.

The Candian bulls might point out that California doesn't have that much oil and gas, TSX, dying Auto industry, immigration, Vancouver’s good weather . However, California has major world-class industries that employ many people. Have most of us perhaps heard of Silicon Valley? There are companies there with the names of Apple, Google, Cisco, Intel, HP, BEA and a long list. Also they have amazing weather, which means they are a huge exporter of agricultural products, including fruit, vegetables, wine. They are also the major port from Asia for the entire USA. In fact, California (if it were a country) has the 8th largest economy in the world (Canada is 9th), and they are running out of land much faster than cities in Alberta or Canada.

If house prices can drop over 30% in one year in California, there is no reason to believe it can't happen in other places, including GTA, Vancouver or Alberta.

You could make the same argument for Japan, sure they don't have oil, but they sure have world class companies that export all over and create high paying jobs for the residents. Toyota, Honda, Nissan, Sony, Mitsubishi and a long list. Japan is the second largest economy in the world, and has the least amount of space to build on of any industrialized country. Yet home prices declined over 70% from the peak in Toyko since their bubble bust in 1990.
------------------------------------------------------------------------

Quote:

---

Originally posted by Krazzyfour

Prices are down 38% from last year, based on Trulia.com from California's multiple listing services, and the state of the housing market has had a formidable effect on homeowners' net worths: with home equity at just 19% of home value, it's the most depressed housing market in the country. At this time last year, homeowners had 57% of their home's value in equity.

Big cities have been similarly bled as home prices have dropped. Sales prices are down 7.7% nationally, according to the National Association of Realtors, with losses of over 20% in places like Los Angeles and San Diego. Indianapolis homeowners hold only 26% of their home's value in equity, residents of Atlanta and Minneapolis-St. Paul own a dismal 27%, and the beaten-down Sacramento, Calif., market has left homeowners with only 28% in equity.


"Most mortgages made between the fall of 2004 and the fall of 2007, the majority of them are underwater," says Mark Zandi, chief economist at Moody's Economy.com, describing negative-equity situations in which more is owed on the home than it's worth.

"There are 9.6 million homeowners underwater, and most of them are those that bought from the end of 2004 through the end of 2007 in places like California and Florida and Nevada."

Price declines, one of the leading causes of equity drops, occur for a wide range of reasons, whether because of basic supply and demand, poor access to credit for potential borrowers, a sliding local economy where buyers have less to spend, or an appraised value inflated by overeager underwriters.

In Las Vegas or Phoenix, where prices exploded in the early 2000s, builders rushed to manufacture as much inventory as possible and lenders were less than judicious with credit. As prices started to fall in 2006, homeowners began walking away from resetting rates, homebuilders couldn't find buyers, and all the jobs that had been created by the construction frenzy melted away.

Price declines, resetting rates and job losses are the leading determinants of foreclosures, which totaled 739,714 in the second quarter of 2008, according to RealtyTrac, an Irvine, Calif.-based brokerage.

Complete story

http://www.forbes.com/2008/08/05/equity-cities-foreclosure-forbeslife-cx_mw_0805realestate.html



Rank City Number of homes in foreclosure

1. Las Vegas foreclosures 20,856
2. Phoenix foreclosures 14,246
3. Chicago foreclosures 12,948
4. Sacramento foreclosures 12,353
5. Detroit foreclosures 11,610
6. San Diego foreclosures 9,378
7. Miami foreclosures 8,965
8. Los Angeles foreclosures 8,536
9. Stockton foreclosures 7,801
10. Bakersfield foreclosures 7,514

Source: RealtyTrac August 12, 2008

Bubble, Bubble, Toil And Trouble

Wishful thinking didn't make subprime the first and last bubble to shatter the balance sheets and income lines of the nation's leading financial institutions.

The meltdown of Wall Street balance sheets continues. The auction-rate note imbroglio--newest of the disaster bubbles, if you will--is already costing major firms $55 billion. Wait until the toll starts building in other consumer paper-like securities backed by credit card receivables. Citigroup (nyse: C - news - people ) just reported a loss, and JPMorgan Chase (nyse: JPM - news - people ) expects write-downs of several hundred million dollars per quarter into the foreseeable future.

Complete story

http://www.forbes.com/markets/2008/08/11/financial-subprime-leveraged-oped-cz_rl_0811croesus.html




When US, Japan, UK, France, Germany, China, India economies are shrinking and in recession, failed to understand how Canadian economy can escape which is dependent on USA.

Any bail out by US Govt. of top financial firms like Fraddie and Fannie etc..will lead to additional tax burden on taxpayers which further reduces spending and further delay economic recovery.


Cheers!

---

The math is wrong because u are ignoring the rent u would have paid somewhere else..

If a property purchased at 100K has appretiated to 150K in 1 year for sure that person has made almost 50-60K if u negate the rent he would have paid v/s the mortgage and utilities..

Ofcourse one should not ignore the brokarage he would have to pay while selling...

Quote:

---

Originally posted by akscanada

Everyone knows that in GTA overall the prices have gone up.
But you need to do your math right.

To see if you have made/lost money on your property you should take into account the mortgage + interest you paid since you bought the property.

For example

Price Bought : 100K
Mortgage + Interest Paid in 1 Year : 40K
Total Paid till Now : 140K

Sales Price Now : 150K

Gain / Loss : 10K

Generally people take into account just the purchase price and the sales price.

You will be surprised to see the numbers once you take into account the Mortgage + Interest. It is true some people have a bigger / lower Mortgage but then your initial down payment is less/more. So it is all absorbed.

---