Buying a house in the USA?

[stealth]

So with all the foreclosures and cheap housing in the states, has anyone bought a place? Rental, vacation, retirement, or whatever it may be used for.

I am looking at Phoenix, Arizona possibly, or anywhere with nice weather and relatively cheap housing.

Can I obtain a mortgage for a place down their from a Canadian bank or mortgage broker?

Any insights would be great.

[MPowered]

http://forums.beyond.ca/showthread.php?s=&threadid=255030&perpage=20&highlight=&pagenumber=2

There is a lot of good info in this thread with some knowlegable people from Phoenix.

I bought a place last year in Phoenix. Some of the banks now are considering lending to Canadians but you would have to check locally.

I purchased a home from Shea Homes http://www.sheahomes.com/find-a-new-home/Phoenix-New-Homes.cfm

I believe they are large enough that they have opened opportunities to mortgage Canadians.

[Toma]

My advice is to save your pennies. To get the really good foreclosure deals in the US, you need cash.

And this is coming HERE, and soon. Home prices are gonna fall 30%, and foreclosures will be through the roof. Avoid the tax implications and troubles, save cash to get the good deals that will be here, especially in the condo market.

[Chandler_Racing]

Originally posted by Toma
My advice is to save your pennies. To get the really good foreclosure deals in the US, you need cash.

And this is coming HERE, and soon. Home prices are gonna fall 30%, and foreclosures will be through the roof. Avoid the tax implications and troubles, save cash to get the good deals that will be here, especially in the condo market.

I'm curious as to what evidence you have that suggest housing prices will fall 30%? :nut:

[Toma]

Originally posted by Chandler_Racing


I'm curious as to what evidence you have that suggest housing prices will fall 30%? :nut:

Sorry should have said AT LEAST 30% :eek: :D

[UndrgroundRider]

Originally posted by Chandler_Racing


I'm curious as to what evidence you have that suggest housing prices will fall 30%? :nut:

It's Toma...

[oz388]

Originally posted by Chandler_Racing


I'm curious as to what evidence you have that suggest housing prices will fall 30%? :nut:

Without those foolish first time buyers who jumped into the market this summer we should already see a 30% drop by now...:facepalm:

[PeterGTiR]

I'd say real estate prices are going to drop 30% too. Here are a few arguments:

1. Garth Turner's blog at Greaterfool.ca suggests that house prices in Canada are going to mimic what's happened in the United States and that we're behind the United States by two years. He's thinking that housing prices have already dropped ~30% in some parts of the US.

2. In my last University course, I had a teacher who mentioned that there were similar circumstances with the housing bubble in 80s and that the effects of a recession would be noticeable in the western United States first and then the effects would go eastward towards New York, north into Canada and then westward towards Alberta and BC. This is similar to what Garth Turner is saying - there's a little bit of a lag between the economy in the US and in Canada.

3. From a local perspective, I remember reading something on Beyond about natural gas prices being the main driver of Calgary's economy. I always thought it was oil, but if it is indeed natural gas, natural gas prices are unlikely to recover within the two to three year time span that people are predicting that housing prices are going to fall. I don't even pay attention to natural gas discoveries and I read about it every few days.



From Garth Turner's June 30th blog entry:



Canada Day, 2011.

Gas is $1.42 a litre, and a five-year mortgage hovers close to 8%. Effects of the crash of Autumn, 2008 are still being felt, even a year into an ‘official’ recovery. Unemployment is chronic and the federal government’s deficit will still top $40 billion with no hope of a balanced budget for at least half a decade. As a temporary measure, the GST’s been raised 1%.

.
Chrysler Canada is gone, of course, along with the notion of daily newspapers and network television. Newspapers and TV still exist but everyday publishing and local TV news are in their death throes. As for Chrysler, all that remains is a $4 billion bill which will never be paid.

The big story is real estate. Just two dozen months after the market entered a classic sucker’s rally, replete with roaring prices, multiple offers and predictions of ever-higher valuations, homeowners despair. Since the summer of 2009, when the national average house price reached its zenith – despite a recession – homes have eroded by 15% overall, and as much as 44% in some areas of British Columbia.

Among those most impacted: first-time buyers, lured into in 2009 homeownership by historic low teaser interest rates, offers of no-money-down financing from the big banks and credible predictions made by respected groups such as the Canadian Real Estate Association, that the market had “returned to pre-recession levels.”

Cassy Luneau and her husband Vache, both 27, spent Canada Day on a Parliament Hill bench, which has been their residence since deserting their home in Mississauga three months ago.

“We’re still in shock,” she says. “I mean, we listened to the real estate guy, and read the papers about housing getting more and more expensive, so we did what everybody was doing – what our parents wanted. We got a mortgage from the bank and they gave us a gift of money just for closing, to help pay for it. We just wanted a nice new house with stainless and granite and stuff. How were we supposed to know mortgage rates would go up and house prices go down, so after, like, a year we owed more than the place was worth. We couldn’t afford to sell it, and with Vache losing his job at the airport, we couldn’t afford to stay. So we came here. I mean, it’s all their fault, right? The politicians. I hate the bloodsuckers.”
Canada Day, 2009.

This week the most authoritative gauge of US house prices showed they tumbled 18% in the latest period. The Case-Shiller Index indicates American real estate has lost 34% of its value since peaking two and a half years ago.

The best guess is that while the pace of the price decline has moderated a little, it will continue for another two years. By that time, American homes will have eroded by between 40% and 50%, more than during the Great Depression, wiping out the life savings of millions of middle-class families.

By the middle of 2009, house prices are back at 2003 levels. It’s reasonable to assume another 10%-15% decline, putting them at 2000 levels by sometime in late 2010. Thus, an entire decade will have been lost. This comes amid news the Obama administration is seriously considering bulldozing sections of cities such as Flint and Detroit to wipe out housing stock, create natural areas and try to stem a real estate-induced urban collapse.

Will this happen in Canada?

Dozers, unlikely. A price correction, absolutely.

We continue to run roughly two years behind the Americans in this real estate saga. There is no escape.

Hence, two years from now, some heartbroken people will wish they might have read these words.

"It's a good time to buy"

[quazimoto]

LOL. I'm almost pee'd myself that was so funny. What friggin moron wouldn't realize that the issues in the United States were caused by sub prime mortgages. People with $50,000 salaries buying $500,000 homes. This is what caused the problems. We only see problems in Canada if interest rates go to the 8% plus plateau.

[PeterGTiR]

LOL. He's suggesting that interest rates will go up to 8%.

[Toma]

Originally posted by quazimoto
LOL. I'm almost pee'd myself that was so funny. What friggin moron wouldn't realize that the issues in the United States were caused by sub prime mortgages. People with $50,000 salaries buying $500,000 homes. This is what caused the problems. We only see problems in Canada if interest rates go to the 8% plus plateau.
I pee myself every time someone is so shallow that they BELIEVE the mortgage (subprime) fiasco in the US led to their crisis...

And my Mortgage is subprime ;)... prime minus 3/4 ;) I can assure you, I wont be losing my home

[Chandler_Racing]

Originally posted by PeterGTiR
[B]I'd say real estate prices are going to drop 30% too. Here are a few arguments:

1. Garth Turner's blog at Greaterfool.ca suggests that house prices in Canada are going to mimic what's happened in the United States and that we're behind the United States by two years. He's thinking that housing prices have already dropped ~30% in some parts of the US.

2. In my last University course, I had a teacher who mentioned that there were similar circumstances with the housing bubble in 80s and that the effects of a recession would be noticeable in the western United States first and then the effects would go eastward towards New York, north into Canada and then westward towards Alberta and BC. This is similar to what Garth Turner is saying - there's a little bit of a lag between the economy in the US and in Canada.

3. From a local perspective, I remember reading something on Beyond about natural gas prices being the main driver of Calgary's economy. I always thought it was oil, but if it is indeed natural gas, natural gas prices are unlikely to recover within the two to three year time span that people are predicting that housing prices are going to fall. I don't even pay attention to natural gas discoveries and I read about it every few days.




I'm not here to say their might not be any short-term volatility, but how much of the price fluctuations in the United States stems from the banking industries loose lending practices (adjustable rate mortgages and liar loans) or complex derivatives?

Also, in the short-term who cares about minor fluctuations in the price of houses unless you're forced to sell? Not that you have to answer, but do you own a home (or are you looking to purchase real estate as an investment in the future). You seem highly dependent on the price decreasing significantly.

I'm also going to have to go against the grain that natural gas prices will not recover in 2-3 years. The charts appear indicate that a bottom is near, even so there is very little down-side risk in relation to the potential for price increases.

[quazimoto]

No sub-prime mortgages were 100% to blame for what happened down there. Let me make this easier for you.

Your prime minus 3/4% is nothing. People in the U.S. with $50,000 or so salaries were buying $500,000+ homes. Many institutions were allowing people to make interest only payments on the mortgages or rates that were 1/3 to 1/2 the normal interest rate.

The regulations in Canada aren't so easy unless you have 25% down and most people that put that 25% down aren't likely to walk away from $100,000 plus. CMHC doesn't hand out insurance to the banks without ensuring the numbers are in line.

So for this to happen in Canada, unemployment needs to soar to unheard of levels, interest rates must spike to the 8% to 10% rate. The fact is we don't hand out retarded mortgages that are heavily out of line even though some mortgage brokers try their best to push through deals that shouldn't be looked at.

The reason it won't happen in Canada is simply because our real estate market is vastly different from the american market. Aslo realize that many americans were simply walking away from the mortgages and homes because they had put next to money if any money at all down. So they buy a house with nearly no down payment, pay virtually no interest. The house drops 100k+ in value would you keep paying the mortgage?

[HRD2PLZ]

I bought a home in the Phoenix area about 2 years ago. From what I remember and have heard from others buying in the US, Canadian banks won't fund a US mortgage because they have no legal authority in the US (in terms of foreclosure, etc).

As far as I know, most US banks will fund a mortgage for a Canadian. Most of the Canadians I know who have purchased in the Phoenix area have bought using Lines of Credit secured against their homes here or have just paid cash.

[Toma]

Originally posted by quazimoto
No sub-prime mortgages were 100% to blame for what happened down there. Let me make this easier for you.

Your prime minus 3/4% is nothing.

Actually it is. That represents a mortgage rate that is cheaper then we saw at anytime in the US.

The loose lending was a last ditch effort to save themselves from an inevitable economic collapse. Tip of the iceberg...

Really had very little to do with the runaway roller coaster that was the US economy heading for the summit.

Read grasshoppa, read....

[quazimoto]

Sorry I don't read, I have dual citizenship and a condo in Maui. Back in 2004 I was offered a 0.50% interest rate when I first bought the condo. Sub prime was not a way to save the ice berg it was a way to make it easier for people that normally couldn't afford homes the chance to own their own home.

This has nothing to do with reading since if you have purchased a property in the US through a US bank you would see the different options that were made available to people. One of them was the "interest only mortgage". More a less you are just paying the interest on the mortgage to the bank and no principal. So if you aren't paying principal are you going to care about the house when it tanks hundreds of thousands of dollars, the easy answer is no.

Just ask yourself if you bought a house for $500,000 with ZERO dollars down and the bank made you only pay the interest and then a year later the house is worth $400,000 are you not going to walk away? That is just how stupid it was in the United States.

I've got a 3.29% fixed rate now on my house in Canada and that's one of the lowest fixed rates you can find anywhere. Seriously people were getting 0.50% in the states for the longest time.

[benyl]

Originally posted by Toma

I pee myself every time someone is so shallow that they BELIEVE the mortgage (subprime) fiasco in the US led to their crisis...

And my Mortgage is subprime ;)... prime minus 3/4 ;) I can assure you, I wont be losing my home

Please tell me that you know what a subprime mortgage is. It certainly isn't a prime minus 3/4%.

The US problems were due to the securitization of the subprime mortgages and open trading on the markets. When people started defaulting, those securities, based on thousands of mortgages became worthless.

The second part of the problem was the hedging done with derivatives. Those didn't pay out either. Banks went bankrupt.

ARM mortgages are another reason why prices are falling and why people are getting foreclosed upon. 3 years at 0.5% so you can afford the payment, then they jack up the interest to 10% for the last 2 years of the 5 year lock in period.

We don't have subprime issues here. Nor do we have ARMs. I see a dip, but not what some people are suggesting.

[whodiman]

We do have shady lending practises here but they are less advertised. I posted about this awhile back but there are lenders now that will still lend absurd amounts. I talked to a broker last month who said i could buy two more houses on top of what I already own. In brief, as long as I don't default, nothing can go wrong.

artificial subprime. This could become an issue 3-5 years from now. People are buying with insanely low rates right now. let's say interest rates go up 2% 5 years from now and you go to renew. If you borrowed 300k well that's an extra 600/mth. According to one mtg broker recently he said 80% of the people buying were maxing out to the penny. An extra $600/mth could do a lot of damage to those people. Not saying for sure interest rates will go up 2% for sure in 5 years but that's more likely than an interest rate drop.

[Toma]

The US economy has been heading for disaster since about 1999 or 2000.

They only started the mortgage crap... what...2003?

This is a way to blame the homeowners/citizens, instead of a failed economic system and policy based on greed, and the concept of ever increasing growth.

We had a WORLDWIDE housing boom, and now we have a worldwide housing slump.

We are about 2 years behind the US.

And we have already seen OUR condo market tank about 30%. Another 30 + is around the corner.... housing is probably down 20 to 25%.

These are big numbers. Condos that were $300 just a while ago can be bought for $230. Considering most these people bought with less than 5% down.... why would they keep them? Hell, you can now RENT a million dollar homes (er, what was a million dollar home), for $2000 a month.

Also, dont forget our own version of the subrime fiasco... the assumable scams. Some company would buy an apartment building. Converted to Condos. They were WORTH $240 on our market, through some backdoor dealings, they mortgaged them at $310, and let new buyers assume them....no qualifying.

And don't forget the hundreds if not thousands of homes in Calgary sitting vacant. Banks don't wanna put them up trying to avert a collapse, developers don't wanna sell theirs to keep the market up....

First time in history, a Calgarian can sell his house, and buy 4 almost anywhere in the US. You guys naive enough to believe this is sustainable?

Have you been paying attention to the businesses around you going under? People you know getting laid off?

[Toma]

Originally posted by whodiman
We do have shady lending practises here but they are less advertised. I posted about this awhile back but there are lenders now that will still lend absurd amounts. I talked to a broker last month who said i could buy two more houses on top of what I already own. In brief, as long as I don't default, nothing can go wrong.

artificial subprime.
Bingo.

The whole mortgage broker thing needs to be abolished. I had so many friends caught up in this "make a quick buck" .

Also, how many of you were offered $5k to $7 k for your good credit so that you would qualify for someone else? I had many friends fall for that too, only now to be FUCKED.

[liquid1010]

The amount of misinformation in this thread is simply unbelievable. :banghead:

Just as a note - stop believing so many blogs, and actually start looking at published work that goes through proper review....

Also .... subprime has nothing to do with how far "under" prime rate your mortgage is :nut: ... it relates to the quality of the individual borrowing the funds.

[UndrgroundRider]

Originally posted by Toma
...


You must be hanging out with Vroy too much.

The problem with all of your statements, forum wide, is that they're pure conjecture. You're simply regurgitating sensationalist theories, which fail to satisfy scientific standards and are not generaly accepted by accredited industry experts. In fact, most of your postulates materialize out of thin air, and no chain of logical deductions from known true statements exist.

That is not to say you're wrong, you could be right, but not by virtue of sound logic, instead by virtue of pure luck.

[quazimoto]

It's amazing how some internet fool makes a post with a bunch of random chaos theory crap bundles it all together and wow the world is ending! In my opinion right now people can buy a fairly affordable new home in newer communities if they are smart. Most builders have 3/2 houses with double attached garages that are in the 1600 SQ FT range going for $340,000-$350,000. If you are telling me that a 300k mortgage is horrible for a metropolis of 1 million then I don't know what to say.

Right now people are locking in 5 year mortgages in the that 3.5% to 4% or so range which is nice. The rates were a lot lower a few years ago when people were getting 2.5% to 2.8%. Funny how that is the bank of canada rates go down but the mortgage rates go up. Now that couldn't be because the banks already know what's going on could it. The fact they are adjusting interest rates based on everything that is happening.

The worst we'll see is a return to the rates of the mid 90's. The rates were in the 5% to 7% range for the most part from 1992 to 1995. Is there any justification for rates to go 8%+, certainly not.

Everyone seems to think we are back in the 80's right now but we are really back to the mid 90's mini recession. The massive interest rates in the 80's were caused by insane over spending. More so a $50 billion dollar deficit today is not nearly as bad as the $30 billion dollar deficit of the 80's. Everyone can thank reagan for his spending policies for the interest rates that were seen in the 80's. Could of swore I said this in an earlier post.

Interest rates aren't going back to what we had in the 80's unless the economy gets a lot worse.

[lint]

Originally posted by quazimoto
I The worst we'll see is a return to the rates of the mid 90's. The rates were in the 5% to 7% range for the most part from 1992 to 1995. Is there any justification for rates to go 8%+, certainly not.


Not long ago people were saying we would never see <$100 oil again never mind <$50

[sputnik]

Originally posted by Chandler_Racing


I'm curious as to what evidence you have that suggest housing prices will fall 30%? :nut:

Ignore him.

He is just bitter his gold investments are still flat.

[sputnik]

Originally posted by quazimoto
Interest rates aren't going back to what we had in the 80's unless the economy gets a lot worse.

:werd:

In order for interest rates to skyrocket... INFLATION must skyrocket as well and right now we are seeing more DEFLATION than anything.

So for those of you with houses. Should inflation jump dramatically so will the value of your house. So if your interest rates get to the point where you can't afford your home anymore, you should probably just sell it and lift the profits.

What we are seeing right now is pretty text book. The value of houses, oil/gas, cars and everything else is falling and interest rates are following.

So for Toma to be correct in believing interest rates will jump. He will also need to see commodities and housing prices jump in step... not fall 30% like he claims.

[quazimoto]

Well if rates do go high it's really simple, you don't do 5 years fixed terms and you select the "variable" rates as the bank normally gives you anywhere from 1.5% to 2.0% off the rate to take it. If you think we will ever seeing 12% mortgages again in our life time you sir are very incorrect.

Problem is in this day and age you have idiots that go and blog and tweet crap that really have no proper education that can put a lot of BS out there.

I mean comparing the US style to the Canadian style of real estate and mortgages is just crazy.

Who here in Canada wouldn't die to get a 5.5% 30 year fixed mortgage rate? I'd love to do this in Canada.

[483hp]

If buying in the US, look carefully into the US Estate Tax rules. It's not just for US citizens.

As for Calgary, I agree that we haven't seen the bottom yet. There is still lots of room before we hit bottom.

[lint]

Originally posted by quazimoto
Problem is in this day and age you have idiots that go and blog and tweet crap that really have no proper education that can put a lot of BS out there.


How... ironic

[quazimoto]

Except I'm educated. Ironically the same crap I took in university and got a degree in.

[Toma]

I don't believe interest rates will go up. Where did I say that? Our housing is gonna tank.

I said this at our peak, and no one believed me then either, and we have seen a 30% decline.

What killed the US is that during the sub-prime era, they loosened loaning restrictions, and INVESTORS and SPECULATORS, could "tie up" 10 to 20 or mor properties with very little down, and zilch for collateral.

This caused the explosion in house prices, and the subsequent crash since they had nothing to loose, they just walked away.

People needing a place to live, buying one home etc were just victims.

[Toma]

Originally posted by quazimoto
Except I'm educated. Ironically the same crap I took in university and got a degree in.

Huh.... ironically, you must not have taken any classes with guys like Ron Schlenker who predicted this and forecast US economic woes WAY back... I think late 90's, maybe 2000 when I went to school there.

[sputnik]

Originally posted by Toma
I don't believe interest rates will go up. Where did I say that? Our housing is gonna tank.

I said this at our peak, and no one believed me then either, and we have seen a 30% decline.

What killed the US is that during the sub-prime era, they loosened loaning restrictions, and INVESTORS and SPECULATORS, could &quot;tie up&quot; 10 to 20 or mor properties with very little down, and zilch for collateral.

This caused the explosion in house prices, and the subsequent crash since they had nothing to loose, they just walked away.

People needing a place to live, buying one home etc were just victims.

So what is going to cause a 30+ percent drop in Calgary?

[liquid1010]

Originally posted by Toma
I don't believe interest rates will go up. Where did I say that? Our housing is gonna tank.

I said this at our peak, and no one believed me then either, and we have seen a 30% decline.

What killed the US is that during the sub-prime era, they loosened loaning restrictions, and INVESTORS and SPECULATORS, could &quot;tie up&quot; 10 to 20 or mor properties with very little down, and zilch for collateral.

This caused the explosion in house prices, and the subsequent crash since they had nothing to loose, they just walked away.

People needing a place to live, buying one home etc were just victims.

Aren't you the one who thought Subprime related to the rate on the loan?!

Also - please explain your rationale as to why interest rates will not increase..... as the idea seems absurd to me and almost everyone else.

[Toma]

Originally posted by liquid1010


Aren't you the one who thought Subprime related to the rate on the loan?!

Also - please explain your rationale as to why interest rates will not increase..... as the idea seems absurd to me and almost everyone else.
It was a joke moron.

And technically anything under prime IS subprime by definition, just not in the context of the US :poosie:

And it tough for governments to raise interest rates during a recession when they need to stimulate spending.

[Toma]

Originally posted by sputnik


So what is going to cause a 30+ percent drop in Calgary?
Why have they dropped so far? When was the last time we saw a 30% drop on prices in Calgary, and what was the cause?

[sputnik]

Originally posted by Toma

Why have they dropped so far? When was the last time we saw a 30% drop on prices in Calgary, and what was the cause?

A previously overheated local market that was due for a slight correction.

Most houses are only down in the 5-7% range from peak and house prices are on the rise again as inventories are dropping. The absorption rate in Calgary for single family homes is only around 2.34.

Even if we were to directly correlate the current economic situation (while completely disregarding the housing market of the last two years). What are you predicting will happen in the next couple of months/years to see the Calgary housing market fall by over 30% on average?

[Toma]

Originally posted by sputnik


A previously overheated local market that was due for a slight correction.

Most houses are only down in the 5-7% range from peak and house prices are on the rise again as inventories are dropping. The absorption rate in Calgary for single family homes is only around 2.34.

Even if we were to directly correlate the current economic situation (while completely disregarding the housing market of the last two years). What are you predicting will happen in the next couple of months/years to see the Calgary housing market fall by over 30% on average?
5-7%??

Put the crack pipe down. Sure, we have had a good couple months.... but... lol

[sputnik]

Originally posted by Toma

5-7%??

Put the crack pipe down. Sure, we have had a good couple months.... but... lol

Who needs stats when you can make baseless claims on the Internet.

June 2009 Average Selling Price:$447,142 (down 5.6% from same period 2008)
June 2009 Median Selling Price:$399,000 (down 2.2% from same period 2008)

At any rate. You are still avoiding my question.

[benyl]

Originally posted by quazimoto
If you think we will ever seeing 12% mortgages again in our life time you sir are very incorrect.

Are you serious?

That is a very naive statement.

[liquid1010]

Originally posted by Toma

It was a joke moron.

And technically anything under prime IS subprime by definition, just not in the context of the US :poosie:

And it tough for governments to raise interest rates during a recession when they need to stimulate spending.

The concept of subprime relates to the definition of the "individual" and "safety" of the loan.....

It's evident by your posts that you don't have the slightest clue what you're talking about. In macroecon there are two measures of inflation which policy makers need to look at.... headline and core. Headline may be low.... but core in Canada is still at 2% because it does not include oil prices and food. Therefore, although the economy may still be slow.... interest rates have no-where to go but up. Given the quantitative easing going on........ in the medium to long run, we could easily see interest rates jump by 3-4% quite easily. It will cause blood on the streets.... but it's a very probable outcome.

If you don't believe my assessment, then read the newest economic releases. (by this I mean actual published work, not some blog)....

[quazimoto]

12% interest is just not a possibility anymore unless you want to talk about the next global depression. More so a depression that would make the 30's look like a mild recession.

You really need to remember this as well, if you buy a house for $250,000 it has no value. Always remember that. Its your home and you need a place to live. It only becomes a commodity if and when you really must move. I get sick of people saying I've made $100,000 on my house already when in theory they haven't made a dime. The same is applied when investing into stocks or mutual funds. It's the units you are buying and there shouldn't be a panic because things will rebound given some patience.

The issue of 12% interest simply isn't realistic since it will increase the average debt ratio to unheard of numbers. For many people that would easily tack on $1,000+ a month in interest to the basic mortgage.

If anything in Canada I do believe we'll see increase government policy into the banking industry to ensure it never happens.

[sputnik]

Originally posted by quazimoto
The issue of 12% interest simply isn't realistic since it will increase the average debt ratio to unheard of numbers. For many people that would easily tack on $1,000+ a month in interest to the basic mortgage.

The problem with 12% rates is that we would first need to see VERY high inflation for the Bank of Canada to adjust their overnight rate to double digits.

The BoC moves rates up to curb inflation.

If we see 12% rates (up from the current 2.25% bank prime rates) we will probably see massive inflation that would ultimately first push housing prices a LOT higher.

In Calgary oil and gas prices would also be a lot higher as well. Which is only good for the local economy and potentially push salaries up as well.

So 12% rates are certainly possible. However we would probably see another housing and oil boom occurring first.

[benyl]

Originally posted by quazimoto
12% interest is just not a possibility anymore unless you want to talk about the next global depression. More so a depression that would make the 30's look like a mild recession.


Really? So what happened in the late 70s and early 80s then when interest rates were in the high teens / low twenties? I don't recall a depression. I recall stagflation.

High unemployment with rising prices and rising interest rates.

[liquid1010]

People are looking at this from the wrong direction. Fiscal and Monetary policy are driven by the overall factors of the economy, primarily the GDP/unemployment relationship. Although housing and other things factor into this relationship.... the big picture is that full employment, creates full potential GDP... thereby the economy produces at full capacity.

Benyl - the problem in the 80's is not that similar to this one in that the cause of that interest rate increase at that time was the huge bump in oil prices caused by external shocks (Iran/Iraq). This increase in oil prices caused massive inflation by increasing the price of the inputs of production....... forcing policy makers to bump interest rates to curb inflation and slow production. This was not an ideal decision - but they were forced into it since inflation control is essentially their #1 mandate. They were forced to chose between inflation and a recession - they chose the recession (this is oversimplifying it somewhat).

The reason inflation rates will increase now is that the economy has had so much liquidity dumped into it. As counterparty risk begins to drop... and lending increases, that extra quantitative easing has to have an outlet....... since the gov't is great at pumping money in, and poor at pulling it back out.....

[sputnik]

Originally posted by benyl


Really? So what happened in the late 70s and early 80s then when interest rates were in the high teens / low twenties? I don't recall a depression. I recall stagflation.

High unemployment with rising prices and rising interest rates.

Actually the late 70s (especially in Alberta) were boom times which ultimately drove up interest rates into the low 20s.

It wasn't until the 80s (81-83 specifically) that stagflation hit. However interest rates lingered until the BoC and bond rates moved back down.

What happened was that there were many that bought during the boom and justified the high interest rates and high house prices based on their high income. However when the 80s hit and they lost their jobs or took paycuts they could no longer make the exorbitant payments and many lost their houses. Had they been able to hang on for a year or two, they would have seem much lower rates around 1983. Unfortunately many couldn't.

What we have right now looks nothing like the span between 1977 to 1983.

Luckily the boom here was fast and furious enough that interest rates only got into the 6-7% range briefly before falling as a result of the economic recession.

Where we are now is more like 1976.

We are on the verge of another potential boom and hopefully people think twice before assuming they can buy a house at a high price or with high interest rates when the boom hits again.

We got lucky this time around. The next one may not be so forgiving.

[quazimoto]

Simply put debt ratios aren't in line to support 12% interest for the vast majority of mortgages. It's not even mortgages. Loans that businesses take, most small and medium sized businesses would find it incredibly hard to operate. I really doubt the bank of canada would raise interest rates that high though. The highest I could see them for a while would be in the 6% to 7% bracket for a typical 5 year fixed.

People just can't believe in chaos theory where they think everything is going to come crashing down since the people who make econimic policies are going to ensure it doesn't happen to the scales we have seen in the past.

The scary part to me is that china owns roughly 1.5 Trillion worth of US debt. It's only a matter of time before China will theoretically own the United States. It's already at that point now which is rather scary.

[Toma]

Originally posted by sputnik


Who needs stats when you can make baseless claims on the Internet.

June 2009 Average Selling Price:$447,142 (down 5.6% from same period 2008)
June 2009 Median Selling Price:$399,000 (down 2.2% from same period 2008)

At any rate. You are still avoiding my question.

Huh.... sorry, you must be confused. I said 20+% down from PEAK, not year to date, or whatever stat you picked to fit your agenda.

From the ground level... I had a property that PEAKED at $360, I got $320 a short time after, now they are under $300.

I was looking at several condos in 2007 that were in the $310 to $330 range in a particular area. Now they can be had for $230.

Another property I have peaked at $520, now it's worth about $430.

I just rented a property that was purchased for $980k at peak, now worth $740, and renting for $1800.

Give me all the stat you want. I've been buying houses in Calgary since 1992. This is what's going on out there, despite your intuition, and cherry picked stats.

[sputnik]

Originally posted by Toma


Huh.... sorry, you must be confused. I said 20+% down from PEAK, not year to date, or whatever stat you picked to fit your agenda.

From the ground level... I had a property that PEAKED at $360, I got $320 a short time after, now they are under $300.

I was looking at several condos in 2007 that were in the $310 to $330 range in a particular area. Now they can be had for $230.

Another property I have peaked at $520, now it's worth about $430.

I just rented a property that was purchased for $980k at peak, now worth $740, and renting for $1800.

Give me all the stat you want. I've been buying houses in Calgary since 1992. This is what's going on out there, despite your intuition, and cherry picked stats.

o0o0o0o.... anecdotal "evidence"... the best kind of proof there is... how convincing.

Thanks for the "statistics" Mr. Stats.

I guess the Calgary real estate market IS down 20-25%.

:nut:

At any rate. You are STILL avoiding my question.

[Toma]

Originally posted by sputnik



I guess the Calgary real estate market IS down 20-25%.

:nut:


LOL... you dont have to tell me... I know I am correct.

Go ahead and Google the RIGHT stats, and get back to me....

[sputnik]

Originally posted by Toma


LOL... you dont have to tell me... I know I am correct.

Go ahead and Google the RIGHT stats, and get back to me....

Feel free to post links for all of us at any time.

[Toma]

Ok, sorry for the distraction from the misinformed...

OP... I never said that investing in the US is a bad idea. I think it COULD be a once in a lifetime opportunity.

However, keep in mind, the real estate slump is worldwide. You may be better off investing in a developing country, as the US may never regain is once economic might, or it might be a LOONG road. Smarter people than me have predicted that ALL economic growth for the foreseeable future will take place in emerging markets.

I was merely pointing out that since you brought up mortgages to buy ridiculously cheap property, you may stretch yourself too thin to take advantage of the opportunity that will present itself here soon.

Having said that, I did invest in US property, and will add a couple more. But I will leave enough in the bank to buy here when the time comes.

[benyl]

Originally posted by quazimoto
People just can't believe in chaos theory where they think everything is going to come crashing down since the people who make econimic policies are going to ensure it doesn't happen to the scales we have seen in the past.


Haha, past not repeating itself?

Look up bucket shops and derivatives. The reason we are in the mess we are in today.

They were outlawed in the 30s. Deregulated again in the late 90s because "we know better."

Then Enron, Freddy Mac and Fanny Mae, then banks falling left right and center.

People are stupid and make the same stupid mistakes over and over.

[PeterGTiR]

I tend to believe a guy who was a former Member of Parliament rather than a guy who's main argument is that "I'm right, and anyone else is a moron."

The guy who writes the blog was around during the 80s and he's not saying real estate is a bad investment in Canada or the United States, he's just saying that the best approach is to diversify your investments rather than have all your funds tied in a home.

[Toma]

Originally posted by benyl


Haha, past not repeating itself?

Look up bucket shops and derivatives. The reason we are in the mess we are in today.

They were outlawed in the 30s. Deregulated again in the late 90s because &quot;we know better.&quot;

Then Enron, Freddy Mac and Fanny Mae, then banks falling left right and center.

People are stupid and make the same stupid mistakes over and over.

Not sure about this... I'm more of the opinion is "THEY" learned from it, and used it against civilians to part them from their hard earned money and further their attempts at enslaving us.

[quazimoto]

Toma you need to remember a home isn't really worth anything and I seriously mean that. You pay 300k for a home and it appreciates to 400k, that's great but you still haven't made a dime on that home really. Even if you sell the 400k home for 400k you then need to buy another place to live in.

I listened to the same crap from my neighbour who said he had made so much on his house. He now complains about how he's lost all this money. I look at him like he's the world biggest retard.

[Celica TVS3]

I pulled some data together and put it in chart form. We are currently down 10% from the peak, we reached a low of 16.4% in Dec/09.

http://i26.tinypic.com/2wnzacm.jpg

[benyl]

Originally posted by Toma


Not sure about this... I'm more of the opinion is "THEY" learned from it, and used it against civilians to part them from their hard earned money and further their attempts at enslaving us.

Yeah, I suppose you are right. I forgot to add the greed component.

Why I say they are stupid is that what they do is unsustainable. Even with regulation, we get screwed.

[Toma]

Originally posted by quazimoto
Toma you need to remember a home isn't really worth anything and I seriously mean that. You pay 300k for a home and it appreciates to 400k, that's great but you still haven't made a dime on that home really. Even if you sell the 400k home for 400k you then need to buy another place to live in.

I listened to the same crap from my neighbour who said he had made so much on his house. He now complains about how he's lost all this money. I look at him like he's the world biggest retard.

maybe maybe not.... however, I have not owned just one property for over 15 years, so they definitely ARE investments, and not 'homes'.

[Kloubek]

Thanks for the chart Celica. Though I've looked at pricing charts before, I haven't lately and with recent months of data, it is interesting indeed.

For example - I didn't realize we are only 10% down from peak. If I had to guess, I would have guessed around 20% less.

But then, I also didn't realize that we have really spiked up in prices in the last couple of months.

Looks decent for people such as myself who are selling now, and already started building 2 months ago at the low time.

[sputnik]

Originally posted by Kloubek
For example - I didn't realize we are only 10% down from peak. If I had to guess, I would have guessed around 20% less.

The July data will look even better if the last two weeks of the month remain the same as the first two weeks.

[483hp]

July sales are the last minute rush. Data starting in August will be the real indicator in my opinion. The early summer months are always relatively strong because many people have kids and they have to get possession prior to the start of the next school year.

Calgary is still overpriced in my opinion. Current prices won't hold and the uptick is temporary.

[sputnik]

September and October are also busy months as people want to move after summer holidays but before the snow falls.

[ARIZONAREALTOR]

Originally posted by stealth
So with all the foreclosures and cheap housing in the states, has anyone bought a place? Rental, vacation, retirement, or whatever it may be used for.

I am looking at Phoenix, Arizona possibly, or anywhere with nice weather and relatively cheap housing.

Can I obtain a mortgage for a place down their from a Canadian bank or mortgage broker?

Any insights would be great.

If you're interested in obtaining a loan from a US lender as a Canadian citizen there is only 1 commercial bank here in Phoenix that I'm aware of, US Bank. I deal with AmeriFirst Financial as they have a loan program available to Canadians based on Canadian income and credit.