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PostPosted: Fri Aug 27, 2010 2:22 pm 
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This year is the telling year, it will drop just a matter of time. i can see 10 % happening. Recession hasent hit alot of people yet, so it dosnet hurt as much just yet. i think the economy is in for a long haul back to recovery.


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PostPosted: Fri Aug 27, 2010 3:58 pm 
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I'm really doubting we'll ever see something like a 10% decline in the GTA. Housing prices may seem high, but, in Toronto there never is a shortage of people looking for a place to live. At most, if the economy still stalls, is that you'll see housing prices maintain a period of low growth for a number of years.

All IMHO of course. A house is like any investment, that it carries no guarantees.


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PostPosted: Fri Aug 27, 2010 4:31 pm 
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While the average Canadian income is $44,000, the average income in Milton is substantially higher. The Halton federal riding is in the top 5 ridings country wide for average income if I recall.

That being said, I still think it is crazy the way house prices have gone, but perhaps the price correction is starting with Mattamy's release.


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PostPosted: Fri Aug 27, 2010 4:36 pm 
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Ol Skool wrote:
I've already mentioned this but it bears repeating...

Canadians avg. income is $44,000. Americans is $47,000.

Canadian households currently have higher debt levels than American households.

Currently the average home in Canada is twice the cost of a home in the U.S. Yes. Twice. $340,000 vs $170,000. And the U.S. peaked at only 230,000 before their decline.

So we make less money and have more debt and less savings. Yet our homes are currently worth twice as much. Does that make sense?

But I tell people that and they still don't see that we are in a housing bubble that will require a major correction. Not just 10%. People believe what they want to believe. That's what makes it a bubble. It's all emotional but no cognitive reasoning, even when confronted by the facts.


I find it hard to believe that the avg is only $44000. I was making $35000 as a co-op student, and that was back in 2001. Maybe the avg income in Canada is $44000, but I'm positive the avg GTA income is higher than that...

As for the housing, I've been to houses in the states. A friend of mine purchased an 1800 sq ft home in Ohio for $185000. The construction is night and day. All siding, no brick except maybe the front of the house. Very basic on the inside of the home, with 1 living room, 1 dining room and a kitchen. No upgrades what so ever. Lanolem kitchen floor and carpet everywhere. 1 full bathroom upstairs. The lot is huge, but other than that I can see the differences with the construction.

I do agree there will be a correction, but I don't think the housing price will come down that much. Doesn't matter where you go in the GTA, there is a demand for housing everywhere...


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PostPosted: Fri Aug 27, 2010 5:09 pm 
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Correct... as long as there is demand, and as long as the lending rates remain low, we're not going to see any crazy drops, especially in a market like Milton.

Higher end homes in more expensive areas might see a little bit of a correction, but I don't see any sort of a crash in Milton anytime soon.

Of course, nobodys know what is going to happen and when - the best we can do is understand the possible downsides and plan accordingly. Thsoe that overextend themselves and their credit are at most risk. everybody else will be fine IMHO.


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PostPosted: Fri Aug 27, 2010 7:27 pm 
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Ol Skool -- I think you hit it exactly.


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PostPosted: Fri Aug 27, 2010 8:09 pm 
Is there really that many people and banks that have stretched themselves so thin that they cant absorb 2-3% interest rate hikes?


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PostPosted: Fri Aug 27, 2010 8:24 pm 
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Actually, I said "it is crazy the way house prices have gone, but perhaps the price correction is starting with Mattamy's release"

My original point was that you are use false "evidence" to back up your point - average Canadian income matters not to the Milton housing market - Average family income in Milton is $94,484 according to the last census.

Also average Us price versus average Canadian price also means nothing - the background of the 2 countries is vastly different - Canada has a very large middle class, with a very small lower class. The US has a much bigger lower class and a much smaller middle class - combine that with a much larger supply of homes, and of course the average price is going to be lower - whereas in Milton, Supply cannot meet demand currently.

Does that mean that everyone can afford overpriced homes? Absolutely not, and there are people over extending themselves - but the foreclosure rate in Canada is 10 times less than the US rate.

So while you and I actually agree that rates must go up and the price of homes must correct, the basis for your argument is completely false.

Ol Skool wrote:
So you are saying that the correction that is going to take place in Canada as a whole, will not affect Milton because we make considerably more than the average Canadian? That is irrelavent and prices in resale are already coming down. It just haven't shown up in the data official data yet.



rickp wrote:
While the average Canadian income is $44,000, the average income in Milton is substantially higher. The Halton federal riding is in the top 5 ridings country wide for average income if I recall.

That being said, I still think it is crazy the way house prices have gone, but perhaps the price correction is starting with Mattamy's release.


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PostPosted: Fri Aug 27, 2010 10:04 pm 
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Dabills wrote:
I gotta agree with ol skool, as a family of 4 with an annual income of 150,000 i have no idea how some of these people are buying these houses. no chance the majority have 20% down.

its very strange to me.


I can show you how they can have 20% with less your income. Let's say you bought a 2000sq ft $300k detached 36 footer in 2005. If you put that on the market, you will get about $440k today, let us assume the market does CRASH badly by 10% in 18 months., $406k (this is extreme)

You buy a new 480k 3200sq ft spirit home today. You already gained $106k (or even 140k if you sold today). You most likely have been paying your mortgage and had some down payment on your initial $300k home, you should have at least another $40k in that house from mortgage and initial down.

You are already playing with $140 -$180k equity and hopefully have some additional savings. I can tell you that some people said in 2005 the prices were gonna fall and did not buy then.

Maybe I have been lucky, but I found when I stretched myself, another opportunity opens up, maybe I just realize I need to step my game whenever I am stretched.

No I am not on the lineup.


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PostPosted: Fri Aug 27, 2010 10:18 pm 
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@ 4% fixed for 5 yrs that is $1500 a month... 25 yrs ... I personally will be publicly flogged if I pay 4%. Lots of ways to play the game.... for a family of 4 you will be paying about that much for a decent rental.

Housing is expensive in Canada regardless.


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PostPosted: Fri Aug 27, 2010 10:31 pm 
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Yup, if ure still paying students loan, have a car to pay off knock those off before you play the upgrade game for sure. I still don't get how people carry a balance on 19% CC...different strokes I guess.. A lot of people just need to educate themselves and also get help and sit down with a good financial planner(most just want to sell you something) and you will be surprised all the options you have.


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PostPosted: Sat Aug 28, 2010 6:44 am 
I dont get it either, Ive never paid interest on my credit cards, but take that 19%and that some people were paying on their mortgage in the 80's. If it started getting to that point again I would downsize or rent.


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PostPosted: Sat Aug 28, 2010 7:00 am 
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Ol Skool wrote:
Fred,

You preface your entire argument by saying as long as interest rates stay low. Well, they are at historical lows and can't stay low forever. The BOC has raised rates a half percent. How about you come back to me when they raise it another 1.5% and then we'll see how much demand there is.


Uh, no need for the bible, or the aggressive reply, since I agree.

I said "Correct... as long as there is demand, and as long as the lending rates remain low, we're not going to see any crazy drops, especially in a market like Milton. "

When interest rates rise, there will definitely be consequences - the question is, at what level.
Keep in mind though, that interest rate are also historically low at 6% too.

I don't have a crystal ball and I don't believe everything is going to keep shooting up, but it's just as silly to believe there's going to be a huge crash anytime soon. Nobody know, and it would be silly so suggest that we do know exactly what is going to happen.

I also suggested that people plan accordingly, and don't overextend themselves... and I never EVER suggest to a client they should buy a bigger house promising higher returns. (Check all my posts blasting the mortgage reps for pushing 35-40yr products with 0-5% down and you'll see my position) No sense arguing with me since we somewhat agree here, just on a slightly different level.


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PostPosted: Sat Aug 28, 2010 7:08 am 
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Also, people are blasting facts back and forth, but nobody is showing simple math. I won't even use a mortgage calculator, since simple math will explain the argument...

A 300k mortgage at 3% interest is $9,000 per year.

an increase of "only 2-3%" adds another $6-9000/yr to your payments.
that's $500-750 per month.
Will that affect everybody? no.
Will that affect some people, that have already stretched to buy the biggest house they can afford and that have credit card balances , car loans, etc? yes, quite possibly.

With low low rates, people should be at least planning for small to moderate increases, but NOT for the end of the world.


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PostPosted: Sat Aug 28, 2010 7:45 am 
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Ol Skool wrote:
My post wasn't meant to be aggresive. Not sure why you took it that way.


My bad - I just read it as preachy and aggressive, sorry for misinterpreting, my fault there.
And YES, healthy debate and discussion might actually helps some people out there take this into consideration before maxing out their credit. I am 100% FOR debate on this topic! :)

I guess the only part we disagree on is the 'crash' part, since it's tough to define what a crash is. 10%? 30%?

What I do believe is that Milton will not be affected AS MUCH as other areas - why? since the growth in values in Milton over the past 7-8 years was actually somewhat due to the growth and modernization in Milton, and it's "catching up" to the other GTA suburbs. It was not all artificial growth based on pure speculation - it IS actually warranted (somewhat) based on what it has to offer.
Should there be homes selling for $750k on 88' deep lots? no. But that's the extreme minority here. If you've got only 5% down on a 690k HVE Sunflower home, I agree there's trouble ahead, but again, you've got to believe (hope?) that's the minority.


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