My suggestion will be not to wait for market to go down. Market may go down but again there are chances that Mortgage rate may go up.

Cheers!!

Mortgage rate increase will be good news for buyers and it will crash market faster with this high RE inventory. Which one is a good deal 20% price down or 2% increase in mortgage rate? It's easy math. Remember you can shop around/change/refinance mortgage rate whenever you want but mortgage loan can not be changed.

Most people are looking for Boolean ans, when RE market going to crash without doing own analysis or understand "Credit crunch, monetary inflation, goods inflation, hedge funds, western Canada housing situation even with lowest unemployment, EU and Japanese credit and market performance, US Fannie Mac performance, Canadian and other big banks write down $$$”. Did you hear 55000 job losses? But that is a big number for Canadian size economy.

I was watching BNN and very soon one bigger bank is going out of business soon. Can you guess which one is that? My wife is betted on “Lehman Brothers” and me on "Wachovia Washington mutual".
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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".
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Rahul: You do have a point... but what is confusing me is, if 50K new immigrants are landing in GTA every year and people are keeping away from buying houses, then won't the rental units become scarce, there by increasing the rents? That in turn, will drive people to buy, isn't it?

Quote:

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Originally posted by viggy

Rahul: You do have a point... but what is confusing me is, if 50K new immigrants are landing in GTA every year and people are keeping away from buying houses, then won't the rental units become scarce, there by increasing the rents? That in turn, will drive people to buy, isn't it?

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hmm...

1. My take is, just like new immigrans move into the basement units, older immigrants will be moving out. These numbers will be matching somewhat.

2. Again, there is a limit to the number of people these apartments can take in. For new guys to move in, older residents need to move out. In addition, more demand means increase in rent.

3. True, but am thinking, this neutrilizes only a part of the new immigrant flow.

The current posted variable rate at ING is 4.2%. At this rate, a 200K mortgage will cost approx less than 1K per month. When I was renting an apartment, I was paying more than that as rent. So it made sense for me to buy a place - even though it is bit more away from Toronto. Now I pay couple of hundred bucks more per month (including utilities), but I have a bigger place to live.

Yeah, if one looses his/her job and cannot sell the house to recover the buying cost even, then they are screwed... but then again, if u r in a rental place, u will get thrown out to streets for not paying rent - so anyways they are screwed.

My view is only from the perspective of buying a place to live - not as an investment. Also, assuming the purchase cost/mortgage amount is not way higher than the current rent being paid.

"Also, assuming the purchase cost/mortgage amount is not way higher than the current rent being paid. "

A particular house makes sense to rent or buy without having 10 tenants.

Fair Value = 100/(5 Year Mortgage Rate) * (Annual Rent – (Taxes+ condo fee+ Maintenance))

My scenario:
Fair Value = 100/5.35 * (19,200 – 6,600)
Fair Value = $236,000

Current market value of this place: 350K.
July'07 market value was: 390K

Fair value is around 40% price down from peak (390K). We have seen exact correction/crash in US.


Q: Do you know any property for sale that can satisfy fair value equation? I can not find in Calgary at this point.

Quote:

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Originally posted by viggy

hmm...

1. My take is, just like new immigrans move into the basement units, older immigrants will be moving out. These numbers will be matching somewhat.

2. Again, there is a limit to the number of people these apartments can take in. For new guys to move in, older residents need to move out. In addition, more demand means increase in rent.

3. True, but am thinking, this neutrilizes only a part of the new immigrant flow.

The current posted variable rate at ING is 4.2%. At this rate, a 200K mortgage will cost approx less than 1K per month. When I was renting an apartment, I was paying more than that as rent. So it made sense for me to buy a place - even though it is bit more away from Toronto. Now I pay couple of hundred bucks more per month (including utilities), but I have a bigger place to live.

Yeah, if one looses his/her job and cannot sell the house to recover the buying cost even, then they are screwed... but then again, if u r in a rental place, u will get thrown out to streets for not paying rent - so anyways they are screwed.

My view is only from the perspective of buying a place to live - not as an investment. Also, assuming the purchase cost/mortgage amount is not way higher than the current rent being paid.

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Aashu,
The housing market is defenitely going down in the GTA. I can attest first hand as the builders that our office is unable to sell their units. I also heard from the Radio that the condo. market is going to take a massive beating next year (but not as bad as the hit it took in the 90's).
Buying a house as your primary and first dwelling is worth anyday in the GTA but you do have to consider the following :
1. Can and will I rent my basement? (does your house plan allow you to rent the basement)
2. Do I pay unnecessary condo. townhouse fees ?(for lease hold town homes).
3. Will I be there for atleast 5 years (if not no use in buying)
4. Is my and my spouse job secure (if not, better not buy).
5.Will the GTA be my place of residence for atleast 5 years (if not , better not buy).

It is also better to buy in the outskirts (meaning outside of Toronto). Toronto is not longer being attractive for house owners.

Hope this helps.

Peace

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I am a Gents and not a Ladies.