With one sleep left in the decade, will the questions to this tormented blog never vary?
“I really enjoy reading your blogs. Me and my fiance are getting married this May 2011. We have agreed to live with her mom until we find a house and are ready to buy, thinking end of 2011. We have about $110,000 right now and hope to have another 50k saved by end of 2011 that we could put down and our price range is about $420,000-430,000. We make more then $130,000k combined before tax, I am 30 she is 25 and live in the GTA, we are looking in Mississauga or Vaughan. Do you suggest to hold off until 2012? or if we do buy end 2011 will we see some significant price drop thus picking up a good deal. I am just concerned with the amount of drop you anticipate being in the GTA. “
First, get a life. Grow a set. Be a guy, dude. If she’s good enough to marry, she’s deserves a home. No, you don’t have to buy it. And, no, home is not where Mom is. Go lease a one-bedroom condo rental from some desperate spec flipper who’s getting crushed, and carry the throbbing babe over the threshold.
If you think trading that experience for a bigger down payment is okay, check your pants.
Now, as for the market I’ve said my piece. Sales declines in 2010. Check. Price declines in 2011. Coming. How fast and how deep will depend on the psychology of the flighty masses we live among. Right now they’re not expecting higher mortgage rates or a sucky economy, along with structural unemployment, higher taxes or a federal budget realtors will hate. But all that is surely coming, and will ignite the correction in Toronto that morasses of despair (like Calgary) are already grappling with.
Will prices be lower in a year? I expect it. But I also expect it’ll be the beginning of a long move lower, not the bottom of a correction. It might be best to rent that condo for two years, by which time your nest egg may have swollen and towered. Sans mom.
Speaking of weenies, we now flash to Richmond BC, jewel of the Pacific Rim and home of a delusion which threatens to surpass that of neighbouring Vancouver, where there’s actually a culture. One of the local dogs sends this report:
“Approximately 2 weeks ago my friend decided they would sell their home in Richmond, BC and something rather interesting happened. The house went on the market at a lower price than valued at ($800K) and within the week it sold….for $1.1M. Seems that a bidding war was started by the low price and the 200+ people that viewed it on one weekend that resulted in almost 50 offers in a 2 hour time frame. Offshore money from Asia it seems. The thing is, this is not uncommon here. Yes, the market is down in general, we see it in our business, but wow, how long can this last?”
Then he adds:
“I forgot to mention, another friend of mine is looking at purchasing a new home and a lot in a high end area of Langley and he can get a home for about 15% less than it was listed for a few months back and the adjoining property approx 20% less. Welcome to BC, home of insanity.”
So why do houses in the most expensive region of the country keep rising in value, while 20 minutes away buyers are treated like visiting deities? Is this all because a bunch of linguistically-challenged Mainland Chinese think ‘Richmond’ means ‘rich man’? Or does it prove the Lower Mainland has found a way of escaping the real estate swamp that’s invaded most of the rest of the continent?
Who cares? It’s the human condition. As I reminded you recently, people lust after things that are hot and expensive (like, say, January Jones) while eschewing those which seem to be out of favour. This is why idiots mount bidding wars for ugly houses they ‘ve been inside for five whole minutes. The more people elbowing their way through an open house, the more offers likely to materialize. Now compare that to the lonely bargain in the next town, where a superior property can go for a song to the contrarian smart enough to sniff it out.
Want proof of the power of sentiment?
Again, look south. Real estate sales in the USA (the place most like this one) are down 25% from last year (which sucked), and the supply of unsold homes is up 50%. When Standard & Poors issued that big housing report this week (showing prices falling at a 15% annual clip, four years into a disaster), the head guy said: “The double-dip is almost here. There is no good news in this report.”
Because Americans can’t sell their homes, many of them can’t move to find work. Because housing values plunged so dramatically and quickly, people who were 10 years into paying off a mortgage found themselves under water. Surveys of people aged 20 to 35 find that a home is about the last thing most would think of sinking money into. Most telling, those folks who can afford to buy aren’t because nobody else is. So everyone expects prices to keep falling. And they do.
However, no matter how many times I try to explain that orgiastic buying is just the flip side of real estate apocalypse, just as fear mirrors greed, most people could care less. They’re busy wanting what everyone else wants, conga-lining their way through life, horny for stuff, oblivious to what looms.
OK, you can go now. HNY.