Housing Bust 2012

Leveraging, renting vs owning, making an investment or buying a home?

Re: Housing Bust 2012

Postby AltaRed » 06 Feb 2012 19:28

I see no difference. Whether one pays premiums in the US for heathcare or it is buried in income taxes, what is the difference? How is income measured? Gross or net? The comparison should be on a net AT basis inclusive of health care and other payroll type deductions. Canadians really don't understand how the 'house of cards' could come tumbling down. FWIW, it would be good if investors in the speculative condo market get their heads handed to them on a platter to bring some sanity back.
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Re: Housing Bust 2012

Postby Norbert Schlenker » 07 Feb 2012 03:44

Smells like (envy of) teen spirit. Prone to it myself. ;)

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Re: Housing Bust 2012

Postby big easy » 14 Feb 2012 00:12

http://www.theglobeandmail.com/report-o ... le2336199/

Two more steady years ahead according to CHMC. I note in my own area of Vancouver that actual sales prices are now below appraised value - some as much as $100,000 below. Most recent data is as of Oct 2011 though. Could this be the beginning of the long awaited correction/crash.
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Re: Housing Bust 2012

Postby Insomniac » 14 Feb 2012 01:24

We intend to list our Nanaimo condo next week. The market is slow and there is plenty of inventory so I expect that it will take a couple of months to sell. A couple of years ago, we had people leaving notes on our door asking if we were interested in selling.

Last December, a condo on the floor below us sold - I think the owner who had only owned it for a couple of years lost about $50K in the deal.

So in Nanaimo, the correction has been going on for a while now.
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Re: Housing Bust 2012

Postby randomwalker » 14 Feb 2012 07:44

big easy wrote:http://www.theglobeandmail.com/report-on-business/economy/housing/two-steady-housing-years-ahead-cmhc/article2336199/

Two more steady years ahead according to CHMC. I note in my own area of Vancouver that actual sales prices are now below appraised value - some as much as $100,000 below. Most recent data is as of Oct 2011 though. Could this be the beginning of the long awaited correction/crash.



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Re: Housing Bust 2012

Postby dusty2 » 14 Feb 2012 12:27

I don't know who was making the appraisals, but I don't think that I'd recommend them with that appraisal. If they're selling for $100,000 lower than their asking price, then there's a problem. 1984 was one of the great books written in the last century and George Orwell was a great writer.
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Re: Housing Bust 2012

Postby patriot1 » 14 Feb 2012 20:17

dusty2 wrote: If they're selling for $100,000 lower than their asking price, then there's a problem.

The problem is simply that the asking price was too high.

Any owner of anything has two choices - sell at the market price, or not sell.
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Re: Housing Bust 2012

Postby Inquisitive » 15 Feb 2012 03:37

I don't know who was making the appraisals, but I don't think that I'd recommend them with that appraisal.


I am guessing big easy was referring to the assessed value, from BC Assesment,where assessments and sales are currently online.


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Re: Housing Bust 2012

Postby BRIAN5000 » 16 Feb 2012 14:54

http://finance.yahoo.com/news/new-ameri ... -rich.html

"100 percent of the time it was better to rent, rather than own."

"The promise of home ownership is that over the long haul, it can rebate many or perhaps all of your costs, unlike rent, which doesn't rebate a dime."
“Sometimes you are going to sell early and wish you would’ve held on, other times you will hold on a
little bit longer and wish you would’ve sold early - this is just part of the game.” - Frank Zorilla via Abnormal Returns
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Re: Housing Bust 2012

Postby patriot1 » 18 Feb 2012 09:18

Home foreclosures skyrocket in Kelowna

Image

I think the price peak was in 2008.
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Re: Housing Bust 2012

Postby CROCKD » 24 Feb 2012 19:44

Canada's housing bubble: This time is not different

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Re: Housing Bust 2012

Postby Brix » 25 Feb 2012 11:57

Schadenfreude from Australia:
In the years following the global financial crisis (GFC), the Canadian and Australian housing markets were among the best performing in the English-speaking world. While housing markets in other English-speaking nations- most notably the United States, Ireland, the United Kingdom, and New Zealand – remained in a funk, Canada’s and Australia’s powered on to new all-time highs.

Whereas Australia’s house prices peaked in mid-2010, and have been deflating ever since, Canada’s powered on led by its third largest metropolis, Vancouver, British Columbia

http://www.macrobusiness.com.au/2012/02/canadian-bubble-trouble-leith-van-onselen/

Focuses on the role of CMHC, usefully gathers a mass o' graphs and charts.
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Re: Housing Bust 2012

Postby northbeach » 25 Feb 2012 15:53

Prices in Belleville, Trenton and Prince Edward County have not risen that much over the past few years. This is my impression and not based on specific data. From a low base price, prices have been going up moderately. My house is probably worth 25% more over 8 years since I purchased it. I understand prices have near double in Toronto over the same period.

When I drive through Toronto and see all the condos being built, read the papers about Fort MacMurray and Vancouver I sense major spikes.

I am wondering what will happen to the TSE if the Condo market in Toronto imploded? Will it affect the rest of the Canadian economy.

Besides the prospect of possible interest rate increases in Canada, I am wondering what would happen if foreign investors fled due to financial collapses in their economies. Or would that make any difference?
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Re: Housing Bust 2012

Postby gsp_ » 25 Feb 2012 19:15



An economist who believes he can predict not only the magnitude of bond/mortgage rate increases but also precisely when they will peak and then forms his argument around those faits accomplis.

Love the foolishnessbravado displayed by prognosticators.
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Re: Housing Bust 2012

Postby newguy » 25 Feb 2012 19:16

gsp_ wrote:An economist who believes he can predict not only the magnitude of bond/mortgage rate increases but also precisely when they will peak and then forms his argument around those faits accomplis.

Love the foolishnessbravado displayed by prognosticators.

And one who doesn't realize that rates in the US are still declining yet housing still popped.

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Re: Housing Bust 2012

Postby HardWorker » 25 Feb 2012 23:36

We were having dinner at the inlaws, when they mentioned how much the realestate market today reminds them of the 80s. They also commented how unfortunate it is, and was, for the responsible owners to sink with the overspenders. They still have mortgage papers showing 20% interest :shock:

I really hope we don't experience what the US/UK/others are going through, but we know some of our friends will be hurt badly without much stress :(. I think I have done all I could for my family, and with a bit of luck, I'll have enough resources to buy a property or two when they go on sale. I admit it's a bad thought to prosper from other's mistakes, but it's pretty evil to let things slip by as well.
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Re: Housing Bust 2012

Postby AltaRed » 25 Feb 2012 23:59

HardWorker wrote:We were having dinner at the inlaws, when they mentioned how much the realestate market today reminds them of the 80s. They also commented how unfortunate it is, and was, for the responsible owners to sink with the overspenders.

Yes, it can be sad that generally hard working individuals have to endure the stress caused by the consequences of greedy irresponsible speculators. But provided responsible homeowners have not overextended themselves, it is good for the market to shake out the sleazebags from time to time.
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Re: Housing Bust 2012

Postby HardWorker » 26 Feb 2012 00:27

AltaRed wrote:
HardWorker wrote:We were having dinner at the inlaws, when they mentioned how much the realestate market today reminds them of the 80s. They also commented how unfortunate it is, and was, for the responsible owners to sink with the overspenders.

Yes, it can be sad that generally hard working individuals have to endure the stress caused by the consequences of greedy irresponsible speculators. But provided responsible homeowners have not overextended themselves, it is good for the market to shake out the sleazebags from time to time.



The over greedy and irresponsible speculators deserve what they get, but its sad when the less informed/emotional/over optimistic hard workers also loose their shirt. Much like my in-laws, we will take a hit on our house no doubt, but knock on wood it'll be just a bump in the road.

Last week my wife's best friend and husband bought a house. This particular area has grown and seen house prices jump leaps and bounds in 10 years. Asking price was 389, and they paid 409 for a town house. The seller's agent told them he won't deal with a buyer's agent, so now he gets double commission. A week earlier they lost a bidding war, and this week they were very emotional and paid over asking just so they don't lose the house. The 5% down payment is borrowed from one of the parents, who are also the co-signors on the mortgage :( . We tried our best with gentle hints its best not to buy, but we simply were no match for their emotions. They are such awesome people, and I hope they won't get burned that badly, but I'm not betting the farm on it, nor do I think they are the only ones.
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Re: Housing Bust 2012

Postby AltaRed » 26 Feb 2012 00:54

HardWorker wrote:The 5% down payment is borrowed from one of the parents, who are also the co-signors on the mortgage :( . We tried our best with gentle hints its best not to buy, but we simply were no match for their emotions. They are such awesome people, and I hope they won't get burned that badly, but I'm not betting the farm on it, nor do I think they are the only ones.

I hope they at least signed up for a 5 year term. The risk comes when the term is up and the mortgage is underwater. As I understand it, the lender wants the difference up front before agreeing to a new term. This happened in Calgary post-2007 peak when 5% (even 10%) down payments left houses underwater by 2008-2009. People lost houses because they couldn't come up with the difference.
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Re: Housing Bust 2012

Postby HardWorker » 26 Feb 2012 01:15

AltaRed wrote:I hope they at least signed up for a 5 year term. The risk comes when the term is up and the mortgage is underwater. As I understand it, the lender wants the difference up front before agreeing to a new term. This happened in Calgary post-2007 peak when 5% (even 10%) down payments left houses underwater by 2008-2009. People lost houses because they couldn't come up with the difference.



So that would limit their losses to 5 years in a worst case scenario? Meaning they'd lose everything they've spent on that house in 5 years? I'm assuming in 5 years its worth exactly what they paid today. I know if the house drops in value, the lender would go after them for the difference.

I thought the government made mortgage lending harder to obtain? But I guess it doesn't really matter when the parents co-sign. The parents of our friends have the means to buy this house in cash.
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Re: Housing Bust 2012

Postby dusty2 » 26 Feb 2012 12:47

Housing bubble heads should keep their 'gentle hints' about not buying a home to themselves, they've been wrong for the last 30 years and they'll probably be wrong for the next 30. They seem to think that since the U.S., Ireland or Mexico or some other country that caused it's housing to collapse for various reasons, Canada's is next in line. Sort of like saying 'don't buy any Canadian stocks because Bernie Madoff was a crook'. With interest rates at an all-time low, a strong economy, good government, Canada's housing is as solid as a rock. Although that doesn't include Quebec's because of it's political situation.
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Re: Housing Bust 2012

Postby AltaRed » 26 Feb 2012 13:19

HardWorker wrote:So that would limit their losses to 5 years in a worst case scenario? Meaning they'd lose everything they've spent on that house in 5 years? I'm assuming in 5 years its worth exactly what they paid today.

People committing to a 5 year term with say, 5% down, have: 1) a better opportunity to pay down principal during a period of slumping house prices and thus have less to 'make up' for being underwater at time of renewal, and/or 2) a chance to increase their income and/or savings during that time, and/or 3) a chance at cost recovery in a slumping housing market, and/or 4) a chance to survive interest rate shock risk.

Of course, that is not a given, but I believe people with minimum down payments take exceptional risk chasing short term, (current) low interest mortgages when they can least afford to do so. Indeed, if people were forced to get into 10 yr or more fixed term mortgages with accelerated payment options, that would serve them even better as they get their lives together increasing their financial robustness. Remember 25 yr fixed term mortgages?
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Re: Housing Bust 2012

Postby HardWorker » 26 Feb 2012 13:20

dusty2 wrote:Housing bubble heads should keep their 'gentle hints' about not buying a home to themselves, they've been wrong for the last 30 years and they'll probably be wrong for the next 30.


You really would tell a couple with no down payment, bad credit, to buy a house over budget/over asking price just because interest rates are super low now, and houses can only appreciate?
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Re: Housing Bust 2012

Postby AltaRed » 26 Feb 2012 13:24

HardWorker wrote:You really would tell a couple with no down payment, bad credit, to buy a house over budget/over asking price just because interest rates are super low now, and houses can only appreciate?

You are feeding the troll.....
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