Calgary Real Estate predictions?

[gladaki]

http://www.bnn.ca/News/2015/3/16/Rea...-to-burst.aspx

Any one read this book
When The Bubble Bursts: Surviving the Canadian Real Estate Crash."

[Red]

Originally Posted by gladaki

http://www.bnn.ca/News/2015/3/16/Rea...-to-burst.aspx

Any one read this book
When The Bubble Bursts: Surviving the Canadian Real Estate Crash."

Nope, haven't read it. This guys is suggesting that canadians are over extended. No surprise there.

As Buffett said; "only when the tide goes out do you discover who's been swimming naked"

You could've been a pretty bad RE investor in Canada last 10 years and you'd still come out ahead. An up market has been hiding a lot of poor decisions. It's been a good run, but all good things do come to an end.

[MillerTime GFG]

Latest CAAMP stats for June 2015:

Size

NSFW!

[Kavvy]

Interesting article as it gives us glimpse into the minds of CMHC

Despite the headline, it actually appears to be semi- positive? Click bait?

http://www.bnn.ca/News/2015/11/11/CM...n-housing.aspx

CMHC chief paints bleak picture of risks to Canadian housing

[ranchlandsselling]

Originally Posted by Kavvy

Interesting article as it gives us glimpse into the minds of CMHC

Despite the headline, it actually appears to be semi- positive? Click bait?

http://www.bnn.ca/News/2015/11/11/CM...n-housing.aspx

It's interesting, consider what you'd do if housing dropped 30%. Let's say your house was worth $550,000 at the peak, drops to $385,000.

Personally if I had my same job and felt relatively safe in my employment status and could handle my mortgage at existing/future rates. I'd take my mortgage (which most are generally portable) and upgrade houses. Go buy a new house at the same LTV that my prior purchase was at. Your old house value at $550,000 would be able to afford a house that was previously at $785,000. Obviously coming up with a downpayment might be the biggest issue. But if you're taking your debt with you, you don't have to come up with any cash to "pay out an underwater mortgage".

[tkflames]

Originally Posted by ranchlandsselling

It's interesting, consider what you'd do if housing dropped 30%. Let's say your house was worth $550,000 at the peak, drops to $385,000.

Personally if I had my same job and felt relatively safe in my employment status and could handle my mortgage at existing/future rates. I'd take my mortgage (which most are generally portable) and upgrade houses. Go buy a new house at the same LTV that my prior purchase was at. Your old house value at $550,000 would be able to afford a house that was previously at $785,000. Obviously coming up with a downpayment might be the biggest issue. But if you're taking your debt with you, you don't have to come up with any cash to "pay out an underwater mortgage".

While I agree with the logic, this analogy mixed with Red's Warren Buffet quote, makes me think of a naked guy swimming out into deeper water to prove he has it all under control...

[Buster]

Originally Posted by ranchlandsselling

It's interesting, consider what you'd do if housing dropped 30%. Let's say your house was worth $550,000 at the peak, drops to $385,000.

Personally if I had my same job and felt relatively safe in my employment status and could handle my mortgage at existing/future rates. I'd take my mortgage (which most are generally portable) and upgrade houses. Go buy a new house at the same LTV that my prior purchase was at. Your old house value at $550,000 would be able to afford a house that was previously at $785,000. Obviously coming up with a downpayment might be the biggest issue. But if you're taking your debt with you, you don't have to come up with any cash to "pay out an underwater mortgage".

You have to compare equity in the old vs new, as the "sale" prices aren't as relevant. But you're on the right track.

I've been waiting for a correction in order to upgrade, for YEARS. The hard part now that it is here....is pulling the trigger while house prices are still going down. After all, that 785 house might not be worth 785 in a year. It might be worth 750. Convincing yourself to buy when that is a real possibility is harder to do than you think.

[ranchlandsselling]

Originally Posted by Buster

You have to compare equity in the old vs new, as the "sale" prices aren't as relevant. But you're on the right track.

I've been waiting for a correction in order to upgrade, for YEARS. The hard part now that it is here....is pulling the trigger while house prices are still going down. After all, that 785 house might not be worth 785 in a year. It might be worth 750. Convincing yourself to buy when that is a real possibility is harder to do than you think.

I did, just didn't explain it further than the "downpayment". If equity is low in the fist you'd need a larger downpayment with the reciprocal being true should equity be higher.

Laziness on my part and the assumption that people would figure it out.

With respect to upgrading now and waiting.... I think we've got plenty more potential price softening especially in that higher end market. It'll be interesting to see how the US rate hike proceeds or doesn't proceed. Rates will go up, couple that with Alberta's current issues and you have substantial support for further impact to real estate prices. I think rates will be an impact item in the next 24 months which is why my prior post was "subject to current and future rates". I don't think I'd be porting and increasing my mortgage substantially if rates were in the 4.0% - 5.0% range. I'd hold out and try to get that paid down as quickly as possible to reach a happy debt service equilibrium.

[Buster]

Originally Posted by ranchlandsselling

I did, just didn't explain it further than the "downpayment". If equity is low in the fist you'd need a larger downpayment with the reciprocal being true should equity be higher.

Laziness on my part and the assumption that people would figure it out.

I was pretty sure you and I were saying the same thing. But people tend to forget to run the math properly on these things.

[darklord700]

I used to think and plan this way, upgrade when the market is bad. Now the market is not good but even if you still have a job in this market, you'll be afraid to buy a more expensive house because you just don't know if you will still have a job in three months.

Depending on how much of an upgrade you are looking for, you net gain might be small and your cheaper older house will take longer to sell which will eat into your gain at the end.

[Kavvy]

Feds announcing tomorrow that mortgages >$500,000 will now need 10% down.

>$1,000,000 I think already requires 20%

Unsure if it is house value or mortgage value, I am sure someone does.

[Mr.Coffee]

Originally Posted by Kavvy

Feds announcing tomorrow that mortgages >$500,000 will now need 10% down.

>$1,000,000 I think already requires 20%

Unsure if it is house value or mortgage value, I am sure someone does.

this makes sense (I think at first glance) but should cause the higher end homes to soften even further, correct?

As it is I assume there's less liquid cash in the market to put larger down payments, and makes it tougher to "upgrade" so less buyers = less demand... should see downward pressure on higher homes I would think.

[darklord700]

Originally Posted by Kavvy

Feds announcing tomorrow that mortgages >$500,000 will now need 10% down.

>$1,000,000 I think already requires 20%

Unsure if it is house value or mortgage value, I am sure someone does.

I don't see it doing too much to soft landing the market.

[OMG!WTF!]

Originally Posted by darklord700

I don't see it doing too much to soft landing the market.

It's entirely meant to cool the market in Toronto and Vancouver. It's a bizarre message when combined with the BOC suggesting negative interest rates are possible.

[ranchlandsselling]

Hmmmm....
As someone who bought around the $500k level awhile back and as of today still feeling comfortable I could move my house for above $500k this is annoying (I think). That said, should there be a substantial correction in housing it makes me comfortable that $499k should move my house quite quickly even after a fairly sizable correction.

On the flip side, it makes buying in the 500+ range easier (maybe??) as you'll have less competitors by a $25,000 margin increasing by $0.05 on each additional dollar spent.

[bomba]

Originally Posted by OMG!WTF!

It's entirely meant to cool the market in Toronto and Vancouver. It's a bizarre message when combined with the BOC suggesting negative interest rates are possible.

My thoughts exactly. I don't see how this does anything to soften those markets. And given its only 10% on the amount over 500k, so $1M requires a 7.5% downpayment, I fail to see how that extra $25,000 will really limit buyers in that price range.

[OMG!WTF!]

Originally Posted by ranchlandsselling

Hmmmm....
As someone who bought around the $500k level awhile back and as of today still feeling comfortable I could move my house for above $500k this is annoying (I think). That said, should there be a substantial correction in housing it makes me comfortable that $499k should move my house quite quickly even after a fairly sizable correction.

On the flip side, it makes buying in the 500+ range easier (maybe??) as you'll have less competitors by a $25,000 margin increasing by $0.05 on each additional dollar spent.

Not sure I get the 25k number. But it's only on the portion above 500k. So if you buy a house for 750k, your down payment would have to be 50k (500k @ 5% plus 10% on 250k) as opposed to 75k (750k @ 10%). I don't think it will have a huge effect.

[Slava]

I don't think that the point is to cut the number of buyers though. I think that the point is to make those people who are buying have more skin in the game from day one, so if the markets do drop people don't walk away as easily/quickly. Its really more protection for the lenders.

[darklord700]

Originally Posted by OMG!WTF!

It's entirely meant to cool the market in Toronto and Vancouver. It's a bizarre message when combined with the BOC suggesting negative interest rates are possible.

Almost zero interest rate is the problem. When you hand out free money, people will take them to buy real estate.

[OMG!WTF!]

Originally Posted by Slava

I don't think that the point is to cut the number of buyers though. I think that the point is to make those people who are buying have more skin in the game from day one, so if the markets do drop people don't walk away as easily/quickly. Its really more protection for the lenders.

Wouldn't it be more protection for the insurers than anything? Banks are already protected through CMHC. Accordingly, I wonder if CMHC will be raising their rates since the amount they charge is dependent on the LTV of the loan. So this will cause a drop in CMHC revenue. Or will they leave their fees and account for it via less risk?