http://www.thestar.com/Business/article/437201

Warmer weather is failing to heat up the Toronto area housing market as it was hit with the fifth consecutive month of declining year over year sales since the start of the year.

Existing-home sales in May plunged 16 per cent to 9,411, compared with 11,146 a year earlier, according to figures released yesterday by the Toronto Real Estate Board.

Selective reporting?!

Here are few more "selectives" from the same report to put the things in (fair) perspective:

Sales are also down because potential owners are being priced out of the market, Gauthier said.

"Affordability has also been a big issue in the Toronto market, especially when you have a situation where house prices start to outpace incomes," said Gauthier.


"Affordability is the big factor crimping demand moving forward," said Gauthier.


Placing some downward pressure on prices in the Toronto market is more inventory in the form of new listings, which rose a significant 15 per cent in May.

Economist Gauthier, however, cautioned that the overall weak numbers for the Toronto market may look bleaker than the reality because sales are coming off the record highs of 2007.

"Depending on how well the economy does, there is a risk that it would unwind in a disorderly fashion. But what you are seeing right now is a cooling. It's not coming off the tracks."

Prices are still appreciating because sales still remain at historically lofty levels, even though they're not now as high as they have been. The average price in May was $398,148, up a moderate 4 per cent from May of 2007

The Toronto Real Estate Board said it is continuing to monitor sales declines in the city of Toronto after a controversial land transfer tax was implemented this year, adding further to the cost of buying a home.

The number of sales was down 19 per cent in May, compared with 13 per cent in the 905 region, the board said.

"The Toronto land transfer tax has been in effect for four months, and the decline in sales has been running for the same time period," said board president Maureen O'Neill.

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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

Wait is only good option for first time buyer right now..

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Let's take a look at some numbers and see if waiting is a good idea. For the sake of argument lets say interest rates, in three years, on a five year fixed go to 7% from the current 5.6% big bank rate. An eager buyer has 100K as a down payment and is interested in a modest 500K house at today's prices. Let's assume a 10% drop in house prices over the next three years so a patient bear buys for 450K with 100K down.

Monthly mortgage payment on 400K @ 5.6% today is:
$2072 using 40 yr. amortization
- balance owing in 2013 is 384.3K
$2464 using 25 yr. amortization
- balance owing in 2013 is 357.3K

Monthly mortgage payment on 350K in three years is:
$2149 using 40 yr. amortization
- balance owing in 2013 is 346.5K
$2451 using 25 yr. amortization
- balance owing in 2013 is 338.7K

What happens if prices drop by 20%??
Monthly mortgage payment on 300K in three years is:
$1842 using 40 yr. amortization
- balance owing in 2013 is 297K
$2101 using 25 yr. amortization
- balance owing in 2013 is 290.3K

Looks like the bear is the big winner!!

Lot of people will make laugh with 20% price down in next 2-3 years as they were doing same a year before that price can go down because economics fundamentals, lowest employment rate, oil price, great weather, immigration, summer, fall, mountain, water, sea beaches, Olympics, nobody will go back, we are different, .... anything…. absolutely anything

Rahul .. this is very good if you ARE a bear .... as for humans .... one would have a family and so would need a "House "to live in .... so need a rent to be paid..... now if you pay $ 1800 per month for 3 years ..... then it is $ 64, 800 paid waiting for the house to loose 10% and save $ 50,000 !!!! .... the math does not add up ....

I have no "interest "in buying or selling of houses .... just want to see the math

Puttoo,
I think last message went to your personal mail by mistake. Apologize for that.

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Loose 10% and save $ 50,000 !!!!...

Please add the difference between rent and ownership cost (mortgage, tax, maintenance, condo fee) to saving. The house/condo that is renting $1800 today at least has $3200/month expense without any down payment as renting does not need any down payment.

Total saving: $50,000 (10% down) + $50,400 (rent/own difference) = 100K
So after 3 years you have good saving for down payment.

If price down is 20% then bear will be happier. If we love cheaper gas, food, car, hotel then why not house.

In my office I notice some people don't contribute to any RRSP, RESP. Even some guys can not take advantage of company matching RRSP as they are living paycheck to paycheck for keeping house.

Quote:

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Originally posted by puttoo

Rahul .. this is very good if you ARE a bear .... as for humans .... one would have a family and so would need a "House "to live in .... so need a rent to be paid..... now if you pay $ 1800 per month for 3 years ..... then it is $ 64, 800 paid waiting for the house to loose 10% and save $ 50,000 !!!! .... the math does not add up ....

I have no "interest "in buying or selling of houses .... just want to see the math

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http://www.canada.com/components/print.aspx?id=aa561131-012a-4842-bb92-469841e44a4d&sponsor=

Lower Mainland foreclosures have doubled in the last two years as affordability has decreased along with the promise of quick profits.

Kap Hiroti, who tracks Lower Mainland foreclosures at ForeclosureList.com, says foreclosures stand at 20 per week, up from 10 per week in 2006.

"For one reason or another, they didn't pay the mortgage, or insurance, or property tax," says Hiroti, who advises real estate owners looking to foreclose or prospective buyers looking to buy a foreclosed property. "Or they get behind in their strata or condo fees, or face a one-time cost such as a roof or a leaky condo, which might set them back 40, 50 or 60 thousand dollars."

The Lower Mainland, largely buoyed by Olympic optimism and a good international reputation, has so far eluded the real-estate meltdown south of the border....................................................

**Until August 20, 2008 the developer is offering a 2008 Toyota Yaris and NO condo fees until June 2009

MLS®: C3334999

http://househuntvictoria.blogspot.com/

Here's list of helpful hints:

Don't buy. (OK I deviated from what I said I won't do above). This is the best strategy. No matter what anyone tells you, the numbers don't lie. Real estate prices are not going up anymore. Look at all the price changes and sales below asking prices on PCS. Sure the YOY numbers are still up, but the 2008 trend is down. The Victoria market numbers in June are over 7% below the April 2008 price peak. Does this tell you prices are increasing? Wait. The longer you wait, and the longer people around you wait, the cheaper real estate will become. So don't buy.
Take your time and look at 100 properties. Make your REALTOR (and you should use one, there is no reason not to, just be in control of your own decisions) do the work. They're hungry right now. They've had a hell of a run, but there are a hell of a lot of them now, so the competition is fierce. Use that to your advantage. Look at a lot of properties and see what the market is really like.
When you've seen 100 properties (this should take a couple of months) take a weekend to review the ones you're interested that are still for sale (current sales statistics tell us most of them will be (80% plus)). Pick your top ten out of the one's remaining, then have your REALTOR search for new listings on the same block, go look at those.

You've narrowed your search down to ten properties and seen a few of their neighbours, now narrow these down to the two or three that require no updating, no painting, no nothing. If you're going to pay top dollar for a piece of over-valued real estate, you shouldn't have to pay another dime to make it nice. If you can't find any immaculate houses for sale, keep looking. You should not have to pay for updates, make the current owners do this, and the only way to do this is to not put in offers on places that need updating, the market will make them fix their own problems.

When you're ready to prepare an offer, look at what has happened to the market over the last few months and take that trend and extrapolate it out over the next few months. For example, between April and June 2008, the value of SFH's in Victoria dropped about 7%. So that should be the minimum below the asking value you should be willing to pay. I suggest doubling it for the first offer, that is, make your offer on that $400K home, 14%-15% below asking, or $340K. Do not be afraid of offending anyone. If your REALTOR refuses to take this offer to the vendor, get another REALTOR who will, there are plenty of them out there right now who will do this.
Don't buy. I've said it again. I think I needed to, for me at least. Many realty companies also do rental or property management (Duttons and Pemberton Holmes definitely do) get one of these REALTORS to show you rental properties that are similar to what you are trying to buy. Do the math on these places and calculate the price difference between owning and renting including all the ownership related costs (monthly assessments on strata properties, taxes, maintenance etc). Buy when the ownership costs are the same (plus or minus 5%) as renting.

If a low ball offer is refused, walk away. These sellers don't understand the market they are in. Rejection is the best medicine for them to get it.
If a low ball offer is countered with a 1%-2% below asking price change, walk away and see point 8 above.
If a low-ball offer is countered with 5%+ below, you've found a dance partner. Don't immediately jump to the halfway point between your first offer and the counter, add 1-2% to your original offer and stick to that price. No matter what. If it doesn't work on this house, it will eventually work on another, it just takes time, and the longer you wait in a buyer's market, the cheaper properties will get.

If you are under any time constraints to buy, prepare yourself emotionally to lose. No one wins making rushed decisions in real estate during a buyer's market. (The reverse is true in a seller's market although the risks are still there). Find a way to be patient. Your family will thank you in the long run. And no matter what anyone tells you, there are no good opportunities to make money in declining assets. There are opportunities to prevent yourself from losing too much should something occur in the near-term before values start rising again. There are no guarantees that future values will rise above current ones should this market correct significantly. If you bank on prices increasing above current values, you are gambling with your family's future.