# Owning a house really worth it for me?



## mar2007 (Oct 13, 2007)

I just entered the housing market last year. So everything is really new to me. 

Everybody always told me buying a house is the best thing you can do at a young age. So here i am now, i have a career im 25, and bought my first house. 

Before i had a house i had been renting a room for 9 years, Ive never rented an apartment. I love having a house but i think i made a mistake.. is it really worth it?

I pay almost 6000 a year of interest to the bank
and i pay almost 2000 a year of property taxes
and 4000 a year for heat, hydro, cable
not including matinance

for a total of 12,000 or more a year out the window

I am thinking a selling my home and going back to renting a room. Why? 
To me it doesnt seem worth it. Instead of throwing money away on interest and taxes, i could be saving that money every year.

If i didnt own a house i could save 20,000 or more a year because i dont smoke, drink, eat out at resturants or go on vacations and In 10 years i would have a little over 200,000 saved up and use that as a downpayment.

And renting a room only cost about 4800 a year, dont have to worry about heat, cable, taxes.. nothing. yes its smaller but if i hold in for 5- 10 years..It seems to be worth it for me considering i am single no kids and dont want a girlfriend anytime soon.

Any Advice?


----------



## winwintoo (Nov 9, 2004)

You forgot to mention:

yard work

rakes
lawn fertilizer
lawn mower
lawn edger

painting

ladder
paint
brushes

roof repairs
tree trimming
fences
furnace repairs
plumbing
For some people, owning a house is like a religion. For other like me, I didn't drink the koolaid and have been happily renting for 30 years after selling my house.

Margaret


----------



## Dr.G. (Aug 4, 2001)

Depends where you live. If you live in a place with stable but rising housing values, like where I live in St.John's, you would not make a killing with soaring prices, but will make up all of your interest and costs when you do sell. I am a year away from burning my mortgage and I can't believe what my house would sell for even now, after living in it since 1996. We have been lucky in that the mortgage rates kept falling for most of the life of our mortgage, and that cut years off the final bill, as did paying weekly and adding an extra $100 a month to the payments.

Equity is the name of the game when buying a home.


----------



## Macfury (Feb 3, 2006)

If you don't value the experience of home ownership right now, go back to renting a room.

Either sell the house at a profit, or live in the basement, rent out the house and have them pay the bills.


----------



## Sonal (Oct 2, 2003)

I am a big fan of owning real estate, but when it comes to the house you live in, I believe that buying solely for investment purposes is not always a great idea. You should buy a house to live in first because you want to live there. 

Before you look into how much you are losing, you also have to look into what equity you are gaining.... admittedly, it's probably not $20,000 a year, but you need to factor it in, especially over the 5-10 years between now and when you would be ready to buy a house again.

Plus--and this is a very general statement that has a lot of specific exceptions--in 5-10 years, the same house would probably cost you a lot more money to buy. You need to factor in the rise in value, although that is difficult to quantify. 

All that said, there is a good financial argument to be made for renting and investing the difference. If home ownership doesn't matter to you personally, then perhaps it's better to sell your house and just rent. 

However, before you jump and sell, you need to look at how much it will cost you to sell (current prices, commissions, moving costs, etc.) vs. holding on for a while. Maybe you jumped into this without knowing too much before, but don't jump now without researching it carefully. Real Estate is what I call slow money. It's not hard to do well, but it will take time.

All that said, is it possible for you to make some money from your house? What if you were to rent out rooms? That would certainly make home ownership less of a drain.

Edit to Add: I like MacFury's idea of living in the basement and renting out the rest of the house--if you don't enjoy home ownership, then that might be a very smart financial choice for you.


----------



## Adrian. (Nov 28, 2007)

Try living in a condo. All of that + they tell you how much it is going to cost + condo fees. 

I pay $650/month just in condo fees. My building is 3 years old, so there have been no major repairs necessary.

That is the price of living biking distance to work.

The problem with waiting is that if the housing market continues to rise, that $200,000 might not mean as much in ten years. 

As Marc said, it depends where you live.


----------



## Dr.G. (Aug 4, 2001)

Also, keep in mind the size of your family. I always rented when it was just me. When I got married, and we started to have children, a home in a good neighborhood was what we looked for. I knew nothing about "location, location, location", but luckily we had a good real estate agent who helped us and it was a good decision at the time.

Sadly, the home we now live in and bought back in 1996 is one which I could not afford on my salary and the salary of my wife. This area of St.John's never went through any boom cycle, but has not gone through any bust cycles either.


----------



## Dr.G. (Aug 4, 2001)

Adrian. said:


> Try living in a condo. All of that + they tell you how much it is going to cost + condo fees.
> 
> I pay $650/month just in condo fees. My building is 3 years old, so there have been no major repairs necessary.
> 
> ...


Good point, Adrian, re living close to where you work. I was able to walk to work in 10-15 minutes, and bike to work in 5-7 minutes. I live in the center of St.John's, but border a park. Still, if I walk across the park, I am near my bank, a Dominion store, a Shopper's Drug mart, etc.


----------



## Sonal (Oct 2, 2003)

Adrian. said:


> I pay $650/month just in condo fees. My building is 3 years old, so there have been no major repairs necessary.


You remind me why I love the condo management company in my building.... I have the lowest condo fees of anyone I know in Toronto, and mine includes all utilities.

Plus, they really do an excellent job.


----------



## John Pryor (Feb 13, 2008)

As someone who is mortgage free at 40 I would say that owning is better but only if you don't try and live beyond your means. My Wife and I had some good basic rules that we use and recommend to others.
-NEVER do just the 5% down, always aim for 15% - 20%
-BUDGET your monthly payments so that you can make a few extra in the year. The extra will go straight to equity AND reduce your interest. We just applied our tax return every year and we paid off 15 years early.
-Make sure that the house is not too big for your use! it is nice to have that extra room but it also costs a lot more to heat/cool/light and the extra maintenance can kill.
-New is not always better. Many new homes have complicated roof and window layouts that cost more to replace and they need to be replaced/upgraded every 15-25 years.

If you can't make this house fit your budget then downsize. If you are used to renting a room then smaller would be better anyway so you can build up your equity and then when you start a family you can move to something bigger or not.


----------



## i-rui (Sep 13, 2006)

Macfury said:


> or live in the basement, rent out the house and have them pay the bills.


this.

why rent from people, when you can rent TO people? if all you need is a room, rent the rest of the space, and that should more than pay for your expenses.


----------



## MLeh (Dec 23, 2005)

As much as I am inclined towards recommending home ownership for most people, the decision really depends upon your own personality and self-discipline.

In theory it is cheaper to rent than to own on a day-by-day (or month-by-month) analysis. If you actually DO save the difference, and invest it in something that is going to provide a better return than the difference in the gain in equity less the cost of your interest on the principle, then yes, you are better off renting for now.

But rent is money out the window while mortgage payments do build equity. Home ownership is better for people who lack self-discipline to save in other ways. 

(We had this very discussion 30 years ago with a friend who did the math and said it was cheaper to rent and save. They decided they would rent and save the difference, but they never actually did 'save', and now 30 years later they are worse off - bought later, and just now finally paying off their mortgage.)

Looking into the crystal ball is always helpful, because it's hard to say where housing values are going to go in the future.

You say you bought last year - which was a low point in most markets. Not a bad time to buy. If you bought a good house, one in an advantageous location - I'd say you'd probably be better off keeping it. Your original post said " I love having a house", and that has to be an important factor as well.

What you haven't said is how big your house is, or its location - both of which will be important factors in long term viability of keeping it. Is it in a good location for work and other factors? Is it a one person house? If it is larger: have you considered taking in a room-mate? (We bought a 2 bedroom condo for our daughter to live in last year - while she's at University - and rent out the second bedroom to a classmate of hers. What we charge the room-mate pays the condo fees, the taxes, maintenance costs & utilities, while she's getting a much nicer place to stay than what she'd get for more money living in someone's basement. All we're out right now is the paltry interest the banks would have paid on our savings, and hopefully we'll gain that back in rising value when we sell the place. If not - well, we would have had to pay for our daughter to live somewhere anyway.)

Realtor fees, if you sell the house right now, will probably eat up any profits you may have gained in the little time you've owned the house. The only people who are guaranteed to make money if you sell is the realtors.

My own story: Rent cheap, then buy and pay it off quickly. My husband was capable of saving, as was I. When we got married we'd both been renting, and saving, and when we bought our house we had a hefty down-payment and paid it off fairly quickly by sacrificing some of the 'toys' our friends were enjoying. We've been married for 28 years and mortgage free for more than 20 of those. Life is good without a mortgage. 

But you have to have self-discipline, and only you can answer that question.


----------



## johnnyspade (Aug 24, 2007)

Like John, I am also mortgage free and was so at 35. I wouldn't be in the situation I'm in had I not entered the property market in the first place.

So much of making money in real estate is timing and location. I purchased my first place in Vancouver about 9 years ago and we lived there for 3 years until the boom hit. With the money we made from selling the loft we were able to purchase our home in Nova Scotia outright, 5 years ago. If I were still renting today I would be no further ahead and still lining someone else's pockets with my hard-earned cash.

I would also recommend entering the market, if you need to carry a mortgage, while the interest rates are low. If you're ready to enter market in ten years, interest rates could be much higher and so could the price of the home you wish to buy. What you may want to consider is saving up so that you can put a large chunk of cash against your mortgage at renewal time, or ongoing depending on your mortgage. Putting money towards your principal will save on that interest.


----------



## Sonal (Oct 2, 2003)

If you do choose to rent out part of your house, you will be able to write off a portion of your housing expenses against the rental income. (Unless you are renting under the table.)

Some info:
TaxTips.ca - Property rental - deductible expenses

I know you are still learning about finances, but if you choose to rent out space in your house, then look into this.


----------



## Adrian. (Nov 28, 2007)

That is very good advice.

When I was doing my undergrad, my dad co-signed a house for me that I had 4 people lined up to live in. I paid the mortgage, lived rent free and cleared about $400 a month for 3 years. I sold the house after I graduate and made about $16,000. That paid for half of the next 2 years . 

Just have to be careful who you rent to.


----------



## MACinist (Nov 17, 2003)

As all of you have mentioned, it all depends on the situation and the location. 

We bought downtown not too long ago (6 months ago). We live in a 2bed/2bath plus den condo downtown that's a pretty new building. If I were to try to find a place of equal size and quality, i'd be paying 2000 to 2400 per month in rent easily. Including my mortgage, maintenance, property tax etc... I pay on the lower spectrum of that. And we only put 5% down. So, I think the biggest rule of thumb that I stick by is if it carries like rent, then it makes sense. The biggest advantange of rent to me is the freedom of moving when the housring market is not so good or in a decline. (like now)

If you don't need the 2 bedroom though, then it is a better deal to rent, at least downtown it is.


----------



## Jason H (Feb 1, 2004)

Macfury said:


> Either sell the house at a profit, or live in the basement, rent out the house and have them pay the bills.


For the past few years I've been wanting to buy a house, and saving for it while paying down my student loans. Lately I've been thinking that a house doesn't really suit my lifestyle and would prefer renting. I'm in the same boat as the OP I suppose. I've also been tempting buying a house and renting it out till I'm ready to settle down.


----------



## MacDoc (Nov 3, 2001)

I'm with Margaret on the rent end tho I've owned and made some money I have issues with the social destruction of speculative housing market...the whole thing is a sewer as we've seen recently and Toronto is big time over heated let alone over extended.

If you have doubts...get out now as interest rates are going up and that along with the HST coming in July is going to make life interesting.

Sonal is in the shelter providing business as is my landlord and I have no issue with that.
I'm happy to work with someone who provides decent shelter for a reasonable rent and leave me with no capital costs or serious maintenance costs.

House ownership has been far too much treated as for sure way to make money - well quite a few in the last two years found out otherwise as they did as well in the 80s.

The biggest issue - especially if you are young is it limits your ability to move - either for a job or to travel..

Use your time without heavy responsibility of family or property to get out and see the world, adventure etc. 
Good luck but if you are even considering getting out...now IS the time.


----------



## Sonal (Oct 2, 2003)

Jason H said:


> For the past few years I've been wanting to buy a house, and saving for it while paying down my student loans. Lately I've been thinking that a house doesn't really suit my lifestyle and would prefer renting. I'm in the same boat as the OP I suppose. I've also been tempting buying a house and renting it out till I'm ready to settle down.


If you are looking to buy a house as investment property, then I would advise (if you can afford it) to look into buying either something that is already split into multiple apartments, or at least where you can rent rooms. The money you can make is typically a bit better, it's easier to rent apartments than whole houses, and if you get one bad tenant or a period of vacancy, it doesn't take down the whole operation. (i.e., if you depend on one tenant to pay the mortgage and they don't pay for 3 months, you are screwed... however, if it's split between 3-4, you are in much better shape.)

The other thing is that if you have a place with a few apartments in it, it's a lot easier to justify the cost of getting someone to do the grass cutting or snow shovelling for you. 

When the time comes that you want to settle down, you can live in one of the units as an owner-occupier. (There are some tax advantages if your rental property is your principal residence, though I am a bit fuzzy on this area of taxes.) 

If you need more space later (married with kids, or just want a really big man-cave) you can break through one of the apartments and re-claim the space and change the house from multi-family to a single residence. 

Note that small landlords (3 or fewer rental units, not sure if you have to be an owner-occupier or not) can get a lot of their cases expedited at the Landlord and Tenant Board. It's among the few landlord-friendly changes they made in latest Act.

I have a small 4-plex, and the way it was set up (before I changed a bunch of stuff), if 3 units paid their rent, all of my expenses--mortgage, taxes, repairs, utilities, insurance, maintenance, etc.--were covered. So if I had wanted to live in the 4th unit, I'd have 0 living expenses. Or I could rent it out and make 1 month's rent worth in profit every month. 

It was pretty sweet.


----------



## PenguinBoy (Aug 16, 2005)

MacDoc said:


> Good luck but if you are even considering getting out...now IS the time.


+1

At this point, home ownership is more a lifestyle choice than an investment.

Interest rates have only one way to go, and prices as a multiple of average earnings have never been higher - so further capital appreciation is unlikely. 

While a mortgage does build equity, with the 35 year amortization common these days it does so very slowly. Most of the folks who did well off low downpayments and long amortizations did so because real estate was rising in value at a faster than average rate. When even the realtors think we might be in a bubble, the risk is on the downside.

Housing market overheating: Royal LePage - The Globe and Mail


----------



## Lichen Software (Jul 23, 2004)

*You have changed lifestyles*

From your description of life prior to the house, you were living a really minimal lifestyle. So the fact that there is a price difference is not surprising. A few thoughts:

1. You are at the age where you are accumulating "things" .. cars, houses, clothes, girl friends/boy friends, children ..The things that will be part of your life for years to come. Later on, you get rid of things. So, even if the house is not totally to your lifestlye now, chances are that you are going to "Grow In To It" before you "Grow Out Of It".

2. It is always expensive to enter the market. Though there are ups and down, in general, there is no less expensive time than now. So you can ditch the house, but you will pay the price to get back in, probably about as much as you are saving per year (which you probably won't do...see point 1 above). 

Note that the more economically sound the area you live in is, the higher you will pay to get in. There are places in Canada where you can probably purchase a house of some sort for about $5,000 ... But you don't want to live there. I know, I used to sell homes there and the very last deal I did as a broker was a home for $5,000 - 1 1/2 storey, partial basement on a 66 x 132' lot. Huge commission - 10% - I spent it in gas showing the house.

3. Is it a housing bubble -Yup, I think so, but I have thought so for the last 10 years. This is the absolute longest price run in Canadian Housing History. That being said, my son has purchased three homes through this bubble and has not lost a thing.

4. The real costs of the housing market are getting in and getting out. Once you are in, you are playing the trading game. If prices go up, the house you buy is more expensive, but the house you sell is also. Similarly if prices go down. You are just paying marginal costs. The name of the game is to pay the house off to stop the bank bleed. Then you are sitting on a tradable asset. As long as you can afford the bank bleed you are Ok. General rule is to minimize the bleed by bringing amortization time down and by making as many prepayments as possible.

Real example from long ago. I had a client in tought financial times. They had a $50,000 mortgage (was a lot then) at about 12% (That was a good rate then) with payments of $500.00 per mo. They had been there 5 years, just making minimum payments. So they had paid out $30,000. They owed $49,500 after these payments. So one prepayment of $500.00 would have put them into the second 5 years of their 25 year mortgage. Prepayments of $2000 to $3000, probably would have cut their amortization down to 15 years or less from 25. So you can manage the bleed and the earlier you do it, the less it costs to have maximal impact.


----------



## groovetube (Jan 2, 2003)

PenguinBoy said:


> +1
> 
> At this point, home ownership is more a lifestyle choice than an investment.
> 
> ...


that's a generalization.

Perhaps in areas like mississauga, where they can continue to build more and more, that could be somewhat true, in certain areas. But the downtown Toronto market, it isn't the interest rates fueling the heat right now so much as it is simply no houses on the market. They said similar things nearly 10 years ago when you could get a mortgage for 5%, but prices were almost half of what they were now.

I don't see downtown toronto resale doubling in the near term, perhaps a softening of the overheat of this past year, but it will, continue to rise over the long term.

Just wait til all those professional yuppies all living condos used to walking to work, all get married, have kids, and don't want to live in Aurora or Mississauga and commute...


----------



## kps (May 4, 2003)

groovetube said:


> Just wait til all those professional yuppies all living condos used to walking to work, all get married, have kids, and don't want to live in Aurora or Mississauga and commute...


There's already talk of "family friendly" condos.

I sold the house I had in the west end of Toronto in 2007 and now rent in Mississauga. I'm leery of re-entering the market and find that this leaves me flexible at this point in time. We'll see what happens when the HST comes in and the interest rates start climbing.


----------



## groovetube (Jan 2, 2003)

rising interest rates will soften the market, though having 10 or more people bidding and now doing bully offers on a house, it seems supply and demand is really playing a serious role here.

As fo HST though, on resale, it's only really going to affect real estate fees, and the related fees on the transactions. The seller will get hit a little harder than the buyer.

The hst thing though, will hit the new house/condo market much harder.


----------



## MacDoc (Nov 3, 2001)

> rising interest rates will soften the market,


Multiple whammy tho

some stretched will have to sell putting more houses on the market just when the entry gets harder both from the interest rates and the bank's scrutiny.

What can spiral up can spiral down aas we saw in the US and in Canada in the 80s


----------



## screature (May 14, 2007)

One thing that has not been mentioned is that buying also means that if you intend on staying where you are for the duration of the mortgage, one day you will be mortgage free, paying only property taxes and utilities. 

This is very useful in ones retirement when ones income tends to be significantly reduced, not to mention, for someone who is as young as the OP, if they fast tracked the paying off of their mortgage they could have significantly reduced expenses during the years that would typically be their highest earning period thereby being able to sock away significant savings or use the money for investments.


----------



## groovetube (Jan 2, 2003)

MacDoc said:


> Multiple whammy tho
> 
> some stretched will have to sell putting more houses on the market just when the entry gets harder both from the interest rates and the bank's scrutiny.
> 
> What can spiral up can spiral down aas we saw in the US and in Canada in the 80s


yeah I've heard this storey as well.

But each and every time, it will recover, and it will rise, just as it always has over history.

If you are in to make money in the shorter term, get out now. Yes.


----------



## Dr.G. (Aug 4, 2001)

screature said:


> One thing that has not been mentioned is that buying also means that if you intend on staying where you are for the duration of the mortgage, one day you will be mortgage free, paying only property taxes and utilities.
> 
> This is very useful in ones retirement when ones income tends to be significantly reduced, not to mention, for someone who is as young as the OP, if they fast tracked the paying off of their mortgage they could have significantly reduced expenses during the years that would typically be their highest earning period thereby being able to sock away significant savings or use the money for investments.


An excellent point, screature. As well, with a mortgage free home, if you sell and downsize, you come out ahead with a tax-free capital gain. 

I have to admit that I balked at buying the size of house and location where we currently live, but after all is said and down, with all of the additions and renos, property taxes, etc that we will have put into our home, by next year when the mortgage is paid off, we could sell the home and buy something for $300,000 that is smaller, and still come out $250,000 ahead. We are not going to sell since I am not going to retire, but we could.


----------



## MLeh (Dec 23, 2005)

It's important to watch the demographics for housing value if you're thinking about 'downsizing'. 

As the baby-boomer generation ages there will be more large homes on the market, and smaller, more convenient, less maintenance-intensive properties will rise in value. 

The trend I see is more and more Boomers buying high-end condos, so they can simply lock it up and leave on their vacations.


----------



## RatsOnMacAttack (Mar 5, 2005)

Interesting thread for me to come across this morning, I am currently in the process of buying my first house. Here in Regina, real estate isnt that expensive, relatively speaking. I dont need alot of space either, so I found a charming little 1-bedroom house in a great neighborhood, for dirt cheap. The house is ALOT nicer on the inside than the pictures made it look. In 2007, the house was gutted and all the walls and flooring, electrical and plumbing have been redone. My grandma recently passed away, so I got a good chunk of change for a down payment (I put 20% down payment), and I figured nows the best time to look into buying. Last time I rented an apartment, I swore Id never do it again, considering my mortgage payments would be about half of what I would pay in rent, for an apartment half the size of the house, plus no yard, etc. Im very excited about this, and everything should be finalized by Tuesday. I get possession June 1.


----------



## tilt (Mar 3, 2005)

As a person who immigrated into Canada at the age of 40 with savings of $20,000, and having owned a condo-townhouse for the last five years, my opinion is that renting is much better than owning. But that's just MY opinion. My reasons are:

1. My monthly mortgage is more than double what I would pay as rent
2. I am not a handyman, I belong to the "pay-a-guy" school, so if the sink is backed up, instead of calling the landlord, I have to pay (and more importantly, wait for a plumber) to get it fixed.
3. keeping a three-bedroom-with-basement-townhome clean is much more work than keeping a two-bedroom rental apartment clean!!!

My choice, based purely on my no-kids-so-don't-care criteria (plus it's Friday night, I am a bit drunk) - owning sucks, renting rules.

Cheers


----------



## Dr.G. (Aug 4, 2001)

RatsOnMacAttack said:


> Interesting thread for me to come across this morning, I am currently in the process of buying my first house. Here in Regina, real estate isnt that expensive, relatively speaking. I dont need alot of space either, so I found a charming little 1-bedroom house in a great neighborhood, for dirt cheap. The house is ALOT nicer on the inside than the pictures made it look. In 2007, the house was gutted and all the walls and flooring, electrical and plumbing have been redone. My grandma recently passed away, so I got a good chunk of change for a down payment (I put 20% down payment), and I figured nows the best time to look into buying. Last time I rented an apartment, I swore Id never do it again, considering my mortgage payments would be about half of what I would pay in rent, for an apartment half the size of the house, plus no yard, etc. Im very excited about this, and everything should be finalized by Tuesday. I get possession June 1.


Kudos, ROMA.


----------



## l84toff (Jul 27, 2008)

RatsOnMacAttack said:


> I get possession June 1.


Congrats!

To the OP;

There are certainly pros and cons either way. One thing to note is that money earned on the sale of your primary residence is tax free. So if you buy a house today for 200k, then sell it in 5 years for 250k, you've just earned 50k tax free. 

I like the idea of owning my home for lots of reasons. Firstly, right now we're paying under 2% on our mortgage, meaning a lot of money goes straight to the principal. Yes interest rates will go up I realize this. I can do whatever I want inside and out when ever I want. Want to pain the kitchen lipstick red, or plant a tree in your back yard or knock out a wall in the bedroom to make it bigger, or go swimming in your pool at 3am, knock yourself out. It's doesn't all smell like roses though, I will admit. There are the unannounced repairs, yard work (which I actually enjoy), seemingly never ending renovations...

However you should compare the cost of renting over the same time vs paying a mortgage: (this really should be called forced savings)

25 years renting = 300 monthly payments @ $1000/month (let's say) = $300,000 gone forever. 

25 year amortization on a $250,000 mortgage @4% = $1315/monthly mortgage payment
+ $250 for taxes and bills that you don't always pay when renting (this is difficult to predict here as rentals differ, home ownership bills differ also depending on where you live, size of your home...)
= about $1575 monthly payment, you could even add some maintenance costs and call it $1700 for the month. Total paid out over 25 years would be ($1700 x 300) $510,000.

Now out of that 510k you paid out 250k in principal, the other 260k is indeed lost forever (sort of). So you actually lost less money owning a home than you would renting (300K vs 260k).

But it's also important to note that your house is going to be worth quite a bit more in 2035 then the 275k (I assume you had a downpayment) you paid for it back in 2010. If you look at the average price of a house in the greater Toronto area, they have more than doubled since 1985. Let's put that in perspective. You essentially could be living for free owning a home over the course of 25 years (or at least very little). Having said that, there is no guarantee that your house will be worth that much in 25 years. But one thing that is guaranteed is that every penny you pay renting, is gone forever!

The renting idea is not without merit however. You could put away that $700 every month (the difference between $1700 mortgage and paying $1000 in rent) into an investment at 4% average rate of return (for example) and have about $360,000 in savings by 2035. But you would have to pay taxes on this, cutting a huge chunk out of your savings. I believe that people who are disciplined enough to follow such a savings plan over the long haul are in the (minuscule) minority.

Only you can figure out what's best for you. However I would have to agree with the responses suggesting you live in the basement and rent out the rest of the house. This seems like the best of both worlds in your case.


*I realize the examples above do not account for inflation and every other factor imaginable, it's a generalization.


----------



## bsenka (Jan 27, 2009)

I was dragged kicking and screaming into home ownership by my wife ten years ago. I liked the easy nearly care-free life of apartment life, and felt it was a worthwhile tradeoff to not get the investment in return.

I feel much differently now. In ten years the market value of the house has tripled. Given that our total payments so far only total half the original principal, that investment has already paid off huge. Using money I would have spent anyway on rent.


----------



## gordguide (Jan 13, 2001)

There are very few investments you can make in this world that also provide a service to you ... and an essential service at that ... a place to live.

In Canada, any money you make on this investment is tax free. Again, it's difficult to match that with any other avenue.

At your age (25) you will be free of mortgage payments AND the need for rent payments before you are 50 ... probably much before, actually. So, what you are "wasting" today's annual payments on is equivalent to 30+ years of rent-free home after that point.

When I was 25, I could rent a huge house for $250 a month (and that's what I did). Had I bought at that time, my mortgage payments, like yours, would have been in the order of $450~500/month.

Today, rental of that same house is in the order of $1400~2000 month.

As far as I'm concerned, provided you take the proper approach (as others have said ... buy to live in, because that's what you will want to do with or without mortgage payments) it's a no-brainer. The extra money you are paying out now will almost certainly be a fraction of what the rental rate will be on the day you are mortgage-free.

That's just the basic, conservative approach. There are many other benefits, including establishing a good credit history, that come with home ownership. If you rent, then unless you are borrowing money on a regular basis, your credit rating will be essentially based on your being a new or unknown risk.

With a home, you don't have to borrow for any unnecessary expense, or carry a credit card balance, or whatever ... you have a credit history that comes as part of simply having a place to live.

A credit history without the need to borrow for cars, use your CC's, etc can mean the difference between getting a job (employers use credit checks) and not, between lower car insurance, and a number of other, not so easily quantifiable, advantages.

Since you are young, and most people your age will probably not be homeowners, this gives you an advantage you can leverage to improve your chances in life all through your adult years. You never know when an opportunity may arise, and often the biggest changes in people's lives come from seemingly minor coincidences.

In my experience, people who were homeowners at a young age are all better off than their renting peers, and that difference begins often as soon as the early 30's. It will most certainly show by the time you are in your 40's.

Even if catastrophe falls upon you, and you are put into a financial crisis of some sort between now and the long-term future, being a homeowner is a huge advantage. As a renter, fall behind and you are homeless, and in quick order. As a homeowner, even if you default on your mortgage, in Canada it can take up to a year, and sometimes longer, to take title to the house and remove you from your home, provided you live in it during that time.

That is a long time to deal with whatever issue put you in dire straights, to find work while still enjoying a stable address and contact info, to not have to deal with fire-sale of your possessions and storage costs, to sell the home if necessary and take your equity out, or at the worst be forced to rebuild your credit, which takes years, but certainly not decades.

Banks hate property and love money. Under almost any circumstances you can imagine, if you find a job or manage to recover, they will take the money, work with you in dealing with the arrears, and carry on, still in your home. You didn't have to move a single box to do it.

Note: if you don't actually live in the home, they can foreclose so fast your head will spin. If you do, though, it's a very difficult process to kick you out. Your home most certainly still is your castle.

You can always rent out your home, and even do it hands-free by hiring an agency to handle everything, if you have a short-term need to go elsewhere. If you gain employment where a relocation is in order, you may qualify for all kinds of employer help getting a new home in another city that won't apply if you rent.

Chances are all the equity you've built up can be re-invested in that new home without you having to come up with cash on a short term basis ... especially if this is a new job and you don't have much income to throw at the situation (perhaps you were unemployed or just out of school ... whatever).

There are many ways in which home ownership benefits you that are not directly related to the practical situation and the bare number crunching. Although those two criteria are the most important part of buying and choosing a home, the rest will only become obvious later, and trust me ... they will be just as obvious if you do not buy and find you need them later.


----------



## PenguinBoy (Aug 16, 2005)

Lots of great points in this thread.

I bought my first house when I was in my mid 20s, and it certainly worked out for me, so in general I'm in favour of owning my own place. The only reason I would be cautious about getting into the market right now is the fact that Canadian real estate is looking a bit frothy at the moment - especially markets like Vancouver, Calgary, and Toronto.

Many people are carrying way too much debt right now, and the recent run up in prices seems to be fueled more by speculation and artificially low interest rates than economic fundamentals.

If you are looking for a place to live for the long haul, and you can put down 25% and amortize over 15 years - you'll almost certainly be fine.

If you can come up with 10%, and make payments on a 25 year amortization it might work out for you.

If you have 5% down and can keep up with the payments on a 35 year amortization, you might be in trouble when interest rates go up, or might be in a negative equity situation when the inevitable short term correction comes. In this case it might be better to rent for a while, and "buy low" after the next correction.


----------



## screature (May 14, 2007)

gordguide said:


> There are very few investments you can make in this world that also provide a service to you ... and an essential service at that ... a place to live...


+1... an excellent post gordguide. :clap:


----------



## MacDoc (Nov 3, 2001)

> I bought my first house when I was in my mid 20s, and it certainly worked out for me, so in general I'm in favour of owning my own place. The only reason I would be cautious about getting into the market right now is the fact that* Canadian real estate is looking a bit frothy at the moment - especially markets like Vancouver, Calgary, and Toronto.
> *
> Many people are carrying way too much debt right now, and the recent run up in prices seems to be *fueled more by speculation and artificially low interest rates than economic fundamentals.*


 :clap:

that shelter IS an essential service is one reason it is abused by speculators.

I'd like to see tax laws that hammer the **** out flippers ( France and Switzerland have those policies ) yet allow long term buyers to benefit as an inflation hedge.
( tho which way the next few years will go is anyone's guess - in Japan deflation rules and real estate languishes. )

Until jobs/wages come back into line with shelter ratios there is significant risk of this



> Yes, nobody wants to be Japan, the fallen angel that went from one of the fastest growing economies in the world for more than three decades *to one that has slowed to a crawl for the past 18 years. No one wants to live with the trauma of the deflation (falling prices) that Japan has repeatedly experienced.*


Japan?s Slow-Motion Crisis - Project Syndicate

Age demographics will also start to come into play big time over the next five years.

Shifting demographics about to sway real estate market: report

I suspect a more current version post recession might look even more caution inspiring.



> *28 per cent of Canadian homeowners over the age of 50 plan to sell their houses to fund their retirements, according to a survey by Royal LePage in 2006* *- An estimated 37 per cent of Canadians over the age of 55 still have outstanding mortgages.*
> *“Assuming you still plan to use your house as a retirement vehicle, there’s something else to think about*—you’re not alone. Millions of Canadians are all betting on the same strategy, and that could lead to serious problems down the road.
> *
> *One very real fear is that the barrage of boomers expected to retire between now and 2030 will drive down the housing market. There may simply not be enough younger buyers to absorb all those condos and townhouses boomers hope to unload. For one thing, the net growth in the number of new households forming in Canada each year—a key driver of the residential real estate market—is expected to slow, from 1.4 per cent in 2007 to 0.8 per cent in 2030. By that year, when all the boomers will have turned 65, it’s estimated there will be just two workers for each retiree. “If everybody comes on the market at the same time, prices are going to go lower,” says Merrick.
> ...


“28 per cent of Canadian homeowners over the age of 50 plan to sell their houses to fund their retirements” Vancouver Real Estate Anecdote Archive

With higher local taxes, higher energy costs and a jobless recovery - one can bet many retirement plans are in jeopardy.
Notice all the oldsters in the service sector?


----------



## screature (May 14, 2007)

MacDoc said:


> > 28 per cent of Canadian homeowners over the age of 50 plan to sell their houses to fund their retirements, according to a survey by Royal LePage in 2006 - An estimated 37 per cent of Canadians over the age of 55 still have outstanding mortgages.
> > “Assuming you still plan to use your house as a retirement vehicle, there’s something else to think about*—you’re not alone. Millions of Canadians are all betting on the same strategy, and that could lead to serious problems down the road.
> >
> > One very real fear is that the barrage of boomers expected to retire between now and 2030 will drive down the housing market. There may simply not be enough younger buyers to absorb all those condos and townhouses boomers hope to unload. For one thing, the net growth in the number of new households forming in Canada each year—a key driver of the residential real estate market—is expected to slow, from 1.4 per cent in 2007 to 0.8 per cent in 2030. By that year, when all the boomers will have turned 65, it’s estimated there will be just two workers for each retiree. “If everybody comes on the market at the same time, prices are going to go lower,” says Merrick.
> ...


----------



## Max (Sep 26, 2002)

If you're in the COTU zone and you find yourself commuting to and from work, it's really a zone of depletion. Speaking of oldsters... driving for hours in near-gridlock conditions is a great way to grow old before your time. I am now convinced, more than ever, that living in suburbia but doing two and three hour daily commutes to and from work is an abomination to be most strenuously avoided.

That's why location matters still. That's why real estate can still be a sound investment. Not for everyone, not in all locations. Much depends on how canny you are and how much self-discipline you have.

Again, caveats apply. Cities are great until such time as they allow themselves to become unworkable - ie, degradation of infrastructure, crime, lack of planning, lack of political will to make unpleasant decisions intended to serve a long-term greater good.


----------



## screature (May 14, 2007)

Max said:


> If you're in the COTU zone and you find yourself commuting to and from work, it's really a zone of depletion. Speaking of oldsters... driving for hours in near-gridlock conditions is a great way to grow old before your time. I am now convinced, more than ever, that living in suburbia but doing two and three hour daily commutes to and from work is an abomination to be most strenuously avoided.
> 
> That's why location matters still. That's why real estate can still be a sound investment. Not for everyone, not in all locations. Much depends on how canny you are and how much self-discipline you have.
> 
> Again, caveats apply. Cities are great until such time as they allow themselves to become unworkable - ie, degradation of infrastructure, crime, lack of planning, lack of political will to make unpleasant decisions intended to serve a long-term greater good.


Good post Max... and that is why I will never be a big city dweller. I live in Aylmer (Gatineau) a bedroom community of Ottawa on the Quebec side. Our standard of living is very high (without the usual associated high cost) with a small town feel (where we are in a little enclave called Withcwood, it actually has a country feel as in by gone days it was actually cottage country and the city has grown up around it) but I only have a 30 - 40 minute commute. This is as big a city as I ever want to live in/around.


----------



## Max (Sep 26, 2002)

I'm familiar with Aylmer, Screature, having grown up in Ottawa and having a couple of second cousins who live in Aylmer itself. I just came back from Carleton Place last night, having auctioned off my late brother's house, contents and vehicle.... I've spent quite a lot of time in the Ottawa area these last four months and it's rekindled an appreciation for the town I spent much of my early youth in. Smaller local burgs like Almonte or Carp really rock my world. Quiet, lovely scenery, a strong sense of history and continuity, a clutch of colourful locals... and the Gatineaus very close by. Many good things going for the whole area.

Alas, I am a city boy. If we ever move out of the COTU, it will likely be either another large city (likely Montreal) or somewhere radically different - say, a small hamlet somewhere in southern Ontario... someplace where only a couple thousand people live. I don't want to go anywhere near the suburbs of any place now. That's the dreaded middle route for me. I grew up in the burbs of southern Ottawa and then Mississauga. Never quite took to the vibe myself. Was overjoyed to get out and dive into the vitality and weirdness of the city - I found it bracing and full of promise. In a way I still do.

Different strokes, as they say.


----------



## screature (May 14, 2007)

Max said:


> I'm familiar with Aylmer...
> ... *Different strokes, as they say*.


Indeed.  This a sample of the ones that work for me right now...


----------



## Max (Sep 26, 2002)

Nice. Great landscaping there, Screature. I don't care for lawns but yours looks succulent in those pics.


----------



## screature (May 14, 2007)

Max said:


> Nice. Great landscaping there, Screature. I don't care for lawns but yours looks succulent in those pics.


 Thanks Max. Lawns take a lot of work to be sure and I reduced them quite a lot from what they were when we bought the place... but that brings on its own work. 

It is a work in progress and has been from the beginning, but I love it (and that is coming from someone who couldn't even keep an artificial indoor plant alive before owning my own home  ) and I won't be finished until I die and wouldn't have it any other way.  To each their own. Isn't that part of what freedom is all about? He asked rhetorically (I know you know, but I just wanted to say it  ).


----------



## screature (May 14, 2007)

This whole most recent exchange brings to mind another advantage of home ownership. One that is intangible. It can change your mindset... or at least it did my case. When something is yours and your responsibility, for good or bad it can make you a more conscientious person. When it is yours all the responsibility is yours and yours alone. When you rent... not so much, as it isn't really yours so you tend to do the bare minimum to keep it the way you like/want it. When you own it the mind set is different and I think for the better. 

If it wasn't why is it that owners can readily get home insurance but for owners who are renting, it can be difficult/expensive indeed to get insurance.


----------



## Sonal (Oct 2, 2003)

Mortgage rates are also a little better if you live there versus an investment property... the idea being that you are less likely to run away and default if you actually live there.

Owners generally do take better care of the place than renters.


----------



## Max (Sep 26, 2002)

screature said:


> This whole most recent exchange brings to mind another advantage of home ownership. One that is intangible. It can change your mindset... or at least it did my case. When something is yours and your responsibility, for good or bad it can make you a more conscientious person. When it is yours all the responsibility is yours and yours alone. When you rent... not so much, as it isn't really yours so you tend to do the bare minimum to keep it the way you like/want it. When you own it the mind set is different and I think for the better.


Agreed, big time, and I can attest to having undergone such change myself. But not everyone likes to be tied to a home, or finds that home offers 'creature comforts.' There are some restless souls out there, and others with a taste for greater adventurism than the quiet comforts home ownership (and tending to one's garden) offers.

I look at our house as a residence and creative home base first, and as an investment second. Probably a 60/40 split, if I had to be honest. The investment part is very important, but I very much have to dig where I live and find its confines useful and complementary to my proclivities.


----------



## screature (May 14, 2007)

Sonal said:


> Mortgage rates are also a little better if you live there versus an investment property... the idea being that you are less likely to run away and default if you actually live there.
> 
> Owners generally do take better care of the place than renters.


Slum Lords of course being the exception, of which I think there are actually very few. But even then it reflects a mindset... if you only own it to rent it, you tend to do the bare minimum to keep people renting and continue to generate your revenue: an investment vs. a home.


----------



## screature (May 14, 2007)

Max said:


> Agreed, big time, and I can attest to having undergone such change myself.* But not everyone likes to be tied to a home, or finds that home offers 'creature comforts.' There are some restless souls out there, and others with a taste for greater adventurism than the quiet comforts home ownership (and tending to one's garden) offers.*
> 
> I look at our house as a residence and creative home base first, and as an investment second. Probably a 60/40 split, if I had to be honest. The investment part is very important, but I very much have to dig where I live and find its confines useful and complementary to my proclivities.


Tis true... and again different strokes... to each their own... And it often depends on "where" you are in your life. I was ready to own only when I bought my place. Kind of like having kids... some aren't really ready until they have them.  Sometimes it takes a leap to make a change...


----------



## Sonal (Oct 2, 2003)

screature said:


> Slum Lords of course being the exception, of which I think there are actually very few. But even then it reflects the mindset... if you only own it to rent it, you tend to do the bare minimum to keep people renting and continue to generate your revenue: an investment vs. a home.


Quite true, though I actually think there are quite of few negligent landlords... maybe not out and out slumlords, but certainly people who are not thinking in the best interests of the building. Even though vacancy has gone up, overall, Toronto has extremely low vacancy (no matter what most old school landlords will tell you) so even bad buildings make money.

A little over 10 years ago, my folks bought a building in downtown Toronto being sold off by the CMHC... tiny units, needed major capital improvements to everything, extremely low rents, over 40% vacant, drug deals happened in the lobby every night, prostitutes lived there... it still had positive cashflow. 

That's a fairly exceptional situation, but there are still a number of apartment buildings in Toronto which are family-owned, but then were passed down to the next generation... who never sets foot on the place. In fact, I remember talking to one vendor who was very proud to mention that it had been 50 years since he'd set foot on the place. 

Forget beautifying the place, it had its original 50 year old single pane windows... can you imagine how much money was lost in energy costs alone?


----------



## screature (May 14, 2007)

Sonal said:


> Quite true, though I actually think there are quite of few negligent landlords... maybe not out and out slumlords, but certainly people who are not thinking in the best interests of the building. Even though vacancy has gone up, overall, Toronto has extremely low vacancy (no matter what most old school landlords will tell you) so even bad buildings make money.
> 
> A little over 10 years ago, my folks bought a building in downtown Toronto being sold off by the CMHC... tiny units, needed major capital improvements to everything, extremely low rents, over 40% vacant, drug deals happened in the lobby every night, prostitutes lived there... it still had positive cashflow.
> 
> ...


Yes I understand... As I said, it reflects a mindset... I can just imagine what kind of employees/employers these people make.


----------



## Sonal (Oct 2, 2003)

screature said:


> Yes I understand... As I said, it reflects a mindset... I can just imagine what kind of employees/employers these people make.


Well, they might be just fine.

They aren't the ones running the building... it's an investment. How active is the average stockholder in the running of the company?


----------



## screature (May 14, 2007)

Sonal said:


> Well, they might be just fine.
> 
> They aren't the ones running the building... it's an investment. How active is the average stockholder in the running of the company?


Sorry Sonal I guess I didn't understand after all... I thought you were referring to true slum lords (even though you said that you weren't necessarily speaking of such people... I only caught that on second reading... sorry  ) those who knowingly and willingly allow a property to deteriorate because it is "economical" to do so, not just "silent"/ignorant partners.


----------



## groovetube (Jan 2, 2003)

well you just described most of the houses around the corner from me on ossington. or, pick another street. Thousands and thousands of them.


----------



## screature (May 14, 2007)

groovetube said:


> well you just described most of the houses around the corner from me on ossington. or, pick another street. Thousands and thousands of them.


That is shameful... probably all owned by the same person or group of people. Well I guess if there are thousands and thousands, probably not... but obviously they have somethings in common... greed and the mindset I mentioned earlier.



> ... if you only own it to rent it, you tend to do the bare minimum to keep people renting and continue to generate your revenue: an investment vs. a home.


----------



## groovetube (Jan 2, 2003)

well it's all in varying degrees. I've seen some places when we were looking at houses, that would just blow your mind at the depravity of the living conditions. One place I looked at, on Gore Vale, really nice street, was -the- most unbelievable disgusting hovel of a house I have ever witnessed in my house. How the health department wasn't called in, is beyond me.

Most are just investment properties. they'll put as little as possible to get away with it in general. But there are always the better places.


----------



## Sonal (Oct 2, 2003)

screature said:


> Sorry Sonal I guess I didn't understand after all... I thought you were referring to true slum lords (even though you said that you weren't necessarily speaking of such people... I only caught that on second reading... sorry  ) those who knowingly and willingly allow a property to deteriorate because it is "economical" to do so, not just "silent"/ignorant partners.


It overlaps a lot.... if you take no interest in the property, it will deteriorate just the same as if you knowingly and willingly allow it to deteriorate. Also, there are building owners who won't spend the money because they don't believe that the building justifies it... maybe it's not a great neighbourhood or it has a lot of problem tenants, so why would you spend a couple of million dollars fixing up a place when the people living there are just going to cover it with graffiti and damage things and deal drugs in the place, and the building will look like a rathole anyway? 

Mind you, we do know of one property management company that has a reputation for running down buildings, and then buying them up cheap, fixing them up and turning a profit. Most landlords--particularly the second generation ones--don't know a thing about running the building, so they hire the property management company, who then tells them how the situation at that building is hopeless, they will need to spend a couple million in capital to fix it up but it won't matter at all because the building has so many problem tenants.... wouldn't it be better to just sell it? After all, your professional and experience property management company recommends it, and who are you to doubt them?


----------



## screature (May 14, 2007)

Sonal said:


> *It overlaps a lot.... * if you take no interest in the property, it will deteriorate just the same as if you knowingly and willingly allow it to deteriorate. Also, there are building owners who won't spend the money because they don't believe that the building justifies it... maybe it's not a great neighbourhood or it has a lot of problem tenants, so why would you spend a couple of million dollars fixing up a place when the people living there are just going to cover it with graffiti and damage things and deal drugs in the place, and the building will look like a rathole anyway?
> 
> Mind you, we do know of one property management company that has a reputation for running down buildings, and then buying them up cheap, fixing them up and turning a profit. Most landlords--particularly the second generation ones--don't know a thing about running the building, so they hire the property management company, who then tells them how the situation at that building is hopeless, they will need to spend a couple million in capital to fix it up but it won't matter at all because the building has so many problem tenants.... wouldn't it be better to just sell it? After all, your professional and experience property management company recommends it, and who are you to doubt them?


Indeed it does. There is very little black and white... very little... just shades of grey.

"...if you take no interest in the property, it will deteriorate just the same as if you knowingly and willingly allow it to deteriorate." To me these are the same things."Wilful neglect" I believe they call it in legalize. Buying a property to rent to others bears a responsibility. Just like selling food to someone, because it is almost the same. It is an essential, without it or if improperly supplied can l leads to another's detriment. In like regard to selling food, you have a responsibility to sell/rent healthfulness... if not value for money. That is a minimum. (There is of course the whole "Super Size Me" and fast food component, but that is beyond the scope of this post, unless someone is willing to pay me by the word and then I am game...  :lmao: )



> Also, there are building owners who won't spend the money because they don't believe that the building justifies it... maybe it's not a great neighbourhood or it has a lot of problem tenants, so why would you spend a couple of million dollars fixing up a place when the people living there are just going to cover it with graffiti and damage things and deal drugs in the place, and the building will look like a rathole anyway?


Yes exactly and that is a component of what I meant by:



> ...if you only own it to rent it, you tend to do the bare minimum to keep people renting and continue to generate your revenue: an investment vs. a home.


So if it costs too much to do the *necessary* work in a less than desirable neighbourhood, relative to the investment and potential return, many owners will for go it.



> Mind you, we do know of one property management company that has a reputation for running down buildings, and then buying them up cheap, fixing them up and turning a profit. Most landlords--particularly the second generation ones--don't know a thing about running the building, so they hire the property management company, who then tells them how the situation at that building is hopeless, they will need to spend a couple million in capital to fix it up but it won't matter at all because the building has so many problem tenants.... wouldn't it be better to just sell it? After all, your professional and experience property management company recommends it, and who are you to doubt them?


But you know what, I have worked for real estate auditors and the fact is for the owner/investor they may be right/correct. They have an obligation and duty to their client to tell them the truth based on what is (as they interpret the data)... they aren't concerned nor paid to be concerned with ethics.

We are entering quickly into the realm of housing policy and the rats nest of levels of bureaucracy/governmental jurisdiction (municipal/provincial/federal). This warrants a thread on its own and I won't derail this one by getting into it.  Definitely food for thought.


----------



## screature (May 14, 2007)

Don't quite know how I did that... duplicate post.


----------



## keebler27 (Jan 5, 2007)

i didn't wade through all the pages, but unless you're in a ghost town where the value of your house goes up, then it's all good...fantastic in fact.

Right now, you may be taking it on the chin with interest no doubt, but in a few years, that interest will go down and more of what you pay will go on the principle, thus cutting down the interest and overall, what you owe on the house.

And speaking of "owing", you are paying the bank, but in the end, you're paying yourself.
That's how I look at it. When you rent, sure - you have fewer headaches, but you're really paying someone else - why not pay yourself while you're at it?

Another thought - the money you are spending right now may be a larger than what you'd like portion of your yearly income, but think about in 15 years or whatever it may be when you've got that house PAID off? 

Not only will you NOT be (still!) paying rent, that house will be yours to do with whatever you choose.

If you need to move or if you need to take a loan out, you've built equity in your portfolio so you have that buying power. At 25, this is a smart, smart move. Sure, some folks will say re-mortgaging is a bad thing, but taking a smaller loan out on equity you've built will almost guaranteed have lower interest than getting a bank loan.

If you live in the right city, that house may be worth alot more than you imagine years down the road.

I'm kicking myself b/c my wife and I couldn't afford to keep 2 places, but the condo that we had to sell when we bought our house (instead of renting it out) doubled from $70K to over $150K in 6 years.

now that is a colossal DOH!!!!


Cheers,
keebler


----------



## MacDoc (Nov 3, 2001)

> It's early yet, but a good name for the next 10 years might be The Takeaway Decade.
> 
> Prepare to pay more and get less in the years ahead. Signs of this new reality are all around us, most recently in the latest round of government budgets.
> 
> ...


how seriously stupid is that....$1 million for a home in Vancouver....AVERAGE!!!!!

Canadians unprepared for the Takeaway Decade - The Globe and Mail


----------



## screature (May 14, 2007)

MacDoc said:


> how seriously stupid is that....$1 million for a home in Vancouver....AVERAGE!!!!!
> 
> Canadians unprepared for the Takeaway Decade - The Globe and Mail


*One* of the reasons why I will never live there...


----------



## monokitty (Jan 26, 2002)

The rising costs of home ownership (to ridiculous levels) is enough to scare many reasonable people away and keep them renting - and keep substantially more money in their own pockets. The pride of owning your own home versus renting dies quickly when you're left with $0 at the end of the day.


----------



## Sonal (Oct 2, 2003)

Lars said:


> The rising costs of home ownership (to ridiculous levels) is enough to scare many reasonable people away and keep them renting - and keep substantially more money in their own pockets. The pride of owning your own home versus renting dies quickly when you're left with $0 at the end of the day.


Works for me.... as more and more people decide against home ownership, vacancy in Toronto will drop again to ridiculously low levels, and landlords can go back to asking a ridiculously high rent for poorly maintained buildings. So go ahead, keep renting.... Sonal needs a new pair shoes.... beejacon

Most people are not disciplined enough to financially benefit from renting long-term, as MLeh alluded to earlier. 

I have one tenant who makes a lot more than I do, has been renting there for over 27 years, and has absolutely nothing to show for it. He bounces rent cheques if I don't deposit them fast enough. His rent is substantially more than my mortgage payment (mind you, his place is bigger). He has nothing saved. Honestly, I worry about what happens when he retires... I know where he works and he will likely have a good pension, so he could get by month to month, but what about if he needs a big chunk of money? He doesn't have it.

Had he bought a place back when he started renting (he would have been roughly the same age as the original poster) he'd own it outright by now, and would always at least have a last resort of selling the place or borrowing against it. It would have been a good forced savings for someone like him, who would otherwise fritter the rest away.

A lot of the long-term tenants are like this. They have decent jobs, they pay the bills on time, and yet they have no money, because they live month-to-month. 

You can compare numbers and calculate out that it's financially better to rent, but that only works if you stick to the plan for 25 years... a lot of people don't do that.


----------



## groovetube (Jan 2, 2003)

Sonal said:


> Works for me.... as more and more people decide against home ownership, vacancy in Toronto will drop again to ridiculously low levels, and landlords can go back to asking a ridiculously high rent for poorly maintained buildings. So go ahead, keep renting.... Sonal needs a new pair shoes.... beejacon


:lmao:


----------



## MacDoc (Nov 3, 2001)

> You can compare numbers and calculate out that it's financially better to rent, but that only works *if you stick to the plan for 25 years.*.. a lot of people don't do that.


that is also true for ownership as well......how many people lost everything when forced to sell....and bankruptcies are up substantially - it's much about timing as anything else and time simply flattens out the swings and roundabouts.

I knew many people carrying mortgages that were twice as high as the value of their properties in the early 90s.

Assuming increasing property values is incredibly destructive socially, fuels inflation and keeps kids living with their parents for a ridiculous time.

30% of families in Toronto are below the poverty line and the primary cause of that is high shelter costs....period, full stop.

Other nations set aside 20% of the their housing stock as public assets just as roads and parks are..

We let the predators loose.

I'm not including you in that as you are providing a service as my landlord does.

This situation of low interest rates is artificial and anyone thinking about buying should run that mortgage calculator up to 12% and then see if it's still "affordable".

One of the biggest issues is labour mobility.....people need to be able to move to where the jobs are and that will be ever more important as energy costs rise.


----------



## Dr.G. (Aug 4, 2001)

There are some new homes going for $900,000 to $1.25 million here in St. John's. I asked my wife who could afford any of these homes, and she replied that the oil executives who are transferred here from Calgary due to the off shore oil here in NL, are not phased by these prices, in that their homes might have been sold for twice the cost of these homes, which are bigger, and many have an ocean view.


----------



## screature (May 14, 2007)

MacDoc;954479[B said:


> ...and anyone thinking about buying should run that mortgage calculator up to 12% and then see if it's still "affordable[/B]".
> 
> One of the biggest issues is labour mobility.....people need to be able to move to where the jobs are and that will be ever more important as energy costs rise.


*12%!!!* Really???  Where do you come up with that figure? I highly doubt it. When? For how long? Not everyone lives in Toronto or Vancouver you know (rates will be the same everywhere of course, by that I mean not everyone will carrying inflated mortgages). Even if these rates occur, where do you think the cost of renting will be??? Renting is always money down the drain. _Full stop_.  At least when you buy, if you do your homework, you have a chance of coming out ahead... Which is completely impossible when you rent.

_"One of the biggest issues is labour mobility.....people need to be able to move to where the jobs are and that will be ever more important as energy costs rise."_

What people, with what skills? What can someone who works on the line at Ford find in Calgary? I'm sorry Doc but you need to explain if you want people to follow your logic...


----------



## Sonal (Oct 2, 2003)

MacDoc said:


> that is also true for ownership as well......how many people lost everything when forced to sell....and bankruptcies are up substantially - it's much about timing as anything else and time simply flattens out the swings and roundabouts.


Over the short-term (and in real estate, I'd call short term is less than 5 years) yes. Over the very long term (20+ years) that has generally not been the case, unless people are refinancing stupidly--in income-producing property, refinancing frequently is often good thing, but a house is not income producing. 

In Canada, we don't have the same kind of stupid mortgage products or policies that they had in the US pre-credit crunch. I've never heard of a neg-am mortgage in Canada, and I've never seen a bank just take your stated income without proof. We can't prevent people from tripping over their own stupidity, but it's at least a hedge against it.

But if you are forced to sell your house because you are declaring bankruptcy, your mortgage is not your biggest financial issue. 




MacDoc said:


> 30% of families in Toronto are below the poverty line and the primary cause of that is high shelter costs....period, full stop.


And I'll bet most of those people are renters, not owners. 

When interest rates dropped, Toronto began experiencing record-high (for Toronto) levels of rental vacancy. Rents dropped somewhat, and more importantly, landlords began forking out cash to actually maintain the buildings because suddenly renters had options and could move elsewhere. Overall, the more people who buy, the better it is for renters.

I actually do agree with you in general about more money is needed for affordable housing in Toronto, particularly rental stock since what we have is aging and very, very little new rental stock is being built. But I can tell you that from my own experience that City Planning is tripping themselves over their own policies in preventing that from happening. If they want new affordable rental stock, they need to work with developers, and how they have been doing it so far shows a remarkable lack of foresight.

My favourite example is the Minto Midtown--50 story condo towers built near Yonge & Eglinton. While that was being built, Minto build a brand-new apartment building in the same area--to replace whatever rental stock they tore down, and very likely as part of the deal to get permission to build the 50-story towers. But that new apartment building is a luxury rental place, and is by far the most expensive rental in that entire high-rent area--what a missed opportunity for building a new affordable or mid-range rental! 

To me, the problem is not speculation. Frankly, at least not in Toronto, I don't see it happening nearly as rampantly as you seem to think. Most of the rise in prices we've experienced in the City of Toronto has been based on people actually buying places to live. With immigration, the GTA needs to create a tremendous amount of new housing every year, and we simply don't keep up with demand. When interest rates rise and people are pushed out of ownership, they will still need a place to live, and you will see unaffordability in rental instead, because the amount of new rental stock created in Toronto is negligible--and that includes the 'hidden' rental stock of people who buy condos to rent them out, especially since condo rentals tend to be higher priced.

To me, the affordable housing problem is much more a problem of the City having its head up its ass about effectively working with developers to build, renew or otherwise create more affordable housing, whether rental or low-cost ownership. Speculation doesn't have nearly the same kind of effect that this does.


----------



## MLeh (Dec 23, 2005)

screature said:


> *12%!!!* Really???  Where do you come up with that figure?


1980s, recession, interest rates were in the low teens. We were renewing yearly and paying off as much of the principle as possible each year when we renewed. I think the most we paid was 13.25%. My sister and her husband were locked into a 'variable rate' mortgage for 5 years and I recall they were at one point paying close to 20%. If you had a house with a locked in transferable mortgage for anything less than 10% it was a selling feature of the house.

Those who do not learn from (or remember) the past are doomed to repeat it.

12% is a very reasonable number, for those of us who remember. 

The only constant is change.


----------



## groovetube (Jan 2, 2003)

I agree with you, I also remember the skyrockets of the early 80s. Though this time it's a very different ballgame, the amount of debt is waaaaay waaaaaaaaaaaaaaaay higher and if rates went north of 10%, we may not have a whole lot worry about beyond how close we are to the soup server.


----------



## screature (May 14, 2007)

MLeh said:


> *1980s, recession, interest rates were in the low teens.* We were renewing yearly and paying off as much of the principle as possible each year when we renewed. I think the most we paid was 13.25%. *My sister and her husband were locked into a 'variable rate' mortgage for 5 years and I recall they were at one point paying close to 20%.* If you had a house with a locked in transferable mortgage for anything less than 10% it was a selling feature of the house.
> 
> *Those who do not learn from (or remember) the past are doomed to repeat it.*
> 
> ...


Sure that is the past. What *fundamental* influence does it have on today? 

Yeah cause we are in the late 80's . Interests rates are what now...?

Then your relatives were stupid... (sorry but that is IMO) my father was paying a fixed rate of 9% in the same time frame.

Things have changed a lot since then in terms of regulation... I remember all to well so I don't need a history lesson, thanks (but some may do...  ).

Times are different and we need to judge each circumstance according to it's particularities. That is what I am saying. When are we going to see 12% at 2% per year, which is huge, we will see 12% even for a variable rate in what... 5 years if that trend were to continue unabated or at least unchanged. So 2015 maybe, if the worst comes to pass. I think for those who are paying attention the writing should be on the wall by then and particularly if you live in an inflated region.

12% may come to pass but I doubt it. I think 8-9% tops for a 5 year 5 years from now.


----------



## Sonal (Oct 2, 2003)

Speaking of history and just for interest's sake (pardon the pun.)
BANK OF CANADA INTEREST RATES - interest rates history

Seems like in the last 30 years, we've seen some historic highs and lows. 

I'm not enough of an economist to really say what will or will not happen, but for the immediate future (say, 5 years or so) it does not seem likely to me that rates will rise suddenly. Rise, yes, but in small increments.

Still, even I am aware of the days of the credit-card rate mortgage. The folks had a plaza whose financing came due right in the middle of it all, and it had to be refinanced at 18%, meanwhile the economy was falling and getting commercial tenants was near-impossible so there was not a lot of income coming in to pay this mortgage.... it was not at all easy, but somehow, it still worked.


----------



## MLeh (Dec 23, 2005)

People are taking out 25-30 year amortizations based on interest rates in the 5% range. 2015 is only 5 years away. They'll have paid off very little of their principle in those 5 years.

And yeah ... my parents had a mortgage of 6.25% in the early 80's - they'd built in 1964, took out a 25 year fixed mortgage and took the full 25 years to pay it off because it made more sense to keep the mortgage and have money in the bank earning more interest than they were paying on the mortgage.

I don't care what your opinion is of my relatives - it's moot and very 'holier than thou' - hindsight being what it is. But my point was there were lots of people caught in the 'variable rate' scenario - not just my relatives, but lots of people who took the bait of 'lower now' with the risk of higher later. It's what happened - it's history. And history has a way of repeating.

People believe the bankers when they say 'you can afford payments of "X" amount', and then when the interest rates go up, they're living on the edge. The bankers don't really care.


----------



## kps (May 4, 2003)

MLeh said:


> 1980s, recession, ...... If you had a house with a locked in transferable mortgage for anything less than 10% it was a selling feature of the house.
> 
> Those who do not learn from (or remember) the past are doomed to repeat it.


...and that's when I'll get back into the market and take over some poor over financed person's house.

The GTA market, like the Vancouver market is a down right abomination. I can buy two identical houses for the price of one Toronto home within 2hrs in either direction of the GTA.

I've been keeping close tabs on the market for the past 2 years since selling in Toronto and what's going on just does not make sense. Canadians actually took on more debt during this recession than any other country. Bidding wars continue, people seem to be in a panic to buy because they fear the HST and rising rates. Prime targets for flippers and speculators. Prime example below.

As I check the MLS listings often, I save the odd property of interest. The other day I noticed a property I recognized and checked my records only to find that the same house was up for sale a year ago. Only difference is the price tag. No improvements, no nothing.

Current listing:










Listing from May 2009:










I can get a house like this in Windsor for $90,000. Go figure. LOL


----------



## MacDoc (Nov 3, 2001)

and Canada was higher.

Gold is soaring which means many think we are heading for inflation or hyper inflation.

That will be fought with higher interest rates.

Every time you fail to learn from history....it costs more.


----------



## Max (Sep 26, 2002)

kps said:


> The GTA market, like the Vancouver market is a down right abomination. I can buy two identical houses for the price of one Toronto home within 2hrs in either direction of the GTA.


Why does that make the GTA market an abomination? We've been looking at housing in the Trent Hills/Northumberland county area... 2 hours east of the GTA. Prices are way lower. We could get a whole lotta house or property out there for a song, comparatively speaking. Car insurance is way lower, too. Not to mention the cleaner air and other niceties. But then again, you have to look at employment opportunities out that way. They're available but with nowhere the same depth and breadth. Location makes a difference. Should it make that huge a difference? I dunno. But the market has a way of finding its own level.

I might feel differently, were I ready to retire. I'd head two hours east or west - lovely prospects in either direction. As it stands though, there's probably more employment opportunities west though - I'm thinking London/Guelph/K-W.

The COTU has a versatile enough employment base that it will weather a great deal of storms. Other regions sometimes put all their eggs in one frail basket.

Is there real estate speculation happening? Sure there is. A certain measure of it is normal. Like Sonal, I too believe that interest rates will rise but not precipitously. it will be a steady climb. We've seen this coming from a long way off - those who haven't simply have not been paying attention.

Again, the trick is to watch you don't over-extend yourself. Buyer beware - keep that in mind and you should do fine.


----------



## Macfury (Feb 3, 2006)

MacDoc said:


> Gold is soaring which means many think we are heading for inflation or hyper inflation.
> 
> That will be fought with higher interest rates.
> 
> Every time you fail to learn from history....it costs more.


That's because your buddy down South is printing money like toilet paper. He's the one you thought you would be comfortable with in the President's office.


----------



## groovetube (Jan 2, 2003)

Max said:


> Why does that make the GTA market an abomination? We've been looking at housing in the Trent Hills/Northumberland county area... 2 hours east of the GTA. Prices are way lower. We could get a whole lotta house or property out there for a song, comparatively speaking. Car insurance is way lower, too. Not to mention the cleaner air and other niceties. But then again, you have to look at employment opportunities out that way. They're available but with nowhere the same depth and breadth. Location makes a difference. Should it make that huge a difference? I dunno. But the market has a way of finding its own level.
> 
> I I might feel differently, were I ready to retire. I'd head two hours east or west - lovely prospects in either direction. As it stands though, there's probably more employment opportunities west though - I'm thinking London/Guelph/K-W.
> 
> ...



sanity. 

Over the long term, Toronto historically has been a very, stable market.

The interest rate hike will bite, and soon. WHich is why I locked half into a 10 year a 5%, and the rest into a 5 year and I'm overpaying it like a muther. If rates are at 15% in 5 years, I should be fine.




Macfury said:


> That's because your buddy down South is printing money like toilet paper. He's the one you thought you would be comfortable with in the President's office.


I knew at some point, it'd be Obama's fault. :lmao:


----------



## Macfury (Feb 3, 2006)

groovetube said:


> I knew at some point, it'd be Obama's fault. :lmao:


If we get hyperinflation, definitely.


----------



## kps (May 4, 2003)

@ Max: It's an abomination because it has gone beyond simple supply and demand and into a ridiculous frenzy full of idiocy, desperation and speculation..

I figure I have 15 good years left in a working career, but seriously considering buying a shack in the woods, getting off the grid and entering into a simpler, semi-retirement type of lifestyle. Give the COTU the middle finger and hope I can find a source of income to carry me till I kick the bucket.


----------



## Max (Sep 26, 2002)

Not a bad plan, my friend. I wish you all the best. I have been racking me noggin trying to come up with a similar plan. Alas, nothing pans out thus far. I'm hanging in for the time being.

What do you mean by 'getting off the grid?' There's degrees of that and I'm curious how far you'd be prepared to go.

Supply and demand... sure, but surely it's been that way for a very long time now... again, I think cities are about to become even more important in the years and decades to come. If I'm right about energy prices and fossil fuels, we are going to see densification rates climb ever higher, if for no other reason than to achieve infrastructural efficiencies of scale and delivery of requisite services. In fact, I'm thinking people will begin to have a harder time being located _outside_ of cities. Sure, there will always be those hardy souls who equate city living with all manner of vile things, but many of us won't mind at all - it's what we'll consider normal. And there will be millions of us. Heck, there already are.


----------



## Macfury (Feb 3, 2006)

kps said:


> @ Max: It's an abomination because it has gone beyond simple supply and demand and into a ridiculous frenzy full of idiocy, desperation and speculation.


It's still supply and demand, but you just don't happen to like the people who are doing the demanding.


----------



## Max (Sep 26, 2002)

I concur, MF.

Anyway, Kps - you're renting now and you've decided to wait until the market cools down... then you can swoop in and stake a claim in a property some poor fool decided to over-extend himself with... yet that too is speculation, is it not?


----------



## Sonal (Oct 2, 2003)

Macfury said:


> It's still supply and demand, but you just don't happen to like the people who are doing the demanding.


Yep.

As I always say, you're not paying for the house, you're paying for how much someone else wants to live there.


----------



## kps (May 4, 2003)

Max said:


> Not a bad plan, my friend. I wish you all the best. I have been racking me noggin trying to come up with a similar plan. Alas, nothing pans out thus far. I'm hanging in for the time being.
> 
> What do you mean by 'getting off the grid?' There's degrees of that and I'm curious how far you'd be prepared to go.


Not all the way, still intend to file my taxes. lol But I will off-set hydro with solar and wind. Heat with wood from my own source (bush acreage) and eliminate dependance on expensive energy as much as possible. Probably limit telco use and dependability.



> Supply and demand... sure, but surely it's been that way for a very long time now... again, I think cities are about to become even more important in the years and decades to come. If I'm right about energy prices and fossil fuels, we are going to see densification rates climb ever higher, if for no other reason than to achieve infrastructural efficiencies of scale and delivery of requisite services. In fact, I'm thinking people will begin to have a harder time being located _outside_ of cities. Sure, there will always be those hardy souls who equate city living with all manner of vile things, but many of us won't mind at all - it's what we'll consider normal. And there will be millions of us. Heck, there already are.


After living in Toronto for 40+ years, there is nothing to really hold me here any more. That is my personal opinion and I'm not crapping on anyone who wishes to live and work here. The city has much to offer, but I've had my fill of it.

You are absolutely correct when you say " cities are about to become even more important..." and that is a shame, but as long as my future "shack in the woods" is within reason of a town with adequate healthcare and services, I'm golden.

Not being tied down to a mortgage and sitting on a little cash, the draw to make the move is strong.


----------



## i-rui (Sep 13, 2006)

kps said:


> I can get a house like this in Windsor for $90,000. Go figure. LOL


and you could get a house for less than $20,000 in Detroit.

all that proves is location is paramount in real estate.


----------



## kps (May 4, 2003)

Macfury said:


> It's still supply and demand, but you just don't happen to like the people who are doing the demanding.


Perhaps you're right and I'm stuck with some outdated thinking, but I'll be damned if I get caught up in that crap. Time will tell.


----------



## kps (May 4, 2003)

i-rui said:


> and you could get a house for less than $20,000 in Detroit.
> 
> all that proves is location is paramount in real estate.


Yup, the old "location, location, location", but still, Windsor is not Detroit.


----------



## i-rui (Sep 13, 2006)

kps said:


> Yup, the old "location, location, location", but still, Windsor is not Detroit.


yep...but windsor ain't toronto either. Just pointing out the other end of the spectrum.

Anyways, i don't see the toronto market going down much at all. maybe a few points if we dip back into recession, but it'll always be strong as long as it's the financial capital of canada.

Houses in the suburbs of toronto will be ok too, but obviously never as strong. I do question the condo market in the 'burbs. Every time i drive into Mississauga i see more and more buildings going up. I just don't see them holding their value as well as houses in the 'burbs. Condos in toronto make sense....but not so much in the burbs (IMO).


----------



## Sonal (Oct 2, 2003)

i-rui said:


> Houses in the suburbs of toronto will be ok too, but obviously never as strong. I do question the condo market in the 'burbs. Every time i drive into Mississauga i see more and more buildings going up. I just don't see them holding their value as well as houses in the 'burbs. Condos in toronto make sense....but not so much in the burbs (IMO).


Condos in the 'burbs will likely do well for seniors... people who want to stay in the suburbs but not have a full house to manage.

And there's always first-time homebuyers who can't afford 416 prices.


----------



## screature (May 14, 2007)

MLeh said:


> ...But my point was there were lots of people caught in the 'variable rate' scenario - not just my relatives, but lots of people who took the bait of 'lower now' with the risk of higher later. It's what happened - it's history. And history has a way of repeating.
> 
> People believe the bankers when they say 'you can afford payments of "X" amount', and then when the interest rates go up, they're living on the edge. The bankers don't really care.


In the 2001 York University’s Dr. Moshe Milevsky conducted a study showing that from 1950 to 2000 if you had a variable rate mortgage you were further ahead over a fixed rate mortgage going ahead 15 years, year over year 88% of the time on average by $22,000. If you start a mortgage in the double digits you however have no one to blame but yourself for that.

Also, I have never known of or have never seen any evidence of history repeating, have you?

And you started the holier than thou tone with "12% is a very reasonable number, *for those of us who remember*." But I must apologize for the stupid comment, it wasn't necessary and how would I know their particular circumstances... I am sorry. (I was ticked at the insinuation, but that is no excuse. )


----------



## Max (Sep 26, 2002)

kps said:


> You are absolutely correct when you say " cities are about to become even more important..." and that is a shame, but as long as my future "shack in the woods" is within reason of a town with adequate healthcare and services, I'm golden.


Certainly, many people are thinking along the same lines. For this very reason, here in southern Ontario we are seeing notable growth spurts and densification in favoured retirement zones like Collingwood, even Coburg. Many who grow tired of city life and seek something quieter, slower, tend to migrate and filter into the same regions, thus unwittingly demanding more in the way of new shops and services; new population clusters result, with additional strains on existing transportation and grid infrastructure. Generally speaking, as we age so do we increase our reliance on access to medical services. We want 'out' but not so far out that we can't be given quick emergency care.

This is admittedly a tangent, but I keep seeing more and more seniors working these days. The erosion of the social safety net translates to the necessity of more people working for more of their productive adult lives in order to make ends meet. I've been on the road an awful lot these past four months and all the Tim Horton's I've stopped in are being staffed by a high percentage of folks with more than a few grey hairs. Were it not for high immigration levels the fact that our nation's population is skewing older would be even more nakedly obvious. If anything, demands on healthcare will likely surge ever more, for many years to come yet. Again, that factors into the decisions we make regarding where to live and what array of attractions/features are going to be decisive factors.

Far away but not too far... it's a dilemma.

Finally, I applaud your desire to be more off-grid. I believe we could use more of that thinking. We need to apply it more to our lives, regardless of where we live.


----------



## groovetube (Jan 2, 2003)

Sonal said:


> Condos in the 'burbs will likely do well for seniors... people who want to stay in the suburbs but not have a full house to manage.
> 
> And there's always first-time homebuyers who can't afford 416 prices.


very true. The market for retirement "scale downs" will only get larger.

Truthfully I've been surprised at the resiliency of the condo market this far.


----------



## Max (Sep 26, 2002)

There's some evidence that new condo starts here in the COTU are now slowing. Thankfully. But still, there's a veritable forest of the things with cranes still perched atop them. I was out in the West end today to catch Avatar at the Imax (I know, terribly cutting edge of me) and I was struck by how many towers are currently under construction. Many of my old stomping grounds in the west end are almost unrecognizable now, so profoundly have they changed. A lot more people are living in the core nowadays. It's as if the surge outwards to the suburbs has been feverishly reversing itself. Not that this isn't causing some monumental problems of its own, mind you.

I am convinced most of these gleaming towers downtown are so shoddily constructed, their maintenance and repair issues will assume nightmare proportions in just a few years.

I too see the sense of condo tower developments in the burbs... many seniors are happy to live as cliff dwellers if it means they don't have to trudge up - or down - any more stairs.


----------



## groovetube (Jan 2, 2003)

beyond the sea of cranes, I'm not sure where the heck they can jam in more of those things.

Beofre finding my current house, I rented a temp condo downtown briefly, I hated it. The construction wasn't good at all. nightmare proportions is right.


----------



## Max (Sep 26, 2002)

Same applies to many of the three-story townhome developments I see going up in the east end... in-fill housing that fits in with the existing architecture, _sort of_, but made with the fabuously shabby techniques and materials of this frenzied era of ours. Buyer beware for sure.


----------



## groovetube (Jan 2, 2003)

oh god my last house was on a street where they shoehorned some of the ugliest 'things' that were covered in some kind of styrofoam/cement concoction on the exterior. It disintegrated in the first 5 years and had to be redone. I think it was put in the alleyway that was mostly garages and some coachhouses.

eesh. Wonder if someone blew half a mil on those.


----------



## Max (Sep 26, 2002)

You would do better shoehorning yourself into a coach house that was built a hundred years ago. At least there'd be an excellent chance it would have good bones. Nowadays the bones are more like flimsy filaments.


----------



## Macfury (Feb 3, 2006)

That styrofoam treatment with the fake stone blocks and all sorts of open joints is revolting--and basically destroys the beautiful exteriors of homes that are being defaced this way in retrofit. I call it "creaming over" but whatever it is called, it looks like hell.


----------



## Max (Sep 26, 2002)

LOL

It does, and it goes to seed in a big hurry, too.


----------



## groovetube (Jan 2, 2003)

I'm watching do it to a house to the street right now, it'll be on sale in about 2 weeks.

Red brick, no paint, well maintained, was my first requirement.


----------



## Sonal (Oct 2, 2003)

I've got a guy who does excellent work at restoring brick, even brick that's been covered over with years and years of paint.

Just sayin'


----------



## Macfury (Feb 3, 2006)

Sonal: It isn't paint. They cover the brick with strapping attached by huge power nails, then cover everything with gobs of adhesive to glue on the styrofoam. The brick is pretty much ruined by then.


----------



## kps (May 4, 2003)

Speaking of condos, we looked at a "luxury" condo in Mississauga's Square One area and as the realtor was showing us the 2nd bedroom I turned to my wife and said..."Oh, look honey a walk-in closed with a window". Needless to say the realtor wasn't amused. 

What I hate about condos is the maintenance fees compounded by the fact that, as Max says, they're built shabbily. Which can only mean that they'll keep going up. Not to mention the coming HST which will have an immediate impact on these fees.


----------



## groovetube (Jan 2, 2003)

Sonal said:


> I've got a guy who does excellent work at restoring brick, even brick that's been covered over with years and years of paint.
> 
> Just sayin'


really. Good guy to know, I didn't realize you could even do that. Is it really expensive? I found the houses that were painted often took longer to sell and went significantly cheaper.


----------



## Max (Sep 26, 2002)

kps said:


> What I hate about condos is the maintenance fees compounded by the fact that, as Max says, they're built shabbily. Which can only mean that they'll keep going up. Not to mention the coming HST which will have an immediate impact on these fees.


Can I get an 'amen' brother! It's those maintenance fees which spook me... there's no upper ceiling to them.


----------



## Sonal (Oct 2, 2003)

Macfury said:


> Sonal: It isn't paint. They cover the brick with strapping attached by huge power nails, then cover everything with gobs of adhesive to glue on the styrofoam. The brick is pretty much ruined by then.


I know what you are talking about, but some people actually do use paint.

But even that is repairable. You have to strip the styrofoam and clean off the adhesive, and then replace the damaged bricks.... if you can't find ones that are an exact match in age and colour, you can tint them to match. 

Now the pretty stryofoam shows well, so that may not be as worth it to do... and once you strip the stryrofoam maybe you will find out that the reason it was covered is that ALL the brick is in horrible shape... but it's do-able.

All it takes is money.


----------



## Max (Sep 26, 2002)

I've heard that even cleaning brick via power-washing can be destructive to the masonry.... anyone know one way or another? Say you have a brick facade that's old and terribly grimy. Do companies add chemicals to their power washes to blast the crud off? Does it weaken the grout that's holding the bricks in place?


----------



## Sonal (Oct 2, 2003)

groovetube said:


> really. Good guy to know, I didn't realize you could even do that. Is it really expensive? I found the houses that were painted often took longer to sell and went significantly cheaper.


It's not cheap, but it depends on what they have to remove and repair... Hard to just throw out a ballpark figure, but you are probably looking at several thousand to clean, and then more if you need to repair the masonry... masons are not cheap. On the other hand, if painted houses sell for a lot less, then this would bring up the value.

I used him on a building of mine, but it wasn't painted... it just needed some cleaning. However, we saw his work at another place where he was taking 7 layers of paint off an old brick house to restore it... came out beautifully.

If painted houses don't sell well, you could always put a conditional period in the offer and get this guy (or someone like him) out to quote in the meantime and see.


----------



## Sonal (Oct 2, 2003)

Max said:


> I've heard that even cleaning brick via power-washing can be destructive to the masonry.... anyone know one way or another? Say you have a brick facade that's old and terribly grimy. Do companies add chemicals to their power washes to blast the crud off? Does it weaken the grout that's holding the bricks in place?


Yes, sandblasting the brick can damage it, so you need to be careful about your contractor.... you don't want a guy who just sandblasts can calls himself a brick restoration expert. The guy I know specializes in heritage homes, so he has a few different techniques.

Old masonry is very solid--goes back to "they don't build'em like they used to". But over time, you will probably need to re-do the tuckpointing regardless because parts will start to crumble. After cleaning someone comes in to fill in any spots that need it. If you have a good masony, they will match the mortar. If you have a bad one, they will smear in a lot of crap and it will look terrible.

Also over time, you will have a few bricks that have weakened... those simply need to be replaced. Finding old brick to match can be tricky--best bet is to look for people tearing stuff down and asking if they can save you some. But tinting works quite well, and it's not expensive.

Of the buildings I manage hands-on, one is 80 years old and the other is closer to 120. I'm learning a lot about brick.

EDIT: What I love, though, about old Toronto homes is that all of this brick came out of the Don Valley Brickworks.... this is all local, Toronto brick. Some of it--like the buff coloured brick--is somewhat unique to the area because we had special clay that no longer exists, at least, not around here. It's the history of the city tied right up in the bricks that make up the old buildings in the city.


----------



## Max (Sep 26, 2002)

Bricktastic, Sonal. Yeah, I was aware that masonry can be in need of re-pointing (still not quite sure what that entails). There's a lovely specimen of a house across from us which has sat empty for the last five or six years. The owner, a woman in ill-health who thinks she will recover one day and move back in, has in fact not set foot on the grounds in years. One of her sons comes around regularly to take care of the property. He and his siblings are willing to let their mother entertain her fantasy for the time being. It's a tall and stately house with an elegant if faded and forlorn presence on our street, but it's sad that it has sat empty for so long. Too, the brick is looking pretty dodgy - crooked, crumbly, not terribly healthy all around. One day I expect the son to tell me his mother has passed and that the house will be put up on the market. I'm thinking it will go one of two ways. A new buyer will either gut the house and go open-concept inside but restore the facade, or the house will be bulldozed into oblivion and something else will go up in its place.

Nothing like the look of old brick that has been spruced up with a good wash and proper restoration. The solidity of it is very reassuring.


----------



## Macfury (Feb 3, 2006)

They don't allow sandblasting in most places now--too environmentally unfriendly don't you know. They often use dry ice crystals now.


----------



## Sonal (Oct 2, 2003)

Max said:


> Bricktastic, Sonal. Yeah, I was aware that masonry can be in need of re-pointing (still not quite sure what that entails). There's a lovely specimen of a house across from us which has sat empty for the last five or six years. The owner, a woman in ill-health who thinks she will recover one day and move back in, has in fact not set foot on the grounds in years. One of her sons comes around regularly to take care of the property. He and his siblings are willing to let their mother entertain her fantasy for the time being. It's a tall and stately house with an elegant if faded and forlorn presence on our street, but it's sad that it has sat empty for so long. Too, the brick is looking pretty dodgy - crooked, crumbly, not terribly healthy all around. One day I expect the son to tell me his mother has passed and that the house will be put up on the market. I'm thinking it will go one of two ways. A new buyer will either gut the house and go open-concept inside but restore the facade, or the house will be bulldozed into oblivion and something else will go up in its place.
> 
> Nothing like the look of old brick that has been spruced up with a good wash and proper restoration. The solidity of it is very reassuring.


I like option 1, but not everyone has the vision. Keep me in the loop if it ever goes up for sale, though. Who knows?

It's pretty amazing... at my 80 year building, the tuckpointing through most of the building is still perfect. You can see how the old mortar is different, more gravelly, but it's in just about perfect condition. The places where it's worn away are primarily areas where there were some issues with the roof, and the water ran down the face of the building instead, and wore away the mortar. 

Even where they do brickwork, they don't do it quite like that anymore.


----------



## Macfury (Feb 3, 2006)

Mortar now is designed to be quick drying so the job can be done faster. The grainier stuff worked really well. Properly mixed, mortar and cement should gain in strength over the years.


----------



## iMatt (Dec 3, 2004)

I've only scanned most of the posts, but will toss in two cents plus interest anyway...

Having been on both sides of the own-rent divide and back again, I now think renting gets short shrift in our society.

What most often goes unspoken about owning is that even if your mortgage payment is significantly lower than rent on a comparable property, taxes and maintenance will close some if not all of the gap (as the OP is seeing). Maintenance in particular is the great unmentioned drag on homeownership as an investment. If you're a *competent* handyman, great. Most of us aren't. 

In other words, the total cost of ownership is usually seriously underestimated. 

If you have the discipline to save what you might otherwise have built up in equity, renting can be great. If not, consider owning as a form of forced savings, though personally I believe it's best to develop a saver's outlook and discipline whether you rent or own.

If you have good handyman skills (or inclination to learn and use them) and the financial discipline to control those ownership costs that are controllable, consider owning. 

If you have the discipline to avoid buying way more house than you need just because the bank says that's what you can afford, consider owning.

If you find that homeownership is a significant psychological benefit to you... fantastic. But don't assume everyone gets the same benefit. Try to figure out which side you're on before signing on the dotted line, but if you make a misstep and find yourself losing sleep over the stresses of owning, give it a fair chance (a year, maybe two?), then get out, even if it means taking a bit of a financial hit.

Personally, I'm coming around to the idea of stashing money away until waves of boomers start scrambling to downsize. Owning a place to retire to is a nice idea... but not convinced that I'll be SOL if I don't buy it 20+ years before retiring.


----------



## Macfury (Feb 3, 2006)

For me, it's the psychological benefit--great value.


----------



## Sonal (Oct 2, 2003)

Why I own:
1) Psychological benefit.
2) I'm slightly handy, but I have lots of handypeople available to me for anything I can't handle/screw up badly, and some of them will cut me a bit of a break.
3) Leverage for other real estate investments.

Granted, I'm in a condo right now so the maintenance aspect is a bit less, but I do see myself going back to a house one day. I miss gardening.


----------



## Max (Sep 26, 2002)

I'm not a handyman so I take a hit there, no doubt. But in my experience the psychological and emotional value of being a home-owner is considerable.


----------



## iMatt (Dec 3, 2004)

Yup, I know for most people the psychological/emotional factors are almost all pluses.

Turns out we aren't all that way, though, which is a hard lesson to learn after you've taken the plunge.

I'm not sure how you'd figure out whether you're in the minority beforehand, but I'd say if someone has even the slightest doubt about the idea of buying in general (let alone a specific property), it's probably a good idea to just keep on saving until those doubts are gone. And that will become a much more appealing option when rates go up...


----------



## groovetube (Jan 2, 2003)

Max said:


> I'm not a handyman so I take a hit there, no doubt. But in my experience the psychological and emotional value of being a home-owner is considerable.


all you really need, is a hammer. And a few phone numbers for talented individuals that know how to finish it.


----------



## MLeh (Dec 23, 2005)

groovetube said:


> all you really need, is a hammer. And a few phone numbers for talented individuals that know how to fix it.


Fixed that for you. 

My husband and I have an agreement: The only tool I ever pick up is the pen to write the cheque to the contractor.


----------



## kps (May 4, 2003)

I'm handy and can do pretty much anything...and have done so, but there are times when one has to call in the pros. 

Like when the reality of your age and condition of your leg muscles totally dismiss any thoughts of shingling your steep pitch roof.:lmao:


----------



## Macfury (Feb 3, 2006)

I refuse to go on the roof. That's potential instant death.


----------



## MacDoc (Nov 3, 2001)

In case you were wondering



> *House prices
> You can't keep 'em down*
> Houses remain overvalued in many countries where prices are now rising
> Apr 15th 2010 | From The Economist print edition


House prices: You can't keep 'em down | The Economist

Canada 21% over valued...


----------



## groovetube (Jan 2, 2003)

I'm sure some areas in Canada will really take a hit. Here in TO, to put things into perspective, things have gone up about 10 or 15%, above last year, which went 10% above the 2008 crash. Buying in this current heat is a bit dicey. But, as my older lawyer friend says, in 10 or 15 years, you're not gonna care that you paid 20k more for that downtown TO house....

Sensationalist numbers can't be taken literally, for all markets in Canada.

Smart buyers will consider the property, location, etc....


----------



## MacDoc (Nov 3, 2001)

This is a very interesting calculator

Is It Better to Buy or Rent? - Interactive Graphic - NYTimes.com

Consider that the average house in Toronto is $400,000 you have to be betting on a very large increase in value to justify it.

I set interest rates at 7.5% and taxes at a low $5400 = I used my own house rent and values.










Now if as the Economist claims prices are over valued in Canada by 20% ( which means effectively in Toronto by more likely 30% against affordability index ) - then there is very very little case for buying at this point in time.

But then some count on inflation....

I'd hate to run Vancouver's numbers....

( the line has to go above the baseline for buying to better than renting...that would be 30 years out on my property and in the meantime I have no major maintenance costs to risk. )


----------



## Sonal (Oct 2, 2003)

Hmm... my condo justifies after 4 years.

But a lot of the assumptions about costs that they use do not reflect my reality... my costs are lower, so this should justify sooner.


----------



## groovetube (Jan 2, 2003)

if you think toronto is overvalued by 30% macdoc, you are discounting toronto history.

resale homes in downtown has proven to be incredibly resilient, and history shows it. 

I would say in the short term, 15%, and higher on the upper end. But it will indeed, bounce once again...

Hell it skyrocketed 15% since we bought so it isn't like it's surprising.


----------



## Sonal (Oct 2, 2003)

There's also the fact that (single-family) residential property taxes in Toronto is a lot lower than outside of Toronto.

EDIT: Using all of MacDoc's numbers, but just adjusting the taxes down to reflect Toronto property taxes, it shaves 10 years off. And this assumes that the rest of MacDoc's numbers are accurate for Toronto.


----------



## MacDoc (Nov 3, 2001)

*Total Taxes: *
*$3,846.51**
for a $450,000 house

City of Toronto Property Tax Calculator

Given the stupid structure of our taxes you can bet property taxes are going to go up way faster than property values.

Now try putting a negative value into the property prices....downside risk right now is exceptionally high - especially given the demographics.

Rent control also decreases the downside risk of high rent increases.


----------



## groovetube (Jan 2, 2003)

they've been saying that for years. Though taxes have gone up quite a bit in the last decade already, I think ours has certainly doubled at least.

But I would have to say that buyers, right now, are kinda lemmings right now. All afraid of a point hike in rates, and hst, so they're willing to run out and help create bidding wars that do over value properties and overpay 50k plus or more. Perhaps some of that severe heat will account for the cooling of the prices. Glad I didn't buy this place this spring.


----------



## Sonal (Oct 2, 2003)

MacDoc said:


> *Total Taxes: *
> *$3,846.51**
> for a $450,000 house
> 
> ...


That uses the MCAP assessed value, not the market price. MCAP's assessments for houses are typically a lower than the actual market price.

If I use the purchase price for my condo, the taxes are 17% higher than the actual. If I do the same with the purchase price of my former house, it's about 13% higher, but that is an older number. (Mind you, if I put the price that I sold the house for, it's 25% higher.)

I think a good rule of thumb would be to reduce the purchase price by about 15% to get the MCAP assessment. Hard to say though.

Incidentally, I figured out how to adjust all the numbers, so it reflects my own reality. My condo justifies after 2 years. This is my 3rd year here. I'm good.


----------



## groovetube (Jan 2, 2003)

what do you set for house appreciation and rent increase? I figured rent increase is around 4or 5%


----------



## Sonal (Oct 2, 2003)

groovetube said:


> what do you set for house appreciation and rent increase? *I figured rent increase is around 4or 5%*


:lmao::lmao::lmao::lmao::lmao::lmao:

I put 2% for rent increase, but historical increases are here. The movement lately seems to be for lower and lower increases. As of 2007, it's supposedly based on CPI.

2010 Rent Increase Guideline (English)

For house appreciation, I went with 3%, but I vetted that based on what the "Proceeds of sale" number calculated to... if that number made sense, I went with it.


----------



## groovetube (Jan 2, 2003)

ah. my commercial space is higher, it's been a looong time since I've rented a residential I guess.


----------



## groovetube (Jan 2, 2003)

well with that, it seems I'm good under 10 years too.


----------



## Sonal (Oct 2, 2003)

groovetube said:


> ah. my commercial space is higher, it's been a looong time since I've rented a residential I guess.


Commercial is free-market--increases are whatever you can agree to.

Now, if someone was moving every year, yes, the rental increases might be around 4-5%.


----------



## MacDoc (Nov 3, 2001)

> Sonal
> Quote:
> 
> 
> ...


Despite a 20% over valued opinion by The Economist you insist on a 3% per annum increase. 

In part due to rent controls downside risk for renters is very low where it's quite high for buyers into a bubble market.

In a jobless recovery with interest rate rises looming and a major demographic hinge point in progress, moving into this market entails some fairly high risk for buyers.
Vacancy rates in Toronto are also climbing.

I'd hate to look at Vancouver's numbers XX)


----------



## groovetube (Jan 2, 2003)

well that would depend on -when- you bought and how much you paid in relation to what the numbers are today macdoc.


----------



## Sonal (Oct 2, 2003)

MacDoc said:


> In a jobless recovery with interest rate rises looming and a major demographic hinge point in progress, moving into this market entails some fairly high risk for buyers.
> Vacancy rates in Toronto are also climbing.


Yes, which means that the have gone from "insanely low" to just "low". It's around 3% right now.

I know some Toronto landlords were panicking over this, but that's because historically, it's always been "insanely low." Back in the day, being a landlord in Toronto meant just collecting money. Now you actually have to maintain the building and maybe make it attractive to tenants. The horror.

But vacancy rates in Toronto are directly related to home ownership. When interest rates dropped, a lot of people started buying instead of renting... vacancy went up. Interest rates rise, people stop buying, vacancy goes down.

Really, if you want good quality affordable rental, you need to lower demand... pushing people into home ownership earlier does it.


----------



## Sonal (Oct 2, 2003)

MacDoc said:


> Despite a 20% over valued opinion by The Economist you insist on a 3% per annum increase.


If I look at what I paid and what my place is worth now--yep, 3% seems to hold. But even using YOUR numbers, buying is still better than renting after 4 years for me.  I don't think it's unreasonable for me to assume that I'll be in this condo for more than 4 years... I'm already on year 3 with no imminent plans to move.

Also, your calculator does not take into account adding value through renovations. As a homeowner, you have that option. As a renter, there's nothing you can do to lower your cost of rental.

Hey, I live in the St Lawrence Market area that you purportedly love so much as an example of good housing policy and planning. Are you saying that values in this particular area that you love so much are going to plummet?


----------



## MacDoc (Nov 3, 2001)

The market is over priced in general - that does not mean individual areas are over priced ...
IF inflation kicks in then that will take care of the over price but cause other issues.

If deflation kicks in as it has in Japan then property values will plummet as they have there..

I'd put us at a similar situation to the 1980s peak tho not so heated and with not so large a downside.

There it dropped 40% very quickly and shelter costs and wages came into line mid 90s for a few brief years.

Wages stopped rising around 2000 - shelter costs did not.

Cost of Living in Toronto, Ontario | Canadaimmigrants

you can see why condos are popular.

Type​ Price​ Qualifying  Household Income*​ Standard Two-Storey
$537,300 $117,100 Detached Bungalow
$452,800 $98,500 Townhouse
$385,400 $83,100 Condo
$300,600 $66,300
Demographics will play a very large role in the next few years.


----------



## screature (May 14, 2007)

MacDoc said:


> This is a very interesting calculator...


My home has more than doubled in value in less than 10 years and I live in a small town on the Quebec side opposite Ottawa. Needless to say this "calculator" has to have values that actually fluctuate in order have any sort of real world relevance. It is a cute toy but pretty meaningless, unless of course you also believe in crystal balls.


----------



## Sonal (Oct 2, 2003)

MacDoc said:


> The market is over priced in general - that does not mean individual areas are over priced


And yet you keep arguing in generalities with people who are discussing specific areas....

It's not just price that's driving people to condos. Urban living is getting more popular--people are getting sick of commuting, and Toronto has many vibrant and liveable downtown neighbourhoods. If you want to live the urban lifestyle, then a condo is one of the living options to consider.

(Or... I have some amazing unique flats that will be coming on the market soon. All the convenience of downtown condo living without the homogenized big box feel of a condo tower. Act now!)


----------



## Max (Sep 26, 2002)

Sonal: LOL!

MacDoc, it's easy to see why condos are popular. They're relatively inexpensive, and they're shiny-new. But I believe that condos are a short-term solution and are, in fact, ticking time bombs. They are, in general, shoddily built, they're notoriously energy-inefficient, and then there are those staggering condo fees, which can only go up, and up, and up... it's a trap. I know of a few owners who have them strictly as relatively short-term investments. At best, condos downtown, in the COTU of the COTU, offer shelter for transient types - young urban professionals who aren't yet having kids, singles into living near clubland and the party lifestyles, etc. Buildings which are chiefly attractive to transitional owners are not, in any real sense of the word, communities. You're better off living in a town home complex. Better chance you might actually befriend your neighbours.

Alas, space issues intervene... and so price-sensitive buyers opt for the condo solution. Still, I would rather go with Sonal's "unique flats" option than with a coldly impersonal glass and steel cookie cutter tower clustered down by the lake, overlooking the Gardiner.... or Port Credit or Oakville, for that matter.


----------



## groovetube (Jan 2, 2003)

i agree sonal, and max. I think the condo thing is definitely in for a good bit of nuttiness for sure, though I think to some extent,location and style with be a deciding factor on how hard you fall. Location...

And I wonder about the reference to a time when houses saw a meteoric rise in prices in a very short time, to see a similar movement only down shortly after.

Doesn't at all jive with the prices rising over a decade.


----------



## Max (Sep 26, 2002)

I know anecdotes are good for squat, but we had to run a bunch of errands all around Leslieville, Riverdale and East York this weekend past. Seems like every street had an open house. Guess it's the last hurrah before the interest rates cool things down again. But it's definitely feverish out there.

I'm sure it's the same out your way, Groove. Crazy action.


----------



## Sonal (Oct 2, 2003)

Hey, I was doing the same around Leslieville and the Beach(es), Max. Surprising how much activity there is.



Max said:


> Still, I would rather go with Sonal's "unique flats" option than with a coldly impersonal glass and steel cookie cutter tower clustered down by the lake, overlooking the Gardiner.... or Port Credit or Oakville, for that matter.


And that it because of people like you a market for what I am doing exists. I truly believe that the market for this kind of a property is growing. (And if that's not true, I am going to have sell my MacBook Pro to feed myself.)

Same great location, same beautiful house--lower prices. Call now and I will throw in a free blender.  

Hey, I live in a condo. (Brick, fortunately, but still pretty shiny and new.) It's a compromise. Great Location, Low Price, Awesome Structure--pick any two.


----------



## groovetube (Jan 2, 2003)

Max said:


> I know anecdotes are good for squat, but we had to run a bunch of errands all around Leslieville, Riverdale and East York this weekend past. Seems like every street had an open house. Guess it's the last hurrah before the interest rates cool things down again. But it's definitely feverish out there.
> 
> I'm sure it's the same out your way, Groove. Crazy action.


yes it certainly is. There is a much higher inventory which has a big effect too by cooling the bidding wars a bit.

And when things really cool down, if inventory goers back to tighter than a drum, that'll keep prices from falling too much.


----------



## Max (Sep 26, 2002)

Tighter than a drum... why am I not surprised you'd use that expression?

The interest rates are certainly bound to dampen things considerably for awhile. But the economy in general seems to be roaring along... now if only the city's transportation infrastructure would be attended to!

All things being relative, I'm still flabbergasted by housing prices in Van. Astounding.


----------



## screature (May 14, 2007)

Max said:


> *I know anecdotes are good for squat*, but we had to run a bunch of errands all around Leslieville, Riverdale and East York this weekend past. Seems like every street had an open house. Guess it's the last hurrah before the interest rates cool things down again. But it's definitely feverish out there.
> 
> I'm sure it's the same out your way, Groove. Crazy action.


To the contrary... they *can* mean a lot, especially if like anecdotes are in the majority.


----------



## Sonal (Oct 2, 2003)

Max said:


> The interest rates are certainly bound to dampen things considerably for awhile. But the economy in general seems to be roaring along... now if only the city's transportation infrastructure would be attended to.


They are in talks about plans to make plans...
The Public Transit Coalition wants to pressure the McGuinty government into putting Transit City back on track


----------



## PenguinBoy (Aug 16, 2005)

MacDoc said:


> The market is over priced in general - that does not mean individual areas are over priced ...
> IF inflation kicks in then that will take care of the over price but cause other issues.
> 
> If deflation kicks in as it has in Japan then property values will plummet as they have there..
> ...


In general I would agree with this.

I don't think deflation is likely at this point - still a possibility, just not that likely

I don't expect we will see a meltdown, but rather a mild correction followed by several years of more or less stagnant prices that increase at less than inflation. In ten years, prices could be the same as they are today in absolute, but not real, terms.

Then again, my crystal ball is cracked so what do I know. And real estate is regional, so there is probably more downside in some areas than others:
Vancouver housing market: no logic - Canada - Macleans.ca

Even a small correction could be worrisome for folks who put 5% down and can just barely make their payments with low interest rates and long amortizations - if prices correct by 5% and they can't afford their payments when they go to renew in a couple of years, they could be thousands underwater when real estate fees and closing costs are taken into account...


----------



## MacDoc (Nov 3, 2001)

> Bank sees shift over course of the year with lower prices in 201


House prices to drop: TD - The Globe and Mail


----------



## Max (Sep 26, 2002)

This is to be expected, after all. Nothing cataclysmic or shockingly unforeseen. People are still obliged not to get in over their heads.


----------



## MacDoc (Nov 3, 2001)

Careful out there....

House prices overvalued by 14 per cent in Canada: CIBC - Yourhome.ca

ouch 440,000 AVERAGE for Toronto - shades of the 80s :yikes:


----------



## Dr.G. (Aug 4, 2001)

Sadly, I could not afford to buy the home we currently live in if I had to try and buy it today. My salary has increased by about 35% in the 15 years we have lived in the home, but the fair market value has increased about 125% from the purchase price we paid back then.


----------



## John Pryor (Feb 13, 2008)

Dr.G. said:


> Sadly, I could not afford to buy the home we currently live in if I had to try and buy it today. My salary has increased by about 35% in the 15 years we have lived in the home, but the fair market value has increased about 125% from the purchase price we paid back then.


I can agree with you Dr.G as my Wife and I bought when the market was in a slump here and our market value has gone up over 300% in 12 years. But there are still some great deals if you look hard for them in other depressed neighbourhoods that are close to turning around.


----------



## Dr.G. (Aug 4, 2001)

John Pryor said:


> I can agree with you Dr.G as my Wife and I bought when the market was in a slump here and our market value has gone up over 300% in 12 years. But there are still some great deals if you look hard for them in other depressed neighbourhoods that are close to turning around.


St.John's has had big housing slumps, but never unrealistic booms, except for the luxuary homes of $750,000 + for 5,000 to 10,000 square feet of home and lots of land or an ocean view. The oil execs that are coming here from Calgary are simply taking out their checkbooks and writing checks for these amounts, in that they sold their Calgary homes for 3-5 times these amounts. My home would interest someone who wanted to be near good schools and the university, all of which are in walking distance.


----------

