Who wins the Housing Bubble you'd be surprised!

[SASKFARMER3]

Funny another house sold down the block new couple in 30s with a 800000 home its nice nothing special just a great location. Now here is my thoughts they borrowed $760,000.00 over 35 years. Yea their 65 when its paid for but hey that's the Canadian way. I owe I owe off to work I go. That's $3022.00 a Month at today's interest using a 1 year open. Jack that to 10 % that's $6420.00 Hm Now we can see who the losers will be in this scenario but guess who wins.
The chartered banks their pushing these stupid mortgages with 5% down and guess what the Canadian Government is Backing every single stupid mortgage. Ha young couple cant make payments banks repossess and wham paid out by the govt of Canada. Yea you the tax paying public pays.
Hm yea and who cries the moment the country is having a down turn.
yea what a system.

[ado089]

We're no better! I'm trying to expand and I'm having real hard time making it all add up. FCC is a somewhere around 7% for a 5 yr fixed. If by some stroke of luck I'm able to steal some land at $750/ac (not going to happen) even after the 25% down payment that still leaves $53.60/ac for the next 20yrs. Now I think it's pretty foolish to leave debt hanging out there for 20 years so lets shrink that down to 10yrs
now we're at $80/ac/yr payments. Now that all pencils out nicely with 60bu/ac wheat at 6 and change and 50bu/ac at 9 and change for argument sake but your breakevens are ugly both yield and price and intrest rates are sitting on a spring. Tell me how the farm community is any smarter? We're sitting on a time bomb, I hope you're hoarding cash while the getting is good...By the way how long are most people amortizing land?

[perfecho]

Even if you carried it for 30 years, there is probably more money in inflation than actually farming.......how much has it gone up in the last 20 years?

[ado089]

Using the same figures to go to 20yrs you're paying the bank an extra $267 in intrest ontop of the $55 for 10 yrs add it all up 187.5 562.5 55 267= $1072/ac. That's almost 42% appreciation you would need to breakeven, looking at the land alone that is. But toss in inflation and you start subtracting from any gains. Not that I don't think owning land is the way to go but it's pretty questionable right now givin the prices, the global economic conditions, the fact that we are due for a wreck anytime now weatherwise.

[grrrr]

sometimes a long talk with someone who lived through the 1930's is time well spent.

[tmyrfield]

You don't need to go back to the 30's.
late 70's early 80's low interest rates high grain prices caused very high land prices then interest rates up to 18% a couple of dry years and just now land prices have recovered to where they were then,

[liberty]

I think there's an all too common perception out there that no matter how high your mortgage payments are, you can never "lose" because real estate always goes up, right?

My parents' generation benefited hugely from the inflation of the 1970's because the land they bought prior to the inflation was financed by thirty year fixed rate mortgages. Try getting one of those today. Now, mortgages are open to rate readjustment on a much shorter time frame.

Paying big dollars for your house is fine if you can pay it off in five years, which I doubt many people can. It's inevitable that interest rates are going up in the future, and to a much higher level than most people expect. When that happens, look for the real estate bubble to pop in Canada much the way it has in the U.S.