Johnzz
Active Member
Well said Eug.
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So, um, when are condo prices supposed to drop again?
- Thread starter JayBee
- Start date
simuls
Senior Member
To the first question, of course there is a correlation, but it is by no means uniform, which is what a national average of housing prices tries to convey. The health of a national market can be completely contradicted by the health of a local market, even though they share the same mortgage rate. If the correlation were direct then instead of only 11 areas of Toronto showing price increases (or 15%), the whole of Toronto would have (and none would have had significant price reductions as many areas of Toronto did), as well as Regina, Halifax, St. John, etc.
To the second question, I think that the gap is narrowing substantially and while I wouldn't go so far as to say that yes Toronto/Regina are no different than Toronto/Chicago, the very existence of have/have not provincial designation/transfers in our country shows that national boundaries are not necessarily indicators of economic health/interdependence - geographic might figure more prominently. Newfoundland has not been sharing in this recession to anywhere near the same extent as rural Ontario has.
You use a comparative sentence, but don't follow through on the comparison ie: using neighbourhood averages as representative of regions...which of course would be equally foolhardy, and not something I'm suggesting at all. Real estate doesn't occur in a bubble and of course these are all factors.
What I'm saying is i can see no possible benefit, to anyone, in using a national average to convey health/sickness/prosperity/poverty when it comes to real estate. It's like taking East End Vancouver adding it to Forest Hill dividing by two and saying, hmmmmmm... seems like it's ok. It's a ridiculous and pointless exercise that gives us absolutely no information that is of any practical use or help.
urbandreamer
recession proof
Question:
Would it be wise to wait for interest rates to rise, say to 7-10%, then buy? Lock in when interest rates fall again, say about 5-10 years after buying? (The bet: higher interest rates = lower house price.) A Vancouver real estate guru is recommending that idea (to insiders/smart money.)
Would it be wise to wait for interest rates to rise, say to 7-10%, then buy? Lock in when interest rates fall again, say about 5-10 years after buying? (The bet: higher interest rates = lower house price.) A Vancouver real estate guru is recommending that idea (to insiders/smart money.)
Ken
New Member
Interest rate is a big factor to home price. But I don't think your 'bet' is good. Of course high interest rate pushes the home price down, but who is controlling the interest rate? The government, and they WILL (99%) manipulate the interest rate so that home price will be stable, or stably trending up. This is what's happening right now.
The 1% chance that they will mess with home price stability is there is hyper-inflation, and the government has the courage to tackle hyper-inflation down.
The 1% chance that they will mess with home price stability is there is hyper-inflation, and the government has the courage to tackle hyper-inflation down.
Eug
Senior Member
As Ken (sort of ) suggests, you could be in for a very long wait. Plus, even if it does happen, it really only helps you if you can pay most of the house off in cash up front. Otherwise you'll just be in the same boat as everyone else who buys at the same time... buying a house that's priced somewhat less, but paying through the nose in interest.
It's up to you if you would like to ignore that information. The rest of us would prefer not to be ignorant of the available data.
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vultur09
Banned
Toronto faces first employment-rate decline in 14 years: report
Although this article is older, it is the sort of information that you need to determine the strength of the local housing market in the near future.
That's the biggest factor in my opinion. Increasing house prices in the face of skyrocketing unemployment makes no sense to me.
http://network.nationalpost.com/np/...ployment-rate-decline-in-14-years-report.aspx
Although this article is older, it is the sort of information that you need to determine the strength of the local housing market in the near future.
That's the biggest factor in my opinion. Increasing house prices in the face of skyrocketing unemployment makes no sense to me.
http://network.nationalpost.com/np/...ployment-rate-decline-in-14-years-report.aspx
simuls
Senior Member
daveto
Active Member
Home equity represents a significant portion (40-60%) of consumer wealth (source statistics canada). As national house prices change, so too does home equity. This influences consumer behaviour. Greater equity=greater consumer spending.
I'm sure the relevance of consumer spending doesn't need to be explained?
simuls
Senior Member
No, but it still doesn't answer my question. How will knowing this affect your decision to buy a home?
daveto
Active Member
That wasn't your question. You said there is no justification for the media to report national housing price movements. I trust we are now in agreement that there is indeed great value in reporting those price movements?
simuls
Senior Member
daveto, my assertion is within the context of this thread, which is "when are condo prices going to drop again", and a national average will not help any homeowner make any decision to buy/not to buy, will it go up/will it go down in value.
Even that being said though, it's not like 10 years ago, when houses nationally were worth, on average, 60% less than they are now that people spent less. they didn't. It's a predictor of nothing. Also, in Canada, national average house prices have kept their value extremely well during this recession, and yet spending has ratcheted down. Still no correlation.
Even that being said though, it's not like 10 years ago, when houses nationally were worth, on average, 60% less than they are now that people spent less. they didn't. It's a predictor of nothing. Also, in Canada, national average house prices have kept their value extremely well during this recession, and yet spending has ratcheted down. Still no correlation.
cdr108
Senior Member
Not when the BoC has reduced their prime rate to historic low of 0.25% to stimulate consumer spending, when we didn't need it.
If it were not for their intervention, you wouldn't be so sure with your assertion.
Take a look at historic trends beyond the past 10 years.
daveto
Active Member
A rising tide lifts all ships, and vice versa.
If my prices in my local market are increasing, but the national market is decreasing, then that is cause for concern wrt the viability of the prices in my local market. As the national prices decrease, consumer equity decreases, consumer spending decreases, employment decreases (including in my local market), and with higher unemployment in my community there will be downwards pressure on local housing prices.
simuls
Senior Member
As has clearly been the case here in Toronto where average prices are increasing, while employment is decreasing, consumer spending is decreasing, etc.
I have a feeling that your argument against the above
to quote one of my favourite UT members
