Home buying - 300K house or 400K house
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Posted on: 12-10-11 14:09:23
The house prices in US are NOT going up in spite of excessive money printing. Any takes?
Quote:
Originally posted by ashedfc
The mother of all: biggest ever bailout is in the process of getting finalised (probably at the G20 summit in early Nov). This will trigger the rally all over, & take housing prices even more higher.. day by day, we are getting close to the the ultimate of housing affordability.
So, the prices will keep going up because of the global money printing/ infusion, & affordability will keep going down, welcome to stagflation (a new era begins)
Quote:
Originally posted by rahul_singh23
There are lot of good place in USA where you can make good deal and rent/own ratio makes sense. Why does someone want to mortgage renter when renting is cheaper than owning?
Renting < mortgage interest+ taxes+ condo fee+maintenance+ loosing investment return on down payment+ no worry about negative equity
There is other miscellaneous cost, commission and closing cost while in owing process.
Housing is just a part of investment portfolio and there are tons of other investment to own which makes more sense than over price housing which is most illiquid asset.
Only thing I can see in housing that you can rent the mortgage (without or little money) and feel like owner but other investment really needs good financial discipline and savings.
Quote:Quote:
Originally posted by rahul_singh23
Oh boy...the doomsday is near...Not a single countrly left in this world where it is safe to buy a house..More houses than popoulation.
So what is the best investment/alternative?
..and what you intend to buy from all those so called savings ??? In any case whatever you save will be snatched away from you by Canadian govt. or by inflation. So why not give more and better space to live and play for your children ? and in future at least your next generation will not have to rent the mortgage ! makes sense ?
Rent rates also increase year after year , isnt it ?
Today you are able to rent bcs you have a job, what abt the time when your knees start to bend and take no more of yourself ?
I am not against owning home but against owing which does not make sense in term of renting or too much debt like buying overprice stocks. This kind of craziness and price increment can not go forever. We have seen USA, Europe and lately Australia that all bubble bust sooner or later, Canada next. House is not a ATM but most of the people have big money (80s %?) locked into one asset.
"Today you are able to rent bcs you have a job, what abt the time when your knees start to bend and take no more of yourself ?" It seems home owner who has 30,35,40 yrs mortgage will not get older. How can you afford home in USA now? Buy when bubble bust and no-one buying than going for life time (30,35) financial slavery to the bank.
I am not official financial adviser but no-one advising here to keep all the money into saving account.
If you go to bank sales man ( sometime they called financial ad visor) and most time offer they have growth, balance or moderate portfolio. Making 5% to 10% return is not a rocket science with active management. If you can find good financial advisor who does not take commission from your principal but make money on your returns.
I think our focus should be giving financial safety net (RESP), education and good values to kids. I do not think owning a place can provide better education. Now days all the Ivy schools cost around $200K for 4 year bachelor program.
Quote:
..and what you intend to buy from all those so called savings ??? In any case whatever you save will be snatched away from you by Canadian govt. or by inflation. So why not give more and better space to live and play for your children ? and in future at least your next generation will not have to rent the mortgage ! makes sense ?
Rent rates also increase year after year , isnt it ?
Today you are able to rent bcs you have a job, what abt the time when your knees start to bend and take no more of yourself ?
Quote:
Originally posted by rahul_singh23
I am not against owning home but against owing which does not make sense in term of renting or too much debt like buying overprice stocks. This kind of craziness and price increment can not go forever. We have seen USA, Europe and lately Australia that all bubble bust sooner or later, Canada next. House is not a ATM but most of the people have big money (80s %?) locked into one asset.
"Today you are able to rent bcs you have a job, what abt the time when your knees start to bend and take no more of yourself ?" It seems home owner who has 30,35,40 yrs mortgage will not get older. How can you afford home in USA now? Buy when bubble bust and no-one buying than going for life time (30,35) financial slavery to the bank.
I am not official financial adviser but no-one advising here to keep all the money into saving account.
If you go to bank sales man ( sometime they called financial ad visor) and most time offer they have growth, balance or moderate portfolio. Making 5% to 10% return is not a rocket science with active management. If you can find good financial advisor who does not take commission from your principal but make money on your returns.
I think our focus should be giving financial safety net (RESP), education and good values to kids. I do not think owning a place can provide better education. Now days all the Ivy schools cost around $200K for 4 year bachelor program.
It definitly makes sense to own a decent place than living in dingy basement rather than keeping money in solvency prone bank or go-crash stocks. That sense makes up children's life. They may or may not take 4 yr degree program in future but will definitely get mindset build from their childhood place. and what abt your life ?
Also abt 35 yrs loan and slavery to bank, if you pay 2000 pm as mortgage today, value of 2000 will drop for sure in years to come , what was the value (buying capacity) of a 100 dollars 10 years back ? much higher than as of today. In years to come your salary should also increase (or your kids will start earning) making the mortgage percentage of your household income much lesser.
Fine I agree it may be coming , the housing mkt crash in Canada... it happened in US or australia , it will happen here. That will happen along with job losses and inflation, How then will one pay for even rent ?
Similar thoughts were thrown some years back when a detached house was of 250k cost, many people did not buy seeing the crash coming, they went on renting, Same house is now 500k cost, same kind of thoughts are being thrown around. Housing works on demand and supply, in Toronto /Vanc demand is high and will remain high and mkt situation shows for years to come the mortgage rates will remain low. So renting a mortgage makes more sense than renting a house today. On worst day , when you will have to leave your house for whatever reason , then hand over keys to bank and go back to rent. but that time may not come ! Why sulk today, sulk when everybody will sulk along?
Wow! Two year old thread. Still the same reasons as to why house buying may not be a good idea - interest rate hikes, housing price crash etc. Prices have gone up in my neighborhood at least (Brampton) and interest rate is steady....
Quote:
Originally posted by san-hugo
It definitly makes sense to own a decent place than living in dingy basement rather than keeping money in solvency prone bank or go-crash stocks. That sense makes up children's life. They may or may not take 4 yr degree program in future but will definitely get mindset build from their childhood place. and what abt your life ?
Where is the balance portfolio here - house, etf, RRSP, RESP, mutual funds, saving? I do not think 80% asset locked into house is a good idea.
Rent does not mean dingy basement. You can rent a good place in rich neighborhood in 1/2 the price. Other half saving is good for investment or RRSP as a house down payment down the line. I start renting in Calgary from $1600 (2007) and left last month with rent $1350. If I own same place as per 2007 price then I would be atleast 80K underwater (price deprecation from 2007 peak, taxes, condo fee, realtor commission, closing cost). I never heard that Indian kids in North America have option for " not to go univ".
Quote:
Originally posted by san-hugo
Also abt 35 yrs loan and slavery to bank, if you pay 2000 pm as mortgage today, value of 2000 will drop for sure in years to come , what was the value (buying capacity) of a 100 dollars 10 years back ? much higher than as of today. In years to come your salary should also increase (or your kids will start earning) making the mortgage percentage of your household income much lesser.
We should commit on kids univ education then expecting kids to pay our mortgages. We should take responsibility of our decision. I know many american born kids who are working on wall street, Silicon valley and London financial sector. They are not running motel, living with parents or gas station in NJ.
Quote:
Fine I agree it may be coming , the housing mkt crash in Canada... it happened in US or australia , it will happen here. That will happen along with job losses and inflation, How then will one pay for even rent ?
It's easy to downsize or move with a job when renting or have positive equity in house.
I know few people who are in 100K negative equity ( price deprecation, commission, mortgage penalty, miscellaneous cost).
Quote:
Similar thoughts were thrown some years back when a detached house was of 250k cost, many people did not buy seeing the crash coming, they went on renting, Same house is now 500k cost, same kind of thoughts are being thrown around. Housing works on demand and supply, in Toronto /Vanc demand is high and will remain high and mkt situation shows for years to come the mortgage rates will remain low. So renting a mortgage makes more sense than renting a house today. On worst day , when you will have to leave your house for whatever reason , then hand over keys to bank and go back to rent. but that time may not come ! Why sulk today, sulk when everybody will sulk along?
It does not matter how much is appreciation till we do not cash out at right time. there might few million $ house sale which skew data. I heard that Brampton Real Estate board is not publishing stats any more.
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http://www.greaterfool.ca/2011/10/13/revenge/#respond
In the last few weeks the Toronto market (and others) has seen bidding wars fade dramatically. The number of active listings has shot higher, while sales have fallen dramatically since the summer, and stagnated for the last three months. The economy’s stuttered and stumbled and this week mortgage rates inched higher. All in all, supply is up and demand is down. The market cools, and revenge warms.
Rahul,
Thanks for detailed response. some of your thought do make sense. But still it depends whether one prefers money saving for future or lifestyle of today.
I am not basically calculative person rather go by guts and good life thought process.. still here are some basic calculations for you.
Since 2007 you are living in condo counting 80k you saved , but your home owner is richer today by 1600 * 50 months = ~80k. All in all the loss which you would have born owning a home is same as what you have born by renting. But you still do not own home as of today despite that loss.
All this while, you saved in RRSP for down payment , but that saving is already eaten up by the rise in house price. Today your down payment will be almost double than it would have been in 2007. Where do you intend to buy now ? way out of city ? to travel long for job?.
80% of asset gets locked in house ! only for initial years, gradually your household income increase brings this percentage down and you have residual saving to put in other sources.
What kind of houses are giving 100k negative equity in Canada as of today? Which area are you talking abt ? If it is in US, then hold on to the house do not sell it , the equity surely is intact. negative equity in case of US is if you intend to sell it as of today. That cannot be the reason to rent which is clear cut loss every month.
I am sure if we do poll among CDs who bought home in 2007 , none will say they have negative equity.
Another lame excuse FOR renting is added to the database - Do not buy home today because your son has to do higher studies one day ! Time will come when our kids will ask for 'their space' which you will not be able to give in rented house atleast!
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