Housing Market

[nobbie48]

Sorry if this has been mentioned already, I didn't feel like reading through dozens of posts.

Your primary residence should never be treated as a speculative investment. If you're not able to settle in a particular area for at least 5 years, then wait until you can, and save/invest like a mofo in the meantime. Then when you settle you can buy a property in that area and let time do its thing to protect your property value from market swings. Return on investment should only be a secondary concern when looking at home ownership, the real benefit is the eventual reduction of living expenses once your mortgage is paid off.

So with that in mind, your first question should be "where's a good place for us to set roots for at least the next 5 years?", and only then ask about an area's potential for increased valuation as part of a larger formula to find the most home you can afford.

Good advice. The term "Flipping" rolls off the tongue so easily just like "Buy low, sell high" on the stock market. There are no guarantees.

I knew someone who committed to a new house and took a long closing so his old one would appreciate another 40 grand and he'd have a smaller mortgage. Prices crashed and it went the other way but he was committed to the big price on the newer home.

It is said that Joseph Kennedy made his killing on the US Stock market by getting rid of his stock before the crash of 1929 because a shoe shine boy started giving him market tips.

So..........now we have real estate advice being handed out on a motorcycle forum. Time to sell.

 

[GreyGhost]

Sorry if this has been mentioned already, I didn't feel like reading through dozens of posts.

Your primary residence should never be treated as a speculative investment. If you're not able to settle in a particular area for at least 5 years, then wait until you can, and save/invest like a mofo in the meantime. Then when you settle you can buy a property in that area and let time do its thing to protect your property value from market swings. Return on investment should only be a secondary concern when looking at home ownership, the real benefit is the eventual reduction of living expenses once your mortgage is paid off.

So with that in mind, your first question should be "where's a good place for us to set roots for at least the next 5 years?", and only then ask about an area's potential for increased valuation as part of a larger formula to find the most home you can afford.

This all makes complete sense until the government creates tax law and makes this investment one of the very few that do not attract tax. That allows for a modest return that still beats typical investments.

The capital gain free should have a lifetime max of something like $500,000. I know a couple that live in a 12,000+ sq ft house and they do not ever use 10,000 feet of it but they needed somewhere for their money to grow tax free, that's messed up.

 

[Baggsy]

You want your first place to stay low in value, to keep the property taxes down,
and then rise like a rocket before you want to sell.

Successful speculators tend to buy small knock downs with lots of land in up and coming neighborhoods.
Some are also real estate agents and know the product, and how to sell it.
You're not going to compete with them as a first time home buyer.

Buy a place where you want to live, and would be happy to settle for a while.
One of our main criteria was good schools for the kids.

Some friends bought in Orangeville a long time ago.
They have some decent land and a nice house with a pond,
but had to build there own shelter, for the kids to wait in, for the school bus.

 

[Ducati911]

I should also make a topic on which home builder is good. I began researching and finding a few builders are ones to stay away from like Mosaik and Mattamy. Anyone here know which builders to stick with when house shopping? No one wants to spend 750 to 800k on a house made by a kindergarten graduate.

 

[Baggsy]

I should also make a topic on which home builder is good. I began researching and finding a few builders are ones to stay away from like Mosaik and Mattamy. Anyone here know which builders to stick with when house shopping? No one wants to spend 750 to 800k on a house made by a kindergarten graduate.

If they're working piecework, then it's likely that they will all have some issues. If you're racing to get it done, or meet a quota, it's harder to take pride in your work, and fix mistakes.

Some of the best workers I've seen were kindergarten graduates, if they made it to kindergarten. You don't need a Ph.D. To do a job well.

 

[crankcall]

Any of the large volume tract home builders have the same challenges. Its not a custom home , its built to a price point by guys that are paid by the sq foot. They aren't bad guys and they aren't doing a crappy job on purpose , however the pressure is on to put hardwood down while the cement is curing in the basement, drywall is taped and spray primed, fittings give 'meets code" a whole new meaning.

 

[nobbie48]

Any of the large volume tract home builders have the same challenges. Its not a custom home , its built to a price point by guys that are paid by the sq foot. They aren't bad guys and they aren't doing a crappy job on purpose , however the pressure is on to put hardwood down while the cement is curing in the basement, drywall is taped and spray primed, fittings give 'meets code" a whole new meaning.

The consumer can also be part of the problem. They're tight on cash but expect granite countertops and marble floors. Champagne taste, beer income and the builder has to adjust.

What is so great about granite?

I know a few custom builders that have stepped out of the new home market because they can't compete price wise and still maintain their standards.

 

[Matt Rain]

Roughly, at 12% a million dollar mortgage is about $10,000.00 a month. (My price was much less)

At today's rates it's around $2500.00 a month. You can see where people can afford crazy prices. Will higher rates ever come back?

On a 75-year mortgage maybe. It's closer to $5500 a month. Almost pulled the trigger on a downtown 4-plex in 2012 but money woulda been super-tight.

We still rent and stash the extra disposable income in index funds. No stress.

 

[LePhillou]

Problem is, if you want a million dollar home, you need to have a 20% downpayment too... since they don't qualify for CMHC insurance.

So yes people can "afford" higher price mortgages, but you need
a) to have a lot to start off (200k isnt given to everyone)
b) to accept that you wont get that much for one friggin million dollars if you're looking to live in the city

 

[sevet]

Hard to believe how much Toronto housing prices have gone up. Just starting my working life now, I don't know if I'll ever be able to afford a detached house in a decent part of Toronto. Probably will end up leaving the city/country long before that happens.

 

[-D-]

Hard to believe how much Toronto housing prices have gone up. Just starting my working life now, I don't know if I'll ever be able to afford a detached house in a decent part of Toronto. Probably will end up leaving the city/country long before that happens.

It will all be decent soon enough, they will expand into the bad areas to acquire the space.
It amazes me how they avoid talking about the obvious elephant in the room...but then again they have to keep the bubble growing.
Income is nowhere close to what a basic house/townhouse/condo costs. Taxes are much higher etc...

And we wonder why we have to import people to make kids for the next generation of tax payers.

There is something fundamentally wrong with this pyramid.

 

[mimico_polak]

There is something fundamentally wrong with this pyramid.

Shhh....don't tell anyone...everything is fine....it'll all be fine....

When we went to the bank for a mortgage pre-approval and the like, we were approved for 550k as a maximum with a little wiggle room to 600k if it came down to it. Of course the realtor thought that's great so she sent us houses in the 600k+ range...so we fired her.

Now we ended up with a place for 420k in a small pocket in Mississauga, and even though we could've gone higher...we didn't want to stretch ourselves too thin should something not go according to plan. I'm comfortable at this range, and we can support the payments which was the most important thing to me. Wasn't what I was looking for from the start, but we're ready to live there for a bunch of years, and then take it as it comes.

 

[Joe Bass]

Re: new home builders. They build it. Get it done. Then go back for any issues. Then they do as little as possible until you get fed up and then they go away.
Custom home builders/ big home builders aren't much better. I remember checking one of the PMH lottery show homes. Build quality was atrocious.

Sent from my custom purple Joe Bass mobile device using Tapatalk

 

[EC2010]

OP, here are a few things I've learned from my experience. Just my humble opinion.

New homes:
- I hear Mattamy, GreenPark and Empire are pretty good.
- Even it's a new build, I'd still recommend a home inspection to produce a report to be submitted to Tarion

If you are buying an existing home:
- Never get emotional with a property. By this, I mean avoid bidding wars. A good realtor will know the true cost of the property and advise you properly on it. Bidding most often turns into over-paying, not worth it because why pay 2018 prices today?
- Do the comps yourself. Take a quick browse on MLS listing and know what the highs & lows in the neighbourhood of your desire. Understand why something is selling so low / high. Never pay to own the most expensive house on the street.
- I love pink walls and dated decors on prospects. Don't be turned off by things that can be changed. Look past the cosmetic stuff that can be changed, adjust your offer accordingly. Structural stuff is a whole different ball game, and me personally I avoid those.
- Stay within your budget.
- As principle residence, you can go as little as 5% down.

A bit on financing:
- When it comes to mortgage, I always look for the longest possible term (e.g. 30yrs), lowest possible monthly payment, and the flexibility of the mortgage product itself (prefer a home equity line vs. mortgage).
- Do not just only focus on rate. Rate is important, but shall not be the only deciding factor. Plus, a 2.5% vs. a 2.6% should not matter (stretched over 30yrs). If it does, you have to worry about affordability.
- Do not do accelerated payment - Instead do the lowest possible monthly payment, save up any extra money and make lump sum payments towards principle every year. Personally, I choose to be not in a hurry to pay down my mortgage, because it locks in and ties up my cashflow.

Good luck with your search.

 

[Riceburner]

Yep. Knew a few construction workers. They want to do a better job, but can't cause the builder is paying only so much for the amount of work and wants it done ASAP. Most builders will/must come back to fix "defects" up to a year. I had my builder rep almost on speed dial. A few things even went past the year, cause they were always active in the fix file. The file on my house was pretty thick. All in all it ended up ok. Especially since I sold for over 2x what I paid...after 10+ years. Buy where you want to live. Speculating for the lay person is a gamble. I knew of someone that bought 3 brand new houses to flip. A few years after completion the market tanked. He ended up selling the 3 for the price he paid for 2.

 

[ZX600]

I should also make a topic on which home builder is good. I began researching and finding a few builders are ones to stay away from like Mosaik and Mattamy. Anyone here know which builders to stick with when house shopping? No one wants to spend 750 to 800k on a house made by a kindergarten graduate.

I had a great experience buying from Tribute. Great customer service once we received the house and they took care of everything we asked right away.

The quality seem decent and had nm issues for the two years we owned the house. Of course it was only 2 years but I have heard many good things from people than own their tribute home for a long time.

 

[ZX600]

OP, here are a few things I've learned from my experience. Just my humble opinion.

New homes:
- I hear Mattamy, GreenPark and Empire are pretty good.
- Even it's a new build, I'd still recommend a home inspection to produce a report to be submitted to Tarion

If you are buying an existing home:
- Never get emotional with a property. By this, I mean avoid bidding wars. A good realtor will know the true cost of the property and advise you properly on it. Bidding most often turns into over-paying, not worth it because why pay 2018 prices today?
- Do the comps yourself. Take a quick browse on MLS listing and know what the highs & lows in the neighbourhood of your desire. Understand why something is selling so low / high. Never pay to own the most expensive house on the street.
- I love pink walls and dated decors on prospects. Don't be turned off by things that can be changed. Look past the cosmetic stuff that can be changed, adjust your offer accordingly. Structural stuff is a whole different ball game, and me personally I avoid those.
- Stay within your budget.
- As principle residence, you can go as little as 5% down.

A bit on financing:
- When it comes to mortgage, I always look for the longest possible term (e.g. 30yrs), lowest possible monthly payment, and the flexibility of the mortgage product itself (prefer a home equity line vs. mortgage).
- Do not just only focus on rate. Rate is important, but shall not be the only deciding factor. Plus, a 2.5% vs. a 2.6% should not matter (stretched over 30yrs). If it does, you have to worry about affordability.
- Do not do accelerated payment - Instead do the lowest possible monthly payment, save up any extra money and make lump sum payments towards principle every year. Personally, I choose to be not in a hurry to pay down my mortgage, because it locks in and ties up my cashflow.

Good luck with your search.

Horrible advice on not getting into bidding wars. Might not be for everyone but we went up against 8 people on our current home and won. Most houses in my street have sold in the past year for 50k more than what I paid and they don't have a pool like I do or anything special much better than mine.

It's all about setting your limit to a number you are comfortable with and not going above regardless if you lose the house or not.

You might be losing an excellent opportunity because this mentality of not going into bidding wars.

It's a sellers market today, you got to deal with it if you want to have all options available.

 

[EC2010]

Horrible advice on not getting into bidding wars. Might not be for everyone but we went up against 8 people on our current home and won. Most houses in my street have sold in the past year for 50k more than what I paid and they don't have a pool like I do or anything special much better than mine.

It's all about setting your limit to a number you are comfortable with and not going above regardless if you lose the house or not.

You might be losing an excellent opportunity because this mentality of not going into bidding wars.

It's a sellers market today, you got to deal with it if you want to have all options available.

So was the property priced for bidding? or it was priced at market value and people went nuts over it? Two very different mentalities and scenarios.

I was speaking to the latter... still stand by my comment. Not an advice, but my opinion.

Glad you "won" ... and hopefully you didn't overpay what the home is actually worth at the time. All I am saying is pay for what it's worth, and don't get emotionally charged because other people want it as well. Stick to budget and don't get caught up in the bidding frenzy.

 

[Baggsy]

We do the opposite of EC2010 for financing. Pay it off asap.

Our second house was a bidding war. (Not many for sale ever, in the neighbourhood). We offered a little more than asking, but with a flexible closing date for the sellers, as advised by our agent. The closing date closed the deal.

But as advised, don't get emotional, know what it's worth to you, and don't go above that.

 

[EC2010]

We do the opposite of EC2010 for financing. Pay it off asap.

Our second house was a bidding war. (Not many for sale ever, in the neighbourhood). We offered a little more than asking, but with a flexible closing date for the sellers, as advised by our agent. The closing date closed the deal.

But as advised, don't get emotional, know what it's worth to you, and don't go above that.

This is good advice on how to maintain leverage if a bidding war is inevitable. Adjust closing date to your advantage if you are going to be paying a premium

For example:

home is listed at $500K
Agent advised it is priced for bidding, goes to $600k on average in neighbourhood

people who gets emotionally charged may go beyond the $600k with the standard 30 day+ closing. You can go in with an offer at $588k and close in 2 weeks. You may win because the seller may need to offload fast for their next home also. Find out what the other side wants and see if you help provide a value. Cash isn't the only thing.

I got a downtown property under-asking recently employing similar tactic. I know... it's unheard of getting a downtown Toronto property below the listing price