House Price

[TAPTATANU]

Hi,

Can anybody give me a idea whether in coming days the house prices will go up or down.Some people are telling that house price will go down in Toronto GTA due to stress test.

 

[scylla]

Like you've heard, no one knows for sure. Some people think prices will stay the same or keep going up. And others think we are due for a price correction. Impossible to say for sure. But lots of opinions out there.

As of now, prices still seem to be going up in my neighbourhood... This house just sold for almost a million around the corner from me: http://www.blogto.com/city/2017/01/sold-toronto-bungalow-fetches-double-asking-price/

 

[blueshirt]

quick question guys...

I see buying house these days is very expensive. Even if one can afford to buy house on mortgage, the equity on these house in 5 - 7 years wont be much may be less than 50K to 100K
Is it worth if someone already has investment property and instead of buying 2nd investment property he just pays off his first investment property and use the rental income as earning and not into mortgage.
Just a thought....I may be wrong so please give your advice

 

[steaky]

quick question guys...

I see buying house these days is very expensive. Even if one can afford to buy house on mortgage, the appraisal on these house in 5 - 7 years wont be much may be less than 50K to 100K
Is it worth if someone already has investment property and instead of buying 2nd investment property he just pays off his first investment property and use the rental income as earning and not into mortgage.
Just a thought....I may be wrong so please give your advice

I thought the appraisal is paid by the mortgage bank and appraisal itself wouldn't cost 50K to 100K. Probably less than a thousand. In this market, the more propery you own, the better.

 

[blueshirt]

sorry i meant to say equity built on house not appraisal

 

[steaky]

sorry i meant to say equity built on house not appraisal

Again depends on the market conditions. You seems not optimistic, so better not invest any further....

 

[ALRIVAS]

It all depends on the area where you plan to buy real estate.
If you go to a rural area the prices increase very little compare to the gta where I work.
In my opinion all investments in real estate are good as I said I work in the gta.
Just read below.
If you have any question go to alrivas .com I have all the info you need.

http://www.trebhome.com/market_news/market_watch/historic_stats/pdf/Historic_1612.pdf
http://www.trebhome.com/market_news/market_watch/2016/mw1612.pdf

 

[anujoshi]

It certainly depends on a variety of factors. No one can say for sure.

The stress test is in place so that buyers are tested at a higher interest rate (last I checked it was 4.65%) for the banks to make sure that they can pay their mortgage payments at that price if the interest rates go up. This is one way to ensure that all the borrowers (the home buyers looking for a mortgage) are strong and have the means/funds to pay. It's a way for banks to mitigate their risk and decrease foreclosures. When people who can truly and comfortably afford the debt ratio with their income, they are more likely NOT to default on their payments, ensuring the mortgage market stays steady and on-going. It's a step to stabilize the housing market.

I work in Toronto and surrounding cities (like Brampton, Mississauga, Caledon, York Region, etc.) and the real estate market here is quite active. Due to the still low inventory of properties on the market, buyers are competing over the same limited number of properties. Classic example of low supply and high demand which drives prices up.

Let me know if you have any other real estate questions!

 

[Pda]

Hi Anujoshi,

As a realtor can you give me suggestion
We have an investment property under mortgage. Is it wise to put cash into this property and make it mortgage free or to buy another investment property. Current housing market prices are so inflated that if I put money in another investment property I may not gain much as currently houses are sold 10K - 120K above asking price.
what you suggest from below 3 options for long term gain

1. pay off your current investment property and be mortgage free
2. buy another property at this peak market time hoping prices will never fall and will always go up
3. only invest in new construction as you can still make money in holding the property before closing or construction complete then sell it of

It certainly depends on a variety of factors. No one can say for sure.

The stress test is in place so that buyers are tested at a higher interest rate (last I checked it was 4.65%) for the banks to make sure that they can pay their mortgage payments at that price if the interest rates go up. This is one way to ensure that all the borrowers (the home buyers looking for a mortgage) are strong and have the means/funds to pay. It's a way for banks to mitigate their risk and decrease foreclosures. When people who can truly and comfortably afford the debt ratio with their income, they are more likely NOT to default on their payments, ensuring the mortgage market stays steady and on-going. It's a step to stabilize the housing market.

I work in Toronto and surrounding cities (like Brampton, Mississauga, Caledon, York Region, etc.) and the real estate market here is quite active. Due to the still low inventory of properties on the market, buyers are competing over the same limited number of properties. Classic example of low supply and high demand which drives prices up.

Let me know if you have any other real estate questions!

 

[arunsgirl]

Ah...the "always up" Toronto housing market... 8)

Housing has some economic fundamentals tied to it. Let me name a few:

1. Housing prices historically increase 5%
2. Housing prices are tied to salary increases
3. Housing prices are tied to the economy rising, falling or stagnating

Ok, now based on these 3 facts YOU CAN DECIDE if the market is going up or down in the future:

1. Housing prices are increasing 15, 20%?!!!! Where have we seen that before? Ah, in every housing bubble in history.
2. Salaries in Canada have barely increased. Not 5%, especially not 15 or 20%. So are houing price increases justified then?
3. Canadian economy has been down and stagnant, with slight rise but under 2%. Based on that, are housing prices rising along with the economy or waaaaay faster like in any bubble situation?

By the way, I am a realtor too and realtors are tied to ethics when consulting clients. Ethics means disclosing ALL THE FACTS to the buyer and helping the buyer make an INFORMED decision. It is not ethical to try and fill up your pockets with a commission, while failing to mention all the facts to the buyers or sellers.

Now CMHC (Canada Mortgage Corporation) is claiming Toronto is in a bubble, BMO just announced it 2 days ago and only people looking to earn money from real estate speculation are still claiming the market is healthy. So, to end this long debate: can you make money in real estate in Toronto? Yes. Do homes sell at ridiculous prices? Yes. Is this investment? No, it's speculation. The difference being the speculator HOPES prices will keep rising, because a greater fool will pay more, while an investor crunches numbers and makes an informed decision based on them. In Toronto informed investment decisions have been out of the window for a few years now.

 

[blueshirt]

Thanks very informative. Can you also help reply my question as what option works well.


[quote


author=arunsgirllink=topic=470863.msg5783782#msg5783782 date=1487352518]
Ah...the "always up" Toronto housing market... 8)

Housing has some economic fundamentals tied to it. Let me name a few:

1. Housing prices historically increase 5%
2. Housing prices are tied to salary increases
3. Housing prices are tied to the economy rising, falling or stagnating

Ok, now based on these 3 facts YOU CAN DECIDE if the market is going up or down in the future:

1. Housing prices are increasing 15, 20%?!!!! Where have we seen that before? Ah, in every housing bubble in history.
2. Salaries in Canada have barely increased. Not 5%, especially not 15 or 20%. So are houing price increases justified then?
3. Canadian economy has been down and stagnant, with slight rise but under 2%. Based on that, are housing prices rising along with the economy or waaaaay faster like in any bubble situation?

By the way, I am a realtor too and realtors are tied to ethics when consulting clients. Ethics means disclosing ALL THE FACTS to the buyer and helping the buyer make an INFORMED decision. It is not ethical to try and fill up your pockets with a commission, while failing to mention all the facts to the buyers or sellers.

Now CMHC (Canada Mortgage Corporation) is claiming Toronto is in a bubble, BMO just announced it 2 days ago and only people looking to earn money from real estate speculation are still claiming the market is healthy. So, to end this long debate: can you make money in real estate in Toronto? Yes. Do homes sell at ridiculous prices? Yes. Is this investment? No, it's speculation. The difference being the speculator HOPES prices will keep rising, because a greater fool will pay more, while an investor crunches numbers and makes an informed decision based on them. In Toronto informed investment decisions have been out of the window for a few years now.


[/quote]

 

[arunsgirl]

Hi Blueshirt,

Regarding your question...

Let me first state this: a home you live in is not an investment. Why I say this? Because if you sell it you will have no place to live. Ok, there is more to it, to fully understand this fact. For example: If you have an expensive house and want to sell to buy something cheaper, then your home is considered an investment because you can earn money on it. Remember: an investment is by definition "the action or process of investing money for profit or material result". So, there is a difference in what is a purpose for a specific real estate holding.

If you live in it: it's a home. Make sure it's safe and you like it, and can afford it.

If it's an investment the only thing that matters is the money that the property can earn you.



Now, to your question...

Do I understand this correctly: You own your home and a 2nd property (the investment property). Is there a mortgage on both or just 1 of them?

 

[blueshirt]

I live with parents and that house is mortgage free. Our investment property is on mortgage. Do i pay off this property soon or just live with mortgage. Any future cash i get from saving do i buy another house or just pay my mortgage and be mortgage free less than 25 years

Hi Blueshirt,

Regarding your question...

Let me first state this: a home you live in is not an investment. Why I say this? Because if you sell it you will have no place to live. Ok, there is more to it, to fully understand this fact. For example: If you have an expensive house and want to sell to buy something cheaper, then your home is considered an investment because you can earn money on it. Remember: an investment is by definition "the action or process of investing money for profit or material result". So, there is a difference in what is a purpose for a specific real estate holding.

If you live in it: it's a home. Make sure it's safe and you like it, and can afford it.

If it's an investment the only thing that matters is the money that the property can earn you.



Now, to your question...

Do I understand this correctly: You own your home and a 2nd property (the investment property). Is there a mortgage on both or just 1 of them?

 

[arunsgirl]

Blueshirt, based on the information you gave me, this is what I have to say:

You parents house is payed off, so no matter what happens to the housing market you guys have somewhere to live. That's great.

Regarding the investment property:

If the housing market keeps going up, you're probably better off buying another property. The property has to generate positive cash flow taking all costs into consideration (don't just look at CAP rate).

If the housing market goes down your decisions depend on the amount of equity in your current investment property. Let's say you have 10% equity and the market goes down 20%, then you owe more to the bank than the property is worth. If you have substantial equity it might be a good idea to sell and cash in the profit, wait for the market to go down and then buy more properties or invest in stock, bonds...

Paying off your mortgage completely makes sense only if mortgage rates are going to increase drastically or if you're loosing sleep over worries that you have a big debt over your head. If you can live with the idea of debt mortgage amount and if you can comfortably afford your mortgage payments you should be fine keeping it.

There is many ways to deal with this. The most important thing is to have a plan what you want to achieve and then react accordingly. If you want more details I'd need numbers. If you're comfortable sharing them, do so over private message. For any other public questions, go ahead.

Knowledge is power.

 

[blueshirt]

I am happy to get a good advice and what you said I will evaluate whats best for me. one question did you hear about icona condos. the way they are advertising if we don't invest in it we may loose a fortune. I personally don't like investing in condo as they don't appreciate and also high condo maintenance fees attached to it which keeps increasing. SO whats your take on icona condos?

Blueshirt, based on the information you gave me, this is what I have to say:

You parents house is payed off, so no matter what happens to the housing market you guys have somewhere to live. That's great.

Regarding the investment property:

If the housing market keeps going up, you're probably better off buying another property. The property has to generate positive cash flow taking all costs into consideration (don't just look at CAP rate).

If the housing market goes down your decisions depend on the amount of equity in your current investment property. Let's say you have 10% equity and the market goes down 20%, then you owe more to the bank than the property is worth. If you have substantial equity it might be a good idea to sell and cash in the profit, wait for the market to go down and then buy more properties or invest in stock, bonds...

Paying off your mortgage completely makes sense only if mortgage rates are going to increase drastically or if you're loosing sleep over worries that you have a big debt over your head. If you can live with the idea of debt mortgage amount and if you can comfortably afford your mortgage payments you should be fine keeping it.

There is many ways to deal with this. The most important thing is to have a plan what you want to achieve and then react accordingly. If you want more details I'd need numbers. If you're comfortable sharing them, do so over private message. For any other public questions, go ahead.

Knowledge is power.