What is fueling home sales in the GTA?
Jump to Page:
< Previous [ 1 ] [ 2 ] [ 3 ] [ 4 ] [ 5 ] [ 6 ] [ 7 ] [ 8 ] [ 9 ]
Posted on: 27-04-09 19:12:59
Ok. Let's be a bit realistic. This indicates that this particular person has not evolved.
Quote:
Originally posted by rahul_singh23
1989:
Income Level: $100k
Quote:
Originally posted by rahul_singh23
2009:
Income Level: $100k
Ooh .. never mind .. it's you again ...
:-) That was indeed funny 
What is the purpose of CMHC insurance? Does it cover borrower in case of non payment or delay in mortgae payment or in worst case of power of sale ? My agent says that in case of power of sale CHMC will pay the due amout to the bank and we do not have to pay anything to bank or CHMC. Is that correct?
Quote:
Originally posted by rahul_singh23
Back in 1989 the discounted five year mortgage rate was 11.25%. Today the best five year rate is 3.69%. Back in 1989 buyers could only extend amortization period out 25 years whereas today we can go out 35 years.
So most of these FTB’s today are likely doing the same thing people did long time back. They go to the bank and are told how much they can borrow. But today because of changes to both interest rates and amortization periods, the amount one can borrow has increased substantially.
1989:
Income Level: $100k
Interest Rate: 11.25%
Amort. Period: 25 years
Maxx. Mortgage: $229600
Monthly Mortrage:$2250
Debt to Income Ratio: 2.3
House price to Income: 2.55
Yrs to payoff with 10K prepayment: 10.4
2009:
Income Level: $100k
Interest Rate: 3.70%
Amort. Period: 35 years
Maxx. Mortgage: $532000
Monthly Mortrage:$2250
Debt to Income Ratio: 5.32
House price to Income: 5.91
Yrs to payoff with 10K prepayment: 20.5
So today someone with 10% down can easily buy a home worth six times their income whereas back in 1989 you were limited to about 2.5 times your income. If the 1989 family was able to save 10% of their income ($10k per year) and apply this annually to the mortgage, they could pay off their mortgage in just over ten years, but it will take over 20 years for the 2009 family to pay off their home. If the first family after paying off their mortgage continued to contribute the same amount into a retirement fund earning only 5%, they would have over $475,000 saved in the ten years while the former family was still paying off their mortgage.
This whole thing got me thinking that maybe we can explain most of the housing bubble through mortgage lending changes, so we need to pull an analysis of average income levels in 1989, 1999 and 2009 with mortgage lending practices and average house prices to see if there was a correlation.
1989:
Family Income: $57k
Interest Rate: 11.25%
Amort. Period: 25 years
Maxx. Mortgage: $112600
% Change for 1989: 0%
Average SFH Price: 160K
% Change for 1989: 0%
2009:
Family Income: $75k
Interest Rate: 3.7%
Amort. Period: 35 years
Maxx. Mortgage: $374000
% Change for 1989: 232%
Average SFH Price: 535K
% Change for 1989: 234%
Amazingly the increase in SFH prices over the past twenty years is highly correlated to the maximum mortgage being made available to average families. This analysis aligns with what the greatest real estate investor I know once told me which was always to buy real estate when interest rates are at their highest levels because prices will always be lower. Mortgage rate can change but price of house you signed never change.
Today many people that could not have qualified for a SFH because of their income levels, now can with these ridiculously low interest rates. This has increased the pool of buyers and resulted in a mini sales boom for entry level homes. It appears to be almost predictable.
Smart money will wait for interest rates to rise as this will both decrease the number of buyers in the market while simultaneously putting pressure on people renewing their mortgages at higher rates.
Is this truly your own opinion or copied and pasted verbatim from http://househuntvictoria.blogspot.com/2009/04/explanation-for-real-estate-bubble.html .
Don't you think Ried deserved the credit for this post?
-----------------------------------------------------------------
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
Agree that the housing market is on a roll but why is it that houses still show on MLS even weeks after the listing agent says the house is sold?
Quote:
Originally posted by indiarocks
Agree that the housing market is on a roll but why is it that houses still show on MLS even weeks after the listing agent says the house is sold?
The public MLS website is not updated as fast as the Realtor MLS system. There is always a delay. It takes time for new listings to appear on the public MLS as well. Even when the house is sold conditionally, the public MLS still shows it available but the Realtor may know the exact status.
-----------------------------------------------------------------
Sanjeev Manocha, MBA
Real Estate Sales Representative
Accredited Buyer Representative (ABR)
Re/Max West Realty Inc, Brokerage
96, Rexdale Blvd., Toronto
Mobile: 416-843-7600
Office: 416-745-2300
http://www.manocharealty.com" rel="nofollow">LINK
Quote:
Originally posted by indiarocks
Agree that the housing market is on a roll but why is it that houses still show on MLS even weeks after the listing agent says the house is sold?
Depends at what point of the transaction you called the salesperson.
If you called when the offer had just been accepted, it could take as long as two weeks for it to actually be SOLD firm. Once all documents have been received from the agent by his/her brokerage, they change the status on TREB database. MLS.ca is synchronized only at certain times and property will no longer show up usually within 24-48 hours of the update by the Brokerage.
Other possibilty is that the Sale did not go ahead and the property is back on market.
There is a distinct possibility that someone left it on MLS(R) to act as a bait to get more clients. It is prohibited according to MLS Rules and unethical too.
-----------------------------------------------------------------
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
Advertise Contact Us Privacy Policy and Terms of Usage FAQ Canadian Desi © 2001 Marg eSolutions Site designed, developed and maintained by Marg eSolutions Inc. |