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Top 15 Real Estate Myths

Wed Apr 23, 2008 6:27 pm

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The Full List is now published: http://www.canada.com/vancouversun/news ... 2312b0a299

Vancouver Sun
Published: Monday, April 21, 2008

Top 15 Real Estate Myths:

Using a combination of data analysis and expert opinion, The Sun's Derrick Penner looks at a number of the most common beliefs about real estate to see whether they stand up to scrutiny. Don't miss The Sun on April 26 to find out whether your beliefs are myth, or reality.

Here are the questions we'll answer:

1. Albertans are buying up B.C.'s recreational property. Myth or reality?

2. My home's assessment tells me what the property is worth. Myth or reality?

3. A home that has been "staged" using professional design principles to make it more appealing to buyers sells quicker and for more. Myth or reality?

4. Real estate prices in Greater Vancouver can't keep going up - they're too high already. Myth or reality?

5. Spring is a good time to buy or sell a residential property. Myth or reality?

6. A bathroom or kitchen renovation is the best way to add lasting resale value to your home. Myth or reality?

7. Swimming pools are a negative when it comes time to resell. Myth or reality?

8. More than half of all Lower Mainland houses will soon be worth more than $1 million. Myth or reality?

9. A house with a south-facing backyard is likelier to appreciate more than the equivalent house facing the other way. Myth or reality?

10. New condominiums are commonly flipped for a profit before they have even been occupied. Myth or reality?

11. You can save money by buying a 'fixer-upper' and renovating. Myth or reality?

12. Buying a home outside the city and commuting to work is a good way to save money. Myth or reality?

13. Buying an additional property to rent out is a solid investment. Myth or reality?

14. "The bank owns my house." Myth or reality?

15. You've just sold your house and have made a ton of money off it. Myth or reality?
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Re: Top 15 Real Estate Myths

Wed Apr 23, 2008 6:37 pm

16. Almost all these questions are meaningless without context. Reality.
 
johnlaury
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Re: Top 15 Real Estate Myths

Wed Apr 23, 2008 6:52 pm

This should be good.

I somehow have a hard time believing that this won't be the usual rehashing of the re-estate pumpers' mantras.

John,
 
Johnny Horton

Re: Top 15 Real Estate Myths

Wed Apr 23, 2008 7:27 pm

What does it matter to a Historian if these are myths or realities?

You Historians will do nothing but contemplate your navel til it falls off.

Quit wasting band width.

Here's No 17... If the market crashes 50%, Bears will move out of mom's basement suite and jump into the market....Myth or Reality?

I think we all know the answer to this one. :mrgreen:
 
blazespinnaker
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Re: Top 15 Real Estate Myths

Wed Apr 23, 2008 7:29 pm

oh oh oh! Let me play

1. Albertans are buying up B.C.'s recreational property. Myth or reality?
I'll say Albertans are buying it more than any other ex-provincial group. Probably more BC'ers / local people though. So myth by gross numbers, but reality when you compare to other groups.

2. My home's assessment tells me what the property is worth. Myth or reality?
The only way to find out what your property is worth is by selling it. Myth!

3. A home that has been "staged" using professional design principles to make it more appealing to buyers sells quicker and for more. Myth or reality?
OoOoh. I'll say reality, though it depends somewhat on the place. Sometimes going empty can be better. People do get nervous about buying dumps.


4. Real estate prices in Greater Vancouver can't keep going up - they're too high already. Myth or reality?
Who knows. Certainly not the vancouver sun. What a stupid question, unless they suddenly devised a time machine! They'll probably say myth though. In theory, it is a myth. There is no such thing as "can't'.


5. Spring is a good time to buy or sell a residential property. Myth or reality?
Well, I did an analysis for a certain area at one time, and statistically the average price increase was the most during the spring. It also depends on the particular year, I guess. Bit vague. I'll guess the sun says reality though. I don't know about "to buy".. I certainly know for my area it was to sell.


6. A bathroom or kitchen renovation is the best way to add lasting resale value to your home. Myth or reality?
Myth .. Best way is landscaping from an ROI perspective .. curb value. However, you can add the most (in terms of gross value) by doing a bathroom/kitchen reno. Also depends on the house. If the bathroom/kitchen are in good shape, or whatever, then minor improvements are not going to help. Same thing, if the landscaping is OK, then further landscaping isn't going to help.


7. Swimming pools are a negative when it comes time to resell. Myth or reality?
A negative in terms of the cost of the pool (negative ROI), but probably a positive versus a house without. So Myth or Reality. Also, probably depends on the area. I suspect san diego is a bit different where everyone wants a pool.


8. More than half of all Lower Mainland houses will soon be worth more than $1 million. Myth or reality?
Again.. dumb question. Nobody knows. I'd say myth though, because that's the MEDIAN value and not the average. If the sun says reality, than they truly truly suck. Also, what do they mean by soon? 1 year? 5 years? 3 months?


9. A house with a south-facing backyard is likelier to appreciate more than the equivalent house facing the other way. Myth or reality?
I say Myth. It'll have a premium, but I can't imagine it'll appreciate faster.


10. New condominiums are commonly flipped for a profit before they have even been occupied. Myth or reality?
OooOh. Reality? I'm not sure ... not my area of expertise. Myth? I bet the sun says myth.

11. You can save money by buying a 'fixer-upper' and renovating. Myth or reality?
Who's doing the renovating? Are you contracting it out or doing it yourself? If doing it yourself, I say reality. If contracting it out... I say myth. Very poorly worded question.


12. Buying a home outside the city and commuting to work is a good way to save money. Myth or reality?
Well, depends on whether or not you can take the train in and like it. But, I'll say myth. Commuting sucks!


13. Buying an additional property to rent out is a solid investment. Myth or reality?
Ugh. Depends on the yield. In the current market, I'd say myth .. But I'm guessing the sun is going to say reality.


14. "The bank owns my house." Myth or reality?
Ok.. this is stupid. It's a false dichotomy. If I only owe 10K left on a 1M house,I'd say I own it. Also, if I have a zero down on a 500K I'd say the bank owns it. However ... being on the title does give you certain legal rights and the question is overbroad. I'll say Myth.

15. You've just sold your house and have made a ton of money off it. Myth or reality?
Reality. There are pretty cheap places you can move in the world. No doubt the Sun will say Myth because it'll say there aren't cheap places to move in the world or that you're stuck on the ladder, blah blah blah.


--
Well, I wonder if they will all be Myth. Some of the questions are, of course, really too vague.
Last edited by blazespinnaker on Wed Apr 23, 2008 7:38 pm, edited 1 time in total.
 
Johnny Horton

Re: Top 15 Real Estate Myths

Wed Apr 23, 2008 7:36 pm

You didn't answer #17. :mrgreen:
 
blazespinnaker
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Re: Top 15 Real Estate Myths

Wed Apr 23, 2008 7:40 pm

Johnny Horton wrote:
You didn't answer #17. :mrgreen:


I think the answer to that question is too obvious :)
 
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Re: Top 15 Real Estate Myths

Wed Apr 23, 2008 7:49 pm

Johnny Horton wrote:
Here's No 17... If the market crashes 50%, Bears will move out of mom's basement suite and jump into the market....Myth or Reality?
Myth. Bears will still be there (mom's basement), talking about how bad fundamentals are, ...and what happened in Japan. :mrgreen:
 
Johnny Horton

Re: Top 15 Real Estate Myths

Wed Apr 23, 2008 7:57 pm

Thompson!!!! Go to the head of the class!!! :mrgreen:
 
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canadian
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Re: Top 15 Real Estate Myths

Wed Apr 23, 2008 9:35 pm

Thompson wrote:
Johnny Horton wrote:
Here's No 17... If the market crashes 50%, Bears will move out of mom's basement suite and jump into the market....Myth or Reality?
Myth. Bears will still be there (mom's basement), talking about how bad fundamentals are, ...and what happened in Japan. :mrgreen:

meanwhile, ppl will be guessing the characteristics of extinct bulls through fossil remains :mrgreen: :mrgreen: :mrgreen:
The cure for higher prices is higher prices - Rob Chipman
 
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Re: Top 15 Real Estate Myths

Wed Apr 23, 2008 9:53 pm

8. More than half of all Lower Mainland houses will soon be worth more than $1 million. Myth or reality?
Again.. dumb question. Nobody knows. I'd say myth though, because that's the MEDIAN value and not the average.


Not only that, but it is the median of HOUSING STOCK, not median of SALES. If we use the latter as a proxy, we are still far way as the median is around 750K. If the recent pace continues, it will take three years to get there, and if we slow to a more normal 6 percent, it will take 5+years. If prices fall and we go back to baseline and continue to appreciate at historical rate, it could take decades.
 
yogurt
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Re: Top 15 Real Estate Myths

Wed Apr 23, 2008 11:02 pm

14. "The bank owns my house." Myth or reality?

Myth. If the bank actually owned the house, it would be taking on all of the downside on the price, as well as responsibility for paying taxes, maintenance, etc. Nor would you have any obligation to the bank beyond just letting them have the house back.

What the bank actually owns is a personal debt from you secured by a lien on the house that prevents you from selling it until they get their money back. But they also have a claim on all your assets - and future income - just like any other creditor.

Note also that the bank is getting a much better yield on what they own (the debt) than what you're getting on what you own (the house).

And finally, the price of what the bank owns (the debt) is insured (premium paid by you), while the price of your house isn't.

Not hard to figure out which owner is getting the better deal.
 
Johnny Horton

Re: Top 15 Real Estate Myths

Thu Apr 24, 2008 7:22 am

Not hard to figure out which owner is getting the better deal.



See what I mean?

Case closed.

I don't think Yogurt would own a house if he/she was given one.
 
Johnny Horton

Re: Top 15 Real Estate Myths

Thu Apr 24, 2008 4:35 pm

canadian wrote:
Thompson wrote:
Johnny Horton wrote:
Here's No 17... If the market crashes 50%, Bears will move out of mom's basement suite and jump into the market....Myth or Reality?
Myth. Bears will still be there (mom's basement), talking about how bad fundamentals are, ...and what happened in Japan. :mrgreen:

meanwhile, ppl will be guessing the characteristics of extinct bulls through fossil remains :mrgreen: :mrgreen: :mrgreen:


Pretty good sense of humour Canadian
:mrgreen:
 
blazespinnaker
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Re: Top 15 Real Estate Myths

Thu Apr 24, 2008 5:05 pm

yogurt wrote:
Myth. If the bank actually owned the house, it would be taking on all of the downside on the price, as well as responsibility for paying taxes, maintenance, etc. Nor would you have any obligation to the bank beyond just letting them have the house back.

What the bank actually owns is a personal debt from you secured by a lien on the house that prevents you from selling it until they get their money back. But they also have a claim on all your assets - and future income - just like any other creditor.

Note also that the bank is getting a much better yield on what they own (the debt) than what you're getting on what you own (the house).

And finally, the price of what the bank owns (the debt) is insured (premium paid by you), while the price of your house isn't.

Not hard to figure out which owner is getting the better deal.


Actually, it's the other way around in the US in many places. The banks are the ones who are taking all the risk and the zero down stated income buyers are just walking away. SOme of them are even just staying in their houses, without paying, because it cost too much for the bank to foreclose..
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