Realestate, Mortgage and Home owners discussion

[Wetundies]

You can always buy a house in Vegas. It's 50% off right now. Or Texas, you can get a brand new 3200 sq feet home for $340,000 USD. NO strata fees.

[joel]

Here's my 2cents.

If you can aim for at least a 20% downpayment. Even if you have to borrow from your parents to do it. You end up avoiding CHMC Loan Insurance which ends up being up to an additional 6% tacked onto your mortgage.

And any new place you will also be charged tax for. And with HST looming that will be a 12% hit instead of the now 7%.

Most mortgages provide numerous options at paying off your mortgage quicker, even if your amortization period is for a long time.

I know TD for example allows the ability to increase your payment amounts by double and do yearly one-time payments of up to 15% the original principal amount. So if you had the money that means you could technically pay the thing within 7 years.

[joel]

If you are considering a shagpad, maybe you should look at a place with 2 rooms and rent out to roommate. Anything that allows you to supplement your income to pay the mortgage is a plus.

Also last time I talked to Jairo, the average person's lending power is yearly gross income * 3.5. Although you can get mortgages of more than that I think depending on your credit rating and assets, etc..

[supersuk]

[joel]

[Duncan]

it's tough because the reality of it is, in this city, short of you having a crazy job that pays in powers of uberness, you can't afford to buy as a single income.

Literally, most people our generation cannot buy unless they have two incomes.

Talking to alicia's cousin in law who's a banker, what a lot of young people are doing these days are getting their parents to take out a loan against their own house and using that to buy a place and then they pay their parents' loan. This is to get the best interest rate possible. This only works if the parents own their own home and are not paying off the mortgage still. Seeing as i know mom and dad are still paying off the mortgage, i don't think this is an option for you.

Alicia and i are optimistically looking at buying a place sometime in 2011/2012. It'll take us a while to save up 20%, but even if we do, i don't know if we can sustain monthly mortgage payments. it's just the reality of living in the greater vancouver area, you'll need a household income of $75k+ to barely even afford a $300k home after 20% down payment.

Also, one thing to note, most bankers recommend you saving up 10% on top of the downpayment because there are closing costs, and you still need to furnish your home, and there may be unexpected costs that you incur post purchase. In essence, you have to save 30% and have a $75k+ household income just afford a $300k home "comfortably". Of course if you eat like a anorexic antisocial girl who prefers subzero temps in the dark with no entertainment, then i'm sure those numbers don't have to be so high.

I agree, the more you crunch the numbers, the more depressing it is

[supersuk]

Bye, I'm moving to a communist country.


Where you do not apply for mortgages, mortgages apply for you.\

[joel]

I dont have to worry about HST.
http://www.gov.bc.ca/hst/Documents/hst_homebuyers.pdf[/quote]

I am not completely sure, but I think this may still have an impact..

Yes the government may provide a rebate on HST, but what is not so obvious is that you likely have to apply for this rebate after the fact. Which means after they have tacked it on to your mortgage amount.

I can only speak from my experience, but this is what happened to me when I got my place, which also happened to be a new home.

I entered into a purchase agreement with the developer in 2007, at which time GST was 6%. The house was transferred to me at 2009 at which time GST was 5%. Due to this I was eligible for something called a "Transitional GST Rebate". Also as a first time home buyer, I was also elligble for some "First Time Home Buyer's Tax rebate, aproximately 2.5% of the GST back. When my mortgage was filed though, the full 6%GST was part of the princial loan. And I had to apply for these rebates after the mortgage amount was already set. So sure I got that money back but I still had to pay it first. That means no matter what you are still making interest payments on that amount while the government is taking it's time processing your application for the rebate.

[Duncan]

i agree with joel though, if you're planning on buying, buy a pad that you can possibly supplement mortgage payments with rental income. I hear it makes a huge difference. but the problem still lies in getting approved for a mortgage to begin with and saving up that 20+% for the down payment.

Oh and HST only applies to new homes. Best thing for you to do is to buy a home that isn't new. Nothing wrong with purchasing an older home as long as it passes inspection.

Maybe tyson can chime in here about experiences being a real estate agent and what many first time home owners don't expect or should know in advance?

[Keiho]

Just keep renting and saving your money.

Real estate historically has always been "expensive", and should be taken on with both eyes open and you knowingly acknowledging the huge responsibility and commitment owning a place entails. You should look into buying because you want it to be your home (and not just a place to stay or as a means of investment), and with that attitude I'm sure you'll start evaluating other things besides cost.

And if for some strange reason yes, Vancouver does continue this insane upward trend of real estate pricing that is unattainable for the overwhelming majority , you'd still have a large chunk of money put away in other investments and savings. Not a big loss. You could always move to another city, province, or country where real estate is more affordable.

If you already are in a position to buy NOW then get on it as the interest rates will likely never again be this low again. If not, oh well, just keep saving and plugging away. Better to be prudent then to join the mad craze and then end up belly up.

[Duncan]

i think a lot of people are sitting around waiting to see how the market reacts post olympics. I hope the market crashes, but i highly doubt that even if it falls, it'll fall that much.

I think it's time for keian to go JT mode and find some rich WoW chick to pay for his mortgage.

[tiger]

From what I understand of the HST, there is an exemption for houses/townhouses/condos that are under $525K, but you still have to pay the 5% GST.

The Olympic bubble has already past thru the real estate market. The HST will have some impact on the market, possibly lowering prices by perhaps 7% (the extra tax). Most likely it'll end up that there will be a drop around 3-4%. The builders get to claim back the PST that they will be paying. That retraction will probably be recovered within a year. Builders will always try to find ways to get affordable housing to the general public. That's what they do for a living. I think the HST just promotes more under the table stuff (cash).

What is more critical is the interest rates and how easy it will be to get a mortgage. If interest rates go up, it'll be harder to get a mortgage b/c your monthly payment will be larger. In turn, they won't lend you the money unless you have a larger downpayment or have someone co-sign. Also, if the interest rates go up, there are a lot of people that can't afford a 2% jump in interest rates, which is possible within a 5 yr term. So when they re-new, they find out they can't afford their home, and have to sell to buy a cheaper place. This will drive down the real estate market. Banks are watching this balance very closely.

Vancouver has reached a critical mass in term of population and immigration. Prices are going to continue on an upward trend b/c BC is an attractive place to live b/c of the economy, weather, multi-culturalism, etc. I know people who said 10 yrs ago that Vancouver was significantly undervalued compared to similar cities around the world. They still say that we are priced very well now. Just check out prices in San Francisco. The houses are older and cost more. For people coming from other parts of the world such as Taiwan, Hong Kong, New Delhi, Soeul, London, etc., we are a total bargain.

Out in Surrey/Langley/Abbotsford, there is something pretty interesting going on. When the market slowed down last year (Olympic bubble burst? Hedging?), a lot of builders hopped out of the market and took in their profits. When the market picked up again 6 months later, land prices went soaring b/c land developers also cut back on their projects. It takes 18 months for land to be developed to the point where a builder and build on it. There wasn't enough land to build on, so the prices starting going up on any available land. Demand dropped during the recession, but supply dropped even more. The HST is probably going to cause builders to hedge their bets, so inventory will be lower than demand, and land prices will not crash.

One builder put the Olympics in perspective. How big of an impact do you think the Olympics in Whistler (and Vancouver) have had on the price of a home in a subdivision in Surrey/Langley/Abbotsford/Chilliwack? He thinks little or none at all. We have been in a real estate bull market for 8 years. That's unheard of. We've had our corrections and the market is able to sustain itself. People made a lot of money in these times, and they've been able to keep it in their pockets.

Some have suggested that with the world coming to see Vancouver/BC, you could see more immigration after 2 years. Although the Olympics are only 2 weeks, some come earlier and stay long after. When they see how great of a place it is to live, they will consider it as their summer/retirement homes.
Do you remember that soccer promo last summer, Zidane and friends? One of the South American soccer stars came with his wife. She loved Vancouver, and they bought a place. Survey's have also indicated that a large percentage of people in Ontario and Alberta would like to retire in BC.

Suppose 10 houses in Shaughnessy went on sale 20% lower than previous market values. How long do you think they will last? How much do you think the last one is going to sell for? Probably not 20% off.

[Wetundies]

Saw some real good deals on the west side during the slow period we had. They were bought within 4-7 days. Can't find anything like them in the same prices they were going for anymore.

Toronto was slow before us, now they've picked right up. If you take our city into comparison against so other major cities, like NY, HK, Taipei, London, Shanghai, or prices are still fairly low. The only ppl complaining are the ppl who can't afford to buy anything.

[Wetundies]

And in everyone of these open houses, 3mil+, it was all mainlanders browsing through them. So you know how has the money now.

[nature boy]

my head just exploded. lol.