Posts Tagged housing prices
Housing Prices Falling; Sooner or Later?
Posted by Top Home Loans in Economy, Mortgage News on August 31, 2010
On the news, radio, and newspapers everyone is talking about how house prices are expected to drop from 10% to 20%. At first it was stagnant growth, but now it is a bubble that is expected to burst over the next term of the economy; however, when can we expect housing prices to fall?
House prices aren’t like grocery store prices or stock prices. A house is only worth what a person is willing to pay for it. Since your house is not sold frequently, it is difficult to tell how much it is worth. When people list their property, they rely on the advice of a real estate agent to them how much they think that their property is worth. If the real estate agent is wrong, then no one will show up. If the real estate agent lists too low, then too many people will show up.
The fact is that now, no one is showing up to buy houses.
When people stop buying, people have to offer lower house prices to get people to buy. Lower prices can inspire people to buy even if they did not consider it before in the past.
How much is the difference between property values today and values if property values decrease by 20%?
A house today that would cost $600,000 would cost only $480,000 if the market dropped 20%. The difference is over $120,000. If you bought a house for $600,000 and the house dropped by that amount, would you want to stay in the market? Most likely not.
Usually, price increases tend to take years to increase; however, house bubbles bursting take a short amount of time. It can only take a time less than a year to drop into lower values. With the herd mentality, once some people get scared, then everyone becomes scared. Expect that once house prices start dropping, that they will drop fast.
When do you expect house prices to bottom out? When will you be buying a house? Leave your response in the comments below.
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Mortgage Bits: House Upkeep; What does it really cost to own a home?
Posted by Top Home Loans in Mortgage Advice, Property Management on December 13, 2009
when purchasing a property, most buyer’s number one question is: how much are the mortgage payments? Buyer’s usually think that if they can afford the mortgage payments, then they must be able to afford the property.
Unfortunately, this is the furthest thing from the truth. Upkeep, especially on condos, can be as expensive, if not more expensive, than the property itself. For example, let’s take a look at the average property in Toronto.
In Toronto, the average property value is approximately $450,000. This property would produce the following upkeep fees if it is a free hold unit.
? Property taxes: 350/month
? Heating: 75/month
? Electricity: 100/month
? Cable and Internet: 120/month
? Phone Service: 60/month
? Repairs and Upgrades: 200/month
Total upkeep per month: $905
If you look at a condo, then you would also need to factor in condo fees and parking rental fees. These fees alone can be as much as an additional $1000 per month.
Keep in mind that as your property increases in value, so does your upkeep. All the upkeep items are aligned with values, so you should expect to pay more as your value goes up.
Unfortunately, just because you have the money to buy a property doesn’t mean that you should if you can’t afford the upkeep. Make sure that you calculate the upkeep as well as the mortgage payments before you decide to purchase a property.
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Mortgage Bits: Home Ownership is Less Affordable then before the Recession
Posted by Top Home Loans in Economy, Mortgage Advice, Mortgage News on November 4, 2009
The good news is that the recession ended several months ago. The bad news is that unemployment numbers are at record highs, housing prices have continued to rise in many places in Canada, and emplyment income is depreciating.
Condsiderly, all the negatives in the market, prices continue to be bid up in some markets. In the micro leave, this will be good in the short run, but it will have negative impacts in the long run.
Before the US collapse, the average mortgage was 125% the average annual household income before the housing collapse. In Canada, the percentage of household income is aproximately 137%.
Not to mention, we have shorter mortgage terms, commonly used variable rate mortgages, and high exposure to volatility. All these elements seem to be working against Canadians.
These facts can be argued for or against and there is no clear cut law on new scenarios. What do you think? How will the market play out over the next few years?