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Real Estate Prices

by thunderbird
11 replies
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The news says that there has been a slowdown and price reductions in the Canadian real estate market. Having recently bought a condo, I can't say that I am too pleased with things in real estate. My timing has been abysmal, lol. At least I am not indebted for years to those vile thieves known as mortgage brokers. Three things I don't trust: Pimps, Banks, and Mortgage companies.

It is kind of funny how I could have bought impressive properties in Canada or the States for the price I paid for my condo, but what can I say. I don't want to move.
  • Profile picture of the author rondo
    They say the Canadian and Australian housing markets are the only 2 real estate bubbles yet to burst.

    In Sydney the median house price is now 9x median income. Historically it has been 3-5x income.


    Andrew
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    • Profile picture of the author seasoned
      Originally Posted by rondo View Post

      They say the Canadian and Australian housing markets are the only 2 real estate bubbles yet to burst.

      In Sydney the median house price is now 9x median income. Historically it has been 3-5x income.


      Andrew
      Overall in the US, the comparison median to median has been about 6 times! In large parts of california, it has been about 10!

      Gee, in california it hasn't been 3-5 for a LONG time! I tried to get a home in the 80s, and they TOLD me I could have it. TECHNICALLY, they LIED! I got a $5K raise, putting me OVER the median income by over $10K! I could NO LONGER qualify for the special funding they were trying to sneak in, and didn't make enough to buy the home. And SURE it was less than 3 times my "income". But when YOU say income, what do you mean?

      Income here is generally NOT income, but outgo! SO, compared to my REAL income, it was like 5 times. The problem is that you get like 50% of the outgo as REAL income. IRONIC since they give you a tax break AFTER you get the home but, until you get the home, your actual income(money you have coming INTO your account), is NOT enough to qualify. Oh well, ironically, they are obviously letting lower income people in. I guess I should have quit my job, and gotten a minimum pay job so I could qualify!

      The home I got costs a bit above 8 times median income(Assuming NO tax is ever taken out). BTW it is worth about the same now. I refinanced in 2009.

      Steve
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  • Profile picture of the author rondo
    "But when YOU say income, what do you mean?"

    I meant gross annual salary, which has been the traditional measure here, but you're right Steve different definitions of income are used by different players in order to justify their outlook on the market. eg some people use 'household income' which means 2 salaries much of the time.


    Andrew
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    • Profile picture of the author seasoned
      Originally Posted by rondo View Post

      "But when YOU say income, what do you mean?"

      I meant gross annual salary, which has been the traditional measure here, but you're right Steve different definitions of income are used by different players in order to justify their outlook on the market. eg some people use 'household income' which means 2 salaries much of the time.


      Andrew
      I'm talking about ONE income, meaning what the employer pays as a salary,

      Steve
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  • Profile picture of the author Don Schenk
    Over the years real estate prices have always fluctuated. The "normal" cycle is around 9 years - however it can go way up quickly (a couple years) as in a bubble, or it can have a longer 15 year cycle.

    In theory the best time to buy is just as soon as prices begin to go up from their low point. Unfortunatly we can't always do that. If we need a new home or are moving to another part of the country, we get to pay the prevailing prices.

    A friend of mine retired due to health issues, and he sold his house to get out from under the huge loan payments - he had refinanced it several times to take out equity. When he was forced to sell because of his health, his $1.2 million dollar (at the peak of the bubble) sold for only $600,000. Half! But he still made a couple hundred thousand dollars on the deal, and bought a small home in another city for cash - with a little money left over from the deal.

    My wife and I bought our first rental property in 1975, so we have followed the real estate markets closely over the years as we kept purchasing properties. We have found some excellent mortgage brokers as well as a few duds. A good broker helps you get the best rates, and helps you figure the break-even on any costs of points or closing. A bad one costs you money.

    Thunderbird, you are correct in it being a timing issue. And the mortgage brokers have no control over the index the lenders/underwriters use to determine interest rates. A broker can pick a different lender or underwriter.

    :-Don
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  • Profile picture of the author ledbeauty
    Hey, what about the price at present? Still slowdown? If it is, I think you should buy one. The government of China also say that the price of real estate has a slowdown, but after one or two month, the price go up again. Maybe you can learn something for the case.
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  • Profile picture of the author Lou Diamond
    Hello,
    you say you just bought so you must have got a good price, if you are not selling right away stop worrying about the down turn in prices, just be happy with what you have.
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    • Profile picture of the author thunderbird
      Originally Posted by Lou Diamond View Post

      Hello,
      you say you just bought so you must have got a good price, <snip>
      Nope, but we did get a good baby, lol.
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  • Profile picture of the author John Henderson
    I always shake my head when I hear somebody exclaim that "The value of my house has gone up".

    Firstly, it's not your house until you've made the last mortgage payment. Default on the loan before that payment, and you'll find out whose house it is.

    Secondly, the "value" of the house to the occupants has not increased unless it offers them something more, like an extra room or an attic conversion. What's changed is the price.

    So let's revisit that exclamation. Instead of people saying "The value of my house has gone up", what they really mean is "The price of the bank's house has gone up (along with the price of all the other houses in this town that are owned by the banks)".

    And the result?
    For the banks and the real estate agents: more income for exactly the same assets.
    For the rest of us: more debt for exactly the same assets.
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    • Profile picture of the author thunderbird
      Originally Posted by John Henderson View Post

      <snip>Instead of people saying "The value of my house has gone up", what they really mean is "The price of the bank's house has gone up (along with the price of all the other houses in this town that are owned by the banks)".

      And the result?
      For the banks and the real estate agents: more income for exactly the same assets.
      For the rest of us: more debt for exactly the same assets.
      Interesting that you point this out. Most people don't make that distinction. Maybe they're in denial, I don't know. Who likes to think of themselves in bondage to mortgage lenders,banks, leasing companies and creditors? That is why I bought the place outright. My wife wanted it for raising the baby. I've been in sales involving leases and know what rip-offs leases of any kind usually are (I made enemies). However, I assuage my conscience knowing that others offered them a far worse deal (I offered the better of necessary evils, so to speak). Those "service charges" are bogus.
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      • Profile picture of the author John Henderson
        Originally Posted by thunderbird View Post

        Interesting that you point this out. Most people don't make that distinction. Maybe they're in denial, I don't know.
        I think that most people have been brainwashed, Thunderbird. When I moved to the north-east of England in 2002, a 3 bed family home on a particular street cost £81,000. When I moved out of that town two years later, the exact same houses on that same street were selling for £168,000. People have been told that property price rises indicate that "the economy is strong", but in reality they've just sleepwalked into borrowing more and more to live in exactly the same town.

        Originally Posted by thunderbird View Post

        Who likes to think of themselves in bondage to mortgage lenders,banks, leasing companies and creditors? That is why I bought the place outright.
        That's a great decision, Thunderbird. I rent at the moment, but I'd love to be able to buy outright.
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