| Edmonton House Prices Moving Past Calgary?! - Click HERE for Original Thread |
| RiceKing |
Just for fun I was checking the house prices in Calgary and they seem similar to Edmonton's!?! I don't get it, has the prices in Edmonton gone up so high and Calgary's leveled off? I must've fell asleep...
MLS , Comfree
Also, who is going to spend 1/2 mill to live in Edmonton? How can an average young couple with a kid do $100K for a 20% downpayment?
The monthly payments on a $400K mortgage, 5 years fixed, 6% (prime rate), 30 year amort is: $2559 !!
Rice |
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| REFLUX |
Take a look around at other major cities in North America.
What are housing prices like there?
It just seems bad in Edmonton because we witnessed the rapid change in price.
Ever heard of the 50 year mortgage in London England? |
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| TrevorK |
quote:
Originally posted by RiceKing
The monthly payments on a $400K mortgage, 5 years fixed, 6% (prime rate), 30 year amort is: $2559 !!
Rice
The only reason people complain about the prices is because they've seen them go up so high recently.
In today's economy there is no reason a couple could not afford $2559 towards their mortgage while still living an average lifestyle.
In fact, any single person who has a good work ethic could afford it themselves as well if they have a good head on their shoulders. |
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| GQsmooth |
quote:
Originally posted by TrevorK
The only reason people complain about the prices is because they've seen them go up so high recently.
In today's economy there is no reason a couple could not afford $2559 towards their mortgage while still living an average lifestyle.
In fact, any single person who has a good work ethic could afford it themselves as well if they have a good head on their shoulders.
It's bullshit for the younger generation these days, as wages are not going up so it's tough for us to have to be able to afford something so big.. |
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| TrevorK |
quote:
Originally posted by GQsmooth
It's bullshit for the younger generation these days, as wages are not going up so it's tough for us to have to be able to afford something so big..
I agree that it's much more difficult in the past for us younger folk to afford property, however it just means that you can't have the BMW and the house. You may be forced to live in a condo first, then move onto the house.
It's not easy to save for a house/condo - but it's not out of reach for anyone who wants to put an effort in either. |
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| dtjohnst |
quote:
Originally posted by GQsmooth
It's bullshit for the younger generation these days, as wages are not going up so it's tough for us to have to be able to afford something so big..
In 1 year, renovation cost at one of my clients has tripled due to the wage increase for labourers. If your wage isn't going up, you're in the wrong line of work.
You won't be able to afford a house if you want to get absolutely smashed twice a week, eat out every meal, buy a new car, constantly buy new mods for that car, buy new computers and computer games, own a nice motorcycle, and work a 40 hour work week constantly.
But make a little effort and sacrifice, and it's simple. I make under $40k/yr, I could afford $2500/month if I cut back on things and made an extra $300/month. So anyone making $50k/yr or better can do it.
Having said that, these prices are not "normal" for all of Canada. For downtown Toronto, Ottawa, Montreal, Calgary or Vancouver, I suppose that's normal. But slums here are going for $300k/yr. Slums in Ottawa are $150k/yr. Outskirts of Toronto are $150k/yr. Montreal are $150k/yr. Ottawa prices are almost identical to Winnipeg's once you get outside the rich quarters where all the politicians live. Not to mention the other major cities: Quebec City, Winnipeg, Regina, Saskatoon, where prices aren't so bad at all. Prices are high here because earning potential is high here. Higher than just about anywhere else.
Are you sad that houses don't exist in your price range? Suck it up. Because the people buying them are people just like you only with a better work ethic and a willingness to sacrifice. If houses didn't sell for 1/2 a mil, they wouldn't be asking for 1/2 a mil. People ARE affording them, by virtue of the fact that it's a "sellers market". There wouldn't be any "sellers" if no one could afford it. |
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| ehos |
quote:
Originally posted by TrevorK
In today's economy there is no reason a couple could not afford $2559 towards their mortgage while still living an average lifestyle.
Not everyone wants to grind it out on their leather asses for 25 years. And that $2600 MONTHLY payment doesn't include property tax, heat, water, food. You know, the luxuries. Heaven forbid you have kids...
How much have house prices gone up compared to wages? Have wages quadrupled in 4-5 years? Because house prices sure have. People are stupid if they're buying $4-500K houses (first time buyers). This is a great market if you're upgrading, flipping, realtor etc. But for the average joe family, not smart. Interest rates are going up from an all time low. Boomchashers are gonna get pasted (again). |
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| ehos |
400K mortgage = $2600
Property tax = $300 (@3500/yr)
Heat/water/cable/internet/phone = $400
Food = $400
=> $3700 if interest rates stay at 6% for 25 years.
You would need to make a MINIMUM of $60K a year, for 25 years just to live. (NO car, no cell phone, never going out).
SMART!
:rolleyes: |
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| dtjohnst |
Who can't make $60k/yr in this economy?
Yes, I know I said I make $40k. I could make more, I just have no need or desire to. I like where I am for now, I know where I will be shortly, and I have no desire to buy a house here. But I could easily deliver pizza 3 nights a week and bump myself up to $60k/yr. |
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| ehos |
quote:
Originally posted by dtjohnst
Who can't make $60k/yr in this economy?
For 25 Years. Assuming 6% interest. For 25 Years. With no accounting for inflation. For 25 Years. NO increase in property tax for 25 Years. |
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| dtjohnst |
quote:
Originally posted by ehos
For 25 Years. Assuming 6% interest. For 25 Years. With no accounting for inflation. For 25 Years. NO increase in property tax for 25 Years.
As opposed to people who take decreases in salary over the length of their career?
If you want to consider increase in taxes, you'll have to consider increases in wage too. |
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| ehos |
quote:
Originally posted by dtjohnst
As opposed to people who take decreases in salary over the length of their career?
If you want to consider increase in taxes, you'll have to consider increases in wage too.
Are you saying wage increases have kept up to inflation/house price increases?
Because last I checked, my wages didn't quadruple in 5 years.
Doesn't matter to me either way, I'm not in the new house market (but I still feel sympathy for people buying houses in Edmonton). |
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| RiceKing |
Lots of good talk about the owning side but I'd also like to hear from the renters. Are we seeing $1100 rents yet for the average 2 bedroom 700-900 sqft apartments?
Looking at MLS, I see tons of rentals are being converted to condos. I think most of the apts in Edm were built in the 1960s and 70s and I never see any new ones being built.
I'm guessing vacancy is so low that the landlords/owners don't care about renovations?
Is relaxing basement suites rules the solution to increase the number of rentals?
Hmmm... I have a unfinished basement... how much in materials does it take to frame, wire, drywall, carpet, etc... to build a bedroom, living room and 3 piece bath, etc, cost? $20K?
Rice |
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| ehos |
That's cool about Edmonton. We have condo conversions! So what happens is an investor buys a building that has renters.
Turns them into condos, flips them. Tenants can't afford to buy (no duh, otherwise why are they renting?) 3 Months later, 50-150 families looking for a new place to live/or going to paying more rent. Guess what the vacancy rate is?? .5 - 1%. SWEET!
Rents go up. Everyone thinks, hmmm, might as well buy a place to rent! More condo conversions, more people looking for no rental places.
Edmonton = best city in the world!
:rolleyes: |
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| dtjohnst |
quote:
Originally posted by ehos
Are you saying wage increases have kept up to inflation/house price increases?
Because last I checked, my wages didn't quadruple in 5 years.
Doesn't matter to me either way, I'm not in the new house market (but I still feel sympathy for people buying houses in Edmonton).
Last time I checked, everyone in Edmonton was laughing all the way to the bank 5 years ago when they had outrageous money and cheap houses/condos to buy.
Your wages grew faster than your housing market and started to level off, now your housing market has caught up. |
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| SilverZ24 |
These fucking things suck ---------->
quote:
Originally posted by dtjohnst
But make a little effort and sacrifice, and it's simple. I make under $40k/yr, I could afford $2500/month if I cut back on things and made an extra $300/month. So anyone making $50k/yr or better can do it.
The thing you are missing here is that no bank is going to lend you 400k when you are only making 50k. You will need to make over 100k a year to get approved for that size of loan and also to live reasonably comfortable. Like Ehos said, there is a lot more to deal with than just a mortgage payment.
Now 100k is easy with 2 incomes, but for single people and single income families it is definitely not that easy. And not what the average person is making.
I do feel for the people who are just starting out today, or people that have spent too many years living in their parents basement spending all their money on their car. It isn't going to be easy. |
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| Inzane |
quote:
Originally posted by SilverZ24
or people that have spent too many years living in their parents basement spending all their money on their car.
Yup. There's probably more than a few of those here. |
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| rythex |
Man, I'm so glad I bought my crappy condo when I did for $109,000 ... $88,000 left on my mortgage and it's worth about $240,000 now
:thumbup: <- I hate this smiley but I can't think of a better one to use. |
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| ehos |
quote:
Originally posted by SilverZ24
I do feel for the people who are just starting out today, or people that have spent too many years living in their parents basement spending all their money on their car. It isn't going to be easy.
I'm not going to be that harsh, but I do feel alot of sympathy for EDMONTONIANS (not boomchasers), that have lived here, grown up here and won't be able to afford a house here.
40-50K is a really decent wage for alot of young people, but that much income affords a $150K mortgage. There is NO shame, no stigma etc in buying a CONDO!
Do it! Don't be suckered into thinking you need a house. Someone very close to me lived in a bachelor place (wife/baby), and he worked hard, now he's worth close to 600K (cash money!), not counting his own house!
Start small, and work your way up (if that's your desire). If not, that's cool too. I see alot of people in a panic state, but that's really not going to help anything. |
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| the_saint |
quote:
Originally posted by RiceKing
Is relaxing basement suites rules the solution to increase the number of rentals?
Hmmm... I have a unfinished basement... how much in materials does it take to frame, wire, drywall, carpet, etc... to build a bedroom, living room and 3 piece bath, etc, cost? $20K?
Rice
$20k? You can do it for ALOT less.
FWIW I rented out my basement (just kicked out the last tenant this month :)) for the last 5 years. I was lucky and got in BEFORE the housing boom in Winnipeg.
My tenants (graduate students) paid for my mortgage/utilities etc for the last 5 years. Living 1/2 block from the University of Manitoba helped (with regards to finding tenants).
With regards to the other comments in this thread I agree with many of the comments on "both" sides of the coin.
thesaint |
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| TrevorK |
quote:
Originally posted by RiceKing
Hmmm... I have a unfinished basement... how much in materials does it take to frame, wire, drywall, carpet, etc... to build a bedroom, living room and 3 piece bath, etc, cost? $20K?
Rice
In order to help "solve" the housing shortage the city is considering relaxing the rules on basement suites. Typically, to make a legal basement suite there are many, many hurdles that need to be passed. This is why they estimate there are over 10,000 (I think that's the number they threw out in the paper) illegal suites.
That being said the cost to develop your basement is strictly related to what you want to get out of it. But if you don't put a kitchen in you don't need to consider it a basement suite (It'll be renting out a room). In actuality, if you don't want to put in a kitchen you can just frame/drywall a bedroom/bathroom and leave the rest undeveloped. These days, I don't think many people are going to mind....
This is the route I would go - when you have a person who rents out a room the landlord is in a greater position of power than if they were renting a "basement suite". |
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| TrevorK |
quote:
Originally posted by ehos
400K mortgage = $2600
Property tax = $300 (@3500/yr)
Heat/water/cable/internet/phone = $400
Food = $400
=> $3700 if interest rates stay at 6% for 25 years.
You would need to make a MINIMUM of $60K a year, for 25 years just to live. (NO car, no cell phone, never going out).
SMART!
:rolleyes:
I would do the following:
400K Mortage (6% @ 40 years) = $2180
Property tax = $200 (@2400/yr)
Heat/water/cable/internet/phone = $400
Food = $400
=> $3180 if interest rates stay at 6% for 25 years.
If each person made $35K/year they would have just over $2000/month in income, which means they'd have ~$800/month left over for other expenses. If that's still not enough (And I can't fathom why, for a couple it wouldn't be) each of them could work an extra 10 hours/week and their income would increase by almost $10,000/year (20h/week @ $10/hr = $10,200/year).
If they choose not to live this lifestyle, then they should look to live within their means. There are 137 condos/townhouses that are priced between $100K-$150K in Edmonton right now. There are over 500 (MLS.ca won't pull if more than 500) between $100K-$300K.
I believe that people can afford the house they want, if they choose to make the sacrifices. If they don't want to sacrifice, then they will need to purchase a property that is more in line with their budget. And let's be honest, if there are 137 condos/townhouses under $150K, there is no shortage of affordable living for a couple or single individual. |
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| Insomniac |
We are in a strange time, my friends...
FWIW, I graphed these a while back:
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| dtjohnst |
quote:
Originally posted by SilverZ24
These fucking things suck ---------->
The thing you are missing here is that no bank is going to lend you 400k when you are only making 50k. You will need to make over 100k a year to get approved for that size of loan and also to live reasonably comfortable. Like Ehos said, there is a lot more to deal with than just a mortgage payment.
Now 100k is easy with 2 incomes, but for single people and single income families it is definitely not that easy. And not what the average person is making.
I do feel for the people who are just starting out today, or people that have spent too many years living in their parents basement spending all their money on their car. It isn't going to be easy.
Of course they won't loan you $400k if you've never had a big loan before. But make $50k and save up for a down payment. You got enough money sitting around, the bank will hook you up. I know guys who deliver pizza and have $180k in loans. Get a decent job with a steady income and it's easy to break $200k in loans for a tiny condo. And then work your way up to a decent house. |
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| Prudz_lude |
quote:
Originally posted by TrevorK
I would do the following:
400K Mortage (6% @ 40 years) = $2180
Property tax = $200 (@2400/yr)
Heat/water/cable/internet/phone = $400
Food = $400
=> $3180 if interest rates stay at 6% for 25 years.
If each person made $35K/year they would have just over $2000/month in income, which means they'd have ~$800/month left over for other expenses. If that's still not enough (And I can't fathom why, for a couple it wouldn't be) each of them could work an extra 10 hours/week and their income would increase by almost $10,000/year (20h/week @ $10/hr = $10,200/year).
If they choose not to live this lifestyle, then they should look to live within their means. There are 137 condos/townhouses that are priced between $100K-$150K in Edmonton right now. There are over 500 (MLS.ca won't pull if more than 500) between $100K-$300K.
I believe that people can afford the house they want, if they choose to make the sacrifices. If they don't want to sacrifice, then they will need to purchase a property that is more in line with their budget. And let's be honest, if there are 137 condos/townhouses under $150K, there is no shortage of affordable living for a couple or single individual.
Your estimations do not include any tax deductions, cpp payments, ei payments, rrsp's, and no additional expenses that may arrise simply from your monthly paychecks. However, i do agree. living in a condo is extremely easy to obtain, maintain, and afford. As well your building equity that can be used to get that bigger house which will have lower payments due to the huge down payment from the money returned from the condo. |
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| dtjohnst |
quote:
Originally posted by Prudz_lude
Your estimations do not include any tax deductions, cpp payments, ei payments, rrsp's, and no additional expenses that may arrise simply from your monthly paychecks. However, i do agree. living in a condo is extremely easy to obtain, maintain, and afford. As well your building equity that can be used to get that bigger house which will have lower payments due to the huge down payment from the money returned from the condo.
The guy paid off a house in 2 years, he knows what he's talking about. |
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| Prudz_lude |
well congrats for him. But the numbers he gave don't include all that. Take a calculator if you need to. take 10x20, now take that number and times it by 52 weeks a year. Now you get 10400 hmmmmm only 10400 and he said 10200. Does that mean taxes are only 200 dollars a year with all the deductions off the paycheck?
What does him paying a house off in two years have to do with the numbers he shot out? His income is not reflected in his statement. it was directed to lower income households who want to have a 400k house. |
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| ehos |
Nice graph Insomniac!
Very telling, maybe it should make the point to people that don't understand.
TrevorK: 40 YEAR Mortgage. Good one! :) From 25 -> 40 Years, you wind up paying more than 290K in interest! And you get to save $380/month. And that's after tax! Eiyah. Does that seem even close to rational to you?
For a 40K/yr income, with NO debt, and 0 downpayment, you can afford a 115K condo. So, in Edmonton, that equals a few bachelor places or if you had 119K, there's ONE one bedroom condo in Montrose. |
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| dtjohnst |
I'll say it again: If the most you can manage is $40k/yr, you need to find a better job. That's like asking how someone affords to RENT a an apartment on $40k/yr in Toronto. The answer is you don't, but why are you only making $40k in Toronto?
Besides,,,,,,there's guys at work making between $44 and $48k/yr who bought houses in the past few months as single income guys. Explain that one if it's impossible. |
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| ehos |
quote:
Originally posted by dtjohnst
But make a little effort and sacrifice, and it's simple. I make under $40k/yr, I could afford $2500/month if I cut back on things and made an extra $300/month. So anyone making $50k/yr or better can do it.
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| dtjohnst |
quote:
Originally posted by dtjohnst
Who can't make $60k/yr in this economy?
Yes, I know I said I make $40k. I could make more, I just have no need or desire to. I like where I am for now, I know where I will be shortly, and I have no desire to buy a house here. But I could easily deliver pizza 3 nights a week and bump myself up to $60k/yr.
Not to mention change fields completely and make $60k base then deliver pizza to bump it to $80k. Or go work on the rigs and make more. If I really wanted a house, I'd find a way to buy one. But since I'm just wasting time until next June, why leave somewhere I'm happy and enjoy working? |
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| JeepGirl |
Don't knock pizza delivery in this city, a family member delivers pizza and he manages to clear $180-$250/night on friday/saturday nights and $150-$200 a night the rest of the week. Yet he only uses $5-$7/night in gas in his Kia.
I'm seriously considering it. :dunno: |
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| the_saint |
quote:
Originally posted by dtjohnst
I'll say it again: If the most you can manage is $40k/yr, you need to find a better job. That's like asking how someone affords to RENT a an apartment on $40k/yr in Toronto. The answer is you don't, but why are you only making $40k in Toronto?
Besides,,,,,,there's guys at work making between $44 and $48k/yr who bought houses in the past few months as single income guys. Explain that one if it's impossible.
What kind of price range on those homes?
I know that you can "survive and live" on much less than I make. But you need to sacrifice "lifestyle". Definitely easier if you make $60k versus $40K, but I feel bad for people that have to sacrifice to own a house (pay the mortgage).
Some people are less debt adverse than others and would rather pay a ton of interest (and build equity much slower) to be able to live in a house (that they will one day own, perhaps) versus living in an apartment/renting.
Complaining about the interest rates between a 25 yr versus 40 yr, is pointless, b/c I can point out people that pay cash for their homes who laugh at people paying any interest. Sure they make more, but they just view it in the same light as your arguement about people making $60k/yr versus $40k/yr.
I think the bottom line is people have to do whatever it takes for them to achieve their goals in life.
Would I give up going out every night for food/drink? Nope, so I just work a bit more to pay for it.
At the same time, I do think housing prices have skyrocketed, and am glad that I got in when I did. However, the prospects of buying the next house are mind-numbing.
thesaint |
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| the_saint |
quote:
Originally posted by JeepGirl
Don't knock pizza delivery in this city, a family member delivers pizza and he manages to clear $180-$250/night on friday/saturday nights and $150-$200 a night the rest of the week. Yet he only uses $5-$7/night in gas in his Kia.
I'm seriously considering it. :dunno:
How many hours does he have to drive to do that?
Making $50+k for delivering pizza is definitely good coin/work ratio. :) haha
Having your car smell like Pizza? Not so good. :) |
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| JeepGirl |
quote:
Originally posted by the_saint
How many hours does he have to drive to do that?
Making $50+k for delivering pizza is definitely good coin/work ratio. :) haha
Having your car smell like Pizza? Not so good. :)
5-8 hours a night and pizza smell is easy to get rid of, try getting rid of chinese food smell in you're car... now that sucks! |
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| Prudz_lude |
quote:
Originally posted by dtjohnst
I'll say it again: If the most you can manage is $40k/yr, you need to find a better job. That's like asking how someone affords to RENT a an apartment on $40k/yr in Toronto. The answer is you don't, but why are you only making $40k in Toronto?
Besides,,,,,,there's guys at work making between $44 and $48k/yr who bought houses in the past few months as single income guys. Explain that one if it's impossible.
its possible, they are just idiots because they are paying for a second house in interest. If anybody had any brains they would buy a cheaper 150-200k condo and finish paying it off. Sell the condo once its paid off, use the equity once they are in their late 20s or early thirties and move into a house which is right around the time when its seems modern couples are starting families. You have a 150k-200k downpayment you can put on the house and finish paying off the additional 200k or so. And hell, who knows, maybe the market will play in your favour and you will be able to sell that 150-200k condo for 50% more when you sell it.
Sure people can BARELY afford to live in a 400k house locked into a 40 year mortage and hope interest rates don't fluxuate during those 40 years:rolleyes: but they are then locked into a very very very risky life style where it can be distrubed very easily and your life will seem like a living hell. Not to mention, when its all over you can look back and say to yourself "Woah, i could have had 2 houses by now if i sucked it up and bought the condo as my first home rather than fucking myself over and wanting that 400k house first by locking myself in a 40 year mortage...." |
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| TrevorK |
quote:
Originally posted by Prudz_lude
well congrats for him. But the numbers he gave don't include all that. Take a calculator if you need to.
A single individual making $35K/year pays the following in deductions:
$1559.25 (CPP)
$654.50 (EI)
$5440.68 (Income Tax)
Which leaves us with $27,345.57/year or $2278.79/month.
So yes, I did include all that in my numbers. |
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| TrevorK |
quote:
Originally posted by ehos
Nice graph Insomniac!
Very telling, maybe it should make the point to people that don't understand.
TrevorK: 40 YEAR Mortgage. Good one! :) From 25 -> 40 Years, you wind up paying more than 290K in interest! And you get to save $380/month. And that's after tax! Eiyah. Does that seem even close to rational to you?
I have no problem with 40 year mortgages if people use them as a starting point.
For young people their wages should be going up over the course of their 5 year amortization period, and they should be able to refinance (Especially if housing keeps going up) and bring it down to a 25 year amortization.
I do not advocate keeping the 40 year amortization period, rather using it as a staritng point to get into the market with the goal of changing when the income level makes it possible.
quote:
For a 40K/yr income, with NO debt, and 0 downpayment, you can afford a 115K condo. So, in Edmonton, that equals a few bachelor places or if you had 119K, there's ONE one bedroom condo in Montrose.
When I was making $31,200/year I was offerred a $110K mortgage so I'm sure banks are willing to lend you much more than that now (especially with the 40 year amort's).
You might be able to step up to the $150K house that's been condemned then ;) |
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| Prudz_lude |
quote:
Originally posted by TrevorK
A single individual making $35K/year pays the following in deductions:
$1559.25 (CPP)
$654.50 (EI)
$5440.68 (Income Tax)
Which leaves us with $27,345.57/year or $2278.79/month.
So yes, I did include all that in my numbers.
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NOoooo because someone making 10 dollars an hour working 20 hours a week only makes 10400 before tax. multiply that by 2 if you have a spouse making the same equals 20800. How are you getting 30k when you clearly stated in that equation that its 10 dollars an hour 20 hours a week? Please enlighten me. |
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| TrevorK |
quote:
Originally posted by Prudz_lude
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NOoooo because someone making 10 dollars an hour working 20 hours a week only makes 10400 before tax. multiply that by 2 if you have a spouse making the same equals 20800. How are you getting 30k when you clearly stated in that equation that its 10 dollars an hour 20 hours a week? Please enlighten me.
That is if they wish to take on a second job. This is the optional part of my statement, as it is doable with just one job. However, if they feel the need for the "luxuries of life" they can get a second job, where they would be able to make the $10/hr for 20hr/week. |
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| SilverZ24 |
I still find it funny how everyone makes a ton of money and it is sooo easy to make at least 60k apparently.
The simple truth however, is that the 'average' person doesn't make 60 grand a year. Average family income is under 70k and that includes 2 incomes for many families. I think the average person is around 45-50k.
Sure it is easy to find a job nowadays, and many jobs are paying very well. But it is not 'easy' to make big money or even 60k a year. As an accountant I see T4's for tons of people a year. Most do not make 60k. It is a simple fact. Sure some are underpaid and could make more, but many simply can't.
And also there is more to life than just the bottom line on your paycheque (although it really doesn't seem like it here). Many people would rather make 20k (or more) a year less and only work say Monday to Friday, 8-5 and have lots of spare time for family, friends, and themselves.
Bottom line is house prices in Edmonton have greatly outpaced incomes and it is more difficult to own a home or condo today than it was 5 years ago. It is unfortunate, but it is reality.
Personally I wish my place (along with every other one in the city) didn't appreciate a dollar in the last 2 years. Then I could make a nice move up for about 100k instead of the 200k it will take now. The extra equity I have doesn't really help... |
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| the_saint |
quote:
Originally posted by SilverZ24
Bottom line is house prices in Edmonton have greatly outpaced incomes and it is more difficult to own a home or condo today than it was 5 years ago. It is unfortunate, but it is reality.
Personally I wish my place (along with every other one in the city) didn't appreciate a dollar in the last 2 years. Then I could make a nice move up for about 100k instead of the 200k it will take now. The extra equity I have doesn't really help...
I think this sums up the situation across Canada.
Any "equity" gained in my current property is useless, as in the case of SilverZ24, the "next" level up is at least $200k, on top of the current value of my home.
My home has increased in value 250% as it currently worth what my friends paid for their "more expensive" homes 4 years ago, which are now $150-200k more.
In Winnipeg at least, the "good starter home" segment has really taken off.
I still think real estate is a great investment, and that their are still many undervalued properties in all cities.
Vacant land is also nice, barring being next to a garbage dump/toxic waste.
the_saint |
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| Inzane |
I missed the first boat when I moved back up to Fort Mac after school in '96 and didn't buy then (before any boom had started).
But then I moved to Edmonton in 2000 and bought a house here at that time (which I will be selling later this year at 2007 market prices). Its kinda like I got a 2nd chance. |
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| dtjohnst |
quote:
Originally posted by SilverZ24
I still find it funny how everyone makes a ton of money and it is sooo easy to make at least 60k apparently.
The simple truth however, is that the 'average' person doesn't make 60 grand a year. Average family income is under 70k and that includes 2 incomes for many families. I think the average person is around 45-50k.
Sure it is easy to find a job nowadays, and many jobs are paying very well. But it is not 'easy' to make big money or even 60k a year. As an accountant I see T4's for tons of people a year. Most do not make 60k. It is a simple fact. Sure some are underpaid and could make more, but many simply can't.
And also there is more to life than just the bottom line on your paycheque (although it really doesn't seem like it here). Many people would rather make 20k (or more) a year less and only work say Monday to Friday, 8-5 and have lots of spare time for family, friends, and themselves.
Bottom line is house prices in Edmonton have greatly outpaced incomes and it is more difficult to own a home or condo today than it was 5 years ago. It is unfortunate, but it is reality.
Personally I wish my place (along with every other one in the city) didn't appreciate a dollar in the last 2 years. Then I could make a nice move up for about 100k instead of the 200k it will take now. The extra equity I have doesn't really help...
Right, some people are happy making 20k a year......but do you really think the housing market should cater to them? The point is people CAN buy on house on their incomes. Just because the cost of houses has doubled doesn't mean it's unfair, the fact is pay STARTED much higher before the boom, and now the housing market has caught up to income.
I said it before, I'll say it again: people are buying houses at these prices, otherwise they wouldn't sell and prices would come down. The proof their affordable is in the fact that they're selling. |
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| ehos |
People are buying houses because they can afford them.
Wow, that's pure genius right there. |
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| 96MX6 |
Its been 3 solid months of all those rig workers sitting on their buts at home with drilling activity at a really low level.
Result, oh shit, we can't afford this 500K house anymore, better put it up for sale and go back home. |
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| jberger |
| and then this winter it will be crazy busy and houses will go high again , hahahaha i'm lovin it |
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| SilverZ24 |
quote:
Originally posted by dtjohnst
Right, some people are happy making 20k a year......but do you really think the housing market should cater to them?
I never said anything about someone making 20k a year. I said money isn't everything and many people would rather make 20k a year LESS and have a better job/more spare time/etc. (ie 60k instead of 80k, 50k instead of 70k, .....)
Why would I think the housing market should cater to people making 20k a year?
And I agree with 96MX6 that there will be a ton of people in trouble when things slow down enough that they no longer get 20 hours of OT a week, or get laid off altogether. Lots of those big upgraders have like 4000 people working on them while they are under construction, but when they are up and running they only need about 10% of that to maintain the place. Eventually they won't be building these things left right and center anymore. Alot of people with expensive mortgages will be in a bit of trouble. |
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| JustinL |
quote:
Originally posted by SilverZ24
Eventually they won't be building these things left right and center anymore. Alot of people with expensive mortgages will be in a bit of trouble.
That's the kind of situation that has a lot of opportunity for people who are able to save money when times are good. Those who live beyond their means end up having to sell all their nice toys at a huge discount. |
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| SilverZ24 |
| ^ that is exactly what I'm hoping for. :thumbup: |
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| Inzane |
quote:
Originally posted by SilverZ24
^ that is exactly what I'm hoping for. :thumbup:
Yup, pretty much. :D
(as I rub my hands together in anticipation waiting to see those used BMWs and Infinitis, etc. come up for sale down the road...) |
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| SilverZ24 |
| I thought you would be waiting for one of those dually's with a big chrome nutsack hanging from the back. :lol: |
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| Inzane |
quote:
Originally posted by SilverZ24
I thought you would be waiting for one of those dually's
Trust me, its more than just price that keeps me from ever buying (or wanting) one of those monstrosities.
Ford, Chevy, or Dodge.... Makes no difference to me. Gas or Diesel (although diesel seem to be 10x louder!), Quad fuckin' cab or King, Duellies, etc. I hate 'em all.
:thumbdown |
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| SilverZ24 |
| If you ever towed a big trailer with one, especially the new 08 Ford diesels, you would love them. I have gone out with my trailer twice this year with the new Fords. Interiors are amazing and the motor is great. Some people need big trucks and they are great. Unfortunately driving them daily is retarded imo which is why I don't own one and bought the Expedition which is decent at towing but damn nice to drive around other times. |
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| dtjohnst |
quote:
Originally posted by ehos
People are buying houses because they can afford them.
Wow, that's pure genius right there.
If people can't afford them, why are the houses selling?
Basic supply and demand "genius". If people couldn't afford them, they wouldn't sell, and the price would come down. |
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| Alberta_Daytona |
quote:
Originally posted by ehos
People are buying houses because they can afford them.
Wow, that's pure genius right there.
:lol:
They cant afford them....The bank thinks they can though....and they get a massive loan.
Then they are in debt to the tits.....in a year or so interest rates will go up another percent or so....Meaning 500$/month increase in mortgage payment.
And then the boom will slow down so they lose alot of hours or get fired.....
And then there will be TONS of houses for sale.....and the prices will crash like the Titanic.
And then I will buy one for 150k or so...when Interest rates are like 10%......make huge payments until interest rates fall once again....And then be smiling :D .
Cause interest rates change over time....as long as you have a mortgage you are gonna have to get that new interest rate every 5 years or so....
But when you buy a house....thats the price...It doesnt change over the years.
Buy at high interest rates....sell at low.
I am waiting for the high.... |
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| TrevorK |
quote:
Originally posted by Alberta_Daytona
And then I will buy one for 150k or so...when Interest rates are like 10%......make huge payments until interest rates fall once again....And then be smiling :D .
Edmonton housing prices are not going to drop to those sort of levels again. I would strongly advise you rethink your strategy.
quote:
Buy at high interest rates....sell at low.
I am waiting for the high....
Please explain to us why you feel the interest rates are going to go significantly higher. While you are at it, you might want to consider the effect that a large slowdown in the Alberta economy would have on interest rates as well (Since you feel that's going to happen).
I have a strange feeling you have no explanation, and I truly feel sorry for you because when you don't understand economics, yet are banking on economic indicators to occur before you make potentially life-changing decisions (Financially speaking) you have a much greater chance of failure. |
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| ReasonOne |
^A somewhat good strategy, Alberta_Daytona.
I've been looking at property between either Calgary and Airdrie, or Airdrie and Red Deer. I can't believe how much money can be made there. It's always been a dream of mine to own rural property - but I don't quite have enough cash set aside yet. I'm biding my time waiting for the right deal. And when the market goes south I'll be right there to buy something for cheap in cash so I won't have to deal with 22% interest rates (if they ever get that high).
Growing up in Calgary I can't forget how many of my friends parents had to put their keys in the mailbox and walk away, or walk into the bank and fork over their keys with the deed to the property.
My brother bought a house in Trochu for $9,900 many years ago as extra property... most of his friends though he was insane. He used it as a pit stop whenever he was driving from Edmonton to Calgary and vice versa (he just started going to U of A at the time and he drove home often to see my parents).
He did the math and worked out that it was cheaper for him to buy this place than to pay for hotels/accomodations throughout university when he was too tired to drive any further.
A snowbird couple also approached him asking if they could use it to store their RV and hang out there part of the year. No problem there.... they were more than happy to pay the $200/month rent for complete access to the property.
I believe the old couple ended up buying it from him about 2 or 3 years after he graduated.....
for $63,000...... :eek:
He paid off his student loans and he used the rest of the money to start his real estate holdings company.
I felt the same way then that many non-home owners feel now that want to buy. If I was only old enough to buy something then...... If I only could have gotten into the market then. He bugs me about it ALL the time.
But the right deal will come along for me. And it will for you too.
Just remember, only invest what you are willing to lose. |
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| rythex |
I just love how everyone says "the real estate market will not drop"
:rolleyes:
Go look at the US and what their real estate market is like in most of the country, it's pretty stalled everywhere except for a few major centers. |
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| stealth |
I do not know if the housing market will drop drastically, but I think it will level off.
For example look at Vancouver. |
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| ehos |
quote:
Originally posted by rythex
I just love how everyone says "the real estate market will not drop"
:rolleyes:
It will, ONE day. But by then people will already have made fortunes (ie real life example, my brother has almost 600K in FREE cash thanks to our real estate market). He's buying a new 500K house (cash money) and he's probably one of the most conservative people out there.
Is the market going to drop tomorrow? Hell no. Next year? Nope. In 5 years? Maybe. In 10 years, WHO CARES. |
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| TrevorK |
quote:
Originally posted by rythex
I just love how everyone says "the real estate market will not drop"
:rolleyes:
Real Estate will level off and will not drop to levels that make a significant difference to an entry level buyer. The economic indicators currently in play do not support a province-wide drop in real estate prices.
What are you basing your theory on that real estate will have a significant drop in the near future, to the levels that Alberta_Daytona was referring to?
quote:
Go look at the US and what their real estate market is like in most of the country, it's pretty stalled everywhere except for a few major centers.
If you are referring to the large drops in the market you'll be best to research sub-prime lending and the effect it has.
If you are referring to the cool-off the market has, I would suggest research what exactly this means to prices. In Denver during Q1 sales slid 10.6% and prices only dropped 1.3%:
http://www.rockymountainnews.com/dr...5595401,00.html
This is a drop, but a drop that doesn't really make a difference to the average buyer. It is more of a market correction. |
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| Insomniac |
| I for one am very curious to see what the EREB will report for prices at the end of this month. My impression that June was a slow month, with marginal price increases. We'll see. |
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| Alberta_Daytona |
quote:
Originally posted by TrevorK
Edmonton housing prices are not going to drop to those sort of levels again. I would strongly advise you rethink your strategy.
Please explain to us why you feel the interest rates are going to go significantly higher. While you are at it, you might want to consider the effect that a large slowdown in the Alberta economy would have on interest rates as well (Since you feel that's going to happen).
I have a strange feeling you have no explanation, and I truly feel sorry for you because when you don't understand economics, yet are banking on economic indicators to occur before you make potentially life-changing decisions (Financially speaking) you have a much greater chance of failure. [/B]
ReasonOne seems to agree with me.
It happened before....and it will happen again.
That how my grandpa raked in the coin about 40 years ago. |
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| ReasonOne |
Alberta_Daytona, I do agree with you to an extent. Buying when the rates are high is a great idea. But: 1) You better be paying the house off in cash 2) You should OWN your primary residence already and not be renting 3) If you have a mortgage your renter had better be paying it for you and 4) It better be cheap. I should have clarified this earlier. You have a good strategy IF you are paying the house off when you buy it (no mortgage) or if you are using OPM (other people's money) to acquire it.
It will happen again. But are you personally willing to wait that long? I am. Why? Because I have more than one fund banked for the purpose of property acquisition. I have investment vehicles set aside specifically for the purpose of purchasing if interest rates go out of control. Will it? I don't know..... but cycles repeat themselves and I'm covering my bases. These cycles don't takes months or years to occur either...... we're talking a decade or two here. And in this instance a buy and hold strategy is best for the long term. If you buy be prepared to hold that property for decades if you intend to profit like your grandfather did.
When interest rates are high, you want to acquire property without having to borrow it because it costs so much (pay cash, barter or some other alternative). Would you like to pay $3000/month with $2850 going straight to interest? I thought not. Why do you think people left their keys in the mailbox and walked away? When rates are low you can always borrow or use OPM to get something..... either way, if you rent the damn thing out and have someone making your payments, you're laughing. When rates are high....people don't like to borrow. They pay in cash.
Interest rates are indeed rising, but it will take some time (as well as quite a bit of economic meddling) to bring rates back up to what they were in the early to mid-80's. Remember what your returns on your bank balances and investment vehicles were getting in these times? I do. I certainly can't tell the future. But I know a good deal when I see one. And when I see something I want, I'll buy it - in cash.
Here's the tricky part. For example, something happens to the economy where there's a mass exodus and everybody leaves. There's a surplus of homes on the market. Prices drop and rates may rise (whether it's significant or not - we can't be certain). Person A paid cash for his place long ago (or paid off their mortgage long ago). Person B has a mortgage. Their tentants give notice and leave. Who do you think will suffer through a shitty economy longer with no rental income? The answer is obvious (unless B makes a significant amount of money through other means).
Personally, I think the possibility exists that prices could drop and rates could skyrocket. But it won't be happening for a while - so don't hold your breath. I'm looking at rural property for this purpose. Rural property not only takes longer to appreciate - it takes longer to buy and sell too. Rural property also tends not to be as "price sensitive" as their urban counterparts (unless we're talking out and out Snob Canyon). I would buy rural property and hold it for decades.
I live in Airdrie. $200K buys you a mobile home with the lot it sits on or an apartment...... but you're NOT going to like it and it might need a few thousand dollars in work. In Calgary, you'd be very lucky to find a very small apartment (less than 450 sq. ft.) and no mobiles will be available with the lot (A mobile park owner would have to be insane or senile to sell the land when he or she can charge $700/month pad rent). You could swing a mobile for about $30-40K but you still need a place to put it. And banks don't like to give mortgages on mobile homes. Someone let me know what apartments and mobiles are going for in the Edmonton area.
But enough of my long winded blabbing. I'm already starting to get a bad reputation. In short.... Alberta_Daytona, Good strategy to buy when the rates are high IF you can afford it. But statistics prove that housing prices generally INCREASE over time. And there's only so much of it, as my father - or every father likes to say. They freeze or stagnate often, and even occasionally drop - but the prices are going nowhere but up over time. The only exception that might affect this is when all the boomers start kicking off and leaving property to their kids. But I digress and will start a new thread on this topic before I get in trouble. :p
Your thoughts? |
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| Alberta_Daytona |
I can handle paying 2850 a month in just interest as long as the rates go down in due time.
Yes its a long cycle.
I am expecting 3+ years for things to change at all. The only other way to get into the market is if wages catch up with house prices. The fact that a normal house costs 10x the normal yearly GROSS pay.....is scary at best.
Seems to be alot of people leaving alberta recently.....I know lots of guys going to Saskatchewan cause its cheap to live....and there are still lots of jobs. |
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| RBS14.5 |
| LOL Off topic but is anyone interest in a 1164SqFt Condo? |
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| stealth |
quote:
Originally posted by RBS14.5
LOL Off topic but is anyone interest in a 1164SqFt Condo?
Send me a PM with info please. |
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| TrevorK |
quote:
Originally posted by Alberta_Daytona
ReasonOne seems to agree with me.
It happened before....and it will happen again.
That how my grandpa raked in the coin about 40 years ago.
Unfortunately what you are discounting is that things happen for a reason. The housing market doesn't just slow down/pick up randomly - it is all based on the economic climate.
I would hope that you are using economic indicators of present as your basis for your opinion, because basing your opinion on an economy that has been completely revamped is a poor way of trying to judge the future performance. |
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| dtjohnst |
quote:
Originally posted by TrevorK
Unfortunately what you are discounting is that things happen for a reason. The housing market doesn't just slow down/pick up randomly - it is all based on the economic climate.
I would hope that you are using economic indicators of present as your basis for your opinion, because basing your opinion on an economy that has been completely revamped is a poor way of trying to judge the future performance.
Nah, he's planning on all this occuring after he lives through a Great Depression like his Grandpa did too...and 2 world wars, and all those other good things his grandpa had to deal with. |
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| n0c7 |
quote:
Originally posted by dtjohnst
The guy paid off a house in 2 years, he knows what he's talking about.
And he also bought it when times were good. Time to ship the hell out of this forsaken greedy shithole if you want to live. $2600 a month for a mortage payment excluding EVERY other cost of living, even on a combined income? I still don't see that happening. Couples don't stay together these days. Has anyone happened to look at the high school graduation rate in Alberta lately? Not so pretty. Way too many factors. This place is fucked.
I've never seen so many for sale signs up in this town ever. Everyone is trying to make the buck. Wait a few years down the road when everyone is foreclosing - there will be twice as many signs and maybe for once we'll have more than 1.5 metres between our homes. |
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| ehos |
When it's good, it's REALLY good. When it's bad, holy shit, you won't be able to get a job at MacD's.
How do I know? I lived through the bad. And the good is just nicer :) |
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| Prudz_lude |
Its kind of funny. If some of you guys are talking about our economy never falling apart i hope some of you caught the news today. I don't personally think it will happen but who knows, terrorist have their ways.
Anyway, on the news they talked about a dirty bomb. Dirty bombs are bombs that have radioactive chemicals in them that can be put in regular bombs and can clear downtown cores in a day. Entire buildings have to be evacuated and cleaned which takes several weeks. The radioactive material can be found all over our cities and are easily accessable. The potential outcome of this terror strike could potentially cost vancouvers economy over 9 billion dollars, in toronto i could cost over 27 billion, if one of these dirty bombs ever were set off.
I don't think it would happen but just for the fun of introducing this aspect into edmontons economy it would kill the houseing market because our economy would suffer greatly. Alberta is also a main target that was mentioned as an oil hub to the US that needs to be attacked, or so the news has informed me that alquaida has said so. :eek:
:drama: let it begin :lol:
I just have no clue why the news straight up explained in such detail how to build the bombs, how to buy the ingredients, and how much economical impact each single bomb could cause. |
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| ehos |
Can't live in fear.
This whole thread is all about that one thing, and the post above mine just crystalizes it. It's all about people that are afraid to buy. Or people that are afraid of what will happen in the future.
Even the guys with their own houses are afraid/worried about what will happen to future value of their homes. The people that don't have homes are afraid of never owning/buying a home.
RELAX! If you have a house, enjoy! If you don't, who cares? it's not a fucking competition. That's great other people are making money, but people have always been making money. I personally think Edmonton sucks (past 2-3 years), but I'm just going to enjoy what it is now and try to hold on to the good things that were Edmonton.
Chill out, you'll live longer :) |
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| Prudz_lude |
| ^ agreed. That is the best way to live |
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| JustinL |
| Interesting... That's about what I expected based on the prices I have been seeing in my neighborhood. I guess we've hit the plateau. I wonder what's next for the market. |
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| TrevorK |
quote:
Originally posted by JustinL
Interesting... That's about what I expected based on the prices I have been seeing in my neighborhood. I guess we've hit the plateau. I wonder what's next for the market.
I think the biggest variable is that how many people are going to jump on this chance to get into the market.
Whenever you talk to the younger generation they are always mentioning they will wait for prices to fall before they purchase - will a 5% decline over say, 3 months, convince them that now is the right time? |
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| MAPEX |
quote:
Originally posted by ehos
400K mortgage = $2600
Property tax = $300 (@3500/yr)
Heat/water/cable/internet/phone = $400
Food = $400
=> $3700 if interest rates stay at 6% for 25 years.
You would need to make a MINIMUM of $60K a year, for 25 years just to live. (NO car, no cell phone, never going out).
SMART!
:rolleyes:
thats not smart enough, u have to enjoy ur life , buy a nice car and if ur morgage 400k make it 40 years to pay, dont expect that u own it, its like u rent it cu'z when u get old am sure u like to live senior home , u travel anywhere and get more money for ur pension if dont have a property but u have property when u retired , u get less money for ur pension.. |
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| TrevorK |
quote:
Originally posted by MAPEX
get more money for ur pension if dont have a property but u have property when u retired , u get less money for ur pension..
I seriously hope you're joking - I've yet to hear of a pension plan that is tied to the amount of property you own.
I think OAS and other government-funded income subsidies are tied to income level (Which does not relate to your housing situation). |
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| stealth |
quote:
Originally posted by MAPEX
thats not smart enough, u have to enjoy ur life , buy a nice car and if ur morgage 400k make it 40 years to pay, dont expect that u own it, its like u rent it cu'z when u get old am sure u like to live senior home , u travel anywhere and get more money for ur pension if dont have a property but u have property when u retired , u get less money for ur pension..
You do know that the price difference in a 25 and 40 year mortgage is only about 200-400 dollars a month right. |
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| SilverZ24 |
| ^ He can't even write a sentence, I think you are going over his head. lol |
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| ehos |
The only reason to get a 35+ year mortgage is if you're trying to generate positive cash flow.
If you're living in the house and not Smith Maneuvering or Insu-death paying it off, then it's not smart. Or you're hoping that your wages will increase over time to re-finance. But basically it means you're living well beyond your means. |
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| EK9Hatch |
I gave up on buying a house long ago. I'm investing my money in drugs, gambling and more drugs. :cool:
Then I'll buy a house in cash...with $5 bills.
Jamie |
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| ehos |
As mentioned before, I think it's time for a paradigm shift like in Sask. The hot properties there are the CONDOS.
And it makes sense. I hate shoveling, mowing, and basically anything to do with the house except for the garage :)
Heat bills, water, garbage disposal, etc etc are just stupid. I like the return on the house, but is it reaaaally worth it?
I'm thinking of a condo with underground parking as the next purchase for us. Prices have really pulled back nicely (buy on dips as the stock market says), and we're looking.
I still kick myself for not buy that one condo that was listed here in St. Albert for 200K. OUCH! GREAT deals are still out there! |
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| MAPEX |
quote:
Originally posted by stealth
You do know that the price difference in a 25 and 40 year mortgage is only about 200-400 dollars a month right.
u can get a brand new car for 400 dollar montly payment, just think u have house and brand new car , thats a lot of excitement..... |
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| stealth |
quote:
Originally posted by MAPEX
u can get a brand new car for 400 dollar montly payment, just think u have house and brand new car , thats a lot of excitement.....
:lol: SilverZ24
I couldn't stand the idea of paying 400 for 60 months, for a new vehicle, when I could cut down mortgage payments 15 years shorter. |
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| Inzane |
quote:
Originally posted by ehos
I hate shoveling, mowing, and basically anything to do with the house except for the garage :)
Heat bills, water, garbage disposal, etc etc are just stupid. I like the return on the house, but is it reaaaally worth it?
I'm thinking of a condo with underground parking as the next purchase for us.
Apartment-style living FOR THE LOSE! :thumbdown
I hope to never have to return to that... Not until its time for a retirement home anyway. :lol: |
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| Inzane |
quote:
Originally posted by EK9Hatch
I gave up on buying a house long ago. I'm investing my money in drugs, gambling and more drugs. :cool:
Then I'll buy a house in cash...with $5 bills.
Jamie
Don't forget to buy a nice briefcase. |
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| EK9Hatch |
quote:
Originally posted by Inzane
Don't forget to buy a nice briefcase.
Oh you know it :cool: Probably the nice, Titanium style ones...
Jamie |
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| ehos |
quote:
Originally posted by Inzane
I hope to never have to return to that... Not until its time for a retirement home anyway. :lol:
I retired 7 years ago from 'work'. :) |
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| JustinL |
I'll bet we'll see another month of decreasing prices when the reports come out for July. The prices are coming down because the number of houses on the market has gone up so much. That leaves me wondering why there is so much for sale... Are people leaving Edmonton? Has there been a rash of new home/condo completions? Why aren't people who are complaining about rent increases getting into ownership now?
Interesting times. |
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| ehos |
Good assessment!
Prices have come down almost 10% on some properties, and you are seeing the 'junk' not getting sold. Which is great. New homes are offering incentives, and so are the downtown high rises (great!).
At the same time really desirable properties did go up in price (no duh). I was seeing almost 160+ new lisitings a day. It's dropped to around 140 ish last week. |
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| SilverZ24 |
I think the massive amount of new listings is from people that had purchased/built multiple properties on speculation. I even know a few people that are just having their houses finished that they built 12 months ago just to flip. Lots of people doing that drove up the prices huge last summer and now all those new houses/condos are being finished with no one to move into them. Or people are moving into them and selling their old places last minute because they thought they would get more money for them.
I don't think many people are actually leaving. And there are obviously still more coming in then going out. |
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| JustinL |
I've been reading about this subject for a while and I have a couple new theories to throw out there. Housing prices have effectively leveled while condo prices continue to increase. There has been a huge exodus from the landlord business with record numbers of apartments being converted to condos.
Now I'll speculate that this is driven by the provinces and city's push to limit rent and prevent condo conversions. Landlords are seeing/foreseeing their businesses turn much less profitable and are deciding to sell the units at the elevated price it's at now.
This is driving the rental vacancy rate down and down as the demand is not changing, but the supply is shrinking. I would bet that this is forcing people into the condo market who were previously renting. This might be part of the reason that condo prices are continuing to increase. Where are these renters getting the money to finance these purchases is the next obvious question. I think they are being lent this money and/or taking 100% mortgages and other high risk loans. I'm no expert on the lending laws in our country, but this seems to be a setup for a subprime mortgage problem like they are having in the states right now.
Thoughts and discussion? |
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| ehos |
Well, Canada has much more difficult lending laws than the US. They will lend money to ANYONE. Here, you better have good credit, a good job, or an amazing down payment.
I think the shift to Condo's is because of the huge difference between houses and condos. They are much more 'affordable' and you get basically the same thing. For example, in Regina/Saskatchewan condos are much 'hotter' than houses (and have been for a long long time).
Like I posted before, you get all the benefits, no drawbacks. And in cold weather environments, condos kick ass. Also add in the factors you said (condo conversions, INSANE rents) and condos are the defacto choice for buyers (new and old).
Also, people are selling their appreciated homes and downsizing into really nice condo's. (Sell for 500K, buy for 300K, and you are literally retired, no mortgage). |
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| TrevorK |
quote:
Originally posted by JustinL
I think they are being lent this money and/or taking 100% mortgages and other high risk loans. I'm no expert on the lending laws in our country, but this seems to be a setup for a subprime mortgage problem like they are having in the states right now.
Thoughts and discussion?
I don't think we're going to experience the subprime mortgage problem because our market is structured differently than the US.
One of the bigger reasons for subprime disaster is the negative amortization - this relies on housing prices going up to cover the amount you aren't paying. I don't think there are many lenders out there that are offerring negative amortization in the Canadian market.
Our problems will occur if interest rates are hiked - that's where we will get stung (If we do).
EDIT: And I can't forget - all our mortgages have to carry insurance as well (If the equity isn't 20%). |
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| ehos |
| Also, the market is heating up again. |
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| TrevorK |
quote:
Originally posted by ehos
Also, the market is heating up again.
Shhhh - you'll scare all the people who have been waiting for 2 years for the "market to correct itself" and thought they finally had their chance. |
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