[taylor192]

Originally Posted by blkgsr

taylor: you say you expect housing prices to drop in the next while and possibly more after the olympics

Yes. Look at the number of buildings due for completion, then remember the lineups of people fighting to buy them a few years ago. These buildings were not bought by people wanting to move in, they were bought by investors who will be upsidedown trying to rent them.

For example:
2-bd places in Yaletown rent for $2-2.5K/mn. After property taxes and condo fees, you're looking at a $1.5-2K/mn mortgage. On a 35yr term, with rates < 4%, a $400K mortgage is ~$2K/mn.

So if the place sold for $400-450K then the investors are breaking even (actually they are losing, cause there's taxes, yet you get the point). If they sold for more, then the investors are losing. Considering 2bd Yaletown condos were going for > $600K at the height of the bubble, I think there's a lot of losers right now.

Next consider tourism will drop off after the Olympics, unemployment has already gone up, and Olympic construction will be done adding to unemployment problems. Prices will drop, they do in every Olympic city.

Originally Posted by blkgsr

now the bank are increasing the mortage rates....do you see them degreasing them again in 6-8 monts or more as housing prices continue to drop? do you think this is a short term "grab" while the market is some what active?

This isn't a "grab", this is the market recovering and rates increasing on mortgages cause investors are fleeing mortgages (bonds) to higher yielding products.

I think its a "dead cat bounce", that the market is not really recovering (can you think of an industry leading the recovery?) its the bubble being propped up again by super low rates and people stretching themselves to get into the market (>50% of new mortgages are 35yr terms!).

Originally Posted by blkgsr

also you say "housing" prices will drop....is this more condo's? single family homes?

Higher priced units will drop more than low prices units. Houses typically hold their value better, cause there's only so many of them. Yet houses also went up the most in price, so they have the most to fall.

There is definitely a flood of condos coming, read about Toronto's condo market bursting a few years ago due to over building.

Originally Posted by blkgsr

i'm looking at buying a house in east burnaby/new west/coq/port moody.....what do you forsee happening in these areas?

I have no clue. I am not interested in living there so I don't research those areas.

NW, PoCo, Coq, PM, ... all suffer some lack of industry, lack of transit, traffic, and needing gentrification. With the economic downturn, further gentrification will be stalled so those neighbourhoods will not get any better (some parts of them are rough). They are commuting suburbs, where you live, not work. As prices come down in other areas, there will be less reason to live there to avoid high housing costs.

Moreso, lookup the house increases in those areas from 2004-2009:
Vancouver West (Kits, PG, ...) was up 40%
NW, PoCo, ... were up 60%!

Lots more room to fall! yikes!

Burnaby is a different story, same with Richmond and Surrey. You can live, work, play in those cities, so I don't see them suffering as much.

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All that aside, I don't think prices will drop much more, 5-10%. People will hold onto them rather than sell and lose money.

It might be WAY cheaper to rent, yet with low rates the difference between rent and mortgage would be about equal to what you'd be paying down the mortgage. (ie $1000 rent, $1800 mortgage with $800 of that mortgage going to principal if you take a 25yr term)

So in the end you're breaking even, yet paying a LOT more per month. No thanks, I'd rather not pay more per month only to break even, yet that's your choice.