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Ive been variable for 1.5 years even though the bank, my peers and my financial adviser say rates are going up. If and when rates do go up they wont jump up 2% over night. If i see a trend upwards ill lock in then.

In the near term, it is almost certain that the interest rate will stay low. I just don't see any justification from the economy or the political scene that would support an interest rate hike.

In the medium term, it depends more on how the oil situation plays out, and that is really anybody's guess. As OPEC continues to keep oil prices low, and as China's economy continues to cool (esp its manufacturing and export sector), I don't think the demand is there to support $100+ per barrel prices just yet. In the end, my personal expectation is for the interest rate to continue to stay low (or low-ish) beyond 2015. Whether you agree with my assessment is an entirely different matter though.

At the same time, with our loonie's crappy exchange rate to the USD, I also expect to see some inflation on regular consumer items.

If I were you, I would still proceed with the variable rate mortgage. Based on my expectation, that will save you at least 0.5% for 1 year. Then even if rates were to increase, you should probably still have year 2 and/or 3 where you are paying something close to the fixed rate, which means you are breaking even. Year 4 and 5 are a little hard to tell, but at least you have already saved on some interest early in year 1, and that means you've already paid down more of your principle amount. So even if interest rates were to rise, you are still paying the higher interest rate on a smaller principle, so I think you would still come out ahead with a variable rate at this point.

Of course, free advice are worth exactly as much as you have paid them for.

surprised no one has mentioned this yet, but the big banks dropped prime by 0.15

Quote:

Originally Posted by xxxrsxxx (Post 8587623)

surprised no one has mentioned this yet, but the big banks dropped prime by 0.15

honestly, i think there's fatigue setting into the market. 0.15% really makes shit all difference - ppl are tapped out.

if you couldn't buy at 3%, not sure you can buy at 2.85% given the risks associated with variable (whenever rates go up).

in other news, canada's economy is so fucked. consumers will be squeezed due to increasing input costs, housing will likely tumble as confidence and jobs are lost...

Traum - thanks alot, great explanation

i'll look into the lock in costs/fees, but doesn't anyone have a basic rundown on how it might work? is it only after a certain time? up to a certain time?

thanks

time to make some money in the next few years and save to buy another property when the prices come down....or do what i really want to do and just move to SE Asia or Central/South America and say fuck it to all of this

Quote:

Originally Posted by 4444 (Post 8587679)

in other news, canada's economy is so fucked. consumers will be squeezed due to increasing input costs, housing will likely tumble as confidence and jobs are lost...

Going long on the USD/CAD!!! :D

Quote:

Originally Posted by multicartual (Post 8587761)

Going long on the USD/CAD!!! :D

the time to go long USD was about 25 basis points ago. Having said that, I think there is still plenty of room left to move with the fed raising rates sometime this year (though I'm not sure it'll be a whole 0.25% bump, nor do I see another 10 basis point move for USD/CAD on that alone).

God bless America and its greenback!

Really was the CAD doing well previously, or just the USD was doing poorly and making the CAD look good artificially? I'm thinking more the latter. It's been a good few years of cross-border shopping.

Quote:

Originally Posted by UFO (Post 8587772)

CAD was strong due to commodities

High demand for copper, coal, and oil meant high demand for CAD

commodities are dead = drop in CAD
interest rates were decreased = further drop in CAD
economy will get more and more shaky = likely a further slow drop in CAD
US will raise rates = further drop in CAD

however, over this time we have also had renewed confidence in US economy, leading to the ceasing of QE and at some point soon, a rate raise = increase in value of USD

So, it was a combo of both, which at the same time have reversed.

Been browsing MLS lately as I start to look at my return to Vancouver. There is extensive evidence that suggests…
http://www.troll.me/images/rent-is-t...-damn-high.jpg

Really though, at 30 years old it's virtually impossible for me to convince myself that 1.5M for a "basic" home is reasonable… mind you I am looking only in more desirable areas. The delta between buying and renting is so insane… for what I would put down I could put that money into a fixed income portfolio that would be fairly low risk and have my rent paid for every month and protect myself from RE market volatility while remaining far more liquid.

Would I potentially miss out on climbing RE prices? Sure, but a scenario with price depreciation seems much more likely to me.

Meh, shit's cray.

I can almost understand loonie bin prices in the neighbourhoods that are prestigious and have no room for expansion… but damn… Surrey and Langley I would suspect a bloodbath will come eventually.

Wealthy Chinese investors eschew residential real estate for hotels, wineries, mineral water in British Columbia | Financial Post

Quote:

VANCOUVER — When Liu Chuang landed in Vancouver in 2013, he noticed that most of the Chinese immigrants he met were heavily invested in residential real estate and hungry to diversify.

Secret path revealed that allows wealthy Chinese to transfer billions overseas by buying pricey property in Vancouver, New York and Sydney

For years, wealthy Chinese have been transferring billions worth of their money overseas, snapping up pricey real estate in markets including New York, Sydney and Vancouver despite their country’s currency restrictions.

Now, one way they could be doing it is clearer. Last week, when China Central Television levelled money-laundering allegations against Bank of China Ltd., the state-run broadcaster’s report prompted the revelation of a previously unannounced government program that enables individuals to transfer their yuan and convert it into dollars or other currencies overseas.

Continue reading.
Flipping houses didn’t appeal to the 39-year-old entrepreneur, who is launching a Vancouver-based tech incubator to help his Chinese-born friends invest in local startups.

“The Chinese I know … they’ve already bought quite a few houses, they really don’t want to buy any more,” said Liu, who was also born in China and co-founded venture capital firm Nextplay Ventures. “Now they want to invest in technology or other industries that can give a good return on investment.”

Liu represents what real estate agents, lawyers and immigration consultants say is a transformative shift in where wealthy Asian individuals and families, primarily from mainland China, place their money in British Columbia, the West Coast province.

Vancouver has been a top destination for Asian immigrants for decades, helping make it Canada’s most expensive housing market and one consistently ranked as North America’s least affordable. Houses and luxury condos in the Vancouver area have been the investment of choice for both well-heeled new arrivals and China-based investors putting money abroad.

But with the Vancouver market looking pricey, many of these investors are seeking other opportunities. They range from hotels and golf courses targeting Chinese tourists to berry farms, mineral water sources, and wineries that export to Asia.

“The days of parking capital in five houses in Vancouver have passed,” said Richard Kurland, a local immigration lawyer.

While provincial agencies and industry associations contacted by Reuters do not collect figures for foreign investment in commercial property, there are threads of data that support the anecdotal evidence.

Related
As Vancouver home prices surge out of reach, businesses worry how to retain staff
The new face of B.C. wine: Why Chinese buyers are pouring into the Okanagan’s vineyards
Foreign buyers are fuelling a seismic spike in Vancouver’s luxury housing market, realtors say
Hotel sales to buyers with ties to China increased to four in 2014 from just one in 2011, according to sales information provided to Reuters by global hotel consulting firm HVS. And reports of rising demand for wineries and farms has coincided with a 60% jump in the value of British Columbia wine exports to China from 2010 through 2013, and a doubling in the value of agricultural food exports to China in that same period.

Those servicing the new wave says Chinese investors are also looking to put down roots and build a local business for their children, with British Columbia’s mild climate and clean air increasingly seen as more desirable than China’s pollution-hit cities.

This marks a shift from a tradition among many wealthy families who had lived in Canada just long enough to secure citizenship, and to put their kids through school, before returning to Asia.

The recent rise in demand for commercial land, tourism properties, and even entire villages has coincided with China President Xi Jinping’s “Operation Fox Hunt,” which aims to nab allegedly corrupt officials who have moved abroad and to seize their assets.

The corruption crackdown has even legitimate business people concerned about the future and looking to diversify their holdings, say those serving this community.

“It has to do with the perceived political climate in China,” said Alice Chen, managing director at SKY Capital Group, which advises wealthy Chinese on acquisition opportunities.

“Economic and political policies can change at any minute, which affects their businesses, so they see Canada as the more stable environment.”

HOTELS, WINE AND WATER

The recent hotel deals were mostly in the $15 million to $30 million range, said Carrie Russell, managing director for Canada with HVS. Chinese buyers are also seeking to acquire expensive luxury hotels, though they have not been as successful in winning the bidding for those, she said.

Chinese groups are also looking to crack into property development, seeking land to build condos or major mixed-use projects, said David Goodman, a real estate agent with HQ Commercial.

“Over the last three or four years, they were dipping their feet in. Now they are really setting up shop,” he said.

The days of parking capital in five houses in Vancouver have passed
These investors are also looking outside of coastal Vancouver to agribusiness and tourism opportunities in British Columbia’s interior and remote north, such as the ghost town of Bradian, which sold to a group of Chinese investors in December. They plan to turn it into a mini Whistler-style resort for everything from skiing to snowmobiling and fishing.

Among the most popular investments are wineries, which appeal to buyers looking for a lifestyle business that can be passed on to the next generation, said Christa Frosch, an agent with Sotheby’s International Realty Canada.

In 2009 there was just one Chinese-owned winery in British Columbia, said Frosch. But now she estimates about 10% of the province’s 230 licensed wineries are owned by people with ties to mainland China.

Chinese ownership has risen in tandem with trade, and now roughly 90% of the province’s wine exports go to China.

Some investors are eyeing another luxury export – spring water.

Immigration consultant Alex Liao said he has clients looking to spend at least $20 million to buy a well and set up a bottling plant to export mountain water to China, where the economic boom has also meant higher pollution.

“One of my clients is exporting – I cannot believe it – 200 container loads of mineral water from B.C. to China every single month,” said Liao. “Lots of people, right now, are buying wells.”

FOR THE KIDS

Julie Wei, a residential agent with Macdonald Realty who now also helps clients find commercial opportunities, says the desire to buy a Canadian business is motivated in some cases by children who have spent years in Vancouver and no longer want to return to China.

That’s what happened to Ben Bi, who came to Canada for university and ended up staying. Backed by his family’s real estate business in China, Bi has bought a tract of land and is designing a high-end multi-home development.

The project is the first of many the 34-year-old hopes to tackle, as he looks to shift more of the focus of the family business to Canada from China. His parents first resisted the plan, but changed their minds after learning more about Vancouver.

“They actually want to see the next generation, and even the generation after me, have a better life,” he said.

As long as the china money keeps coming in vancouver will always have high real estate prices.

Yes we are no london or new york, but we do have the chinese foreign money due to the proximity of us to Asia and that it's easier for mainlanders to fit in here since being asian in vancouver is not a minority like those other cities. Thats what makes our city attractive to these people.

I'm seeing a lot of the china money in the commercial real estate market, its been increasing every year.

Winners: people who are selling out for top$
Losers: people who cant afford to buy or rent at these sky high prices and have to relocate to other cities.

Quote:

Originally Posted by iEatClams (Post 8597420)

Losers: people who cant afford to buy or rent at these sky high prices and have to relocate to other cities.

rent isn't expensive in Vancouver.

Rents have not AT ALL moved with residential purchase prices. Point is moot.

The China money thing is just that, a thing to get ppl scared, horny, whatever. until Canada actually tracks and releases data, it's mere speculation and racism.

I don't doubt it's true that there's lots of chinese money coming in, but prior to this there was a lot of US money coming in, there's always something to try to convince ppl one way or another.

just look at fundamentals and make decisions based on those. and that decision is rent (on fundamentals)

Quote:

Originally Posted by 4444 (Post 8597598)

We can agree to disagree. You're entitled to your opinions. There are many here in vancouver (especially us asians) that know the asian money is affecting the market. How much I dont know but its a factor. So it's not really racism.

Rent is subjective, to rent a house is pretty expensive in vancouver compared to historic rates. 3 BR houses is anywhere from 1500- 3000 depending on area. That's pretty expensive since it use to be much less than that 5 years ago.

Yes I agree with you that renting is the obvious answer based on choosing $2000 rent or 4000 mortgage payments. Comparing it to buying and paying mortgages/property taxes maintenance etc its a no brainer. . . .

I know I wouldnt be buying at these prices.

Quote:

TORONTO — Sales of existing homes in Canada slipped further in January as the drop in oil prices hurt homebuyer demand in western Canada, the Canadian Real Estate Association said on Tuesday, with one analyst saying seller panic has set in.

Canada’s oil capitals look set for their first major housing correction since 2008

Bank of CanadaTD economists say prices are on track to fall as much as 10% in Calgary, Edmonton and St. John’s Newfoundland over 2015 and into 2016 as plunging oil prices turn the nation’s housing market upside-down. Read on
The association, the industry group for Canadian real estate agents, said sales activity was down 3.1% last month from December, the third consecutive monthly decline.

The data suggested Canada’s prolonged housing boom may finally be ending after more than five years of rising sales that pushed home prices to record highs.

Canada escaped the U.S. housing crash due largely to more prudent lending standards, but the long boom and high consumer debt levels have raised fears of a U.S.-style collapse. Still, economists expect any corrections will be strictly on a regional basis.

“Canada’s housing market is cooling notably, largely because of the sudden deep chill in the previously hottest cities. However, there is still plenty of regional variation churning below the surface. We suspect that with borrowing costs still plumbing the depths and many provincial economies holding up, any housing correction will be a specific regional affair,” said BMO chief economist Douglas Porter.

Prices, which lag sales, remained 5.2% higher than a year earlier, according to CREA’s home price index.

Actual sales for January, not seasonally adjusted, were down 2.0% from the same month in 2014, the first year-over-year decline since April 2014.

Related
Canada’s oil capitals are headed for their first major housing correction since 2008, TD warns
The economist realtors love to hate: David Madani stands by 2011 prediction of Canadian housing ‘day of reckoning’
Edmonton housing sales down nearly 26% in January from a year ago
Calgary’s housing market under pressure as new listings, inventory soar
FP0218_HomeSales_C_JR

A sharp and sustained drop in oil prices has sideswiped the economy in the resource-rich provinces of Alberta and Saskatchewan, where homeowners are trying to sell their houses before values drop further.

“What is interesting to note about the housing measures is that there is a clear sense of panic,” Mazen Issa, senior Canada macro strategist at TD Securities, said in a research note.

Issa said Alberta and Saskatchewan were the epicenter of housing-related weakness in January, with sales down 24% in Calgary, 10% in Edmonton, 7% in Regina and 18% in Saskatoon.

“While national new listings were up by a modest 0.7% in January (after a 1.3% increase in December), the regional breakdown reveals a rush of homeowners looking to obtain top dollar before their respective regional housing market nosedives on the price,” Issa said.

Calgary’s drop extended December declines that have made the last two months the worst for the city’s realtors since at least 1988.

Since November, home sales in the city have fallen 44%, according to Bloomberg calculations based on figures dating from 1988 provided CREA.

The national sales-to-new listings ratio dipped to 49.7% as the number of newly listed homes rose faster than sales. It’s the first time the measure dipped below 50% since December 2012, CREA noted.
At the same time, months of inventory rose to 6.5 months, its highest since April 2013.

Gary MacLean, realtor with RE/MAX Real Estate Central in Calgary, said the housing downturn has taken place faster than any he has witnessed in his 28 years in the industry.

“It is, of course, linked directly with the speed at which oil crashed,” said MacLean. “There are layoffs happening everywhere which is taking buyers out of the market. If they have not lost their jobs, they are afraid they might lose theirs, so they have put on hold their buying plans.

“These layoffs or potential layoffs are also hitting homeowners with large mortgages, lines of credit and credit card debt,” he said. “I believe that a large percentage of the rush to market may be caused by this group of people trying to sell their homes.”

MacLean said many people know someone who has been laid off and that causes a ripple effect in the economy, resulting in consumers becoming very cautious about spending. This reduces the number of potential buyers in the marketplace.

“When we have a market like last year with a shortage of inventory for the number of buyers out there, prices are driven up,” he said. ” It is the law of supply and demand. Well, we have started this year with a huge number of homes on the market, up over 100% from this time last year — and with sales down 40%, the same law applies here only in the opposite direction.

“This is a market in which there are a few buyers compared to the number of homes for sale. Sellers have to be aware of this and that they have to price their home competitively.”

According to Mike Fotiou, associate broker at First Place Realty in Calgary, there were only 580 MLS sales in the city between February 1-14. That’s a 35.8% drop from the same period in 2014. Sales are also off by 35% from the 10-year average and by 25.7% from the five-year average.

Fotiou said it’s the lowest February level month-to-date going back to 1996.

The average MLS sale price is down close to 5% so far this month to $465,861.

Fotiou said the Calgary luxury market has also slowed significantly, with only 15 homes selling for $1 million or more, compared with 36 for the same period last year.

Overall, new listings have risen by more than 14% so far this month.

The national average price, not seasonally adjusted, for homes sold in January 2015 was up 3.1% from a year earlier to $401,143, the smallest year-over-year gain since April 2013.
With files from Postmedia News

Canadian home sales drop 3.1% as ?sense of panic? sweeps western markets | Financial Post

TL;DR : listings up, sales down in Alberta. I think this may be the start of a housing downturn? Seller panic may set in. Time will tell.

Quote:

Originally Posted by iEatClams (Post 8597724)

There are many here in vancouver (especially us asians) that know the asian money is affecting the market.

I think this is a major point of contention. You, I, nor anybody else "knows".

You hear C-Lai's tell everyone their friends are buying up condo blocks, you hear rockstar realtors in rented bmw's tell you that asians are buying up everything and you'd better buy now or never (i wonder why), you have the real estate boards providing phantom sales numbers, you have news stories one week saying it's all asian, then all of a sudden it's all local buyers.

Until there is a reliable source (likely government) which shows sales numbers, amounts, and to whom sales are made (resident or otherwise, employed, self employed, investor class, first time buyer, etc.) we don't KNOW.

It's all speculation and rhetoric.

What I KNOW is fundamentals - fundamentals says don't buy (we can both agree on that). beyond that, it's speculation as to who is buying, why they are buying, and whether they will continue to buy... or it's speculation that prices will continue to rise.

I'm happy for prices to rise forever in vancouver, as i say, rent is cheap (that's a fact - fucking cheap to rent vs. buy in vancouver, and that's the only metric that matters for rent), so whilst the rent/buy metric is so skewed on the side of rent, then no one need worry - it's not like you won't be making 7% real gains on average invested in the S&P500 (long term - S&P500 has ALWAYS outperformed real estate in the long run... there's so much more to this discussion that i won't go into, like average costing vs. buying at 1 time for ur house and just paying for it over the 30 years).

^ if everyone listen to you no should buy and wait for the "right fundamentals". In any business you can look at the fundamentals and know when it is the right time to make a decision, however, you are normally too late. LOL.

In regards to iEatClams comment, I agree with him. All I have to do is look at my 6 neighbours that have moved and bought in my neighbourhood and they are all Asians.

Quote:

Originally Posted by Z3guy (Post 8598132)

In regards to iEatClams comment, I agree with him. All I have to do is look at my 6 neighbours that have moved and bought in my neighbourhood and they are all Asians.

Before we sold our place, our neighbourhood was like that too. Except these people would all rent out their illegal basements suites, filling the streets up with parked cars and bringing in people who did not exactly "belong". These people are likely over leveraged. Would not like to be in their shoes if and when the market corrects.

Quote:

Originally Posted by jasonturbo (Post 8597412)

The delta between buying and renting is so insane… for what I would put down I could put that money into a fixed income portfolio that would be fairly low risk and have my rent paid for every month and protect myself from RE market volatility while remaining far more liquid.

Been in that position the last few years. Small portion of my portfolio is in equities, and a majority of it is in preferreds and fixed income. Every year returns have covered living expenses and I'm building equity on top. Much rather build up my money for a larger down payment or buyout than be stuck with interest payments.

Not to bring race into this thread again, but I am experiencing the opposite with my area (East Vancouver, near VCC). Lots of "wealthier" caucasian people are moving in, and they complain about everything and try real hard to make this neighbourhood "theirs". I used to get complaints from a neighbor that I parked in front of "their house" in "their spot" when really anyone can park there and it's the only place where my AE86 didn't get covered with leaves... it's all very "HOA" like and I can't stand it. My family and I own a house precisely because we want to keep to ourselves and not be told what/what not to do like a strata-type setting. My GF's car even got a few complaints though she parks on the side of the street that ISN'T marked "Only residents of this block" when she sleeps over. The entitlement mentality is insane!

My point? Just from MY personal experience, I'd rather live around Asians, yes, even Mainlanders, who mostly keep to themselves and mind their own business rather than people who kept trying to include me in block watch shit, or complain about how my cars take up too much space. It's just not my cup of tea. Not to mention none of these fucks pick up after their dogs!

Quote:

Originally Posted by 4444 (Post 8598099)

fundamentals is one thing but feeling is another. We all know we don't need the newest iphones or the next best phone, we all know we don't need fancy cars just a car that bring us from point A to point B, or buy that $1000 jacket vs $100 jacket. Is the same with Rent Vs Buy.

Some people just feel more secure buying than renting, some ppl got pressure by their parents, wife/husband, pressure of having a family and having kids, maybe they have pets and most rental units don't allow pets. The list can go on.

I just don't think there is a right or wrong answer to buying vs renting.

^ I have a caucasian neighbour that puts orange cones in front of her house to signal to everyone not to park in front of her house (public parking).....one of these days I am going to run over her cones and park my car there for 3 days...haha!

Quote:

Originally Posted by Mr.HappySilp (Post 8598247)

4444 can preach whatever he wants. I bought my house in Vancouver in 2007 and it has been the best investment I have ever made. Especially being tax free. I am by no means saying I am savvy real estate investor, the timing just worked out for me because I wanted my son to start Grade 1 at the right school.

Quote:

Originally Posted by Z3guy (Post 8598249)

I've had this a couple of times and simply called 3-1-1 to get Parking Enforcement to remove the cones/buckets. It's illegal to "save" parking spots for yourself and obstruct city property for your personal use: The City is enforcing neighbourhood parking restrictions during the PNE | City of Vancouver

Quote:

On-street parking spaces cannot be reserved with cones or other objects. City of Vancouver Parking Enforcement Officers will be working in surrounding neighbourhoods to ensure parking activities comply with City bylaws during the exhibition.... Residents are reminded it is illegal to sell parking spaces in RPO zones. Enforcement staff will ticket and may tow vehicles that are not registered to an address in RPO zone on the block.
Violations of the bylaws can result in fines ranging from $100 for illegal parking to up to $2,000 for illegally allowing parking on residential property.

Quote:

Originally Posted by Z3guy (Post 8598249)

Reminds me of my inlaw's neighbour. Stupid kids in the area were driving their truck around knocking over people's garbage cans for several weeks. One night he decided to fill his garbage can with cement. Well, you know what happens next. :whistle:

Quote:

Originally Posted by Z3guy (Post 8598249)

Is there a rule that says one is only allow to park in front of someone's house for a maximum of 3 hours or something?

I remember a while ago I parked my car in front of neighbor's house for more than 6 hours or so, and he walked up to me and said he has the right to call the city to ticket me.

Is this true?

Quote:

Originally Posted by Y2K_o__o (Post 8598276)

Tell him do it! He have no right to do that as long as you live there. You can park up to 3 days straight without being ticket or tow.