Home buying - 300K house or 400K house
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Thanks hopesrforever27. I remember 2004-2005 when I was in USA and people with no or little money down were buying multiple condos just by specs. Fake demand and real supply..We have same kind of long line too?
Here is the future of GTA condo market.
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http://www.greaterfool.ca/
Between now and the end of the year, myopic developers will bring another 12,000 condo units to market in Toronto alone. Add to these the 6,000 units that were finished in the last three months, and there’ll be a total supply of 19,000 new condos in this city alone – a huge whack of them within a 10-block radius downtown.
And there’s no end to the tsunami of concrete boxes. Right now almost 275 projects are desperately marketing for buyers, while another 40 or so are expected by the end of the year. This is a classic case of supply and demand getting out of sync, leading to tumbling values.
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Originally posted by hopesrforever27
I think this should be in the fun section :-)
http://ca.finance.yahoo.com/personal-finance/article/cnnmoney/condos-that-cost-less-than-cars-20100802</font>
Location: Brampton, Ont, Canada
Posted on: 04-08-10 13:13:43
Rahul: all your comments have valid points on paper. In that case may be only 3% to 5 % of population actually afford the house - rest should be renting - Is that sounds interesting ? NOT at All.
Housing Sector Plays Big Role in Economy The real estate industry is a major contributor to the Canadian economy, adding hundreds of jobs and generating millions of tax dollars
So we need people to invest in house –
Also, there are mainly two types of buyer: Investor & Home Owner
First: Investor are there to gambling so it’s up 2 them to take a Risk assessment , may be they just don’t make money right way but if they can hold for little longer then they make profit
Second: Home Owner – buys house for shelter so they don’t really care to much about how housing market will effect – they will buy it to stay in it - People are not that dumb anymore , they know the risk involve but most of them are ready to put extra effort to save house if something goes wrong. (Extra hours, rent portion of property, or support from other family members so and so). So basically if they buy house they are ready to handle in most cases, there might be chances that they will have little hard life but as time goes by they will be OK.
So the bottom line is no matter what happen to economy, RE market still be doing good .
Yes, agree that market is not that hot , sale price will drop a little or get stable , may be less buyer but that will be not in huge numbers-
NOTE: It's good to have friends who have different opinions. We are all different and unique individuals, and that's what makes us all special people. Life would be boring if we were clones of each other
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'Some goals are so worthy, it's glorious even to fail.' (Param Vir Chakra awardee Lt. Manoj Pandey)
First of all I am feeling much honored finally seeing friend word here. Thanks.
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NOTE: It's good to have friends who have different opinions. We are all different and unique individuals, and that's what makes us all special people. Life would be boring if we were clones of each other
President Bush said in 2005 state of union address "Homeownership is highest ever in America under my watch". Higher homeownership is not a sign for richness or success. I don’t know 3% to 5% but govt(CMHC, Freddie/Fennie) should get out from Real Estate pimping business. Free market should control the market and Interest rates. Risk should be among buyers, seller or banks but not to tax payers.
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Originally posted by Blue_Peafowl
Rahul: all your comments have valid points on paper. In that case may be only 3% to 5 % of population actually afford the house - rest should be renting - Is that sounds interesting ? NOT at All.
USA is best example how Real Estate industry contribute to any economy. Living paycheck to paycheck, buying overprice assets and overspending by people and govt is not the sustainable economy model and it can go into one direction called long term recession. After some time people don’t have saving to buy even $25k condo except govt come with new creative low interest and buyer credit program so called housing socialism. We already have RE socialism in North America.
Long term economy is run by saving, investment, stay within means, export, research, manufacturing and natural resource base technology and competitive growth model. But RE debt and support program eats such a big chunk of money that people and govt does not have extra to spend and invest somewhere else. There are tons of home rich and cash poor people where who don’t have any or sufficient RRSP, RESP, saving, investment or rainy days cushion money.
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Originally posted by Blue_Peafowl
Housing Sector Plays Big Role in Economy The real estate industry is a major contributor to the Canadian economy, adding hundreds of jobs and generating millions of tax dollars
Investor: It needs 10% returns to make $100 to $110. If that $100 becomes $90 then it needs 23% to make it $110. There is nothing called long term or short term…it’s all about timing. Buy when its $90 and investor should have loss minimization method before thinking about gain.
Just getting $200 positive cash flow (if lucky) with 300K+ investment and a capital loss if bought in last couple of yrs is not an investment. I have seen lot of so called investors who take loc, heloc and all kind of loan to buy investment property. Now own home and investment property are underwater and they don’t have cushion to keep investment property for 2 months without rental even. They can not sell too.
When anyone can buy cheapest possible in USA where capital loss is absolutely zero then why investor buying in Canada? How much loss a investor can make in 50-60K RE investment?
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Originally posted by Blue_Peafowl
So we need people to invest in house –
Also, there are mainly two types of buyer: Investor & Home Owner
First: Investor are there to gambling so it’s up 2 them to take a Risk assessment , may be they just don’t make money right way but if they can hold for little longer then they make profit
Home Owner: "Buys house for shelter so they don’t really care to much about how housing market will effect"....Yes they care if your neighbor got exactly same cookie cutter home in 100k less or 20%-30% cheaper. How long it take to pay 100K in mortgage (7-8 yrs??) and pretty much paying double (180k??) the amount if mortgage is 35/40 yrs? Putting extra effort means you are working hard but returns are zero. Even banks would not like to finance easily if someone have negative equity and asset price are deflating.
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Originally posted by Blue_Peafowl
Second: Home Owner – buys house for shelter so they don’t really care to much about how housing market will effect – they will buy it to stay in it - People are not that dumb anymore , they know the risk involve but most of them are ready to put extra effort to save house if something goes wrong. (Extra hours, rent portion of property, or support from other family members so and so). So basically if they buy house they are ready to handle in most cases, there might be chances that they will have little hard life but as time goes by they will be OK.
"So the bottom line is no matter what happen to economy, RE market still be doing good."...I am not sure what kind of industry people are in where on this forum. But it's difficult to understand when someone paycheck is coming from RE transaction. CREA, Real Estate Board and RE professional can not predict couple of months back what is coming. They are revising their forecast every week.
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Originally posted by Blue_Peafowl
So the bottom line is no matter what happen to economy, RE market still be doing good .
I wish buyers know from RE professionals before Real Estate Board report is publishing. Every month price and sale is going down, buyers like to wait…..may be I can get better goodie with same price next month?
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Originally posted by Blue_Peafowl
Yes, agree that market is not that hot , sale price will drop a little or get stable , may be less buyer but that will be not in huge numbers-
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http://www.greaterfool.ca/
GTA sales down 34% in July 2010 vs July 2009.
The Calgary Real Estate Board reported that sales of single-family homes in July plunged 42% from the same month last year. Condo sales were down 44%, and this was the third month in a row of cascading deals.
In Victoria a single-family home dropped in price by $35,000 last month. “A chill swept through Greater Victoria’s summer real estate market,” said the Times Colonist, in reporting a 43.5% crash in sales
in Vancouver, head realtor Jake Moldowan shrugged off another month of toe-curling stats saying, “Activity in today’s marketplace is clearly trending in favour of buyers.” Sales in July took a 45.2% dive from the summer of 2009, and a 24% drop from the month before – which was itself a stinker.
Location: Brampton, Ont, Canada
Posted on: 05-08-10 13:47:12
I don’t wanna go deep into this conversation ... one thing is for sure, if someone believe in you then they will never buy a house 
Back to the topic - no matter what all experts says or warn people – RE market always stay active
Yes, this so called recession may fix RE market a little bit and that is good news for home buyers
But recession will not stop home buyers from buying (may be little slower than previous years but they will buy it)
On side note: if someone really believes in all this statistics and opinion then they will never be home owner. – With the current assumptions it’s almost impossible to buy house with peace.
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'Some goals are so worthy, it's glorious even to fail.' (Param Vir Chakra awardee Lt. Manoj Pandey)
People and govt hate two discussions - Debt and deflation.
60% of Canadians would have a hard time paying their bills if their paycheque was delayed 1 week.
http://www.cmhc-schl.gc.ca/en/co/buho/buho_005.cfm
CHMC’s direct quote is
“The first rule is that your monthly housing costs should not exceed 32% of your gross monthly household income. Housing costs include monthly mortgage payments, taxes and heating expenses. If applicable, this sum should also include half of monthly condominium fees.
Secondly, your entire monthly debt load should not be any more than 40% of your gross monthly income. This includes housing costs, and other debts such as car payments, personal loans, and credit card payments.”
How many people are living under 32% of their housing cost that includes mortgage payments, taxes, condo fee and heating expenses?
We are left with 8% of our gross monthly income to service car payments, personal loans and credit car payments. There are a lot of new luxury cars in neighbourhood. As I have argued all along, it is the over indebtedness of Canadians that will put downward pressure on real estate.
If real estate debt was our only problem we would be fine. But it is not. We are amongst the most indebted people on earth. I understand that many paychecks are generating because of this super debt phenomena but how long?
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Originally posted by Blue_Peafowl
Back to the topic - no matter what all experts says or warn people – RE market always stay active
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There are a lot of new luxury cars in neighbourhood. As I have argued all along, it is the over indebtedness of Canadians that will put downward pressure on real estate.
Oh, Boy! You said exactly the same thing I was discussing with my wife the last weekend while out on a shopping spree across the border. While waiting in line on the border, I saw a whopping number of new luxury cars around me, everywhere. I wondered if everybody had bought a new car lately. Then, when I finally reached the parking lot of the major grocer, I glanced around and saw the exact same scene - brand new cars parked everywhere. I then discussed with my wife and wondered how (almost all the) people could afford brand new luxury cars, and not me. Either everybody is rich around me, or I am not doing something right in my life (damn! was I depressed for a moment?) - thus still own and driving 1999 Camry (poor chap thy name is me!
Then, a thought crossed my mind that it's all because of 'Credit Devta' that's looming over the NA scene.
It's now the same in India as well - a global phenomena may be. The world is catching up in debt.
However, I agree with Blue Peafowl that no matter what, people will not stop buying RE. Recession or no recession.
Location: Brampton, Ont, Canada
Posted on: 06-08-10 12:25:15
“””How many people are living under 32% of their housing cost that includes mortgage payments, taxes, condo fee and heating expenses? “””” May be max 3% to 5 % - actually can afford the house based on regulation - so what happen to other people ? - All of them should rent? If everyone who is not qualified under the govt deadline then what will happen to RE market? – no one buys – money stuck, loss of jobs ( in thousands) , more bankrupt people
Again My Freind Rahul : If everyone start calculating numbers then no one will be able to buy... so i believe those rules, deadlines are just guidelines , it may have some sort of impact on decision to buy house but overall it’s up to the individuals thinking and risk tolerance factors
I’m not saying you are wrong, your point may be practically correct but in real life it does not always work for individuals
I don’t think we will see the disastrous problem as the states here in Canada. There is one thing that reports do not take into account is a factor in determining peoples ability to pay debt, that is the “underground” economy. Most Canadians, when push turns into shove will find a way to do odd jobs for cash to support themselves and their families
Although, I agree with RE “correction”, will take place here in Canada, but not a crash.
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'Some goals are so worthy, it's glorious even to fail.' (Param Vir Chakra awardee Lt. Manoj Pandey)
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