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PostPosted: Tue Aug 31, 2010 10:49 am 
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Joined: Wed May 19, 2010 11:06 pm
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Location: Vista Phase 4
I BELEIVE KIDDAN MEANT HOUSEHOLD INCOME, CORRECT? QUITE REASONABLE.

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PostPosted: Tue Aug 31, 2010 10:50 am 
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Based on Stats Can and the 2006 Census, the median income for Milton was $87, 739.

http://www.milton.ca/ecodev/ED_Community_Profile.pdf


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 Post subject: INCOME & DEBT
PostPosted: Tue Aug 31, 2010 11:14 am 
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Location: Vista Phase 4
DABILLS, FIRSTLY, I COMPLETELY AGREE WITH YOU AND EVERYONE ELSE: IF A FAMILY'S HOUSEHOLD INCOME ISN'T $150K+, HOW THE HECK ARE THEY PAYING DA BILLS (NO PUN INTENDED, OF COURSE)?

IT'S ONLY A MATTER OF TIME (EVEN IF RATES DON'T INCREASE) BEFORE ONE'S PAYCHECK DOESN'T CUT IT GIVEN THE LONG TERM INFLATION TRENDS. YOU KNOW WHAT I'M TALKING ABOUT... UTILITIES, DAYCARE, KIDS ACTIVITIES, TUTORS, SHOES, FOOD, INSURANCE, GAS, REPAIRS, "VACATION", DUES, CHARITABLE DONATIONS, CAR PAYMENTS..... WE ALL HAVE OUR LISTS. AT THE END OF THE DAY, THE MORTGAGE ENDS UP BEING AN AFTER THOUGHT AFTER ALL THE OTHER EXPENSES.

WHAT DO YOU THINK ABOUT THIS COMMENT FOLKS: IF PROPERTY VALUES DECLINE, THAT "FREEDOM THROUGH REFIANCE" OPTION THAT TOO MANY COUNT ON WILL TOO DISAPPEAR. THAT SECURED LINE OF CREDIT WILL BE MAXED. THAT MORTGAGE REFINANCE THAT TOO MANY COUNT ON WILL BE DECLINED AS THE "ANNUAL EQUITY INCREASE" WILL DISAPPEAR AND THEY WON'T QUALIFY FOR AN INCREASE. THAT MAY BE THE PINCH THAT REALLY HURTS?

THOUGHTS?

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PostPosted: Tue Aug 31, 2010 11:25 am 
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Dabills wrote:
kiddan, average incombe 150-200 K? keep dreaming on that one. maybe if they add in their 70,000 line of credit as personal income.


Yes, I am dreaming to be in that category one day but for now I am wondering if I can qualify for low income housing in Milton based on my household income :)...


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PostPosted: Tue Aug 31, 2010 11:27 am 
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Location: Vista Phase 4
Kiddan,
What about that Tothburg under your name?
That pretty low income? :)

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PostPosted: Tue Aug 31, 2010 11:31 am 
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^ Also, check out my join date. House prices weren't crazy back then...even though this wasn't our first home in Milton


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PostPosted: Sat Sep 04, 2010 5:49 pm 
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I have friends currently trying to sell their village style home in HV. Their house has been on the market for over 4 months now without a single reasonable offer. Price has already been reduced by over $25k. They purchased the home about 3+ years ago and have been moved in just over 2 years.

The HST/Interest rates TOTALLY affected the market (going against the above statement). I'm one of those people. There is a reason the market was so hot the first half of 2010. Everyone was getting in before conditions changed. I'm one of them.

People rushed to buy (those that might have waited until the end of 2010) to save HST on closing costs, real estate, etc. To ensure a low interest rate (yes, rates didn't go up and aren't going to go up in the near future, but 6 months ago the forecasts in the news were 100% RATES ARE GOING UP). On top of that, banks were still offering 35 year amortizations which,again, the media was reporting would soon be eliminated and switched to a maximum of 30 year. It was the ideal time to secure a VERY low mortgage rate, 35 year amortization, and not pay HST on all the 'related housing costs'.

Basically anyone in the market to move.. moved. Anyone looking to buy.. bought. The market will be stale until the Spring now. If the economy is doing better and jobs are still secure, it'll be a buying frenzy once again.

The housing market only matters when you want to sell. If you are happy in your home and not looking to move, relax! You're not going to lose your shirt.. your house WILL increase in value (at what rate is anyones guess) and it will still be a sound investment.

Now if you purchased in the beaches and spent $900k on a 80 year old home in dire need of repairs on a $125k household income, you're going to be in some trouble ;)


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PostPosted: Sat Sep 04, 2010 6:49 pm 
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Steve & Kelly wrote:
Dabills wrote:
why will the houses increase in value DTC? the demand obviously isnt there anymore as you stated with your friends village style home. will it go up because you think real estate always go up?


I think in the future you are going to see demand patterns shift. What you will see more of a demand for are smaller homes and "attached" homes like townhouses and condos. As the costs of energy and looking after a home continue to rise (along with interest rates, taxes on home purchases and the cost of developing land) people (for the most part) will want smaller homes. The population in the GTA is only going to go up and there will be a demand for housing, but it will be a different type of housng than what you see now. The impact of the HST will also drive people to buy houses under the price point where the impact of the HST is felt (in Milton that will be townhouses and condos for the most part). You will still see detached housing, but in the future it will not be the dominant house form that it typically has been in the history of the suburbs.


I agree with everything you said but the HST part, with the current prices if I get a large 3200sq ft spirit home for $490k. HST impact on that home is about $9k...not so much.
At a point people will get desensitize to the actual pre-HST price and $9k will not prevent you from purchasing a home at that price point....ask people that bought 2 days after and mattamy pushed the price up by $10-20k.


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PostPosted: Sun Sep 05, 2010 9:48 am 
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Dabills wrote:
why will the houses increase in value DTC? the demand obviously isnt there anymore as you stated with your friends village style home. will it go up because you think real estate always go up?


As I stated, my friends can't sell because everyone who was in the market already jumped in Q1, Q2 2010. They listed late when all the prospective buyers already bought.

Canada immigrates more people than any other country. Immigration has been feeding the real estate market for years. Just look at the influence of China on British Columbia.

Immigrants come to Canada and buy homes. Especially in and around major cities. Immigrants can be wealthy or not. It doesn't matter. It's North American's who want to have a house for their immediate family only. Immigrants from other areas of the world have no problem living 2-3-4 families per house and all contributing to the mortgage/bills. For this reason, as long as Canada keeps immigrating people, they will want to buy houses.

Next..

Dabills wrote:
why will the houses increase in value DTC?


The economy is based on house prices going up. Right or wrong, this is the fact. Majority of people in North America have no savings other than their house equity. If house prices don't go up or at least remain, the economy will collapse. This is the primary reason for the meltdown of the world economy with the United States housing crisis. Every sector of the economy tanked because people in the states all of a sudden had less money than they did weeks before. The world won't let this happen again. You see, they pulled out all the stops to prevent a massive depression. Those stops are all gone now. Money.. interest rates... it's been done. Now they will regulate the hell out of the industry and use other measures to prevent it from happening again.

If you were around in the late 60s, my business teacher used to talk about how my parents generation made so much money on their homes -- not because of real estate values per say -- but because of high inflation rates. They all bought homes with big mortgages (probably around 30k at the time lol) and the inflation rate was so high that as each year passed, the value of a dollar was devalued and the money they owed on the house became less and less and less of their income.

We are poised for that to happen now. They usually raise interest rates to quash inflation. Inflation is on the up. They can't increase interest rates because it will kill the economy and investment. Precarious position they are in.

If inflation goes up, the governments are devaluing their debt (all that money they spent on the recovery) and anyone with long term debt such as mortgages will be devalued as well -- provided that our employers give us raises to match the inflation rate.


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PostPosted: Sun Sep 05, 2010 11:30 am 
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Steve & Kelly wrote:
I think in the future you are going to see demand patterns shift. What you will see more of a demand for are smaller homes and "attached" homes like townhouses and condos. As the costs of energy and looking after a home continue to rise (along with interest rates, taxes on home purchases and the cost of developing land) people (for the most part) will want smaller homes. The population in the GTA is only going to go up and there will be a demand for housing, but it will be a different type of housng than what you see now. The impact of the HST will also drive people to buy houses under the price point where the impact of the HST is felt (in Milton that will be townhouses and condos for the most part). You will still see detached housing, but in the future it will not be the dominant house form that it typically has been in the history of the suburbs.


I disagree. I think you will always have those who require more space and those willing to live with less space. I personally would never live in a townhouse or semi because I'm a loud person! I'm into music and home theatre and sometimes find myself watching movies cranked to the max, 7.1 at 2AM. I also don't like fighting with my neighbor over parking in the shared driveway etc. To each their own.

Here is the deal - if you buy a reasonably priced house in a decent area, you will not lose. Some may see a future where everyone goes into the cities and lives in 500 sq/ft condos to be close to work thus decreasing demand in the suburbs while increasing demand in the cities. I see technology playing a huge role in the future with more and more mobile workers and mobile work centers. This would mean demand in the cities would decrease. Many businesses like Cisco and even Revenue Canada have cut office space by many times and now allow workers to telecommute from home offices or small rented satellite offices. If this happens, do you think someone will be willing to buy your $900,000 home that's over 80 years old?

Every house has a cost. That's materials, labour and land. On top of that, there is a small profit by the builder. The closer you pay to that price, the safer you will be. Go onto a home insurance site and calculate the 'replacement cost' of your house. You will find that it's based on your region and square footage. A 2000 sq/ft house in GTA runs around $340,000. That's the cost to build a new house on your empty lot from scratch. Builders pay much less due to the fact they work in bulk with materials and labour. Regardless of the market, a house still costs what a house costs. Add inflation to that and your price must increase.

If you pay $500,000 for a 2000 sq/ft house that has a replacement cost of $340,000 then you are paying (forgetting about land price) $160,000 for the 'market' of home/location. If you pay $880,000 for a 2000 sq/ft house in downtown Toronto, you are paying $540,000 OVER the actual value of the house. As you can see, you're paying for the location. If that location is not in demand anymore, that house really might only be worth it's true value, $340,000.


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PostPosted: Sun Sep 05, 2010 11:37 am 
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I doubt we will see a drop in Milton. This area is supply and demand.

As you see the line ups during the new phase releases, there is a demand.


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PostPosted: Sun Sep 05, 2010 12:36 pm 
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Joined: Thu Nov 15, 2007 3:55 pm
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Location: 4th line / St Laurent
dtc wrote:
Their house has been on the market for over 4 months now without a single reasonable offer.


There are likely other reasons for this, as almost nothing is sitting on the market for 4 months in HV / HVE. Also, "reasonable" is open to interpretation.

Feb/March showed crazy price jumps and fast deals, and as a result, a bunch of people came on the market in April and May with somewhat increased expectations.

This is purely a professional opinion, but you simply cannot blame the "market" for a house being unsold for 4-months when the average is well under a month for most of Milton. Let me know if your friend needs some stats or second opinion - always willing to help out my neighbours.


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 Post subject: Housing Market
PostPosted: Sun Sep 05, 2010 1:28 pm 
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Posts: 80
I would agree with Ol Skool if the interest rates rise; but 2-3% interest rise is very unlikely in next 3 years. Yes, I know the banks predicted this much interest rate rise couple of months ago, but the situation has changed dramatically since then and I do not see many more interst rate hikes.

Proof? In month of June 2010 the best available 5 year fixed mortgage rate rose to about 4.3%. Now you can get that rate for about 3.7%. Actually, I am talking to a mortgage broker and he is willing to offer me 3 year fixed mortgage rate of 2.7%!! I could not believe it, but yes, that's what they are offering! I am sure that this lending institution is not in business to lose money. I thik the CHANCES are that the rates will stick to relatively low levels for next 3 years, atleast. It should be noted that North America and Europe are still recovering from one of the worst downturns in economy.

The government is quite conscious that if the interest rates go up, the housing market will take a nose dive (in agreement with Ol Skool). Govt would not want to see the housing market going down (which takes whole economy down with it), and hence may remain very conservative in hiking the rates.

I am of the opinion that the interest rates will not rise to uncomfortable levels and the housing market will flatten, if not grow.


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PostPosted: Sun Sep 05, 2010 2:23 pm 
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Ol Skool wrote:
The housing market in the GTA crashes about every 15 years for the last 60 years even with "immigration feeding the real estate market". You don't think there were immigrants here in 1989 when the last crash happened or 2006 when the most recent crash was starting to happen?


I agree. But immigration and mortgage rules were not the same as they are now. The 1989 crash was caused by an influx of baby boomers looking for their 'mid 30s to late 40s' house upgrades. Supply & Demand. My parents purchased in 1986 and paid $109k. By 1989 it was up to $320k and soon fell down into the low $200s. By 1999 it was worth $360+k. As you can see, even if they bought high at $320k, they still made money in 10 years. Now I do agree, if they decided to buy in 1989 at a high and then sell in 1990 at a low they would lose. That's where real estate becomes gambling -- when you aren't looking at it long term.

Ol Skool wrote:
"The economy is based on house prices going up". Who told you that? The economy is based on what you produce as a country and the level of savings that accumulate that can go toward investment in infrastrucuture and capital in existing business and entrepreneurially activity. House prices reflect that prosperity through rising incomes. Incomes have been flat the past 10 years, debt has exploded, savings are pratically zero, manufacturing has been gutted. House prices are not going up for sound economic reasons. Again, a healthy housing market should be the product of rising incomes not out of control debt.


Hey I don't make the rules! Maybe I didn't explain myself. The economy in North America is based largely on the fact that house prices go up. Why? Because we no longer produce anything. The economy is not based on what we produce... we produce credit notes and debt which are sold to foreign countries as our largest export. This debt only comes from one place -- house equity. You buy a house for $100k. You pay down $20k, then because the price went up to $300k you have $280k in equity, that you borrow against to buy stuff.. that's how the economy works. If housing crashes by 40-50-60%, kiss the entire country good bye. There is nothing left for us. There is a really good video about how capitalism has destroyed our economy. If the government lets the market crash - a big crash in the 30-50% range - the banks would collapse just like in the United States. Everyone would walk away from their mortgages and the economy would collapse just like in the states. The government knows this and won't let it happen. They will fool with prime lending rates and adjust policies, rules, and regulations to keep the market growing.

http://www.youtube.com/watch?v=qOP2V_np2c0

Ol Skool wrote:
Let me say something about inflation. It isn't that your home goes up in the value. It is that each dollar you earn is going down in value. Inflation is the biggest hidden tax on income there is. So you are constantly losing purchasing power. Therefore if wages remain stagant or don't keep up with said inflation, many people have to incur debt to remain at the same level of consumption they would be at otherwise.


With a fixed mortgage, the amount you owe goes down in real-world dollars when inflation is high. Over the course of 25 years, your mortgage payment will stay the same but the percentage of your income it occupies will decrease AS LONG AS YOUR EMPLOYER KEEPS YOUR WAGES IN LINE WITH INFLATION. If inflation is 8% and you get 8% raises, the real world value of your debt decreases.

http://www.economicshelp.org/blog/econo ... inflation/


Last edited by dtc on Sun Sep 05, 2010 2:34 pm, edited 1 time in total.

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PostPosted: Sun Sep 05, 2010 3:21 pm 
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Ol Skool wrote:
DTC,

I know you didn't make the rules neither did I. But they still apply if you want a sustainable healthy economy. We haven't had one in North America for a long time and until we do our economies won't recover regardless of how much we try to paper it over with issuing more debt and driving up inflation. I know what our economy is currently based on, that is why I know we are in trouble.


With that, I agree. My point was that as a long term investment, a reasonably priced house will not go down in value. I'm not talking the next 2-3 years, but more 10+ years. I think it would be very difficult to find a house close to a major center (not some mining town) that is worth less 10 years later than it was the day it was purchased. I do see a correction in housing coming but I think for most places it will come in the form of slow increases or holding of current prices for a few years. You may not see any increase in value for 3 or 4 years as the correction takes hold.

I think people who spent more money that current conditions to move into trendy areas will have the most chance of losing money. Once you bring in the fundamentals it just doesn't make sense. Just like in Vancouver. How you can have a $4000 mortgage payment on a house you can only rent for $1000 is beyond me.


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