Thursday, February 25, 2010

OK OK More Bubble Crisis talk

Bottom line: Canada’s resale market metrics are stoking fears of a housing bubble, but the fears for the most part are unfounded. It’s not a bubble when a record sales rebound follows a massive sales collapse, owing to the vagaries of pent-up demand. It’s not a bubble when prices accelerate because growing demand is butting up against shrinking supply. It’s not a bubble simply because relative prices are at record highs. Furthermore, given that mortgage credit growth is moderating, and new home and land prices remain subdued, the evidence on the ground argues against a housing bubble.

David Pylyp Lets recap
  • one in three have no mortgage
  • of the other two thirds the average mortgage is 150,000
  • Jim Flaherty issues advisory to adhere to credit policy of 5 year qualification; to calm credit markets and housing bubble talk.

Well written thoughtful piece on why the sky isn't falling.

Why am I writing about this again? This morning I read yet again that someone had sold their principle residence in Toronto's overheated condo market and was putting all of their money into the bank. Last time I looked the bank was paying approximately 2% on our investments.

Purchasing a property leverages your investment dollars; 300K for a condo Yes, lets say 100K down leaves you a mortgage balance of $200K at 2.5%v or fixed at 4.0% . If that condo goes up 50 K in three years you have made a 50% return on your investment. In teh mean time you are living in your investment. If it drops 50K you have squandered $1500 per month by 36 months of rental payment for $54K Kinda sounds the same, huh.

So if you want to get in on the action, I do offer a Satisfaction Guarantee; If you are unhappy within one year I will sell it for free.

1 comment:

Tonal said...

Its good information of Bubble Crisis Talk
Executive Office Chair