Weighing the Options - Buying a House

[9-Iron Man]

I want to buy I house. I have for a long time now, but little things kept coming up. AdamsGirl and myself are finally in a position to actually go for it, however my Dad thinks otherwise. My Dad thinks that the housing in Edmonton is still very overpriced. We would be looking at houses around the $375 mark which are 3 bed, 2.5 bath homes around 1500 sq ft or so. Don't get me wrong, that is a lot of money. However after renting for the last 5 years, we are more than ready to take the plunge.

My question to pose to the THP members is this, do you think this is a good time to buy?

 

[JR]

My family has a house that we are considering buying as well.

 

[Johnboy12.5]

Hello 9-Iron. I'm no expert, but if you are in a cash position and don't have to suffer through selling a home to finance the purchase of a new home I think it's a great time to buy. There are a few questions I would ponder first. How stable is your employment situation and can you make payments with just one income if you have to? From your comment I guess Canada hasn't suffered through the same price erotion on housing that we've faced here in the states! Either way good luck!!

 

[Smallville]

What were the prices at the housing peak? What were the prices before it started going out of control? My house appraised this year at a couple thousand over what I paid for it in 2003. It was at its highest in 2007, when it was 25,000 above what I paid. I'm no expert, but figure if you can wait until prices are at 1999 or 2000 levels, that might not be a bad idea.

Seems like I am hearing more on talk radio to wait a little longer to buy, unless you just don't want to wait anymore. But hey, offer 80-90% of asking price, if they really need to sell, you might get lucky. Don't worry about offending anyone, you never know who might bite.

 

[adwillingham]

I'm not sure if the housing market in your area has had the same trends as in much of the US, but I would think that housing prices are at least very close to as far down as they are going. Just remember that your house will be a long term investment and prior to the last few years, prices have generally gone up over time.

Took me a while once we got married to be ready to buy, but at least with a mortgage, not all of your money is just being given away each month.

 

[Smallville]

I'm not sure if the housing market in your area has had the same trends as in much of the US, but I would think that housing prices are at least very close to as far down as they are going. Just remember that your house will be a long term investment and prior to the last few years, prices have generally gone up over time.

Took me a while once we got married to be ready to buy, but at least with a mortgage, not all of your money is just being given away each month.

Plus, it makes it easier to itemize your deductions. I got mine to 3 or 4 thousand over standard this year.

 

[Sean]

As you probably know each area of the country, and/or province, will be different with regards to the real estate market. Your father says now is not a good time to buy. Does he say why? What is the real estate market like in your area? Are there a lot of houses on the market that have been sitting there for a long time?

I can understand your wanting to get a house. Paying rent gets old, not to mention having your own place is just, well special. However, if there is nothing tying you to the area you could both pack up and move some place warm. There are parts of the US where that kind of money can get you a lot of house.

ps: plus another argument for getting a house is AdamsGirl need more space to hang her new golf clothes.

 

[Golf 'N Gator]

We bought our house in 1988 and have owned it for ten years. I tried to make as many payments as possible each year, often making 14 to 16 a year. Off the top of my head I can't tell you what the savings was, but it was a lot in interest. This is one thing you should talk over with the bank or whoever is going to hold your mortgage. I know my bank frowned a little on me making so many payments ahead, but mine was written so I did not have to pay all of the stated interest in the original loan. I had a fifteen year mortgage and payed it off in just over twelve. Home values have taken a serious hit the past couple of years and I'm sure mine is worth less now than four or five years ago but it has still been a good investment and I hope when I sell in ten years or so, that it will more than cover whatever we end up with in Florida when we retire.

 

[9-Iron Man]

Hello 9-Iron. I'm no expert, but if you are in a cash position and don't have to suffer through selling a home to finance the purchase of a new home I think it's a great time to buy. There are a few questions I would ponder first. How stable is your employment situation and can you make payments with just one income if you have to? From your comment I guess Canada hasn't suffered through the same price erotion on housing that we've faced here in the states! Either way good luck!!

Employment is good for both of us. Canada is in a stronger position and being in Alberta we have not seen too much of a drop due to the "recession".

What were the prices at the housing peak? What were the prices before it started going out of control? My house appraised this year at a couple thousand over what I paid for it in 2003. It was at its highest in 2007, when it was 25,000 above what I paid. I'm no expert, but figure if you can wait until prices are at 1999 or 2000 levels, that might not be a bad idea.

Seems like I am hearing more on talk radio to wait a little longer to buy, unless you just don't want to wait anymore. But hey, offer 80-90% of asking price, if they really need to sell, you might get lucky. Don't worry about offending anyone, you never know who might bite.

My Dad wants us to wait until there is a market correction so hopefully we can get the $375 house for $275. He's been telling me that we are due for a correction for the last two years. Prices are down about $35000 from the peak and are on the way up again.

I'm not sure if the housing market in your area has had the same trends as in much of the US, but I would think that housing prices are at least very close to as far down as they are going. Just remember that your house will be a long term investment and prior to the last few years, prices have generally gone up over time.

Took me a while once we got married to be ready to buy, but at least with a mortgage, not all of your money is just being given away each month.

Prices have been rebounding for the last year now. So we weren't hit as hard in the "recession".

 

[AdamsGirl]

As you probably know each area of the country, and/or province, will be different with regards to the real estate market. Your father says now is not a good time to buy. Does he say why? What is the real estate market like in your area? Are there a lot of houses on the market that have been sitting there for a long time?

I can understand your wanting to get a house. Paying rent gets old, not to mention having your own place is just, well special. However, if there is nothing tying you to the area you could both pack up and move some place warm. There are parts of the US where that kind of money can get you a lot of house.

ps: plus another argument for getting a house is AdamsGirl need more space to hang her new golf clothes.

LOL! Just a bit... hehe.... At the same time though, we are living in an apartment that doesn't really have a lot of space for us regardless. We had more stuff than we do now before we moved into this apartment 5 years ago because we needed to move and couldn't get the same amount of space as we had before. The other downside is that our onsite management is just pathetic!

 

[Smallville]

As you probably know each area of the country, and/or province, will be different with regards to the real estate market. Your father says now is not a good time to buy. Does he say why? What is the real estate market like in your area? Are there a lot of houses on the market that have been sitting there for a long time?

I can understand your wanting to get a house. Paying rent gets old, not to mention having your own place is just, well special. However, if there is nothing tying you to the area you could both pack up and move some place warm. There are parts of the US where that kind of money can get you a lot of house.

ps: plus another argument for getting a house is AdamsGirl need more space to hang her new golf clothes.

You can buy a lot of houses in California at bargain prices right now. When your housing market's bottom fell out more than about anywhere else, there are great deals to be had. I checked into it hard when we were considering a move out there. We could have bought in the Bay Area (not in San Francisco, but more inland) at just a little more than what houses cost out here, but you have to deal with their HIGH unemployment rate. I was out there for a month looking and found nothing.

 

[AZRhode]

As a broker in Phoenix Metro I think pricing is fantastic at the momoent. In some areas here, the pricing is near 1999/2000 levels and even if prices drop another 5% it's only a few thousand $.

Another major thing to consider is where interest rates are. They are LOW based on historical averages and even if prices drop a few %, a raise of 1% or more in interest rates would eat up that savings and more.

Also, a couple additional factors to weigh are potential tax benefits, the rental cost vs mortgage cost and if you would need to move in the near future. If you are buying, I would plan on a long term hold.

That's my .02 for you.

 

[lindy72]

+1 Smallville....I'm currently looking for a 2nd home (nothing big) in central Florida....Nothing is selling and every few weeks the prices keep dropping....It has to bottom out sometimes, I guess when is the big question....Your house appraisal isn't that bad....I've had 2 friends who bought houses in/near Va Beach in '05/'06...They both just sold them after being on the market over 6 months...1 had to bring $85K to the closing and the 2nd had to bring just over $100K.....Crazy that some people have had to pay to sell their houses....Hope it gets better soon for everyone's sake....

 

[cg13]

ive been tossing around the idea of buying a house too. Especially with the low mortgage rates. Im in a pretty unique position already - i own my condo and its paid off - so i dont have a mortgage right now - which is very nice. The time is right to buy here tho- as its considered a "buyers" market. home values have dropped and with the low mortgage rates - locking those in now for a 15 or 30 yr mortgage would be smart. We're saving up now for a down payments etc - and once we hit our number were going to seriuosly consider buying a home.

I think if you can afford it - now is as good a time as any to buy.

 

[Smallville]

Employment is good for both of us. Canada is in a stronger position and being in Alberta we have not seen too much of a drop due to the "recession".

My Dad wants us to wait until there is a market correction so hopefully we can get the $375 house for $275. He's been telling me that we are due for a correction for the last two years. Prices are down about $35000 from the peak and are on the way up again.

Prices have been rebounding for the last year now. So we weren't hit as hard in the "recession".

If they have been going back up, then if you're ready, I'd say go for it. Does your dad only think there is going to be a correction, or is he knowledgeable about such things? If he is, then you may want to wait. If he's just saying it because he thinks it should, then, you gotta decide if you want to go against his advice.

 

[9-Iron Man]

As you probably know each area of the country, and/or province, will be different with regards to the real estate market. Your father says now is not a good time to buy. Does he say why? What is the real estate market like in your area? Are there a lot of houses on the market that have been sitting there for a long time?

I can understand your wanting to get a house. Paying rent gets old, not to mention having your own place is just, well special. However, if there is nothing tying you to the area you could both pack up and move some place warm. There are parts of the US where that kind of money can get you a lot of house.

ps: plus another argument for getting a house is AdamsGirl need more space to hang her new golf clothes.

My Dad looks at the current state of the market and really doesn't like how it's been propped up over the last couple years with all the bail-outs and such. The market should have corrected at the start of the recession but it wasn't allowed to do so. Therefore, he thinks we are headed to a big drop once the crap hits the fan. He doesn't want us buying a $375 house only to have it be worth $275 and paying the full mortgage.

 

[9-Iron Man]

If they have been going back up, then if you're ready, I'd say go for it. Does your dad only think there is going to be a correction, or is he knowledgeable about such things? If he is, then you may want to wait. If he's just saying it because he thinks it should, then, you gotta decide if you want to go against his advice.

My Dad spent his full career in the finance business. He retired 13 years ago from a bank managers position. He has a keen interest in the economy and follows it closely. His opinion is in my reply to Sean. My main stumbling point is the decision between listening to myself or listening to him.

 

[Sean]

My Dad looks at the current state of the market and really doesn't like how it's been propped up over the last couple years with all the bail-outs and such. The market should have corrected at the start of the recession but it wasn't allowed to do so. Therefore, he thinks we are headed to a big drop once the crap hits the fan. He doesn't want us buying a $375 house only to have it be worth $275 and paying the full mortgage.

Another questions then: if you're going to spend the next 20 years there would it matter? Who know, it could go the other way too. Also, like any investment there is a risk attached to it, but at least with a house it's yours and you guys are living in it. Another thing to ask yourself, if not now, when?

 

[9-Iron Man]

Another questions then: if you're going to spend the next 20 years there would it matter? Also, like any investment there is a risk attached to it, but at least with a house it's your's and you guys are living in it. Another thing to ask yourself, if not now, when?

That is the million dollar question. He wants us to wait 1-2 years which is something we don't want to do. If we were to buy, we would be there for the long term.

 

[cg13]

My Dad spent his full career in the finance business. He retired 13 years ago from a bank managers position. He has a keen interest in the economy and follows it closely. His opinion is in my reply to Sean. My main stumbling point is the decision between listening to myself or listening to him.

He sounds pretty knowledgeable; I know nothing about real estate or buying a house so I have to rely on others for that kind of information. Read a book once on it hah; one of those dummy books- helped some I think.

I do know here in Columbus some of the real estate people that come to my bar say prices are headed back up- but still good to be a buyer not a seller


Tapping and talking since 2010.

 

[Redbird]

My Dad spent his full career in the finance business. He retired 13 years ago from a bank managers position. He has a keen interest in the economy and follows it closely. His opinion is in my reply to Sean. My main stumbling point is the decision between listening to myself or listening to him.

Here's the difference, if you're right and the price of homes increase even by 20K, your looking at an additional $20 a month over a 30yr period. If he's right, and your $375k home drops in price to the levels he believes, you will be in a world of hurt that has had some people turn a gun on themselves. That is unless you plan on staying in the home for the long, long, very long haul.

Now in the same breath you've been renting for 5yrs, so you're used to pissing money down the toilet. So it may not be a big deal to you, but a $100K hole is a big hole to dig out of.

 

[coolbreeze]

9-iron man, just saw this thread and I'll throw my 2-cents in, buy. I can't believe those prices you gave though. $375 barely gets you a 2 bedroom condo here let alone a house.

 

[Super Tuna]

Dude, for $375k in Vancouver you might get a shed. Perhaps.

More seriously you could get a 2 bed room condo in Port Moody (an hour out of the city) or maaaaybe a house in Abbottsford (1:30 out).

Seems like a steal of a price to me, but I think Redbird makes a whole lot of sense with his thoughts if your dad is right. However I've also heard that the housing market is western canada is suppose to bottom out for the past 4 years now and it hasn't come. Prices out in BC actually seem to be going up again. Edmonton/Calgary will be different but not east coast pricing different.

 

[cg13]

yea market prices are xcrazy all over. 375k is a nice house here, 4 br, 2 1/2 bath. my sister moved into a 5 br, 3 bath, on the golf course at pinnacle for 450k. wait you all are canadian dollars arent you. is that a 2 for deal? lol i have no idea what the exchange rate is and ive had a few beers so im leaving this conversation

 

[Super Tuna]

Ha! A 4 br, 2 1/2 bath in Vancouver proper would cost around 3 mil to start with.

One of the big things for west coasters lately has been to buy a home in Arizona instead. There are some plently sweet houses down there for sub $150k. Young couples up here are buying them up and then renting them super cheap to students just to have someone in them. They then use if for a vacation home and consider it an awesome deal. Assuming I could find a job down there, I would be all over this too.

Cg13: Our dollars worth more then yours right now mate and looks to be for the next while according to many a banker here.