Imminent Housing Crash

[cycosis]

So for those of you that have a significantly better grasp on the housing market than I do here in Calgary:

If I have cheap rent right now (can move out at any moment with no penalty), should I just ride out the winter, continue to bank savings and see what happens this spring? I am looking for a 5-10 year home (first time home buyer).

Its driving me nuts not having a good idea of when I should really start to consider tabling offers.

[max_boost]

it's based on comparables, bro. also, no one can predict the future, bro.

with that said bro, buy what you can afford at a good price and you can't really go wrong. lastly, get a good agent.

[max_boost]

might as well add, don't go building yourself a massive bungalow with more garages than rooms, designing funky stuff thinking it's a forever home. not everyone can appreciate that style. like cars, oem > * lol you never know, life could mess with ya. don't do that and take care of yourself before you wreck yourself. good luck!

[ercchry]

Historically winter has better deals to be had than spring... also rates are starting to slowing trend upwards now... the rest is going to be 100% dependant on your own personal situation

Where do you see oil heading in the short term? Do you take these hiring frenzies as a sign a bottom is in, or just typical seasonal trends?

How do you think the new direction the usa is going to take will affect Canadian housing and our local economy?

Do you feel like this is just the beginning of more barriers to enter the market? How do you think the current ones and future ones will affect pricing?

Are you looking at condos? Detached homes? Townhouses? What area of town? What price range?

How much down payment? How much larger will it get in the spring? Does it take you over key percentage points for cmhc?

What is the actual difference in cashflow or net worth between your rent and your potential new mortgage (interest only)/insurance/taxes?

Personally for me if the decision is set that buying is yes, and the only factor is now or the spring... I'd start shopping now... jumping on the perfect house for the right price is going to be much more valuable in the long run and might be the difference between wanting to sell in 5 years, or sticking around for 10 years... which would more than make up the difference in the small price differences between now and spring

[cycosis]

I Appreciate the perspective.

[tonytiger55]

Originally posted by cycosis
So for those of you that have a significantly better grasp on the housing market than I do here in Calgary:

If I have cheap rent right now (can move out at any moment with no penalty), should I just ride out the winter, continue to bank savings and see what happens this spring? I am looking for a 5-10 year home (first time home buyer).

Its driving me nuts not having a good idea of when I should really start to consider tabling offers.

There are a number of factors. I think one of the key factors is your financial status and plan.
What is your income, is it steady? How much deposit are you putting down? How much can you afford..? Take your salary X5. Now it does NOT mean you can buy or should buy that much. I stress that last point.
They purpose of this is to get a realistic number of how much you can pay every month with mortgage, bills, food, RSP Savings, Emergency fund, vehicle bills and insurance items.
So this will give you a number of what you can afford. From this point you can deduct how much downpayment you would like to put down and there are various tools that can help you (i.e the RSP First time homebuyers plan).

That being all good and your financial health in order then that is a good time to start looking/tabling offers. I naturally would say Spring/Summer as that tends to be the natural buying/selling season here. As others have posted, sometimes you get some good deals in the winter.

You can't time the market. The market will go up and will it go down. The key thing is can you make the payments comfortably? When your financial health/plan is good. That's when its a good time to buy.

[Gestalt]

Originally posted by Xtrema


About -1% comparing Oct 2016 to Oct 2015, -4.8% from 2014.

So if you bought a $500K house in 2014, chances are you can only get $475K today. And hopefully you didn't buy that on 5% down with CMHC premium on top, has no job and forced to sell.

Overall market is down 2%, that's because median price for apartments are down 12%.

Yeah, we were looking to upgrade, and I've noticed price increases. The only things that seem to be down are the expensive homes.

[Xtrema]

Originally posted by Gestalt


Yeah, we were looking to upgrade, and I've noticed price increases. The only things that seem to be down are the expensive homes.

As CMHC clamp down and mortgage rate goes up, you would expect the median price of homes sold to head south as well.

So if you are above median, expect your house prices to drop faster than houses below median. It will be great for upgrading for the next little while.

[ercchry]

Eh, 20% cut to buying power really only affects a small percentage of buyers... most people aren't running that lean on purely housing... got to factor in that $600/month luxury car lease

[pheoxs]

Originally posted by ercchry
Eh, 20% cut to buying power really only affects a small percentage of buyers... most people aren't running that lean on purely housing... got to factor in that $600/month luxury car lease

I don't know about that. Almost every first time home buyer I know ended up buying right near the max they could get. The new rules would affect that segment quite a bit.

[ercchry]

Originally posted by pheoxs


I don't know about that. Almost every first time home buyer I know ended up buying right near the max they could get. The new rules would affect that segment quite a bit.

So they had $0 in any other debt? No student loans, no car payments? Nothing? I know exactly 0 people that are in that situation while buying their first place... and if they are chances are they are not willing to extend theirselves that far anyways

[Xtrema]

Originally posted by ercchry
Eh, 20% cut to buying power really only affects a small percentage of buyers... most people aren't running that lean on purely housing... got to factor in that $600/month luxury car lease

FYI, in 2015, 50% houses sold is covered by CMHC. In 2014, it's 54%.

So 1/2 the market buying houses doesn't have 20% down or don't want to put 20% down.

[ercchry]

A lot of the time banks forced people to get cmhc... but doesn't change what I said since the only ones getting around the new stress test would be 20% down with a self insuring big bank... which doesn't happen much since even with 20% down banks are still insuring on the back end

Just to clarify... qualifying at 4.64 vs 2.50=~20% cut to buying power

Basically (this is overly simplified since not factoring in 38 vs 44% debt ratios) let's say old rules said you could have $3k/month debt... a 20% cut would be $2400... but if you had a $600 obligation before the rule change then you only got $2400 anyways for the house... so it changes nothing

[Manhattan]

When everybody loves a particular investment the only direction for it to go is down because you will run out of people to purchase it eventually. Canadian housing has had a great run but its foolish to believe it will continue be as great of an investment in the next 20 years as it has been in the past 20 years. The idea of Chinese or Americans flooding the market here is a long shot and speculative at best. Not discouraging home buying at all but if a high return on your purchase is the motivating factor then there's a good chance you'll be disappointed.

[ercchry]

Everyone needs to live somewhere, as long as there is a growth in population then there will always be more demand, and since you can't build more land, it will also be tough to have a loss in value unless people start fleeing the country

As purely an investment? Yeah you can easily argue that your money is better off somewhere else... but you still need to live somewhere! Long term owning usually comes out on top... but like anything you can make the numbers work for whatever you desire so pointless of arguing past this point

[mzdspd]

Originally posted by pheoxs


I don't know about that. Almost every first time home buyer I know ended up buying right near the max they could get. The new rules would affect that segment quite a bit.

I definitely think it is for the best. I finished school, saved up some money and bought my first place (65-70% of what the bank said I could buy).

I moved out from the parents house and I got by but it eventually started to catch up and I got sick of not being able to do what I wanted. So I sold and downsized.

I think this is a proper move from the government. It is so easy to get caught up into wanting a nice fancy new house and double/triple garage.

[kaput]

.

[ercchry]

People still have babies, and are living longer and longer... right?

It's not like the country is just going to magically transform into a hobo shantytown... plus with forced $15/hr minimum wage... we'll fill that condo surplus in no time!

[Xtrema]

I think major cities will continue to grow. Places like Vancouver and Toronto will always be a good investment because that's where all the jobs are and people always gather around jobs.

2nd tier cities like Calgary/Montreal/Edmonton is harder to make money. But as long as you pick the places right, it should be a safe bet.

Anyway, real estate is a long play. If you think you will make $ (cap gain) under 10 years of ownership, you are crazy.

Primary residence for me is just a life style choice, much like cars.

Rental properties are more like a TFSA where cap gain are locked in until I retired from my day job. While spend some time to manage them and earn that 2-4% per year on rental income.

[BigMass]

Originally posted by Xtrema


Primary residence for me is just a life style choice, much like cars.

Agreed, as well as the rest of your post. People need to stop thinking of their homes as investments. Investing in real-estate is quite different than buying a home. Investing in a car is much different than buying a daily driver. Investing in art is much different than decorating your home. That is not to say your home is not an asset that can appreciate, but it has different criteria than when you're actually looking for an investment.