Would YOU buy a house right NOW ? (we have a really HEALTHY housing market here in Canada ! )?

Question

I 'WAS' thinking about placing a 5% down payment on a $480,000 house (that's a Cheap price here in Toronto). But I have heard so much bad news coming out of the states that I'm getting a bit shy about it.

A realtor told me that a house purchase is the best investment because homes NEVER lose their value ! And he said that if I buy now, in 30 years I will own my own house, but if I continue to rent my apartment, I will still be paying rent 30 years from now. He does have a point there !

If everyone just closes their eyes and ears and pays for the next 30 years, they will be free and clear and own their homes and be MUCH better off than renters. Or is this wrong ??

Please tell me your thoughts, why should I continue to rent ($900 / month apartment), or shoud a just jump in , hope for the best, and buy my first house !!! ???

Answer 1

A house is not an investment, it is a place to live.  In that respect, you should know not to pay to much for a house, you will be making those payments for a long time with only 5% down....oil is the reason Canada's economy is in a boom, and I wouldn't count on that boost on prices for the long term of your mortgage, it is more of a trend, so, just don't pay more than something is worth.  This is advice you won't regret taking.

Answer 2

Right now is an excellent time to buy! It is always better to be paying into something that is YOURS. You can always borrow against your own home, if needed. You could never borrow against anything that you rent! Plus, the market is expected to pick back up in a year or so. When that happens, you're going to be building equity quickly.  

Answer 3

I would for sure buy a house. I mean even if the market goes down, it sounds like you plan to live in that house for a long time.

In the end the value will go way up, and you'll OWN it. :D

Good luck!

Answer 4

I'd buy a house now.  There are quite a few on the market in Toronto, but the feeding frenzy has died down - far fewer multiple offer situations.

However houses do lose their value sometimes.  Prices went down in the early 90s.  If you can afford the house and have some wiggle room in case mortgage rates go up, then buy it to live in it, rather than think of it as an investment and worry about the value.  Think about a shorter amortization time or at least get a mortgage with some prepayment options.  

Good luck

Answer 5

Houses go up and they stay up... then they level off, then they go up again.

40 years ago here where I live you could get a modest house, 2-3 beds 1 bath small yard... $6,000.000

Today? that same house little done but the decorating? $245,000.00

And they say the market here hasn't even levelled out. It's still rising.

Get a great interest rate thats key and make sure you but into

location location location,  and the WORST house in the best neighborhood, something that has potential to rise faster.

Would I buy a house now, living in the states YES... I would make sure I got what I described to you, and yes they are still around, more than you think...

Go get that house. People will always need a place to live.

Answer 6

If you feel the $480,000 house is really cheap ( based on the selling prices of other properties within the vicinity of the same lot size, condition of the house plus repairs that needs to be done if any )

You may be even be face-to-face to a great property. Just check on the other or additional expenses such as taxes, "move-in" expenses and the like. You can check your monthly amortization here after you give your 5% down and see if you're comfortable with the monthly payments at www.loan-expert.blogspot.com

Answer 7

Excellent question.

I live in the southwest United States, and I watched the real estate market collapse here. The most obvious warning sign was when sales began to slow down. People shrugged this off because prices were still either steady or on the rise. To the best of my knowledge, sales have been slowing in Ontario and most other parts of Canada, put prices have been steady. I think Canada is just beginning to get pulled into the same mess we are in. The fact that a lender is offering risky 5% down loans means that there are people in your area who probably can't really afford their homes, and if the economy in Toronto worsens, foreclosures could rise quickly. I believe that it would be prudent on your part to wait a few months before you act. While I believe price declines in Canada will be much, much less than in the US, you could probably pick up a deal down the road. For example, here in the States, MLS listings (supply of homes for sale) according to ListingSupply.com are starting to top out and fall, indicating that price declines on our side of the border may be near the end of their free-fall. Good luck!

Answer 8

This is a tough one.  Just a few years ago (here is the states) "homes never lose their value" was a very common refrain, but in some places houses have now lost 70% of their value compared to a few years ago.  Clearly houses do sometimes lose their value.

I'd consider a few things.  First off, how do rents compare to purchase prices.  Look at houses in blue collar working neighborhoods (if this house is in a higher class neighborhood this won't work for your house, but do the test on working class neighborhoods - not necessarily the area where your house is).  If rents are about 1% of sales price or better in these areas then landlords are doing ok and so the housing market probably isn't to inflated (not saying it won't go down - but if it does go down it will probably eventually come back up to the current levels ie historically prices are at ok levels).  Next off, how much have prices gone up in the last few years - if its alot then maybe things are a bit overextended but if only moderately then maybe not.

Finally, if you do buy the house and prices drop alot and you maybe have some job problems, are you still going to be able to pay the mortgage (assuming you still can get or have a job, but the job market is very weak - no raises and maybe out of work for a few months at a time).  If you can pretty easily afford the place you are probably ok buying it but if its a stretch to buy it, then a prolonged downturn may force you into foreclosure, so watch out.

One more thing, considering that doing this deal will cause your housing expense to go up by 300% or more (just guessing based on the numbers you quote) is the house really that much better than where you rent.  If your apartment is fine you may want to stay there and put the thousands of dollars you save each month into stocks, ro something.  If you do this rigorously you may make alot more money than buying a house would do for you.

Best luck.

Answer 9

Owning a home is extremely expensive becuase you have to fix the electricity, plumbing, tilework, painting, floors, keep up the lawn, garage, and pay homeowners insurance, taxes, utilities... Homes are going down in value right now because the dollar is falling. So only buy one if that's where you want to live forever. I really miss the days when I was renting. I just put nearly $100,000 into moving into a home which decreased in value by $100,000 since moving in four years ago. I have to pay someone to fix every little thing since my husband is not into fixing things. If you are a single man, rent an apartment and keep your money in the bank. Then you can decide if you want to travel the world or own a home or put a kid through college or what you want to do with it. Owning a home gives you "clout" in the community if you are seeking to get into local politics.