First Time Home Buyer - Calgary - Page 4 - Calgarypuck Forums - The Unofficial Calgary Flames Fan Community

Mike Oxlong · 03-23-2006, 10:54 AM

I have a question for everyone saying not to buy a house right now. I am curious why he shouldn't?

I understand the market is crazy and skyrocketing everyday. But if he wants to get in the market the longer he waits the more expensive it is going to be.

Say the market remains really hot for the next 2 years. Prices go up say 15% a year. Then things level off and we start seeing moderate gains in the 5% a year increase level. Why is he better off to buy then?

A house he could buy for $250,000 today is going to be worth WAY more than that in 2 years. No matter how much you save by renting, it isn't going to be enough to keep pace with how fast Real Estate is going up.

I think building something new is the way to go right now. For the most part you don't get in bidding wars and you have a very good idea of the price you are going to pay for the place plus all the warranties that come along with a new place. You get all that free appreciation while it is being built and then when it is ready at least you are in the market. For the next few years while the market is crazy at least you own something that is going up in value at the same rate as everything else. Once the market cools down and things aren't as crazy then you can look at selling your place and taking all the equity you have in it and putting towards something more to your taste or location. At least with this option you are keeping pace with the market. If you wait 2 years then you are just that much further behind and houses are just that much more expensive.

The market might stabalize in a few years and prices won't be rising this quickly but there is no way they are going to drop down to 2002 or 2003 levels again.

Log · 03-23-2006, 11:29 AM

If I were looking at a place in Calgary, I'd build and wait the 12 month construction time. Don't waste your time in a bidding war. Also you can have things done exactly how you want them.

GreenTeaFrapp · 03-23-2006, 12:35 PM

Quote:

Originally Posted by Log

If I were looking at a place in Calgary, I'd build and wait the 12 month construction time.

I'm tempted to put a deposit down on a new house, wait until its ready and then sell it when its done. For a $10,000 or so deposit you can make some good cash in this market.

Tron_fdc · 03-23-2006, 12:39 PM

Quote:

Originally Posted by GreenTeaFrapp

I'm tempted to put a deposit down on a new house, wait until its ready and then sell it when its done. For a $10,000 or so deposit you can make some good cash in this market.

Builders are onto this little ploy now. If you only put down 5-10%, they have the right to raise the purchase price as the house is being built. Meaning they can raise the price as you go, and you either get your deposit returned to you or you take the increase.

If you go this route, ask the builder how much you have to put down to "lock in" the purchase price, no matter how long it takes to build the thing.

ken0042 · 03-23-2006, 12:42 PM

Quote:

Originally Posted by GreenTeaFrapp

I'm tempted to put a deposit down on a new house, wait until its ready and then sell it when its done. For a $10,000 or so deposit you can make some good cash in this market.

Only thing is: at some point you'd have to come up with financing for the balance. From what others have said, it looks like the builder won't let you sell it until after you take possesion. And I also seem to recall reading that in the contract when I was looking at buying.

And the builders are on to that now too. One builder I talked to a few weeks ago said they are only doing spec homes now; maybe 1 in 20 will be a custom one- and you better be going for the upgrades.

But if you think you can qualify for a mortgage and have 10K burning a hole in your pocket...........

Log · 03-23-2006, 12:45 PM

Quote:

Originally Posted by ken0042

Only thing is: at some point you'd have to come up with financing for the balance. From what others have said, it looks like the builder won't let you sell it until after you take possesion. And I also seem to recall reading that in the contract when I was looking at buying.

And the builders are on to that now too. One builder I talked to a few weeks ago said they are only doing spec homes now; maybe 1 in 20 will be a custom one- and you better be going for the upgrades.

But if you think you can qualify for a mortgage and have 10K burning a hole in your pocket...........

You'd also have to pay a penalty for getting out of your mortgage early.

Mike Oxlong · 03-23-2006, 01:52 PM

Quote:

Originally Posted by Log

You'd also have to pay a penalty for getting out of your mortgage early.

Not neccesarily. If you talk to a good mortgage broker they will put you in a mortgage with no early payout penalties.

soulchoice · 03-23-2006, 04:55 PM

Quote:

Originally Posted by Mike Oxlong

The market might stabalize in a few years and prices won't be rising this quickly but there is no Iway they are going to drop down to 2002 or 2003 levels again.

Well that is not a certainty. There is a possibility this could happen. It may not drop to drastic levels, but there is no guarantee that the market will not dip at all. Maybe not to an MLS of $170,000, but I can see it being around $240k to $250, when this hot streak ends, as it will.

soulchoice · 03-23-2006, 05:02 PM

I dont think anyone has told him not to buy if he needs a place to live. One has to do what is neccesary to have a dwelling. However, I think what most are saying, is that if one is to purchase for the sake of investment, this is not the time to buy. Unless it is an extremly short term investment(sell within 2 years).

Whether one wants to believe, Calgary is dependent on the oil industry and for the time being we are reaping the rewards. But its highly unlikely the price of oil will stay this high for anytime longer than a couple years, thus there will be a decline of supposed riches in our pockets. That will affect us all, including the housing markets.

Bobblehead · 03-24-2006, 11:38 PM

Global news tonight had a story that a number of home builders don't have any lots left, so they have shut down the show homes. They interviewed Shane homes and Jayman, and in a number of areas of the city (in the story they were ar Sherwood) there are simply no lots available.

Shazam · 03-25-2006, 01:10 PM

Is it because the City is taking forever releasing lots? I've read some articles saying that it can take the years two years to release lots.

Bobblehead · 03-25-2006, 05:25 PM

Quote:

Originally Posted by Shazam

Is it because the City is taking forever releasing lots? I've read some articles saying that it can take the years two years to release lots.

The developer was blaming the slow annexation talks.
Near the end of the story they were saying show-home staff were being limited to selling 2 houses per month.

I've read that other builders are only building on spec, since the value of the house will be so much more when it is complete.

I'd love to move outside of town, but house prices are running faster than my salary, any my house doesn't seem to be appreciating as fast as other areas.

Perhaps time to look for a new job offering more than a 2% raise

.

Shazam · 03-25-2006, 06:06 PM

Quote:

Originally Posted by fotze

I have a buddy who is a realtor in the Mill Valley/Tiburon area near San Francisco. Absolutely insane. His house was $650k and it looks like something you would see in Rundle here.

SF and surrounding has been like that for years now. I'm surprised it's only $650K

. Just move to Oakland

It's a very attractive area to live in - moderate climate, no real need for a car, great food, great culture. Hell, I'd live there, if houses weren't $650K.

Quote:

The developer was blaming the slow annexation talks.

Where's the Calgary army when you need it?

MacDougalbry · 03-27-2006, 01:15 PM

If you are going to buy right now be very, very careful. Don't waive the "subject to financing" condition. The reason sellers are asking for this condition to be waived is because, in some bidding frenzies, some properties are going for far beyond current market value, and realtors know that there is a good chance the bank will refuse to mortgage these properties. Also be sure to do your own "due dillegence" on market comparables. Someone just bought our neighbour's house for $640,000. This house was built about 15 months ago for $350,000 and was probably only worth about $500,000-$550,000 in the current market.... homes have sold on WeList on our street for $440,000-$510,000. However, buyers were given comparables from MLS for houses on another street... houses on larger lots with designer interiors that back onto a treed ravine. (Our neighbours do not.) In the current market, if you don't have time to do proper research, you are going to get screwed.

ken0042 · 03-27-2006, 01:32 PM

Interesting story on Global about a house that went up for auction. The list price was $230K and they didn't get an opening bid until 180K. (It started at 250 and went down.) The final price was $222K.

Good to see it didn't get out of hand. I'm not sure if the seller could have gotten more just by entertaining traditional offers or not.

Bobblehead · 03-27-2006, 01:38 PM

Quote:

Originally Posted by ken0042

Interesting story on Global about a house that went up for auction. The list price was $230K and they didn't get an opening bid until 180K. (It started at 250 and went down.) The final price was $222K.

Good to see it didn't get out of hand. I'm not sure if the seller could have gotten more just by entertaining traditional offers or not.

I wonder what real estate commissions were charged on that?

There is another one this weekend in Falconridge.

Nabber · 03-27-2006, 02:03 PM

Quote:

Originally Posted by MacDougalbry

If you are going to buy right now be very, very careful. Don't waive the "subject to financing" condition. The reason sellers are asking for this condition to be waived is because, in some bidding frenzies, some properties are going for far beyond current market value, and realtors know that there is a good chance the bank will refuse to mortgage these properties. Also be sure to do your own "due dillegence" on market comparables. Someone just bought our neighbour's house for $640,000. This house was built about 15 months ago for $350,000 and was probably only worth about $500,000-$550,000 in the current market.... homes have sold on WeList on our street for $440,000-$510,000. However, buyers were given comparables from MLS for houses on another street... houses on larger lots with designer interiors that back onto a treed ravine. (Our neighbours do not.) In the current market, if you don't have time to do proper research, you are going to get screwed.

I have to dissagree with you, the reason the finance condition is being waived is to make the offer more attractive to the sellers. Basically the finance condition is an out to purchase the property you have say (7 days) to back out of the contract claiming you couldn't get financing, therefore the sellers would have to put the house back on the market and more hassel for them especially if they need a quick sale. I couldn't see a realtor trying to sell a house to someone who couldn't get qualified for the mortgage to make a sale, huge ethical problem and that is a big no no in the industry.

Now don't get me wrong waiving the fiinancing condition could be a huge mistake if you're clients haven't been pre-approved for a set amount (which is very very important) because if they haven't and like you say over spend out of their means and don't get a mortgage then they're on the hook for the deposit. I try as much as possible to get a financing condition in with my clients but the odd time when I'm in a multiple offer situation and I know my clients are pre-approved for a set amount I will give them the option to take out that condition cause they know they will get a mortgage for that amount no matter what the house sells for. I also always leave in a property inspection condition which is bascially the same as having a finance condition in there anyways.

I know there was a new story about it and how dangereous it is but that's because these un-conditional offers are being put forth without knowing what the buyers with qualify for. I feel the property inspection is way more important than the financing condition, you never know what's wrong with a certain house, with financing at least you know if you've talked with your bank or broker.

Nabber · 03-27-2006, 02:17 PM

Quote:

Originally Posted by Bobblehead

I wonder what real estate commissions were charged on that?

There is another one this weekend in Falconridge.

The real estate commission charged is basically the same as what the realtor and the seller have worked out. What happens is the seller and the realtor hire the auctioneers I think the cost was between 500-1000 to do this weekend auction (I have an email somewhere kicking around). I'd bet money that on the open market that house would have sold for more, people are scared or buying things in the untraditional way. Also I'm pretty sure all offers have to be un-conditional.

Couldn't find the email but I do remember the auctioneers are licensed realtors as well so I take in you could hire them but I'm sure the commission would be the regular rate.

Bobblehead · 03-27-2006, 02:39 PM

Since betting a house built takes so long right now, when should you list your current house if you are considering having one built?

Tooz · 03-27-2006, 03:52 PM

Quote:

Originally Posted by Nabber

The real estate commission charged is basically the same as what the realtor and the seller have worked out. What happens is the seller and the realtor hire the auctioneers I think the cost was between 500-1000 to do this weekend auction (I have an email somewhere kicking around). I'd bet money that on the open market that house would have sold for more, people are scared or buying things in the untraditional way. Also I'm pretty sure all offers have to be un-conditional.

Couldn't find the email but I do remember the auctioneers are licensed realtors as well so I take in you could hire them but I'm sure the commission would be the regular rate.

Hey Nabber,

can you tell me what the average time until possesion that people are looking at is? ie: if I were to put my home up for sale today, is it better to give a longer possesion date (3mos) or a shorter possesion date (1 mos)?

Thanks,
Tooz