HawthorneVillager.com

A lot of questions about the above, but for one you will not have $180k 30 years ago, it will probably take 20 years to get that down so your start up calculation should not be $180k over 30 years.

I'm not saying that you can't do the above but $1000 won't get you much in the GTA. Secondly, find me a GIC that has averaged 7%.

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Phase 96c, Lot 3224

http://www.michaeljamesonmoney.com/2011 ... -they.html
Just in case you don't want to read:
"Using inflation data from Statistics Canada and 5-year GIC return data from the Bank of Canada, I found that from 1969 to 2009, the average GIC return was 2.35% per year above inflation. This is better than today’s GIC rates, but not by as much as most people think.

Historical GIC rates look worse for investors whose interest is taxable. The average real GIC return from 1969 to 2009 at a 25% tax rate is only 0.71%, and at a 40% tax rate it drops to -0.28%! So, for GIC investors who pay taxes, current GIC returns aren’t much different from what they have averaged over the past 40 years. Inflation is the silent killer of wealth. "

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Phase 96c, Lot 3224

In these interesting mock calculations, I don't see the financing cost of home ownership being taken into consideration. Interest costs could basically end up costing you double your original mortgage amount.

Example - @5.14% over 25 years (no prepayment), your $250K mortgage costs you about $440K in real money.

This is a statement that can't be made across the board.

At 55 years old? Bad idea.
At 25 years old while working at home depot part time as a cashier? Bad idea.
At 30 years old, stable job with a great company and long term prospects, great idea!
At 30 years old, stable job with a great company and long term prospects but the house is 40 years old and falling apart? Bad idea again!

Everyone (in all eternity) struggled to buy their first homes when young. Your grandparents. Your parents. My parents. Sure, they had 25% down payments, but they also had 11-15-19% interest rates. The risk of losing their homes was no different than today. The risk of being "underwater" was also no different.

The biggest benefit with buying a home is found in youth. The younger you are when you buy, the better off you will be. I have many 35-40 year old friends with no mortgages and $500k+ houses -- because they chose to jump into the market quickly and early. Low down payments. Big mortgages. It's surprising how well you can do when you pay yourself that "rent" every month from 21 to 41.

The reality is, it's a individual decision and to judge others based on broad assumptions and government statistics is wrong.

I just read an article today talking about debt levels. How Canadians surpassed the US. What it also showed is that unlike the US, Canadians have a lot more assets. RRSPs, savings, pensions, cash, investments, properties. Just looking at a debt percentage against income will never tell a true story. There are MANY boomers with car payments, second property mortgages, home improvement loans, education loans, etc. They are taking out loans because they are are financially smart. They know the interest rates are SO LOW, it only makes sense than to dip into their investments and cash reserves. Sure, they make 80k, owe 120k. That's 150%!!! What isn't mentioned is they have a $750,000 paid off house, a cottage, and $950,000 in pension/rrsp/savings.

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$200,000 over asking.

http://www.thestar.com/business/real_es ... sking.html

This spring is going to be a gong show.

Rumour has it Mattamy is halting construction in milton while they appeal the increase in development charges. Phase 6 on Bronte and Ruhl is the last of it for a while. When this comes out to the general public. watchout!

Gail vaz oxlade would be the mother in law from hell,

How can you say its a phenomenon? Its where we live and biggest investment for most of us.

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Phase 96c, Lot 3224

He's probably referring to the fact if you do all the math, a house really is just a savings vehicle that allows you to save money, tax free, that is protected from inflation.

The actual "over and above" is generally non-existent once you reduce taxes, property taxes, maintenance, real estate fees, interest, etc.

There are quite a few studies that show on average you end up getting back all the money you put into the house, plus about 2% a year -- but not much more.

I still say it's better than renting long term though. Forced safe savings.

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I like to consider it on par with a savings account -- the benefit being you get to live in it and enjoy it vs. seeing a number on a bank slip. But I also am under no illusion it's an "investment" -- now this can change. Bought the house cash? Investment. Paid off within 5-10 years? Maybe even then investment.

For the average Joe, it's just like a savings account (although not as liquid).

Average price in Toronto 1982 was $95,496
Average price in Toronto 2012 was $497,301 (30 years later)

Imagine the 30 year home owner sells out their finally paid off home:

$497,301
-$95,496
----------
$401,805 "profit"
-$114,790 (interest payments on 90k principal 6.5%)
--------------
$287,015 "net profit"
-24,865 (real estate fees for sale)
---------------
$262,150
-98,465 (property tax over 30 years *took current tax and multiplied by 60% to get average)
--------------
$163,685
-$120,000 (maint at 4k per year)
---------------
Actual Profit $43,685

Of course, subtract things like legal fees ($2000), land transfer tax (????) etc.

But generally you made $43,685 on that house over 30 years.
A return on investment of about $1,500 a year.

Not a very good "investment".
But as a forced savings, you did pretty good because at the end of the day, when you sell, you get back everything you put in (even the interest) and then a little extra -- while getting to live in the house the entire time and enjoy it with your family.

Selling would equal a withdrawal of $497,301 - $24,865 (real estate fees) = $472,436.
This wouldn't mean you made the difference between your original purchase price and the $472k. That's really just YOUR money that you've put in over the 30 years.

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What about the ~450-550k you saved on rent by living in the house? Seems more like a "return" of about $1500/month to me, which isn't horrible. Especially considering you probably initially only invested $20,000 into the property.

Just can't say yes, purchasing a home is a wise investment.

BTW: When you do purchase your home, you should look into the 30years mortgage, they are talking about bringing back. If they do happen to bring it back. Take it, but "do not" take 30 years to pay your home off. Your house should be paid off in about 10 -15 years.

When you take the 30 year program your monthly payment drops dramatically. If you take this 30 year mortgage, the bank allows you to double up on every payment (with no penalty). Plus put extra money at the end of the year. Do this and make sure to put the extra allowed amount at the end of the year. "Maximize your extra penalty free payments" Double up, when you double up on your payments the second payment goes directly to your principle. Hence paying off your home in 1/2 the time, plus if interest rates ever go up you now can just lighten up on your extra payments. You have created a safe net, and will have your should home paid off in full in 15 years.

Actually, some lenders offer double-up payments on other products too (incl 25 yr) so the smarter thing to do would be to go with the shortest amortization possible with the product that has the lowest interest rate (meaning over the first 5 yr term you're paying the least interest possible), while maxing out your double-up payments (they don't HAVE to be double, they can be 1.7x, or whatever you want with some institutions, and instead of doubling up, add a payment less than double to get you to the same point.

30 vs 25yr amort, assuming 5% on 400k for ease of math: (for those of you putting 100k down on a 500k home)

Interest payments in the first 5 yrs = $93,615 on the 25yr (principal paid = $45,970) total paid = $139,585
Interest payments in the first 5 yrs = $95,132 on the 30yr (principal paid = $33,950) total paid = $129,082

SO, if you can afford to double your payments on a 30 yr, then you in theory are paying an additional amount of $129,082 of principal over those 5 yrs, which is great.
BUT
you can go for the 25 yr amort, and instead of doubling up each payment (100% more), pay 84.95% more each month and at the end of 5 yrs you would have the same amount of principal paid down, while saving about $1600 in interest charges.
This of course means in both scenarios you're making about $280k in payments over 5 yrs, which is insanely good - congrats!All while keeping an extra $1600 in your pocket. It's not much when you're talking 400k, but it is still $1600!

Just wanted to point out that 30yr amortizations are not cheaper than 25, although the banks do a great job of convincing people that month to month cashflow is a lower hit, but they are definitely not cheaper!

YMMV.

http://business.financialpost.com/2013/ ... =d909-ab2d

New data from CREA shows sales dropping 16% year over year, while average prices dropped 1%. These are both national figures, and seem to be skewed sharply by the Vancouver market, where prices dropped 5.6%. Locally, the Hamilton-Burlington area reported a 5.2% price gain, while the Toronto area reported a 1.6% gain. Calgary, Regina, and Winnipeg all saw price gains around 8%.

The Vancouver data is completely reasonable, but I fail to see how the GTA market can continue to see such ongoing price escalation. I really don't understand where the money is coming from to fuel these prices. I can only assume people are maxing out what the bank will give them and that right now the low interest rates are inflating the market.

2.99% 5 year fixed - BMO

I thought I got a steal at 3.85% two years ago.

If one looks at 300k/25 year/3.85% 5 year fixed the payment would be 1550/mo
If one looks at 330k/25 year/2.99% 5 year fixed the payment would be 1550/mo

The same house could be 30k higher (10% increase) this year vs. 2 years ago and the purchaser would have the exact same monthly mortgage payment.

This is why prices are going up a touch once again.

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