I wonder how long this insanity will last....

[johnp]

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...... My folks sold it 16 years ago for 680k. Two years ago my friends boss bought it for 965k. That's outrageous........

btw over 14 years that works out to average annual gain of 2.53%.

Lots of research shows real estate is not a great long term investment. Most people are leveraged and do really well or really badly - and you don't read about the guys that get wiped out. They're not surfing GTAM since they are holding down 3 jobs to dig themselves out.

 

[Mongrel]

btw over 14 years that works out to average annual gain of 2.53%.

Wouldn't be too bad... if average incomes had risen at that rate too.

 

[lator-illa]

Buy the fancy house and live in the basement, rent out the rest. There is always a way... You just gotta be willing to take a risk.

so what happens if the renter is late on payments or misses it altogether? IMO, doing it this way just to be able to afford the mortgage is stupid. I see renting your own space as extra income, not something where you rely on your tenant to pay a portion of your mortgage.

 

[01cbr]

.

That doesn't mean Apprenticeship pay is a bad deal - it's a damn sight better than the minimum wage a lot of people make. I'm only really saying "Look, it's not as easy as 'Go back to school for trades and be rich!'" as some people were saying.

Where did anyone say that?

Stop looking for "the magic ticket"...........there isn't one.

 

[lator-illa]

Where did anyone say that?

Stop looking for "the magic ticket"...........there isn't one.

Weren't you the one to suggest to "Get a better job" when I had asked "How does one make more money"?
That is when someone suggested trade school as one of the alternatives.

So again, how does one make more money?

 

[Snobike Mike]

btw over 14 years that works out to average annual gain of 2.53%.

Lots of research shows real estate is not a great long term investment. Most people are leveraged and do really well or really badly - and you don't read about the guys that get wiped out.

Exactly. And people also don't include the inflation adjustment when calculating their ROI. So your 2.53% calc is likely lower (unless you already included that).

 

[caboose56]

Exactly. And people also don't include the inflation adjustment when calculating their ROI. So your 2.53% calc is likely lower (unless you already included that).

And how much did they end up actually paying for that $600K house?

 

[estone]

Maybe you die in the fire.

Maybe you die on your bike.


Who cares. Do what you want, live where you want. Its nice living in a good house... I enjoy it. But like I said its a roof over my head not an investment short term. Its a cheap place to live when its paid off.

I get riled up by people like paul1000 because they just don't get that one part and paint everyone with one brush. Again, like ZX said, people DO their research. Lots of people do. They take a risk. At the end of the day, they buy something that they fall in love with, and if they're smart they won't get burned. Even if they do, who cares! It was a great place to live, to raise kids. Whatever.

I DO agree there are some serious monkeys out there, driving up bidding prices through the roof, and these people are...just...dumb. If 50% of the population is average intelligence and up, that means that the other half is dumb.

Just don't paint everyone with the same brush. You might end up in the latter category.

Stupid real estate threads. Paul, good luck with your choices man. It's Christmas, peace and love.

 

[TimC]

as a home owner sitting on the sidelines watching this insanity...I do think we need a slight bump in interest rates to try and slow things down

the Feds 25 year amort revision hasn't stopped the insanity...I guess because the money is still basically free to borrow

I constantly tell my wife how fortunate we've been....bought a nice 3 bdrm bungalow (built in 1957) near Yonge and Sheppard....a 7 minute stroll from the Yonge subway line....in 1997....for $243,800....no bidding wars.....the listing was on the MLS for nearly 6 months and they dropped their asking price twice...I lowballed and then we went back and forth for a week

we scrounged up a 12% down payment and basically borrowed the maximum we qualified for....we locked in at 5% for 5 years and I thought it was the deal of a lifetime (I remember the late 1980s and 18% rates)

fwiw.....the guy we bought the place from sold it for a loss....he had paid $255k in 1992....so prices do drop

we paid it off in 12 years (rode the 5% rate the whole time)....it took some sacrifice...aka...the last fly away vacation we took was our honeymoon in 1994.....and aside from a coat of paint here and there and fixing stuff that broke....we didn't do any renos until the place was paid off (easier to save for renos when there's no more mortgage payments)

I've watched my street go from newlyweds and nearlydeads with probably 20% rentals in all the original buildings spanning 1930s-1960s....to the current trend of developers paying $800k to tear down the property, build a new mansion and sell it for $1.8 million

seems these builders are determined to turn my street from "middle class" to "upper class"....there are literally 9 houses under construction at the moment....around a dozen already built and sold in the past 2 years....it represents about 30% of the properties on my street

it's nuts.....and I feel for folks trying to get into the market

the buyers of these new places on my street are apparently down-sizing from larger more expensive places further south....so they're cashing out and can afford it I guess

but for the same budget as we had....you're no longer buying a detached house at Yonge and Sheppard....but likely a townhouse in Burlington....which sucks when comparing the commute into downtown...but it's not like there aren't places to buy for that kind of money

if I were to offer any advise it would be to establish your budget (using 32% of gross) and then find out where you can afford to buy....and buy it because this is where you choose to live for good....not sit on for a while to try and make money off of it

I haven't got a crystal ball on the real estate market....but I can say without doubt that when interest rates rise, prices will stall and/or fall....but you'll be paying the bank via higher interest rates rather that the seller of the house

I have a sibling who has been renting the same length of time since we purchased (16 years now)...and while I've paid out around $320k for my place in mortgage and interest....he's now up to $230k....but his $230k is gone.....and he'll continue to part with $14k per year.....if he lives until he's 90 his rent tab will be somewhere between $800k and a million bucks

you will always need a roof over your head and it will never be free

 

[lator-illa]

I have no doubt in my mind that prices will fall once interest rates rise. People who could barely afford their mortgage with a really low variable rate will be the ones contributing to falling prices. Once Prime rate rises, they'll slowly realize that payments become more and more unaffordable and will end up selling. At that point, I believe the housing will turn into a buyer's market again.

And yes, because rates go up, you will essentially be paying almost the same amount for a house with a higher purchase price. But i'd rather buy low than buy high with RECORD LOW interest rates.

 

[meme]

Latorlilla What kind of education do you have?

 

[01cbr]

Weren't you the one to suggest to "Get a better job" when I had asked "How does one make more money"?
That is when someone suggested trade school as one of the alternatives.

So again, how does one make more money?

By putting in some effort and stop looking for handouts.

You get paid to learn a trade. You want a to get $60,000 when you don't have the skills? You aren't going to make it far...

 

[Paul1000RR]

I get riled up by people like paul1000 because they just don't get that one part and paint everyone with one brush. Again, like ZX said, people DO their research. Lots of people do. They take a risk. At the end of the day, they buy something that they fall in love with, and if they're smart they won't get burned. Even if they do, who cares! It was a great place to live, to raise kids. Whatever.

I DO agree there are some serious monkeys out there, driving up bidding prices through the roof, and these people are...just...dumb. If 50% of the population is average intelligence and up, that means that the other half is dumb.

Just don't paint everyone with the same brush. You might end up in the latter category.

Stupid real estate threads. Paul, good luck with your choices man. It's Christmas, peace and love.

I completely understand that! There is no need to get riled up over a thread, its just a forum man!

"They take a risk. At the end of the day, they buy something that they fall in love with, and if they're smart they won't get burned. Even if they do, who cares! It was a great place to live, to raise kids. Whatever."

I understand that as well, but if these same people then come on here and chose to skew their numbers to make their decision look better than what it actually is, its not really fair now, is it?

I'm simply pointing out the alternatives and the hidden costs that MOST people don't take into account. A lot of you here might be the exception, i'm however talking about the majority of people that i've talked to over the course of my life.

I hope you all get rich no matter if you rent or own. **** i hope house prices go up 10 fold over the next 25 years in this city, but i doubt it.

 

[lator-illa]

Latorlilla What kind of education do you have?

I graduated in Computer programming.

By putting in some effort and stop looking for handouts.

You get paid to learn a trade. You want a to get $60,000 when you don't have the skills? You aren't going to make it far...

I'm not asking for myself but I was asking generally. Again, you make it sound so easy. You just can't seem to grasp the idea that not everyone can easily do this. Not everyone can just drop what they do and start over..

 

[Snobike Mike]

I understand that as well, but if these same people then come on here and chose to skew their numbers to make their decision look better than what it actually is, its not really fair now, is it?

I'm simply pointing out the alternatives and the hidden costs that MOST people don't take into account.

This is an important point. The cost of ownership includes taxes, interest (if you have a mortgage), and far more importantly the cost of maintenance which is way higher than most budget for.

You have to take all of those costs and deduct them from your capital gains to give you a rough estimate of your actual "increase" in your investment.

Taking aside qualitative items when comparing rent vs own (such as quality of living, pride of ownership) you have to calculate the delta between renting vs owning. In most cases it's likely to be cheaper to rent, again aside from the qualitative benefits of ownership.

 

[nfq]

I graduated in Computer programming.



I'm not asking for myself but I was asking generally. Again, you make it sound so easy. You just can't seem to grasp the idea that not everyone can easily do this. Not everyone can just drop what they do and start over..

Until they have to.

 

[BLUE_KAWI]

Interest Rates don't have to rise. A rise in cost of living or losing a job can be the same in hike in interest rates.

I have no doubt in my mind that prices will fall once interest rates rise. People who could barely afford their mortgage with a really low variable rate will be the ones contributing to falling prices. Once Prime rate rises, they'll slowly realize that payments become more and more unaffordable and will end up selling. At that point, I believe the housing will turn into a buyer's market again.

And yes, because rates go up, you will essentially be paying almost the same amount for a house with a higher purchase price. But i'd rather buy low than buy high with RECORD LOW interest rates.

 

[meme]

Until they have to.

Or if you really want it

 

[Dresden]

Always a possibility, but I am not in a bad spot like a lot of home owners as I didn't over extend myself.
I am already paying more into my mortgage every two weeks than is required, and at the same time I am maxing out my TFSA, contributing to my pension plan, and putting money into RRSPs.

If I lost my job, I could live off my TFSAs for at least 6 months if not longer, and in that time I would look into any work... including going back to driving truck as I still have an AZ license. In the absolute worst case scenerio I would sell my bike, sell my guns and ammo, sell my guitars, and only at the very end would I sell my house. With the interest rates we have right now, I would have to be unable to raise $900 a month (that is the minimum I have to pay towards my mortgage) in order to have to sell.

The USA needs more home owners like you. Maybe the 90's kinds won't know this, but at one time, it was considered a PRESTIGE to own a credit card... they just didn't hand them out on frosh week.


I agree that it's gotten out of hand (condo market especially).

Average 99%-er (no wonder they are mad)

Be 23-25
Just graduating Uni/college
Expects top job, at least $50k+
About $20k in debt, if only.
Cant find job.
Debt mounting, credit hurting, No EI assistance just yet.
Finally finds job. $30k

Now be 25-27
Be girlfriend. Luv u long time.
Still $20k in debt.
GF also $20k in debt. Must have LV handbags and Chanel Glasses, it's a necessity.
Credit in shambles.
Save save save

FF to 27-30
Looking for home.
Hardly any savings, just paying off debt.
Needs 20% to buy own place.
Can't afford $80k deposit.
Cry to parents.


Be looking to get married.
Fiance wants $30k wedding.
Cry even more.

 

[awyala]

The USA needs more home owners like you. Maybe the 90's kinds won't know this, but at one time, it was considered a PRESTIGE to own a credit card... they just didn't hand them out on frosh week.


I agree that it's gotten out of hand (condo market especially).

Average 99%-er (no wonder they are mad)

Be 23-25
Just graduating Uni/college
Expects top job, at least $50k+
About $20k in debt, if only.
Cant find job.
Debt mounting, credit hurting, No EI assistance just yet.
Finally finds job. $30k

Now be 25-27
Be girlfriend. Luv u long time.
Still $20k in debt.
GF also $20k in debt. Must have LV handbags and Chanel Glasses, it's a necessity.
Credit in shambles.
Save save save

FF to 27-30
Looking for home.
Hardly any savings, just paying off debt.
Needs 20% to buy own place.
Can't afford $80k deposit.
Cry to parents.


Be looking to get married.
Fiance wants $30k wedding.
Cry even more.

^This

There is a reality check coming that's 2 generations over due. The price / rate adjustments on the immediate horizon are minor. What is coming is more along the lines of the rust belt in the US. Certain elite geographical areas may be fairly stable especially in the downtown cores, but generally a massive correction is coming.

Either this means a price drop so everyone can get on the property ladder, which is unlikely, or a lifestyle / expectation change is coming.

This is already evident in terms of shoe box living, 250cc low capacity motorcycles, etc. In the near future I foresee a cultural neo-grunge to kick off a new more frugal and introspective cultural shift. Macknemore, Lorde, etc seem to be the vand guard of a coming anti-bling change.

Note grunge co-incided with the 91 recession after glam rock and glam old school rap of the 80s. Rock went grimy and rap went gangsta. With the rise of the economy came bling culture in all forms.

Rates will rise, budgets will tighten, brand names will retreat back to Paris and Monaco and get the hell out of our suburban malls (WTF is up with Yorkvdale!!!!).

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