This thread was initiated by two issues which came up to me during an afternoon siesta.

The first was the observation made by \\\"MR\\\" in one of my recent posts where MR had summed up by saying that we need to buy something based on what we can afford and not we dream of. This highlights/differentiates beautifully the decision making process involved which is Emotional for people of Indian descent while it is strictly Financial for Goras for a lack of another word.

The second observation is that there has been a Tsunami of Real Estate Foreclosures in South of the border. These were all people who have had taken subprime mortgages when the rates were low a couple of years ago and these were variable rates. Now when the economy has COLLAPSED !, and many of them have lost their jobs they have no other choice but to hand over the keys and walk away. If I'm right there were nearly 36,000 foreclosures in California alone and bigger mess in Michigan.

Now all of these home purchasers whose homes have been foreclosed are all banding up together and making speeches/presentation and protests in steps of their City Halls that they want to blame their Realtors/Mortgage Consultants that they were misled, not properly informed about the conditions, trends in the economy & interest rates and have landed in the big mess because of their realtors/mortgage consultants and many of them claim that their Financially Ignorant and the only thing they had in their mind is that they wanted to own a home.

It has been reported in the Canadian Newspapers that when our Canadian Lending Rates are hiked by another point that is 4.5 +1 and the bank lending rates will be 6.5 % there will be plenty of bankrupticies in Canada and will expose the chinks in the armor of the Canadian Economy. There has been precedence of this happening here in Canada in late 1980's early 1990's.

The key issue I would like to discuss in this post is that the actual decision making process for purchase and who is in Control ?.

I can report two cases of my friends one being a IT Techie (IIT graduate from India and extremely educated and his spouse also highly qualified)who recently relocated from USA and purchased a townhouse in the Derry/Mavis area. He is married without children and he went into the purchase with a very strong committment that his budget is 250K. When he finished his deal he ended up buying at 289K. That is a cool 39K. He literally saw about 100 homes before he zoomed in on this home. His logic was that the school was quite good, the house was of Vaastu and hence he could build a nice family there. But within 10 days he gets back to me that his goal is to move into a Detached Home in the next 2 years.

The second is person who is working two jobs (both as machine operator)and his wife(packager) is also employed. He sold his condo in the rexdale area at 155K which he had purchased at 147K a few years ago and done plenty of upgradation. He is not a school graduate and he came into this country as a refugee. This guy now was shopping for a home a semidetached or a detached home at 300K. He made claims that he will not spend a single penny more and when I spoke to him last week end he has purchased a detached home near Gore Mandir at 350K with a basement. This home is away from any walkable shopping and also bus stops. His logic was that he could rent his basement for 700 bucks and the balance he would pay it from saving more on his salary and also his college going daughter took up a part time job at 15 bucks an hour. His logic is that as the property is appreciating at 8% on an average , and his home is near the Gore Mandir(religious sentiments) he over stepped his purchase by 50K.

Now in both the cases they have ended up spending more than they budgeted in a whiff of a moment and basing the decision making on certain sentiments.
They have not taken a financial decision but an emotional decision.

As usual SK being a Negative person on Canada and a Hyprocrite, I thought to myself what happens if these guys lose their jobs in an economic down turn or fall sick as they both do not have essential medical cover. Wouldn't it have been better to have started with a budget which they could afford on the risk they could take than the market sentiments.

Could these guys turn around on a market downturn and blame their mortgage consultant/realtor about the future ?. The reason being in both the cases the amount borrowed was more than they could have been officially sanctioned and their incomes had to be padded up.

Now who is at fault?. The guys making emotional decision(or being eternally optimistic unlike your own SK) or their realtors/mortgage consultant who should said to them this is your budget and you should stick to it and do not try to stretch beyond it. Then they will lose this customer and hence their commission and hence their livelihood.

I do not know but you can advice as I'm a novice in this field.

Your Call !.

Note: WOW ! one post from SK without Googling and a link pasted !

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Speech by Thomas Friedman of The New York Times....

"When we were young kids growing up in America, we were told to eat our
vegetables at dinner and not leave them. Mothers said, 'think of the
starving children in India and finish the dinner.' And now I tell my
children: 'Finish your maths homework. Think of the children in India
who would make you starve, if you don't.'"

Well if someone is making or made an emotional decision, they will pay for it in due course of time. However, if YOU made an economic decision in purchasing a house, you are ahead of the curve. So what is the point? One could learn a lot by watching the emotion-driven buyers. Besides everything you said, there is also a drive to keep up with the joneses... Mr Sankar.... you have written a nice post. But I doubt that there is a simple answer to your query. Whatever floats your boat comes to mind.

Quote:

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Originally posted by shankaracharya

This thread was initiated by two issues which came up to me during an afternoon siesta.

The first was the observation made by MR in one of my recent posts where MR had summed up by saying that we need to buy something based on what we can afford and not we dream of. This highlights/differentiates beautifully the decision making process involved which is Emotional for people of Indian descent while it is strictly Financial for Goras for a lack of another word.

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Quote:

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Originally posted by shankaracharya

It has been reported in the Canadian Newspapers that when our Canadian Lending Rates are hiked by another point that is 4.5 +1 and the bank lending rates will be 6.5 % there will be plenty of bankrupticies in Canada and will expose the chinks in the armor of the Canadian Economy. There has been precedence of this happening here in Canada in late 1980's early 1990's.

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Quote:

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Originally posted by shankaracharya

The key issue I would like to discuss in this post is that the actual decision making process for purchase and who is in Control ?.

I can report two cases of my friends one being a IT Techie (IIT graduate from India and extremely educated and his spouse also highly qualified)who recently relocated from USA and purchased a townhouse in the Derry/Mavis area. He is married without children and he went into the purchase with a very strong committment that his budget is 250K. When he finished his deal he ended up buying at 289K. That is a cool 39K. He literally saw about 100 homes before he zoomed in on this home. His logic was that the school was quite good, the house was of Vaastu and hence he could build a nice family there. But within 10 days he gets back to me that his goal is to move into a Detached Home in the next 2 years.

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Quote:

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Originally posted by shankaracharya
The second is person who is working two jobs (both as machine operator)and his wife(packager) is also employed. He sold his condo in the rexdale area at 155K which he had purchased at 147K a few years ago and done plenty of upgradation. He is not a school graduate and he came into this country as a refugee. This guy now was shopping for a home a semidetached or a detached home at 300K. He made claims that he will not spend a single penny more and when I spoke to him last week end he has purchased a detached home near Gore Mandir at 350K with a basement. This home is away from any walkable shopping and also bus stops. His logic was that he could rent his basement for 700 bucks and the balance he would pay it from saving more on his salary and also his college going daughter took up a part time job at 15 bucks an hour. His logic is that as the property is appreciating at 8% on an average , and his home is near the Gore Mandir(religious sentiments) he over stepped his purchase by 50K.

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Quote:

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Originally posted by shankaracharya

As usual SK being a Negative person on Canada and a Hyprocrite, I thought to myself what happens if these guys lose their jobs in an economic down turn or fall sick as they both do not have essential medical cover. Wouldn't it have been better to have started with a budget which they could afford on the risk they could take than the market sentiments.

Could these guys turn around on a market downturn and blame their mortgage consultant/realtor about the future ?. The reason being in both the cases the amount borrowed was more than they could have been officially sanctioned and their incomes had to be padded up.

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Quote:

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Originally posted by shankaracharya

Now who is at fault?. The guys making emotional decision(or being eternally optimistic unlike your own SK) or their realtors/mortgage consultant who should said to them this is your budget and you should stick to it and do not try to stretch beyond it. Then they will lose this customer and hence their commission and hence their livelihood.

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Everyone dreams to live in the best surroundings and in a home full of all bells and whistles. There is definitely nothing wrong in dreaming. However, the information on the price range for such desireable home is \\\"derived\\\" from sources who have no connection to the real estate market. I come across customers who think they can get a home for the same price or may be a 1000-2000 more than their friend or family member who happened to have bought a home in that area just last year. This is what they are led to belive by them. Now ask their family or friends if they would sell their home for that \\\"increase\\\"? Their response will be shocking. Their own estimate increase for their own place will be over 20% from the price they paid for it (Reason? \\\"...since we have added this and that and upgraded blah, blah..." ).

Last year, prices in Misssissauga increased by an average of 10%.


As to Shankaracharya's friends:

I wouldn't worry about Techie. He definitely knows his numbers and if ever he comes to lose his job in the near future (for reasons other than incompetence), there is still a shortage of skilled techies. He has the \\\"Canadian\\\" experience. He only had one choice to buy the home he desired. Pay more than what he WANTED to....because house prices are not based on what you want to pay, rather it is what the MARKET will pay.


About the the other guy:
I won't sweat for him either. He knows how to get (and keep) what he wants. He himself works 2 jobs, wife is employed and he will add another income from the basement.

You would be amazed to see human survival skills come into play when the thing(s) dear to them are being snatched.....One's home is the last thing that anyone would want to give up. Unless one is casreless enough to really O-V-E-R-S-T-R-E-T-C-H oneself.....

........Please don't make all Realtors scapegoats for making wrong choices. Some of us do love what we do and keep client's interests and well being foremost. There is more pleasure in going to a satisfied client's home than putting For Sale sign on their yard...(unless they are upgrading )

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Rajeev Narula, Broker, REALTOR®
ACE TEAM REALTY INC., Brokerage
10 Kingsbridge Garden Circle, Suite 704
(Opp Square One - HWY10/403)
Mississauga, ON L5R 3K6
Bus: 1-888-355-3155 Ext. 300
Fax: 1-888-443-3155
Email:
Web: http://www.RAJEEV.ca" rel="nofollow">LINK

There are around 10K houses sale in Calgary and 8k in Edmonton (MLS+private+welist). This is highest number we saw after 1992-1993 here. Some are already giving ad for 50K reduce price. The flipping/housing game is over now. Who wants to make money in this market they already made it and they are out now.
I think its time to wait and hold on your money. The bankruptcy and higher interest rate show started.
Again read Patrick's link (http://patrick.net/housing/crash.html) still 80% stuff is true in Canada too.

I am still trying to find out differnce between used car sales man and used house sales man (realtor)

Rahul_Singh23

While you are stil TRYING, let me save you the trouble and make your life easy:

Used Car Salesman:
1. Earns livelyhood by serving people's needs
2. Customer in NEED finds him/her.
3. In most likelyhood, sells a depreciating asset.
4. Contributes to the government coffers by paying taxes on earnings
5. Provide honest services to satisfy customer needs.


Used House Salesman:
1. Earns livelyhood by serving people's needs
2. Customer in NEED finds him/her.
3. In most likelyhood, sells a appreciating asset.
4. Is Regulated and Governed by the provisions REBBA (An act of the Government) ...(New Home Salesman is not bound by this Act)
5. Is Self Employed person whose services contribute to the growth of other services.
6. Contributes positively to the society by raising funds for social causes
7. Lobby government for things that will have positive impact for home buyers and home owners
8. Campaign against things (like property tax increase, Land Transfer Tax increase, etc) that will save Home Buyers and Homeowners money in the future.
9. Contribute to the Government coffers by paying taxes and service fees.
10. Provide honest services to satisfy customer needs.
11. The list goes on........



Peace to you!

-----------------------------------------------------------------
Rajeev Narula, Broker, REALTOR®
ACE TEAM REALTY INC., Brokerage
10 Kingsbridge Garden Circle, Suite 704
(Opp Square One - HWY10/403)
Mississauga, ON L5R 3K6
Bus: 1-888-355-3155 Ext. 300
Fax: 1-888-443-3155
Email:
Web: http://www.RAJEEV.ca" rel="nofollow">LINK

Quote:

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Originally posted by shankaracharya


The second observation is that there has been a Tsunami of Real Estate Foreclosures in South of the border. These were all people who have had taken subprime mortgages when the rates were low a couple of years ago and these were variable rates. Now when the economy has COLLAPSED !, and many of them have lost their jobs they have no other choice but to hand over the keys and walk away. If I'm right there were nearly 36,000 foreclosures in California alone and bigger mess in Michigan.

Note: WOW ! one post from SK without Googling and a link pasted !

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