Jul 062012
 

Buying a home in the US right now is a pretty good idea. Prices have come down 30% from their highs in 2006 and the cost of owning is cheap compared to renting. However it’s not the same story on this side of the border. What goes up must come down right? well apparently not when you’re in Canada.

The US went through a housing correction because of ninja loans and subprime lending. In Spain, the housing bubble popped because they had about 23 million houses, but only 16.5 million families, lol. There wasn’t a real demand to build so muchRecent data now shows Canada’s home prices may also have hit its peak. There are lots of listings in Vancouver but not a lot of homes are selling. The amount of properties bought in June hit a 10 year low. A 27.6% drop from the same month last year. In Toronto the drop is less severe at just 13%. Common sense tells us if there is a large amount of supply (homes) but not a lot of demand (purchases) then this puts downward pressure on housing prices. It’s a buyer’s market now :).

Are we going to see a major correction here? I don’t think so. The demand here appears to be real. Vancouver has a vacancy rate of 2.4%, and Toronto’s is 1.6%. Those are pretty low numbers. We can’t have 0% vacancy because if all the homes were 100% occupied then how can we accommodate new people moving into the city? So I think the boom in residential developments (condo constructions) in major metropolitan areas are warranted to plan for future urbanization, immigration, etc. We might see a 5 to 10 percent downward movement for the average price of a Canadian home, but nothing major is likely to happen.

__________________________________

Random Useless Fact: A study which polled over 2400 women concluded that the average woman spends nearly 1 year of her lifetime trying to decide what to wear.

19
Leave a Reply

avatar
7 Comment threads
11 Thread replies
0 Followers
 
Most reacted comment
Hottest comment thread
8 Comment authors
Marissa (@Thirtysixmonths)Drew @ Epicfinances.comShilpanSunnyModest Money Recent comment authors
  Subscribe  
Notify of
Not Working
Guest
Not Working

Holding MIC at the moment i hope there will be big correction or it might hurt them 🙁

Not Working
Guest
Not Working

Bit retarded, just work up and don’t know how to write haha.

I hope there will NO big correction ***

Liquid
Admin

I’m keeping an eye on the other housing markets around the world, especially in places like China, Hong Kong, and northern Europe. If they were to drop significantly then that might be a warning sign for us. But so far those parts of the world are holding steady (^_^) You can use this interactive chart to compare http://www.economist.com/blogs/freeexchange/2011/03/global_house_prices

Liquid
Admin

Not very familiar with MIC myself. But analysts seem to like the name for the most part 🙂

Phil
Guest
Phil

Personally I think you will see very little up or down in the housing for the next while. In canada anyways the boomers are selling off their homes to move to Condos whith their retirement/severance packages. Bungalows seem to be more the order of the day. That said if you picked a nice home in a good location, then who really cares what the market does… right? That said I’m almost 40 with no mortgage, but also do not plan on selling anytime soon either. I think our housing market is more tied to the demographic shift. You also mention world housing markets… Wealth in China is growing, so i think you will not see much downward side as like 80% of the population live in government owned housing and slowly as wealth grows people will work to own their own over time as China loosens more governmental policies. Hong Kong is more of a speculative location, and a nice one to watch as it follows more closely the ideals of the rich and wealthy. I watch HK more for trends as to what the truely wealthy are doing. Bottom line is, as I’ve said before the general trend is… Read more »

Liquid
Admin

How the Chinese housing market moves in the next couple of years will be interesting to see because since that country is such an economic power house, any changes to rules or government regulation there will likely have big effects on the rest of the world. Real estate prices in Sydney, Australia is also expensive like here partly due to Asian capital pouring into the resource rich country. Too many moving parts lol. Best to diversify, not only with asset class, but also with location.

Modest Money
Guest

Yeah I don’t see housing prices dropping much anytime soon. Here in BC lots of people were probably waiting for the HST to go away. In other parts of the country they may have just been waiting to buy hoping prices would drop. When it doesn’t happen though, they’ll eventually give in. Foreign investors also do a good job of propping up the housing market.

Liquid
Admin

Lol I know people who gave in too after waiting on the sidelines for many years. The whole HST thing was so messy :(.

Sunny
Guest

Its about time people wake up about the housing market. It never been a dream of mine to have a property of my own. Paying huge mortgage and taxes after taxes… no thank you. I won’t spend the best years of my life with the hassle of owning a house. Better without it. Imagine you lose your job and have a big mortgage payment that need to be done month after month. and what if suddenly your property lose half of its value?

This is a healthy crisis. Paying half a million for a really normal house in Vancouver… No thank you. Those values are not real. Its a result of market manipulation. Need to be a fool to fall in the housing properties.

What a lovely post of yours. I need to read you more 🙂

Phil
Guest
Phil

For my situation you are wrong. With a family it is nice to have somewhere to call home. Now that said, when I purchased my house back in 2000, it was $160K (3 bdrm, 1500sqft bungalow, built to my specs) at the time my wife and I had 2 incomes, and $60K in cash to put down to avoid the CMHC. After 5 years, we had paid off the mortgage… Today our neighbours have sold for $350-400K… I figure we have put in another 30K into the house and it is in the top end of that bracket… So in mortgage interest, the bank made $11K off of us over the 5yrs… so that leaves us, if I sell, almost $200K or double in 12 years, of which if i sell i do not have to pay taxable gains 🙂 so apply rule of 72 – So i would have made 6%, clear of any taxes for my investment… Now let look at more… My operating expenses for the house are just shy of $12K a year, or $1K a month… Please tellmme where you can find a 3 berdroom house near Ottawa for about $1K am month and recieve… Read more »

Liquid
Admin

Wish I bought a house in 2000 :0) but I didn’t even have a job back then. Hopefully there will be another buying opportunity like that in my generation. The <2% borrowing rate is very enticing to me because I love to use leverage heh.

Liquid
Admin

It would be interesting to compare prices in Montreal compared to Vancouver lol. You’re welcome to read more anytime D-Girl.

Shilpan
Guest
Shilpan

I don’t know much about Canada’s real estate market, but it’s still terrible in the States. I don’t think that we’ve hit the bottom yet, but it’s pretty close. If you don’t see a systemic problem(subprime), it’s not a bad idea to consider home ownership.

Liquid
Admin

Yeah, even our mortgage rules are different, for example we don’t have a 30 year fixed mortgages up here. I would definitely consider buying now for anyone who plans to settle down and raise a family, especially in the larger cities where the local economy and unemployment is doing relatively well. It’s not the right decision for everyone, but it’s worth thinking about.

Drew @ Epicfinances.com
Guest
Drew @ Epicfinances.com

I honestly would not be surprised if the Canadian housing market did take a hit, but I have a hard time believing it will be the same magnitude of the US housing market.

The US Housing market STILL looks terrible.

Liquid
Admin

It appears to have hit a low point in the US. But then again, I’m not sure ho much shadow inventory the banks have in their sleeves.

Marissa (@Thirtysixmonths)
Guest

Your random useless is amazing! I’m pretty sure I spend a good 10 mins every morning starting at my closet.

Liquid
Admin

decisions.. decisions.. haha. I wonder if these menial morning tasks can be outsourced or automated by a computer program some day, perhaps someone should make an app for that.