Buying my first house in the GTA... Toronto
Anyone, here on SW own houses in the GTA?
After considering some viewpoints in my 'taxes hurt' thread, I've pondered the idea today and decided I am going to start looking for my own house to purchase this week.
Some things I have to consider:
1. A cooling local RE market- it does not appear any 'crash' is insight locally, but a slowdown is expected with avg. prices remaining flat, maybe dropping a little, but generally, expected to preserve homeowners equity.
2. Affordability- I don't see too many affordable areas where I 'want' to live... I work in Brampton and live in Georgetown (a small hick town on the outskirts of the city)... prices are higher in Georgetown than in Brampton, but, Brampton has new issues with crime (has a high immigration settlement population), and it's a manufacturing city and thus is going through negative changes as due to the high Canadian dollar and slowing economy, etc.. layoffs galore... I'd like something private, but I also think that I have to be resourceful in finding something to fit my budget... I won't be able to by something on a 1-acre luxury estate lot, like where I currently rent) I think most stuff in my price range are detached homes on 35'x90' lots... not my idea of 'home sweeth home' but, whatever...
3. Location- I don't want to be in a neighbourhood where I get recognized everytime I step outside my door. I value my privacy... as a student, I don't even let my school friends know what my night life consists of (hard to do, but I've been able to maintain it so far) Gas prices here, at $1.23/litre (about $4.65/gallon+/-...high taxes, even higher gas prices up here!)
other things about my lifestyle... it'd be just me buying the house- no co-signor and no s/o... I have a german shepherd and don't want a condo hi-rise, parking is a must, i'll fill in anything else i think of.
any advice? anyone experienced with the local gta market? or just general house buying advice?
Thx v. much.
Re: Buying my first house in the GTA... Toronto
all I would point out is that the Ontario real estate market may be subject to significant market price drops in the near future. The reason stems from the changes in the US dollar vs Canadian dollar exchange rate, which has now increased the 'cost' of the Canadian dollar to about a 1:1 relationship with the US dollar. This is significant for Ontario because much of Ontario's industy is based on industrial employment at Canadian plants owned by US companies, or based on Canadian plants making products for export to the USA.
From the standpoint of a US automaker, for example, as an American company they account in US dollars. Therefore if the average salary of a worker in a Canadian GM plant a couple of years ago was say CDN$60k= $US$50k, with no increase in the worker's salary the cost to GM has now increased because CDN$60k now equals US$60k. As such, plans are already underway to reduce shifts / close plants in Canada rather than in the USA. Same problem with Canadian manufactured goods for export. A couple of years ago a Canadian electrical transformer might be priced at CDN$1000=US$900. However, today, without any price increase by the Canadian company, the same transformer sells for CDN$1000=US$1000. If a US transformer company was able to sell at a price of US$950, two years ago the business would have went to the Canadian company at a de-facto price of US$900. However, today the sale would go to the American company because the Canadian company's de-facto price has risen to US$1000 !
The point of all that was that was to project that a large number of comparatively high paying manufacturing jobs in Ontario are likely to disappear in the very near future. One of the unavoidable side effects will be the forced selling of houses, which will depress real estate market prices. Thus you may want to wait a year or two and see how all of this shakes out, rather than buying now and experiencing a loss.
Re: Buying my first house in the GTA... Toronto
I'm further out than Brampton, I'm in Cambridge...I own two houses there. I agree with everything Melanie has said. It's possible, and even likely that there will be a correction in real estate over the next few years. Price has been on a steady climb for the last 12 years from the deep trough in 1994. Sales volume has been decreasing, and the fundamentals in the Ontario economy are weakening.
Here is a website with a chart on Toronto home prices:
http://www.gettingtechnical.com/01_home/index.shtml
Scroll to the bottom and click on the house prices link where it says 'more'.
Buying now won't be fatal as long as you intend to own a house from here on out in the GTA. If your home goes down in value and you want to move, the place you buy will likely be cheaper too. But waiting a couple of years will probably get you in at a lower price/down payment/mortgage. Interest rates are pretty low now too.
Owning your home has always been a good path to wealth and security over the long term. Good luck.
Re: Buying my first house in the GTA... Toronto
Quote:
Owning your home has always been a good path to wealth and security over the long term. Good luck.
I would only point out that, while this assumption has proven true for the last 50 years or so, there is no guarantee that it will continue to be true in the future.
Right now there are lots of areas in the USA where the 'cost' of lost equity due to local housing market declines, plus rising property taxes, plus a 'glut' of available rental housing (due to spec housing owners refusing to sell at vastly lower current local housing market prices versus the amount they originally invested), etc. make the total cost of renting significantly lower than the cost of ownership. This includes the cash value of tax deductions available for paying home mortgage interest.
Re: Buying my first house in the GTA... Toronto
^^^We may in fact be coming into one of those rare times up here where it is better value to rent...at least in the short term.
Mortgage interest isn't deductible in Canada, however, as a balancing factor, the sale of a primary residence home is not subject to capital gains tax. I'm guessing you knew that already M....just for the OP's benefit.
Re: Buying my first house in the GTA... Toronto
Quote:
Originally Posted by
hockeybobby
Though the charting data is accurate in and amongst itself, the 'interpretation' of the data is something i am sceptical about.
I'm really not too sure I agree with what this chart postulates... It made it look like housing prices were set to crash after January 1st several times throughout the website gettingtechnical ... here we are approaching May and prices have still increased in the GTA. Also, It is my belief that predicting short term economic swings is a fool's game and evidence of this is seen everyday on CNBC and the Wall Street Journal, etc.. as experts give their 3, 6, 12 month opinions on what a sector, stock, currency, commodity or whatever will do in that time.
Other local 'real estate guru's' such as Garth Turner, www.garth.ca, argue that a crash is due in short order, also. On the other hand, the Toronto Real Estate Board boasts about their 'records' and stats to support continuing asset growth in the RE sector. I'd take both views as extreme polar opposites- neither correct and both biased.
I don't see at this particular time the need to be too preoccupied with the state of the economy with regards to RE investing. A home has certain intangible values that seperates itself from being just an investment to provide a financial return.
And let's face it. The GTA is in a resillient economic condition right now. In facing such adversities as sky-rocketing gas, utilities, and commodity prices along with tax increases and reduced housing affordability, housing prices seem to inflate and job creation zooms along. Immigration is expedited yearly, with many new immigrants making the GTA the choice of where to set up home.
For me, I'm looking into the tax advantages in buying a home- as suggested in my 'taxes hurt' thread... and, what the Original Topic was about. If it doesn't seem to benefit me in my cost/benefit analysis, I am quite content to continue renting a bedroom from my sexy landlord and his gorgeous wife.
It's all in the details, and that is why I seek your's as well as other's input.
Thx.
capital gains tax free selling of personal residence isn't a main concern, as just with many other investments, I am not a flipper or trader, rather I hold off on burning money on unnecessary transaction hits (commissions)... and as for tax deductible mortgage interest, I'll be able to deduct my mortgage interest in about 3 years time (the time I figue that my portfolio will outweigh the possible debt I wish to hold against a property)
again, I can repeat- I am a 1st yer business admin/finance student and have a CA/CFP father so I am somewhat financially literate- it's just I can't seek my pop's opinion on the matter. he ain't gonna find out I'm a stripper :) No way!