HawthorneVillager.com

Actually, no.. to be honest I plan on sitting in this house until I die... (if life goes as planned) -- maybe buy a cottage or a condo down south in a few years... But my response is in direct relation to the forum title... When will housing prices decline by 10%.

If my house is up 12%, but declines by 10%.. It's still 2% higher than a year ago today -- when I bought. That means that if I listened to this post, I should have waited - not bought yet - waited for the 10% decline -- which would have left me paying 2% more for my house (nevermind the rising cost of upgrades and taxes like the HST).

So when is this final tally supposed to happen? Was it May 2011 that we were supposed to see an overall decline of 10% across the board?

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the math here is wrong.

It will be less than 1% higher than when you bought

I think this is my point.. I'm not saying real estate doesn't go up and down -- it does.. just like everything else. Stocks, Bonds, Currency, Jobs, Incomes, etc.

What I am saying is that it is not something to predict. We can make guesses -- even educated guesses based on the here and now but in reality that means nothing. Things can change overnight.

I began my quest for home ownership in 1995. I can tell you, prices have only increased since 1995. We are now in 2011, a full 15.5 years later and prices have not declined overall. I could have put half of what I paid down in 1995 for the same house. I sat out of the market, year over year, watched the prices increase faster, and faster. Home ownership is important to me and watching parents and aunts/uncles enjoy retirement simply due to homeownership and smart RRSP investing makes sense to me. I could look at the "guesses" and sit out of the market until 2016 - another 5 years which would mean I got the pleasure of renting in an ever increasing market from 1995-2016 - 21 years!!!! Or, I could just get on with my life -- bite the bullet and buy now looking long term.

In any event, nobody knows -- which is why I posted in this thread. Look at Japan -- in a matter of minutes -- one of the largest competitors to the United States is demolished. They "predict" (educated guess) that this could cause the North American economy to boom once again as North American manufacturers sell more cars, more natural gas, more wood, more steel, etc. Already the Canadian dollar is down which will relieve some pressure on the manufacturing industry. The price of oil is down which reduces operating costs for companies.

The reality is, a split second completely can shift the path of the economy and we could see more jobs, higher incomes, and thus, higher house prices once again.... or NOT.

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Dabills, you make no sense. People have been predicting a 10% decline in housing prices for about 3 years now in Canada, hasnt happened in the GTA, yet, 'New' housing prices in communities such as Milton, Mississaiga, Oakville, Burlington, Markham and Richmond Hill continue to see new release lots going for 10-15K more than the previous release. Look at the mattamy release a few weeks ago, they stopped letting people in at #75, told people to go home and to come back the next day, and to top it off, the next day, prices went up 15K. It's all about supply and demand, those communities are in demand and will drive pricing up.

Downtown Toronto is another story altogether, most houses have bidding wars and multiple offers, not going to change any time soon. However, where I think you will see the declines are in the older areas of Mississauga, and other citits along with condos.

That is most definitely a risk. And given the state of the economy, it's a smart assumption. But there is another risk (maybe with lower odds) and that risk is... what if the house goes up by another 20-30% from the peak?

All we can do is look at our current situation and decide what's right for ourselves. Real Estate is not absolute and in it's history it has statistically proven to be a great long term investment with a decent average yield. You can't deny that if you bought a house in 1960 that in 25 years it was worth more than you paid - (sure, maybe value fluctuated throughout that time) but in the end, it went up. If you bought a house in 1985 and paid it off in 2010, the value of that home is likely more than you paid.

Generally, long term (10 years or more) leaves most home owners without anything to worry about. If you are buying strictly to up-size or flip within 2-5 years time, you have a *risk* of not getting a very good return on your investment (if any).

I will always agree that real estate is unstable - like any commodity. I will also agree we are at very high prices. If I was looking to invest strictly as a short term investment, I wouldn't buy a house now. Just like I wouldn't buy gold now either.. it's high... it could go up.. it could go down... but with my best judgement -- not a good idea short term. Now if I was looking long term, I'd buy a house now.. hands down.... In 10-15-25 years it will be worth a WHOLE lot more than it is now.

Sitting out of the market when your long term goal is to own a home and live in it for a long time is also very risky. I learned that the hard way. Prices increased faster than my down payment. Couple that with interest payments and you easily would do better getting in sooner.

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Dabills - what are you smoking??? You cant compare Dublin to Toronto. Ireland is in a total meltdown recessionwise, and if I'm not mistaken, Ireland currently has a 14% unemployment rate. Historically, Ireland has always had a higher than average unemployment rate compared to Europe. Europeans live a different lifestyle than North Americans do, once they buy a house, they tend to stay in it forever, that's why they have forever mortgages. In many suburban areas outside of London (similar to Milton, you have townhouses selling for 500K pounds, not dollars) a townhouse and that was 7 years ago, and still climbing.

As for Milton, it has been going on for way more than 3 years, try 11, from when Mattamy first started selling here. My wife and I paid 204K for a 1700 sq foot back then on a 36ft lot (turned out to be 41), the same house today is well over 395K.....11 years later...so your logic is not sound.

The reason that Milton is desireable is because of a few reasons:
1) Mississauga can only really build 'Up' now, condos. They dont have much land left to build. Oakville has always and will always be 20K+ more expensive for the same house in Milton.
2) Proximity to the city and major transportation hubs (401/407/QEW/GO (lakeshore and Milton Lines)

When there is a correction, you will see areas such as brampton, oshawa, scarborough and many other pockets hit harder than a mississauga, oakville, burlington or a milton. Housing prices in the western GTA have historically been higher than their eastern counterparts.

How does Ireland compare to Canada as far as exports? Whats the GDP relationship? Oh wait.. 250 some odd billion to 1.3 trillion... big difference. Probably a reason why the big difference in unemployment... and thus making it not a fair comparison.

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If you take those GDP numbers and compare GDP per capita the numbers are fairly similar.
Repubilc of Ireland's GDP per capita is actually a bit higher than Canada's from my math.
I was fairly amazed since Ireland is much smaller and from what I know have a lot fewer natural resources.

Republic of Ireland pop: approx 4.5 million
Canada pop: approx: 33.7 million

Dabills, do you know about:
-Laurier University campus in Milton
-Two new manufacturing plants in Milton
-Don’t forget immigrants. CIC projects 240,000-265,000 new permanent residents in 2011. Ontario’s population is projected to experience healthy growth to 17.8 million by 2036

And how do you think it should affect the demand?

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Not everyone is sinking in debt. I am 28, my cars are paid off and down payment for my new house will be 35%+. Many of my friends are in the same situation.
I guess we live in different worlds.

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Yeah, totally...

We are first gen immigrants from Europe. We are not struggling by any means but we have to be prudent with our spending cuz we have no family safety net at all.
Talking about how immigrants would make this country immune to the isses: most immigrants don't buy houses right after they landed. The average time is after 3-5 years.
My friends don't sink in debt either but again, just simply can't afford a $700K house in the GTA.

^^

I agree with both of you. In fact, I think most people are in reasonably good shape, but its the few who aren't that can bring the system down.

Anyone have any numbers how how many homes were in default in the US at the start of the crisis? I think it was a relatively small % in the grand scheme of homes in the US.

So while you may have your ducks in a row, it's your neighbor you need to worry about.


(damn, new page, I should have quoted instead of ^^ )

It takes a perfect storm...

1. People who bought houses with no money down (LOTS OF THEM)
2. Same people who didn't have any savings or assets or ability to repay their mortgages - even their first mortgage payment
3. A massive job loss fueled by an economic disaster caused by the housing industries shady practices, bad debts, false investment ratings, fraud, derivatives, insurance fraud (they were taking out insurance on debt they knew was doomed)
4. Record unemployment rates - MUCH higher than we witnessed
5. 80%+ of subprime mortgages issued on adjustable interest rates
6. 18-21% of all mortgages to subprime or terrible credit/high risk borrowers
7. Many states with "walk away scott free" laws.

One might say that 21% of all mortgages at that time were the cause of the downfall.. hardly a small amount of homes. That would mean 2 in 10 on your street.

Ten years earlier that number was more like 8-10%.

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In the first half of March, sales in the Greater Toronto Area are down by 5 per cent compared with last year. The average price of a home is now $460,196, up 4.6 per cent from last March. But the million-dollar question for buyers and sellers is whether prices will hold. So far the current run-up in house prices has been one of the longest since the end of World War 11. Home prices have increased every year since 1996. But analysts are wondering whether this is the year that the party will stop.

http://www.moneyville.ca/article/956084 ... arket?bn=1

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Some interesting points/remarks brought up by both sides.

http://www2.macleans.ca/2011/03/23/a-mortgage-monster/