Quote:
Originally Posted by tiger_handheld  good luck on that thinking  call me when vancouver hosue prices go back to around 500-600k. |
Houses maybe, yet condos have a long way to fall.
I've said it in other threads: 35yr mortgages and low rates cannot continue to bring in new buyers forever, and low rates will eventually end (and hopefully 35 yr mortgages will disappear like 40yr mortgages did!).
$500K @ 6% over 25 yrs == $3220/mn
$500K @ 4% over 35 yrs == $2210/mn (31% cheaper)
$500K @ 5% over 35 yrs == $2520/mn (22% cheaper)
$500K @ 6% over 35 yrs == $2850/mn (11% cheaper)
So a whole bunch of new buyers rushed out and bought condos this year cause, on paper, they were 31%/mn cheaper and
prices still dropped 20% in some areas.
Wait till rates go up (
bond prices and fixed rates have already crept up) and its only 11-22% cheaper/mn at 5-6% rates.
I can afford $2200/mn, yet there's a risk that in 5 yrs I'll have gotten a $600/mn raise ($7200/yr == $10K raise before tax). Its unfortunate a lot of new buyers don't look at it this way, and unfortunately Canada might see a version of the sub-prime mess of the US when many people have the renew at higher rates and now they're paying a higher ratio of their income and carrying a higher debt ratio (or worse, not qualify to renew cause the ratios are too high).
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