Real Estate

Does anyone believe the constant "housing market crash" articles coming out?

  • Last Updated:
  • Dec 14th, 2020 2:19 pm
[OP]
Deal Guru
Aug 14, 2007
10961 posts
2080 upvotes
Toronto

Does anyone believe the constant "housing market crash" articles coming out?

Maybe I live in a bubble, but my gf and I just put a purchase offer / agreement in to which we're waiting on the buyers acceptance or decline. Offer was for $600,000.

Alot of money for us? Yes.

However. Since the recovery after 2008 everyone kept telling me to wait, itll come down, just be patient.

Well, guess what, every time I started looking and found something I liked (when I was single) everyone kept saying to wait. I listened like an idiot. Now I'm over paying.

One of the main reasons we're buying is that we're both done with renting. If anyone saw my rants about a certain landlord they would know the crap that I have dealt with where I am. To the point where I never want to rent again if I don't have to. The way I see it is why pay someone else's mortgage when we can have our own. Alot of money per month yes, but everything split 50/50 it's not too much more than what I was paying on my own per month. So why not?

If we get this home, I'll be happy to own, will I be mad if prices take a big drop? Nope, because it won't be long before prices skyrocket again.

The one i just had pop up on my phone stated RBC saying a ton of deferred mortgages are now delinquent.

My thoughts are, and again perhaps I'm living in a bubble are that every business I see is open and operating (outside of the overly cautious lockdown areas) and I don't see a crap ton of jobs being lost. Many have been able to save a ton of money while being at home. I know I have...

I feel that with all the money the government has been throwing at people to stay afloat would make it far less likely for an economy crash, especially seeing as how the vaccine is right around the corner...

So, what do you think? See a major dip in prices coming? I sure as hell don't. It's still a sellers market. The home were hopefully purchasing for $600,000 if listed on the market would easily go for $675,000+ (3br, 2bth) even though it's older and needs work. The last one we saw 3 weeks ago was stupidly listed at $500,000 (only so the real estate agent could say sold $100K over asking) and sold for $650,000).

Just looking for some insight and thoughts.
45 replies
Deal Expert
Aug 22, 2011
35517 posts
21566 upvotes
Center of Universe
Crash, nope.
Cool off a bit, yes.
Mortgage rates are stupid low.
Sr. Member
Apr 8, 2010
779 posts
430 upvotes
toronto
hard to know and you've heard it too... the so called experts have been calling for a correction/ crash for the last 10yrs.

if you can afford it, i say pull the trigger
Deal Addict
User avatar
Nov 9, 2003
1434 posts
244 upvotes
Grimsby
House prices along with everything else will creep upwards, always has.

Hopefully your offer will be accepted, if so move in and enjoy ownership.

Over the coming years you can negate some of the cost by increasing your monthly payments or occasional lump sum if banks still allow that.

I created a spreadsheet with the full period so I could juggle numbers at home before visiting my bank at mortgage renewal time. Saved us thousands and we became outright owners much sooner.

Good luck with the purchase.
Deal Addict
Feb 4, 2010
4291 posts
3079 upvotes
XtremeModder wrote: Maybe I live in a bubble, but my gf and I just put a purchase offer / agreement in to which we're waiting on the buyers acceptance or decline. Offer was for $600,000.

Alot of money for us? Yes.

However. Since the recovery after 2008 everyone kept telling me to wait, itll come down, just be patient.

Well, guess what, every time I started looking and found something I liked (when I was single) everyone kept saying to wait. I listened like an idiot. Now I'm over paying.

One of the main reasons we're buying is that we're both done with renting. If anyone saw my rants about a certain landlord they would know the crap that I have dealt with where I am. To the point where I never want to rent again if I don't have to. The way I see it is why pay someone else's mortgage when we can have our own. Alot of money per month yes, but everything split 50/50 it's not too much more than what I was paying on my own per month. So why not?

If we get this home, I'll be happy to own, will I be mad if prices take a big drop? Nope, because it won't be long before prices skyrocket again.

The one i just had pop up on my phone stated RBC saying a ton of deferred mortgages are now delinquent.

My thoughts are, and again perhaps I'm living in a bubble are that every business I see is open and operating (outside of the overly cautious lockdown areas) and I don't see a crap ton of jobs being lost. Many have been able to save a ton of money while being at home. I know I have...

I feel that with all the money the government has been throwing at people to stay afloat would make it far less likely for an economy crash, especially seeing as how the vaccine is right around the corner...

So, what do you think? See a major dip in prices coming? I sure as hell don't. It's still a sellers market. The home were hopefully purchasing for $600,000 if listed on the market would easily go for $675,000+ (3br, 2bth) even though it's older and needs work. The last one we saw 3 weeks ago was stupidly listed at $500,000 (only so the real estate agent could say sold $100K over asking) and sold for $650,000).

Just looking for some insight and thoughts.
Hmmm seems like you haven't learned the lesson. Stop asking and worrying about what other people think, it's just their opinion, not fact or gospel. Why do you want to know other people's thoughts? Is it so you can doubt yourself if they don't agree with yours? Do what's right for you and if you have to pay a bit more, so be it. In the end there is no right or wrong, there just IS.
Deal Expert
User avatar
May 10, 2005
36153 posts
10256 upvotes
Ottawa
The price of the house is somewhat immaterial.....after you buy it. That is because you are living in it and are happy.
The price is now only important if you are going to sell.

The big point/issue is if you can afford it. Deferred mortgages were only possible because of the pandemic...they only mean you add the missed payments to the other end of the mortgage. In default means the homeowner cannot pay now. Will they lose the house? Maybe.

The key for you is can you afford the payments...even if there is an adjustment to the mortgage rates when this pandemic stuff is all over?? Prices are up but rates are down so more people thunk they can afford to buy but, when normality returns...can they sustain the payments??
The Government cannot give to anybody anything that the Government does not first take from somebody else.
Member
Oct 28, 2013
394 posts
326 upvotes
Toronto
When we bought our first house in 2003 we were seeing those articles about a housing market crash. We thought we were buying high at $135k for our 3 bedroom home. We've moved 4 times since then and every single time we've worried that we bought high. The last time, 7 years ago, we bought for $490k and I felt sick because that seemed high for our house. And now the market value is approx $850k. The "housing market crash" articles have been out for many years and I used to keep thinking that it was coming any time, but I've been in the market for almost 20 years and we haven't seen a crash... yet. LOL
Penalty Box
Jun 24, 2015
4704 posts
1386 upvotes
0 downvotes
and even if it does "crash" it will rebound eventually so if u sell during the crash your screwed but if u wait it out you will be unaffected and have nothing to worry about
Hi
Sr. Member
Jun 4, 2020
750 posts
663 upvotes
Clarington, ON
Small corrections.... Yes. Crash... No
Deal Addict
Nov 24, 2004
4126 posts
701 upvotes
Toronto
I would concur that what matters in the long term is not the absolute value of your home, but instead your ability to afford it (not just the mortgage, but also property tax and maintenance), and perhaps also the value of your home relative to what you would want to eventually move up to.
Deal Fanatic
User avatar
Dec 4, 2009
5025 posts
1354 upvotes
You only overpaid in relation to how you measure value. In relation to the real world, you paid what the market demands.

Just as others have mentioned, the only real factor that matters in housing cost is affordability. Can you afford the purchase price and all the associated maintenance/operating costs?

The only other time it might matters is when you wish to sell and where you wish to move to. If you're going from GTA (or GVA) and moving to a more rural area (or less "active" market) you'll cash out and make few bucks. If however, you're staying in those areas it won't matter at all. Sell high, you're gonna buy high. And vice versa.

If however, you're moving from a rural area to the GTA/GVA, well, bon chance with that.
"I'm a bit upset. I've been grab by the back without any alert and lubrification"
Lucky
Sr. Member
Dec 9, 2013
608 posts
491 upvotes
Toronto
Your principal living premises shouldn't be viewed as an investment first. Just view it as a home that provides shelter for you and your family. If the property value increases, great, that's just a bonus, only if you sell (but you will always need somewhere else to live).
[OP]
Deal Guru
Aug 14, 2007
10961 posts
2080 upvotes
Toronto
hierophant wrote: Hmmm seems like you haven't learned the lesson. Stop asking and worrying about what other people think, it's just their opinion, not fact or gospel. Why do you want to know other people's thoughts? Is it so you can doubt yourself if they don't agree with yours? Do what's right for you and if you have to pay a bit more, so be it. In the end there is no right or wrong, there just IS.
I'm just asking for opinions, I'm not doubting myself and we've done the math playing with interests rates slightly higher and it looks good for us.

To me I feel that since we do have an opportunity to buy for under what it would sell for on the market, and we both like it then why continue paying some ******* mortgage for them?
Deal Addict
Feb 4, 2010
4291 posts
3079 upvotes
XtremeModder wrote: I'm just asking for opinions, I'm not doubting myself and we've done the math playing with interests rates slightly higher and it looks good for us.

To me I feel that since we do have an opportunity to buy for under what it would sell for on the market, and we both like it then why continue paying some ******* mortgage for them?
Exactly just do it, which is why I'm asking why asking online strangers their opinions and thoughts on your taking the plunge? I'm just asking because I know I often do that because I want validation to go ahead and do something when I'm unsure and have learnt that's not good approach, at least for me because often people are just projection their own worries, fears and insecurities.

Either way, good luck! I hope you find a home to your liking :)
Sr. Member
Dec 5, 2009
518 posts
530 upvotes
Look at the track records of the people writing these articles. Look at their motivation- most likely they are building their brand off and making their living off of these types of articles. Lots of people being taken to the cleaners and being baited by these “bears” (quotes as it could just be a persona, you know nothing about their personal lives or situation) and taking the full hook, line, and sinker. It’s the same as a permanent bull. Proceed with caution, otherwise, best to ignore.
Jr. Member
User avatar
Sep 5, 2018
171 posts
269 upvotes
National Bank predicting 5% base case price drop 2021: https://betterdwelling.com/national-ban ... ice-drops/

RBC putting "greater weight" on home price declines, possibly 7% 2021 base case: https://betterdwelling.com/canadas-larg ... -declines/

In the same breath, the same analysts from these banks are saying it could go anywhere from +6% to -30% next year. The real answer is predicting the market is a fool's errand. However, just as with economic market cycles, you can protect yourself by not buying during complete euphoria, or if you are buying in a period of euphoria (as I too am looking), know what your max $ is based on your budget, leave enough after all expenses and at least $1000/m in supplementary spending to have at a minimum $1500 -2000 each month left over. If you're barely scraping by after expenses then I'd advised against buying anything.
Late Cycle Investing
Member
Jul 18, 2020
407 posts
631 upvotes
I don't understand why someone is down voting this thread. It is not like OP is buying an investment property. Anyway good luck OP, I hope you will win the bid.
Deal Addict
Jan 15, 2017
3901 posts
3355 upvotes
No, I am not expecting a crash. I am also not expecting prices to continue to climb at double digit annual increases. Eventually, affordability really does become an issue.

I also agree with a previous poster that the price that you paid is only relevant when you go to sell. The movements in the overall market may mean nothing when it comes time to sell your specific home. Your home may out pace the market.

I find our fascination with home price gains a bit nuts anyway. As a homeowner, I realize that I have a lot of money invested in my home. I truly get that. And I also get that I need a place to live. And I get that I want it to increase in value. Easy money. What I don't get is why we would be upset if the house lost a little value but think nothing of buying a couple of vehicles that cost $50K each that we know from day one that we are going to lose money on.

Buy the home and move in and enjoy it.
Deal Addict
User avatar
Dec 16, 2015
2688 posts
2342 upvotes
Technoking
lechan wrote: I don't understand why someone is down voting this thread. It is not like OP is buying an investment property. Anyway good luck OP, I hope you will win the bid.
The bears are downvoting it🤣
To the moon
[OP]
Deal Guru
Aug 14, 2007
10961 posts
2080 upvotes
Toronto
lechan wrote: I don't understand why someone is down voting this thread. It is not like OP is buying an investment property. Anyway good luck OP, I hope you will win the bid.
Thanks.

This is actually a private sale. Neighbour was very good friends with my step father, he died. Son is responsible for selling the home and he's willing to sell it to us for $600,000. No real estate agent to list it at 550,000 and sell for 650,000+, etc and has been honest and very open about the home.

Roof was done last year, deck last year, furnace 5-6 years ago. He's replacing all the windows and a side door as well.

Handed over the purchase agreement yesterday and in his quick glance over before his lawyer gets it he said he sees 0 reason to decline the offer.

And no, this is not an investment property at all. Sure it may not be a forever home but we have the opportunity to buy and not pay a slum lords mortgage at all. After 5-6 years of renting if I can buy and maybe have less money at the end of each money then I'm going to buy. We won't be scraping by with $0 left each month, not even close as long as we budget more strictly and all that.

I've seen homes for $499,999 that easily need $100,000+ in renos, and that's being conservative.


As for the banks putting out those articles, I feel like it's them trying to manipulate the market. And it has never seemed to hold true. My problem is is that I don't want to follow this advice of hold off for now because knowing how history has played out, the total opposite will happen.
Last edited by XtremeModder on Dec 11th, 2020 4:43 pm, edited 1 time in total.

Top