Real Estate Market and Selling Home (this year or next year)
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Posted on: 04-05-12 11:22:44
I follow another thread of Real Estate and I have noticed we have lot of knowledge about RE market.
My question is about selling home and it may endup with similar kind of discussion.
Lets assume someone has plan to sell home after two years due to some reason. (He needs money for starting business or going back to India or he is going to loose his Job or whatever)
Do you suggest to sell home today and renting apartment meanwhile?
Do you suggest to sell home next year? (to have little more profit or at least will get chance to live bigger home for one more year without loosing anything in compare of today)
Do you suggest to sell home after two years when he really needs money?
Nobody knows about future of Real Estate market but would like to have your comments/suggestions about what should we do in this situation?
How would your comments/suggestion will be different if home is in Ottawa instaead of GTA? (Would like to have comments for both city)
Thank you very much in advance,
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Success is Never Ending and Failure is Never Final.
Thoda philosophy:
What is known or sure is past and present. Future is unknown. So if selling the current house meets your need and you are ready to shell out around 30,000 in rent for 2 years then go ahead and sell and rent.
But if you are kind of ready for lets say a loss of $30K in house price within next 2 years then you should wait... A lot depends on your current house type/size and what you will be renting. So if it is like 1 mil house and you are ready to move in to a 2 bed condo, then you should sell now. If it is around 400K and planning to move in 3 bedroom condo then wait..So factors to consider:
1) Current house: Type, age, location and current estimated price
2) Mortgage term, if you are near your renewal or on variable then you have flixbility
3) Future renting options: same, age, type, location and current rent
4) and most important..your need and criticality. do you have a bandwidth of +/- 15% of amount you are expecting to get.
Hope this helps..or confuses more...but playing with these 4 factors, you should be able to come to conlusion.
Good luck!
Its a more mathematical question than a market watch game.
Compare the total intended rent/admin vs. total morgage plus taxes you will pay in the next 2 years. (this is individual case based calculations so cannot be generalised ) and go for whichever lesser.
If sold today, The market gain in next 2 years will be offset to some extent by the difference in payments for accomodation plus the interest you will earn on capital gains provided put into TFSA and the sales proceed is considered to be done on primary residential property (else half of capital gains will be taxed )
life style will be compromised for sure in case of renting.
if the period in question is only TWO years and your calculation is tilting towards renting, you will not lose much monetarily.
if your house is getting older selling will make sense as not much gain to expect in 2 years.
Above is valid for GTA as well as Ottawa.
Below only for GTA,
YOu will get a buyer anytime in GTA, Around half of GTA population lives below ground (in basements) or above parking lot (in condos) , allmost all of them aspiring to own a home on ground, not to mention inventory of immigration/business applicants with intentions of earning in other countries spending in canada.
If you know, how construction has shaped up in GTA, a decade ago in GTA for one condo there were 3 detached houses, it is reversed now for one detached house there are 3 condos. You see if there are problem of house cost escalation and unaffordability, there are solutions (condos) being provided by market players. but people with taste are above all market economics !
Enjoy ! Did you ask your wife about your thoughts ? ;-)
Thanks Bhootnath.
your comment helped me for calculations.
After calculation, I ended up
Property Tax + Interest on mortgage + utility bills for his town home
are approximately same as
Rent - interest he can make on fund available after selling home.
He doesn't have big mortgage. So, he can enjoy his stay in townhome instead of apartment for same expense.
Only the problem will be if market goes down and he won't able to sell his home as per today's price. He will loose some money.
I am not sure but I think he should not worry because he has new townhome (Age: 3 years) of approx. $300K in developing area (Walmart is coming to 2 min. walking distance from his home) of Ottawa.
What do you think?
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Success is Never Ending and Failure is Never Final.
If the market started tanking, it won't be some money, it would be big money.
And then it would also be a deal to get the house out of him.. too many sellers...
Quote:
Originally posted by meitsme
Only the problem will be if market goes down and he won't able to sell his home as per today's price. He will loose some money.
I am not sure but I think he should not worry because he has new townhome (Age: 3 years) of approx. $300K in developing area (Walmart is coming to 2 min. walking distance from his home) of Ottawa.
What do you think?
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The cowards never started,
The weak died on the way,
Only the strong arrived.
http://www.youtube.com/watch?v=_yK1i9cLAMM
ashedfc put very nicely.
Other things to consider:
GTA market does not seem bad so how much are you making after complete deal?
Mortgage break penalty, Realtor commission, Home staging cost, moving cost, lost return on down payment or RRSP hole to fill, Condo/town home fee, land transfer fee, lawyer fee and other miscellaneous cost.
Quote:
Originally posted by meitsme
After calculation, I ended up
Property Tax + Interest on mortgage + utility bills for his town home
are approximately same as
Rent - interest he can make on fund available after selling home.
What do you think?
Quote:
Originally posted by meitsme
Thanks Bhootnath.
your comment helped me for calculations.
After calculation, I ended up
Property Tax + Interest on mortgage + utility bills for his town home
are approximately same as
Rent - interest he can make on fund available after selling home.
He doesn't have big mortgage. So, he can enjoy his stay in townhome instead of apartment for same expense.
Only the problem will be if market goes down and he won't able to sell his home as per today's price. He will loose some money.
I am not sure but I think he should not worry because he has new townhome (Age: 3 years) of approx. $300K in developing area (Walmart is coming to 2 min. walking distance from his home) of Ottawa.
What do you think?
If this is townhome, I think he should continue staying. As I said 2 years rent will end up costing at least $30K. so if he sells it now for approx 300K actually he is selling it for $270K. I am pretty sure that at least in next 2 years the Rate of interest is not going to go up sky high. There might be smaller correction in next few months but it will again pick up. Also since it is new townhouse, even if market does not appreciate he can still get at least 300K if not more and plus savings on rent. Again as I said if there is little flexibility around the need for money at the end of the 2 years, there is no harm in continuing to stay. Had it been 6 months or less it was no brainer but to sell now but for 2 years waiting seems more reasonable.
Nice colorful chart Ashedfc...
