tag:blogger.com,1999:blog-7123542260692860177.post2585405527104885483..comments2023-12-02T00:38:46.467-08:00Comments on House Hunt Victoria: Getting serious, 20% change aheadHouseHuntVictoriahttp://www.blogger.com/profile/07456914359088891317noreply@blogger.comBlogger72125tag:blogger.com,1999:blog-7123542260692860177.post-32616519745099236942010-03-13T11:02:04.618-08:002010-03-13T11:02:04.618-08:00More on variable rate mortgages...
There are quit...More on variable rate mortgages...<br /><br />There are quite a few buyers in Victoria that are happy today with their variable rate mortgage. Ask them what happens when interest rates rise and they will counter back that they will just lock in.<br /><br />If they are currently holding a 2.25% variable (bank prime) they will probably see rates jump in June.<br /><br /> <a href="http://www.bloomberg.com/apps/news?pid=20601087&sid=ajbzWvdM2M_U&pos=6" rel="nofollow">Bloomber News -click here</a><br /><br />What happens when they switch. Depends on the contract they probably didn't bother to read. Some will find they will be offered the posted rate which is now over 5%. Their dilemma - big jump in payments to go fixed or ride the variable rate up and up. <br /><br /><a href="http://www.timescolonist.com/business/Study+your+mortgage+before+sign/2665521/story.html" rel="nofollow">Study your mortgage before you sign it</a><br /><br /><i>"You've got the right to lock in, but you are going to want to negotiate that rate and all the bank is obliged to do is give you the posted rate."</i>Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-6441269097621263172010-03-13T10:42:56.858-08:002010-03-13T10:42:56.858-08:00Over on KIV they are having an interesting discuss...Over on KIV they are having an interesting discussion about variable rate mortgages. The costs to switch to fixed and how payments are calculated is covered.<br /><br /><a href="http://www.kidsinvictoria.com/forum3/viewtopic.php?f=7&t=3729266&start=0&PHPSESSID=32beae5e4a2a7b41892c073f5d753441" rel="nofollow">Mortgages on KIV - click here </a><br /><br />On a related note the mortgage brokers over at Canadian Mortgage trends have received word from CMHC that pre-approval letters are <b>NOT</b> valid after April 19th unless they use the new qualification rules. <br /><a href="http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2010/03/pre-approvals-after-april-19.html" rel="nofollow">CMHC & Pre-approval - click here</a><br /><br />Some buyers are going to be surprised when they find they can't get that stretched to the max loan they were counting on. Watch your PCS for collapsed offers after April 19.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-82042939105585194022010-03-13T10:40:50.704-08:002010-03-13T10:40:50.704-08:00This comment has been removed by the author.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-15019249793829565492010-03-12T10:00:00.143-08:002010-03-12T10:00:00.143-08:00City raising builders fees by double, Liberals gou...City raising builders fees by double, Liberals gouging the used car buyers (which will only lead to more fudging the numbers), while they actually tried to screw the Vets who saved our asses shows how desperate the governments are getting.<br /><br /><br /> This is just the beginning and reminds me of the late 70's and 80's where we all learned the words "hack and slash" and the tax anything that walks and talks attitdue of the SoCreds which is a carbon copy of Gordo's bunch. A whole new generation who has never lost will now learn the hard way.Vichttps://www.blogger.com/profile/08986654555255579099noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-8422071592519269602010-03-12T09:17:39.117-08:002010-03-12T09:17:39.117-08:00The loonie nearing par should spur on some more se...The loonie nearing par should spur on some more sellers...at least it's pushing me to sell my alberta rentals faster. <br /><br />And JustJack i've noticed the same 'move up' anomaly pushing the price data in AB last 6 months. Certainly a sign we're building a top.bullbearhttps://www.blogger.com/profile/02993875002639976519noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-25955759460079440522010-03-11T22:24:49.341-08:002010-03-11T22:24:49.341-08:00I really feel sorry for people who is still delude...I really feel sorry for people who is still deluded by realtors without scruples. No one makes money besides them and the banks.<br /><br />Why someone would invest in a market like Victoria where 90% of the properties are in extremely bad shape, rotten, and dirty, when you can get properties like this <br /><a href="http://i41.tinypic.com/21jrnnb.jpg" rel="nofollow"> California</a><br><br><br />House was sold brand new in 2005 above $400,000 USD, probably a bargain in that time or at least what a realtor told the previous owner. <br /><br />Real Estate can take a big dipped quickly, and not what realtors say "Oh Victoria is unique, prices will never go down here" WAKE UP !<br /><br />Time will tell, and remember that a property is worth what people is willing to pay for it, or what people can afford to pay for it.<br /><br />Keep your marbles to play the game, until prices are low enough to buy cash. That is how real estate should be bought, no high piles of debt.WiseInvestor70https://www.blogger.com/profile/08086635041630006514noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-79739981088820068742010-03-11T22:11:43.672-08:002010-03-11T22:11:43.672-08:00This comment has been removed by the author.WiseInvestor70https://www.blogger.com/profile/08086635041630006514noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-90229071705107347642010-03-11T21:30:18.709-08:002010-03-11T21:30:18.709-08:00PCS listing I get 350k-500k SFH w/ suite has jumpe...PCS listing I get 350k-500k SFH w/ suite has jumped over the last two weeks from just a couple to 14. Not a huge number, but it's been a fairly quick ramp up. A number of the places have been on for a while or I recognize from last year.Villagehttps://www.blogger.com/profile/01880618948392892946noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-81060294202395774922010-03-11T18:50:59.619-08:002010-03-11T18:50:59.619-08:00Thanks Tim - this will lead to some good competiti...Thanks Tim - this will lead to some good competition from banks and brokers to offer the best possible 5 year contract rate. Could also lead to some gaming of the system if brokers and noteholders don't assume sufficient risk for the products that they sell. <br /><br />What it is in effect saying is that if one can qualify at the contract rate for five years, then one should be able to hold that mortgage long-term. <br /><br />Politically this pushes back some reset shock five years (one can only qualify the more risky buyers with 5 year terms) - which is an enternity in politics.Animal Spirithttps://www.blogger.com/profile/14290032551579947421noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-7844405693709993402010-03-11T18:33:03.251-08:002010-03-11T18:33:03.251-08:00Hi gang - I haven't been following the comment...Hi gang - I haven't been following the comment thread on this one, so sorry if somebody else has covered this, but the CMT blog has posted the official CMHC announcement regarding the qualifying rate. As they had suspected, it will apply only to variable rate products and fixed rates with terms less than 5 years. <a href="http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2010/03/official-announcement-on-qualifying-rate.html" rel="nofollow">Clicky</a>.Tim Ayreshttps://www.blogger.com/profile/14415091366896213267noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-27446493471914075662010-03-11T17:33:55.123-08:002010-03-11T17:33:55.123-08:00Quite true Just Janice, but your home is not the t...Quite true Just Janice, but your home is not the typical. The typical home is a $625,000 Gordon Head box rented at $2,200 per month.<br /><br />The current interest rates have cratered the mortgage cost for owners, while rents have only fallen slightly. So, for this brief period in time, the rent versus ownership cost is very close to one another. Hence, the big jump in sales activity in condominiums.Johnny-Dollarhttps://www.blogger.com/profile/12950799399842707067noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-54315504796055363872010-03-11T16:33:15.945-08:002010-03-11T16:33:15.945-08:00Rhino,
I'll admit a couple of the listed unit...Rhino,<br /><br />I'll admit a couple of the listed units are in the new Falls building, but my numbers are accurate. The crazy thing my wife and i discussed was that even if we could live in either of the two Falls units for $870/mth, we'd still choose the older reno'd rental unit with nicer view (of course Falls has nicer kitchens, but then we always eat out). Anyway, i'm not really bearish on RE - at least 'til we sell our remaining AB properties..lol. However, i'll admit i'm a little on the cheap side...although that served me well while managing our units over the last decade.bullbearhttps://www.blogger.com/profile/02993875002639976519noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-46835357192347815712010-03-11T16:28:32.316-08:002010-03-11T16:28:32.316-08:00Let me do the own rent comparison for the home I p...Let me do the own rent comparison for the home I presently occupy. The BC Assessed value is $890,000. Assuming 35 year term, 5% down and a five year fixed at 3.85% the total payment would be $3652 per month. Over the five years an average of $92.77 per month is lost as opportunity cost on the money that pays down the principle (this money would have been invested at 3% had it not been used to pay down the mortgage). Over the five years an average of $2595 per month is paid in mortgage. I'll estimate property taxes at 5.78 per $1,000 in assessed value (couldn't find victoria's mill rate so used saanich's) - less the home owner grant ($4574.20) - $381.18 per month. The opportunity cost of the down payment is the interest that money could have earned had it been invested (I've assumed 3%) this amounts to $1335 per year - or $111.25 per month. Assuming another $200 per month conservatively for maintenance and the total cost of renting from the bank would be $3380.20 per month over the next five years. <br /><br />Hmmmm...I think I'll continue to rent for $2200 per month as it would cost me 50% more per month to won....Just Janicehttps://www.blogger.com/profile/06002680972898096266noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-51273797372245238582010-03-11T16:01:51.345-08:002010-03-11T16:01:51.345-08:00Well, I agree that house prices need to correct. T...Well, I agree that house prices need to correct. They need to substantially correct. I did not and would not buy at such prices since I am renting much cheaper. That is also why I am in no hurry to make a house purchase. It just does not make much sense to me.<br /><br />I do think that popping a bubble is less desirable than attempting to deflate it in a more controlled manner. However, I am not an expert and never claimed I was. You guys are completely entitled to your own opinion. Just realize that it is an opinion (that can be more educated or less). Nothing more. The system is far to complex to make predictions as to what is better or not. Time will tell I guess.Unknownhttps://www.blogger.com/profile/03610949355592602680noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-10001316071751983522010-03-11T15:44:23.713-08:002010-03-11T15:44:23.713-08:00With the current low interest rates, the costs of ...With the current low interest rates, the costs of renting and buying are quite similar. I don't see one as having a distinct advantage over the other. <br /><br />If your a landlord, it would be good to refinance your property in order to reduce your mortgage costs. This would take some of the pressure off to increase rents in the future. The problem occurs when you have to re-finance at a higher rate, you will not be able to move the rents up quickly.<br /><br />As a tenant, you have the opportunity to purchase a condominium or buddy up with someone. Which increases the inventory of rentals available.<br /><br />If I were in the market to buy investment properties say a six suiter or larger, my thoughts would be:<br /><br />Are the current rents in the building below market? <br /><br />What are the prospects of increasing rents in the future? <br /><br />Is the vacancy rate increasing?<br /><br />In otherwords I'm looking at the income stream in order to see if it can be increased and how stable is the money flow. It doesn't matter if the building is $100,000 or hundred million, if the market fails these simple tests - don't buy.Johnny-Dollarhttps://www.blogger.com/profile/12950799399842707067noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-15047978127878751592010-03-11T15:34:42.567-08:002010-03-11T15:34:42.567-08:00bullbear,
I think your numbers are kinda out of w...bullbear,<br /><br />I think your numbers are kinda out of wack. For 892/month its going to be small and in an old building. That condo would probably be in the 200-250K range if that. There is no way your cost of owning would be $2800 a month.Unknownhttps://www.blogger.com/profile/12260684230468334866noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-81618262394738638082010-03-11T15:29:20.735-08:002010-03-11T15:29:20.735-08:00The last two months have certainly been unusual fo...The last two months have certainly been unusual for detached home sales. It appears that the sales have been top heavy in the more costly properties in Victoria which has skewed the median and the average prices upwards.<br /><br />My take on this is that the first time HOUSE owners ability to purchase has been severely eroded by the current high prices with most of the sales activity being in the "move up" house market. This anomaly has skewed the statistically data to show a 20 or 25 percent annual increase in house prices. While condos have only shown a nine percent increase.<br /><br />However, the low interest rates have encouraged people to jump into the high end housing market.<br /><br />An anomaly like this signals a major shift in the marketplace. <br /><br />Basically, your kicking the ladder out from the bottom and the market is about to tumble.<br /><br />This is the 1980's all over again.Johnny-Dollarhttps://www.blogger.com/profile/12950799399842707067noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-32800653768442995962010-03-11T14:57:09.561-08:002010-03-11T14:57:09.561-08:00Maniac78, thought I’d share with you our recent ca...Maniac78, thought I’d share with you our recent calculation on whether to own or rent in fairfield area again. We wanted to live in a 750-850 square foot condo close to the Empress and Beacon Hill Park (btw, i can`t see how the ratio for renting a SFH would be any different)<br /><br />OWN – took the average monthly payments of 5 listed for sale condos we viewed. To ensure a proper comparison, we included only the interest portion, present property taxes, condo fees, a nominal extra insurance charge, and a very small monthly special assessment fee for unexpected maintenance issues unable to be covered by the buildings reserve fund. We know 3 couples in the area who recently had special assessments ranging from $12000(brand new) to over $80000(older leaky condo) per couple. We calculated with 5% down & used a still historically low 5% rate on a 5-year fixed term.<br /><br />Average monthly expense to OWN = $ 2787 <br />(Note: your monthly payments would actually be a little higher since it doesn’t include the principle amount so as to ensure an accurate comparison to renting)<br /><br />RENT – took the average monthly payments of 6 similar rental condos (all within 1-2 blocks of the OWN choices with comparable views).<br /><br />Average monthly expense to RENT = $ 892<br /><br />I can honestly say, we’ve never faced an easier decision of whether to rent from a bank or a landlord. Not only with owning do you put your down payment at risk, but possibly a good chunk of your life savings and future wages (as far as I know mortgages in Canada are recourse). Anyway, we ended up choosing a slightly larger condo than the listed condos, which also has a nicer view than 4 of the listed condos. We will pay $870/month, 6th floor overlooking the park, huge windows, new flooring & appliances, month-to-month tenancy, free heat & hot water, and received half a month free (many landlords are already lowering rents due to rising vacancy rates). The best part is, I’m able to catch a glimpse of a couple of those listed units from my balcony, so as to remind me how our equity would have drained away month after month.bullbearhttps://www.blogger.com/profile/02993875002639976519noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-21620532389750429822010-03-11T13:48:28.057-08:002010-03-11T13:48:28.057-08:00Janice you know as much as I do that you can't...Janice you know as much as I do that you can't rent a new home in Fairfield for anything near $1700 a month. As for apples to apples I am talking about rental homes in Langford. I'm aware of some of the risks you talk about I'm just playing devil's advocate here since most bears around here keep claiming over and over again that renting is cheaper when in fact that is not the case. There are good reasons to not buy for sure given the current market frenzy and downside risk but don't kid yourselves about renting. Sure, renting a dump or a bachelor pad is cheaper than buying a house but most families don't find that kind of lifestyle appealing.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-20287861405559857122010-03-11T13:40:35.965-08:002010-03-11T13:40:35.965-08:00Oh and there's always opportunity costs! What...Oh and there's always opportunity costs! Whatever you put your money or time into has the cost of what you would have put your money or time into had you not put it where you did.Just Janicehttps://www.blogger.com/profile/06002680972898096266noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-7911162921272049552010-03-11T13:38:49.179-08:002010-03-11T13:38:49.179-08:00Maniac78 - redo your calculation at 5.5% and ask y...Maniac78 - redo your calculation at 5.5% and ask yourself if you're ready for that kind of rent increase in the future. Also, you will have to be paying some of the principle off (we don't do interest only mortgages in Canada) and figure in what you think might happen in terms of price appreciation or depreciation to figure it out.<br /><br />If in 5 years the house is only worth $400,000 but you paid $500,000 for it what position would you be in? Would you still have positive equity? You will have lost $20,000 per year, plus the interest payments, plus the property tax, plus the maintenance. At which point you will have paid $18,000 per year in interest, $1,800 per year in property tax (conservative guess after homeowner grant) and $1,200 per year in maintenance (conservative in my opinion) - so $21,000 per year plus $20,000 per year in depreciation is $41,000 per year. You can get one heck of a great rental in a great neighbourhood for $3,416 per month.<br /><br />Also, remember to compare apples to apples...don't compare a house in langford to own to a house in fairfield to rent.... Compare a similar house in langford to rent (go to craigslist, used victoria, or any number of the property management companies) to what you're considering owning.Just Janicehttps://www.blogger.com/profile/06002680972898096266noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-4328495945671073172010-03-11T13:25:38.323-08:002010-03-11T13:25:38.323-08:00There is no opportunity cost involved in my calcul...There is no opportunity cost involved in my calculation since it does not include any downpayment at all. Yes true maintenance might cost another $100 or so a month but it's still cheaper than renting an equivalent place plus you get all the benefits of homeownership. I've looked at rentals lately and boy most of them are total dumps or are really expensive or have basement suites.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-4111141622953011232010-03-11T13:19:03.649-08:002010-03-11T13:19:03.649-08:00And one again, someone shows up with half an argum...And one again, someone shows up with half an argument for home ownership.<br /><br />Add in all of the other costs, including opportunity costs, then let's compare to equivalent rents.HouseHuntVictoriahttps://www.blogger.com/profile/07456914359088891317noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-30257913490391042932010-03-11T13:09:49.675-08:002010-03-11T13:09:49.675-08:00So I can buy a house in langford for just over 500...So I can buy a house in langford for just over 500k, nice nearly new with a fairly small yard but definetely a good place to call home. Now just using a stupid formula of 500k * 3.6% I get $18000 a year in interest. Divide that by 12 and you get $1500. Property tax on a place like that after a homeowner's grant is like $160 per month which brings us to $1660. I dare anyone here to find an equivalent rental property for cheaper than that.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-32663779015514889582010-03-11T11:15:23.073-08:002010-03-11T11:15:23.073-08:00Robert -
Why are houses in Canada 50% more expensi...Robert -<br />Why are houses in Canada 50% more expensive than in the USA? Didn't you get the memo from Flaherty & co. "It's different here.".<br /><br />FYI all sorts of other stuff still has a lot of price disparity - the stroller I want is $560 here - it's $460 in the USA. Most books and magazines also seem to have a price disparity.<br /><br />Of course, the manufacturers have done a fair bit of work to keep things from 'level out'...they protect their markets. For example I can't seem to order the stroller I want online and have it shipped to Canada. Many auto manufacturers won't stand behind their warranty for cars imported into Canada from the US. It might be worth looking into what is involved in importing a vehicle that is a couple of years old though...<br /><br />It sucks, particularly as NAFTA was supposed to bring free trade.Just Janicehttps://www.blogger.com/profile/06002680972898096266noreply@blogger.com