“I think it’s naive when people recommend you sell and rent for a period of time. Can you really find a good substitute for your house for 1/2 the costs (ie. desired location, condition, etc)? And is it worth your time, legal fees, and taxes?”

With these super inflated real estate prices? Absolutely.

Nice house on the same street as my house, very similar layout (slightly larger), large corner lot, whole house rents for $1,400 per month. If I sold my house and moved in there, it would be a slight upgrade for my current house.

That house on the open market would sell for $379,000. 25 am at 6% is a monthly payment of $2,425, $1,850+ for interest alone. Add to that property taxes (almost $200/mo), repairs/maintenance (on a 35 year old home, a good $300-$500/mo) and other expenses and that puts it at $2,300-$2,500 per month (and I’d argue more, houses are EXPENSIVE to own!). Granted, you’d put a down payment on that house, lowering your monthly payment, but then you lose the opportunity cost of your down payment money being invested elsewhere.

So the family living there is spending about $1,000 less per month than they would if they had bought the same house.

Right now, renting is the more economical choice by far. Either rents will continue to drive upwards or housing prices will continue to decline. 20%-30% is certainly within the realm of possibility… Canada’s market always follows the US. And no, this time really isn’t magically different.

So for me it would be a good thing if housing prices dropped. My sister has been scaring/telling me that there will be increased inventory, but that prices will remain stable, and maybe continue to slowly increase. However, I have started to see Price Reduced signs.

Several months ago there was a news programme called Saskaboom. It indicated that people from New York and Florida came in and bought up a lot of real estate. So it wasn’t local or relocating people buying property. It was people buying and holding that helped to drive the prices up, speculators I guess you would call them. I thought this was interesting.

So I guess I will just have to wait, see what happens and keep my fingers crossed. Wish me luck!

In my own analysis, I’ve listed a number of ways in which people try to convince themselves that things will be hunky dory.

Nice summary. That just about cover it. I could tell you some truly funny stories about denial and listing prices here.

Christine,

Actually I was more referring to be even in the ball park of Edmonton, Calgary or Winnipeg. I’m not saying Regina and Saskatoon are equal to these cities, but we should at least be in the ball park rather than down in the sewer for price.

O, by the way, most companies couldn’t pay me enough to live in a larger city. I’ve done it and hated the traffic with a passion.

TS- I love living in Regina. It has its issues, like high property tax and cold winters, but overall I find everything I like/need/want in the city.

Additionally it’s not that I won’t sell my home. It is just I need a damn good reason to do it like a very good career move to another city.

Interesting debate everyone.

Tim

20 or 30% drop is a pretty dramatic decrease. I would think that a correction is housing prices is already factored into current pricing in some of the markets that got overheated.

I tend to be a bit more conservative, so I won’t pitch my wife on the idea that we should sell our house and live in a UHAUL until we can buy it back cheaper! Our house is our home.

Double check the math as I have to catch a train, but it’s big dollars.

If you’re convinced the housing market will bust maybe there’s a derivative you can buy instead of moving. In hindsight you could have shorted US home builder stocks or regional banks with subprime mortgages. Neither have perfect correlation to house prices but would have been a decent hedge.

Not sure how you would do this in Canada either, maybe there’s a REIT you could take advantage of.