Should I buy or Wait?

[comet]

Hey, I am hearing how the US economy is going down and how it directly effects us, so my question is that should I wait or is it okay to buy now ? I am in need of one right now since I am renting. I am getting a house on mortgage with 3.75% variable interest rate, which I think is good however not sure if I should wait or not. Any input guys? Thanks in advance.

[coolspot]

I'm waiting... since housing prices in the GTA have not dropped sufficiently to make the purchase worthwhile. It seems most sellers are clinging onto the hope they'll get prices similar to last year.

[urameatball]

I'd wait.
Everyone's making a last ditch effort to get top dollar for their houses and there are still lots of people with money saved up to buy buy buy.

It'll take a little while before housing prices actually start tanking.

[Munchos]

Is there ever a good time to buy a house? If everyone bought a house that they could reasonably afford, instead of living beyond their means in a house they shouldn't really be in, then nobody would have this concern.

I know of a couple people who have been waiting for 3 years to buy a house and still haven't because of job fears and hoping for lower prices. I just bit the bullet 5 years ago and bought my first house. We are on our second, a townhouse, which we could afford even when I was going back to school for 6 months.

My reccomendation is to start small and then work your way up to something more luxurious.

And may I ask where you got that rate from? We have our mortgage being renewed in just over 8 months and are just starting to look at refinancing it.

[iamtoldtherewillbenomath]

Wait for about a year.

[loudsubz]

We are currently looking at a townhouse/semi and talked extensively with our broker who is a close friend. He was telling us that the long term outlook for the housing market in Canada looks good and we shoulnd't be seeing the same thing that happened in the US. He says house prices are pretty stable right now and even if they do fluctuate it wont be very drastic at all (Nothing like houses selling for 50% off etc).

[comet]

We are currently looking at a townhouse/semi and talked extensively with our broker who is a close friend. He was telling us that the long term outlook for the housing market in Canada looks good and we shoulnd't be seeing the same thing that happened in the US. He says house prices are pretty stable right now and even if they do fluctuate it wont be very drastic at all (Nothing like houses selling for 50% off etc).

Thanks for the input, so I guess your going for it huh? Keep the inputs coming guys.

[loudsubz]

Thanks for the input, so I guess your going for it huh? Keep the inputs coming guys.

For sure! Nobody knows the future of anything so if you wait all your life for the best time to do anything you will miss out on oppourtunities that may arise.

I don't think buying a home is ever a bad investment.

[jimmyjams]

We are currently looking at a townhouse/semi and talked extensively with our broker who is a close friend. He was telling us that the long term outlook for the housing market in Canada looks good and we shoulnd't be seeing the same thing that happened in the US. He says house prices are pretty stable right now and even if they do fluctuate it wont be very drastic at all (Nothing like houses selling for 50% off etc).

lol you're dreaming housing prices are going down down down, 50% wouldn't suprise me at all

[loudsubz]

lol you're dreaming housing prices are going down down down, 50% wouldn't suprise me at all

You should quit your day job and become a Psychic!

[jimmyjams]

the housing market is not like the stock market where you can't really predict the future. the housing market is illiquid and inefficient; look how far up prices have come relative to people's incomes and now look whats happening to the economy - prices are not sustainable

[loudsubz]

Heres a good read

http://www.financialpost.com/reports/property/story.html?id=792278

[loudsubz]

http://network.nationalpost.com/np/blogs/toronto/archive/2008/10/03/toronto-house-prices-down-6.aspx

[hagbard]

I've waited years for housing prices to fall, but now, I'm also concerned that the value of the dollar will fall with it leaving us further behind regardless.

[iamtoldtherewillbenomath]

What I would do is start looking now, but be a very picky buyer.

A lot of sellers, as someone mentioned above, haven't accepted the fact that it's a buyer's market, but soon they will be forced to. The negotiating power is with you if you are a patient buyer with lots of options.

Get to know your real estate market very well, and take your time - look at 25+ homes. Ask lots of questions (e.g. why is this house priced $20K higher than the one down the street when it has hardwood floors and granite countertops, and this one doesn't?)

Then put an offer in on a place you love - whether it be next month or next year. Be a tough negotiator and do not listen to agents who may balk at your first low offer. Politely let them know you have other options available to you, and don't be afraid to walk away.

My point is, if you can find your dream home at a price you're willing to pay right now, why wait? It may take you a long time to get this combination to work out, however.

[Munchos]

the housing market is not like the stock market where you can't really predict the future. the housing market is illiquid and inefficient; look how far up prices have come relative to people's incomes and now look whats happening to the economy - prices are not sustainable

This is a pretty dumb statement to make. Look at the low interest rates and you will find the answer to why prices are where they are. People are buying above what they should be buying because of low interest rates. Once these interest rates go higher you will see a decline in housing costs. But in order to keep the economy chugging along, I highly doubt of any major increase but rather a decrease in interest rates.

Unlike the US, Canada has had homebuyers having to prove their debt ratio in order to receive the required loans from the CMHC. IMO, this will cause homeprices to stay relatively the same.

[purplesnow22]

What I would do is start looking now, but be a very picky buyer.

A lot of sellers, as someone mentioned above, haven't accepted the fact that it's a buyer's market, but soon they will be forced to. The negotiating power is with you if you are a patient buyer with lots of options.

Get to know your real estate market very well, and take your time - look at 25+ homes. Ask lots of questions (e.g. why is this house priced $20K higher than the one down the street when it has hardwood floors and granite countertops, and this one doesn't?)

Then put an offer in on a place you love - whether it be next month or next year. Be a tough negotiator and do not listen to agents who may balk at your first low offer. Politely let them know you have other options available to you, and don't be afraid to walk away.

My point is, if you can find your dream home at a price you're willing to pay right now, why wait? It may take you a long time to get this combination to work out, however.

I agree. I just bought a semi-detached house last month. I wouldn't buy a home if there are multiple offers with it; and I wouldn't buy a home that's more than what I need. I think if you find a home that suits your need, and you can afford it, then go for it.

[comet]

^ if you dont mind me asking what was the interest rate you got? and all you others guys aswell?

[urameatball]

We are currently looking at a townhouse/semi and talked extensively with our broker who is a close friend. He was telling us that the long term outlook for the housing market in Canada looks good and we shoulnd't be seeing the same thing that happened in the US. He says house prices are pretty stable right now and even if they do fluctuate it wont be very drastic at all (Nothing like houses selling for 50% off etc).
My friend works at as a receptionist at a real estate office.
She says they recite that spiel to anyone who asks. Not to say your friend is trying to trick you, it could very well be that he's been brainwashed into believing what he says just because everyone else he works with uses the same logic.

Yes, the Canadian market may hold up fairly well relative to the US (and probably most other countries), but when you're talking about a global downturn, there are a LOT of forces acting against out us. Our economy might be immune to some of these forces, but its not bullet proof.

As for how far the housing market will drop? 5%? 20%? nobody knows.

[MontyB]

High End Market Opinion-Toronto

We just re-fin variable rate mortgage 4.4%-Sept 08.

The peak was 07 and the prices have tumbled since October 1, 2008. The prices have adjusted-nobody is buying! This maybe the best time to buy as long as you have sold or are a first time buyer. Nobody can sell at the peak and buy at the bottom-the current market will allow any buyer the chance to buy WELL below the asking price and do not let recent sales determine the price you are prepared to offer-right now any offer is better than no offer-I wish I was in a postion to take advantage of the current market.

12 months from now you will wish you had bought now-October. Do not hesitate to offer 15-20% under asking-just make sure it is a clean offer, no conditions except inspection.

I do not consider conditional offers good offers, I have never accepted a conditional offer.

I know several high end properties, including my own, that have not had any showing since the bank failures a couple of weeks ago. Nobody is going to do a thing for a couple of months-now is a great time to buy! You just have to have the balls to move forward.

5 years from now the US economy will be in great shape and this period will be viewed as the time to buy.

[HeyAddy]

One of my recent blog write ups...

http://heyaddy.blogspot.com/2008/10/when-is-good-time-to-buy-property.html

[paleo]

I just bought a house in Burlington for $325k, and i'm hoping that prices don't crash much here... i've heard that they shouldn't dip much in this city. I guess location is key.

I have a variable rate of prime minus .65% which is presently 3.6% and I saw on the news that the Bank of Canada wants to lower the key rate another .5%.

I kind of regret not locking in for 5 years at 4.99% but i'm hoping that rates don't skyrocket. People "in the know" (whatever that means) are telling me that rates will dip now temporarily but will then shoot straight up. Aren't rates increased whenever there is a recession, let alone potential global depression?

I guess the banks don't have as much money to lend out, and therefore must increase rates?

[ayeung]

If you are looking for a house as primary residence (not for investment purpose) and find one you like and reasonably priced, then go for it for sure. People are guessing the price will come down for years now and it just keeps going up although the rate of increase has slowed down, but still increasing. Besides, the mortgage rate is still pretty affordable at the moment. I would agree with previous comment to start small but enough to meet your needs. Also, I think it's important to pick something you can comfortably afford (in terms of monthly payment), and not maximazing whatever the bank can lend you.

[Deal4US]

I just bought a house in Burlington for $325k, and i'm hoping that prices don't crash much here... i've heard that they shouldn't dip much in this city. I guess location is key.

I have a variable rate of prime minus .65% which is presently 3.6% and I saw on the news that the Bank of Canada wants to lower the key rate another .5%.

I kind of regret not locking in for 5 years at 4.99% but i'm hoping that rates don't skyrocket. People "in the know" (whatever that means) are telling me that rates will dip now temporarily but will then shoot straight up. Aren't rates increased whenever there is a recession, let alone potential global depression?

I guess the banks don't have as much money to lend out, and therefore must increase rates?


I'm at 3.4% Variable Open as of Today. and i don't see BoC can increase the interest rate next year. the Economy still need a lot of time to heal.

[HeyAddy]

The new mortgage rates being offered right now are Prime + 1%

Whoever has a discount rate right now is laughing because the mortgage prime rates have dropped but the banks can't afford to offer the discounts anymore.

As of the last interest rate announcement, any new mortgages being issued are prime + 1% 5.25%!!!

It doesn't matter if you wait or buy now... The monthly payment works out to be almost the same!

[Matrix_dot_ca]

It doesn't matter if you wait or buy now... The monthly payment works out to be almost the same!


And this came from a realtor? Which would you take high price+ low interest rate or low price + high interest rate?

Remember rates are fluctuating in the duration of the mortage period and you will come up way ahead if you go for lower price.

[branat]

My 2 cents, or 1.8 US cents, observations.

1) Stop the Canadian economy is strong illusion. We are fairly intergrated with the US economy. The Canadian dollar is taking a beating now because of the US slowdown.

2) House prices will fall. My sister-in-law and her fiance are looking for houses right now and the sellers are very accommodating. They see 10% or reduction in asking price. They have a budget and they want 20% or more off the asking price. :)

3) In my new division, I'm seeing houses been on the market for months, or just withdrawn from the market. Very little sold signs. The flippers will have to unload eventually when they realize that the carrying cost, will eat into their returns.

edited: as per Toronto Sun's today headline - Toronto average house price slid 15% and 8% in GTA.

[HeyAddy]

And this came from a realtor? Which would you take high price+ low interest rate or low price + high interest rate?

Remember rates are fluctuating in the duration of the mortage period and you will come up way ahead if you go for lower price.

Anyone that needs to buy will buy... If you can afford to wait, then wait...

I know from experience that people who wait, keep waiting! The ones that act are the ones that come out ahead...

Do you know why there are never enough buyers in the market place in a buyers' market??? Cuz everyone starts waiting!

[Matrix_dot_ca]

Do you know why there are never enough buyers in the market place in a buyers' market??? Cuz everyone starts waiting!

That's the nature of the consumers. If someone is eyeing for a 52" flat screen TV and they know FS is having a sale in next 2 weeks. would they buy now or wait when the sale is on?

[HeyAddy]

That's the nature of the consumers. If someone is eyeing for a 52" flat screen TV and they know FS is having a sale in next 2 weeks. would they buy now or wait when the sale is on?

We're debating prices on RFD... Of course, your logic wins!

A lot of buyers right now are waiting... just waiting... I've seen two deals over the weekend that were excellent for investors and got sold within days of reduction. My point is, there are good deals to be had! People who wait keep waiting and the ones that are watching for it to come up, scoop it up and go!

[Matrix_dot_ca]

Smart buyers i would say is buy if the numbers makes sense. Don't just wait, act when there is opportunity. Keep an eye out, there are some deals to be had.

[veryhuman]

The articles mentioned on this thread mostly talks about existing home sales. What do you guys think about pre construction projects (mid/high rise), with expected occupation date in 2010 - 2011, buy or wait?

[Larrylovetoo]

I think if you have the money you should start your searching now...realestate is a funny thing...you never know whats going to be on the market. If you dont really care where you live or you are looking for something pretty generic then I would wait. I think by waiting you will save in interest rate and purchase price.

On the otherhand, I live in an established neighbourhood so people dont really move out of the neighbourhood unless they retire, oldage, or job transfer...so you really dont know which house is going to be on the market. Location and house is important to me so if something comes on the market its worth jumping on because the next buyer might be in that house for the next 20years.

[branat]

The articles mentioned on this thread mostly talks about existing home sales. What do you guys think about pre construction projects (mid/high rise), with expected occupation date in 2010 - 2011, buy or wait?

I think it's slowing down as well. My builder is offering $4000, splitting between buyer and referral.

[HeyAddy]

The articles mentioned on this thread mostly talks about existing home sales. What do you guys think about pre construction projects (mid/high rise), with expected occupation date in 2010 - 2011, buy or wait?

2011 is not a short term commitment... I'd recommend going in and negotiate with them and see if you can strike a deal...

It's a buyers' market so the worst that the seller can say right now is, No!