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I know it was a joke but I hope youre not comparing Milton 10 years ago to Detroit today.

If you want to live in Oakville or Downtown Toronto, yes, rent makes sense -- although I don't know how you found a house to rent for $1600 in Oakville. We are talking about Milton and as I said earlier, the people spending 550k are not putting 5% down with 100k household income. CMHC won't approve it.

What size/age house are you renting for $1600? I know what I can find for $1600 in even Brampton and that's going to be a small older semi-detatched home, limited upgrades. Sometimes that's including a seperate tenant in the basement. I know 2 bedroom apartments in Brampton run around $1200.

So I'm going to assume you are talking about a townhouse/semi. Something you can buy for under $400k.

$400k, 10% down, 3.59% interest, 4% annual change (even though we are at 6-11% depending on area), 1% property tax.

Buying is better than renting after 4 years.

If you stay in your
home for 6 years,
buying is better.

It will cost you
$38,179 less
than renting,
an average savings of
$6,363 each year.

I wonder how much I'll save over 25 years

I notice the curve goes CRAZY nuts the longer you stay in the home. Something everyone here has been saying to you. We are not looking at homes as investment short term but rather long term place to live.

In the scenario above, by 15 years I'm saving 15k a year (and putting that into my RRSP) and by 30 years it's up to 30k a year I've saving over renting.

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$1600 by the lake in oakville? screams shithole. plus oakville people arent even allowed on this board! is it a town? semi? people lisitng homes and they arent selling???? buddy, you are out to lunch more than i ever thought, or the idea that you sold your home due to a crash that isnt here is eating at your inner being. sucks to be you! i guess its tru you start to believe your own b.s. if you repeat it enough.

See this is where we differ. Yes, interest rates are a historic low but they are also unpredictable. It's a gamble like anything. Will they go up? Likely. Will they hit 12% like in 1989, not likely. All I can do is use the data we have at this moment. Historically real estate has gone up on average 6% per year with inflation adjustment in the 2.9% range. Will it continue, who knows. But it's all we can base this hypothetical question on.



While you are very lucky. I'm not doubting you. I'm just saying that I don't think everyone is that lucky. I think most renters are well above that or renting much smaller homes. You also have to realize if the supply of rental units dries up, there will be more competition and it might take more than a good credit rating and a good tenant when someone is offering several hundred dollars more per month than you.



This is one statement we both agree on totally 100%. I do think the madness is over - it has to be - interest rates are as low as they will go. I would *NOT* buy a property for short term at this point. The time to do that was 3-5 years ago. If I was looking to invest, I would definitely *NOT* buy. If I was looking to buy and up-size/move in a few years, *NO*. I would only buy if you are looking at 7-10 years minimum residence. This is not because I fear a crash... this is because I totally expect a major cooling in real-estate for the next few years. Likely very minimal increases if any. I agree this is needed -- unfortunately when I say this, everyone comes back that is impossible to have a cooling off and the only options are major growth or a massive crash. I disagree.



I look at the average rate of increase in the GTA over the past 10 years. We can only go on history -- in fact it's historic states that you keep claiming explain why rent/house and income/mortgage ratios tell it all. You are looking at what happened in the past historically and applying it to what might happen in the future.

The one big thing you didn't account for in the calculation is that it's totally based on renting/living in the very same area. Your calculation of rent to own makes a great point when you key in prime downtown Toronto location figures (house prices, rent, etc.) but fall very quickly when you are willing to do a commute.

When you take away the 1800$ rent vs. 550k house (Toronto) and key in something more affordable and modest like $1600 rent vs. 375k townhouse/semi/detached (Milton, Oshawa, Whitby, Newmarket, Guelph etc.) the numbers quickly change -- and you would actually do much better owning than renting (if you are comparing rent in Toronto to own in Oshawa). You would make more money and have a much higher valued portfolio.

Now this doesn't account for commute costs etc. but you get my idea I think.

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Ol Skool, you have been saying for the past one year the same thing, and i remember you say i am not gonna post anything till May2011 when the prices will actually start to come down according to you.

Oh, I am sorry, was it May 2013. comon man, you can keep posting every thing you can, but the fact is the prices have gone up, even though the volume of sales has gone down. For an family it is the value of their house that matters when they plan to sell, but not how long it takes to sell or how many houses are selling,

From the date you have started this thread, the value of the houses has actually gone up by more than 10 percent, and thats a fact.

none of these conomists have a crystal ball, just as you cant predict anything, even though your trying for whatever reason. ol skools predictions havent rung true. what will he say when this year proves same as last. he will re word his original predictions. just like pastor from the rapture. far from personal dabills. i just call as i see it. not through a magic eight ball.

i think a slight correction has no consequences. a major one would not be good for the economy at all. or you or me, no matter if you rent or own, you dont come out looking like a peach after landing in a barrel of rotten apples. things are not perfect, but far from a catastrophe.

Again as this was already pointed out to you, last year's totals were artificially inflated as many people bought quickly to avoid the impending HST. That is why there was such a large spike (and of course the year long low interest rates made the spike possible).

There is far too much demand in the GTA for any major decrease, regardless of perceived bubbles

I think we need to remove 2010 from the calculations as everyone can agree it was an unprecidented and totally un-natural thing caused by a perfect storm of changes and threats of rising rates from rock bottom.

I would, however, be interested to see the sales numbers of 2011 (first half) against more realistic years... say 2004-2007. Do they look similar or are they WAY down and low against a more normal real estate year. How about against the late 90s.

Second, interest rates aren't going anywhere anytime soon. There has been talk in the non-house related financial posts that central banks are looking to "throw away the playbook" and that rates may never go back to historic norms. "we are living in a new era and a new global economy and the old rules no longer apply".

Some people estimate we might be lucky to see the high 2 or low 3 percentage point range in the next 5 years.

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I hear ya -- and I agree.. but that seems to be the problem. We do have growth and we do have recovery -- we have lots of resources the world wants and the Canadian economy is growing strongly -- unfortunately, the one thing that is sure to kill that growth is to raise interest rates and thus raise the dollars value. We are in a bind because with the US rates low and the US dollar low, we can't afford any raises at this point.

They have a mighty big catch-22 situation and I'm not sure what they are going to do next. In the meantime, we have housing increasing due to the low interest rates (people don't take on a house, they take on a mortgage payment). The first step to manage housing without raising rates was to eliminate the 35-40 year amortizations and add some new rules around investment. That's not going to be enough to save the day if rates continue this low. Maybe we will see 30 year removed next and more changes to CMHC.. who knows.

But I think the fear that rising rates are going to cause the bubble to burst isn't as much of a reality today as it was 2 years ago. Especially with most people locked in for 5 -- even at 2% wage increases, that puts you with 10% more income by the time the mortgage comes up for renewal and even then, rates likely still won't be at historic levels -- allowing another 5 year lock in at a decent rate.

The big issue is going to be how inflation affects all of this -- because if they don't raise the rates (and kill growth), they will have inflation to deal with. If we have high inflation with incomes that match (as seems to be an issue as the government is now reporting rising labor costs as an area for concern) combined with a slow down in real estate, that bubble may never materialize.

Australia went against the grain and raised rates and look what happened over there. Canada likely will not follow suit -- looks like the interest rate is now used to control currency value instead of inflation.

http://www.theglobeandmail.com/report-o ... le2058904/

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I totally agree. The problem is going to be instituting these changes without crashing the market. I totally think there should be annual caps determined and if you require insurance, the amount you borrow should be limited. If they could stage this in starting high and moving down slowly, it would be great for everyone.

As for the other points, I agree -- we are in for some rocky roads -- but the reality is, in the new global economy we aren't manufacturing things and selling them back to ourselves anymore. We are part of a global economy and what used to work no longer will. The scary part is that the United States is the largest consumer of crap the rest of the world produces. If they stop buying, we are all in deep sh*t.

The least of our concerns will be real estate prices.

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QE2 can hardly be called stimulus. The money supply increased by basically nothing, and all of that 'printed money' has pooled in the banks' reserves. Lending has actually gone down in the US, so M2 has barely changed. Commodities have soared because people don't want to invest in the bullshit treasuries which yield next to nothing, so they look for riskier investments (Stock market,commodities,etc). The difference between the US and Japan is that american investors aren't afraid of these riskier investments like they still are in Japan. The stock market terrifies the average Japanese. Since american fund managers have got into this need to redeem themselves (to the point where "long-term" now means 6 weeks), they are all still buying into the emerging market bullshit to make a quick buck. This is STILL the driving force behind the commodities spike.

I'm going to put my balls on the table and make a prediction that by Christmas, the headlines will be about the massive Chinese implosion, and corresponding widespread deflation. And if you think the Americans are having a hard time jump-starting employment now, wait until the Chinese are happy making 20 cents a day again. QE-driven inflation has already happened and is on its way out. It was about commodity spikes, not M2 supply. The american dollar is still the flight to safety, and the currency used in 85% of the worlds transactions. Once the world realizes that China looks a whole lot like the US circa 1929, you'll be begging for inflation.

Oh oh, looks like renters are next to get a wake up call...

http://www.msnbc.msn.com/id/43315486/

Well, 20 years ago we didn't have boats, BMWs, and $100,000 university educations...

Of course, 20 years ago we didn't have banks pulling in half a billion each quarter in profits.

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If you aren't going to pay back the education easily within 3 years, you shouldn't be taking it. Sad but true. I have many friends working part time jobs at Wal-Mart orHMV with degrees in Philosophy or Art or Early Childhood Education.

Same goes for the MBAs. Best to bank the money now, get in an entry level sales position at a large company then do the executive MBA once you get up a few levels and need it to progress to the next phase.

Many MBAs at my company end up in call centre positions. Same as the "summer students"

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