'You know, you're making the biggest mistake of your life. The housing market is going to fall."

I got this great piece of advice from another journalist at the Financial Post, who has since left the newspaper, after buying my first home. Not exactly the type of thing you want to hear after taking on huge debt and making the biggest financial decision of your life.

Lucky for me, I didn't heed that advice about Toronto's red-hot real estate market -- in 1998. I'm not going to say I made a shrewd business decision 12 years ago, or even six years later when I bought a larger house.

For me, it wasn't a case of not following what turned out to be bad advice from a fellow business journalist. Nor was it about trying to time the market.

I was simply following the same pattern as most Canadians: I got married and decided to stop renting and buy something. Later came the need for a bigger home when the second kid was on the way.

Which brings us to today. The supply of housing is rising fast as people try to list their homes for sale before the market "crashes." This is happening at the same time that demand is starting to wane. Economists and even the real estate industry are all predicting a correction, the only argument being how severe it will be.

So, the question for anyone buying is, should you wait?

Don Lawby, chief executive of Century 21 Canada, thinks the strategy of waiting for a crash is not going to work during this economic cycle. "For a market to crash, you have to have people who are desperate to sell," says Mr. Lawby. "People will [only sell] if they can't afford their mortgage or they don't have a job."

He doesn't see a decline in prices, "unless you are predicting that mortgages will renew at a hefty premium, which is not the case, or a whole bunch of people are going to lose their jobs."

Mr. Lawby believes neither will happen.

And, he adds, you are really into a risky game if you are timing the market. "A house is a home. If all you are doing is looking at it as an investment --that's what happened the last 15 years--it's not just that. It's a place to live and a place to raise a family," says Mr. Lawby.

Even Benjamin Tal, a senior economist with CIBC World Markets, who last month said in a report that Canadian housing is 14% overvalued, has doubts about playing the market. But he suspects that's exactly what some Canadians will do.

"Is there a sense that prices will go down and people will wait? I think it might be an issue," says Mr. Tal. "It won't be the main reason [people don't buy], but it will happen at the margins. The fact that people sell at the peak and wait to buy is a normally functioning market."

But even if you do make the right call on housing prices, it could end up backfiring on you in other ways. For example, if interest rates rise fast enough, any gains you make on price could be erased by interest charges, says Mr. Tal.

Edmonton certified financial planner Al Nagy says you need to think of your house the way you think about any long-term investment. "Whether it's an investment for use in your retirement or a house to live in, it's a long-term thing. The timing becomes less critical than it would be if it is a speculative [investment]."

And he says making a call on the housing market is as tricky as any other investment call. "It's very rare you catch the bottom. You can't let the market dictate when it's time to buy. The time to buy is when you can afford it," says Mr. Nagy.

I'm not sure that philosophy would fly with my former colleague, but the problem with timing the market is, what if your timing is off?

Read more: http://www.financialpost.com/personal-finance/mortgage-centre/Forget%20market%20timing%20about%20life%20timing/3129672/story.html#ixzz0xWxsRZ6h

Buying your first home can be very exciting, but also a little intimidating and confusing. A real estate transaction is complex and there are many terms you'll hear that may seem like a whole new language

Amortization: The number of years it takes to repay the entire amount of a mortgage. 

Appraisal: An estimate of a property's market value, used by lenders in determining the amount of the mortgage.

Assessment: The value of a property, set by the local municipality, for the purposes of calculating property.

Blended mortgage: A combination of two mortgages, one with a higher interest rate than the other, to create a new mortgage with an interest rate somewhere between the two original rates. 

Blended mortgage payments: Equal or regular mortgage payments, consisting of both a principal and an interest component. With each successive payment, the amount applied to interest decreases and the amount applied to the principal increases, although the total payment doesn't change. (Exception: see variable rate mortgages.)

Buy-down: When the seller reduces the interest rate on a mortgage by paying the difference between the reduced rate and market rate directly to the lender or to the purchaser, in one lump sum or monthly instalments.

Closing: The real estate transaction's completion, when the parties involved agree that all legal and financial obligations have been met, and the deed to the property is transferred from the seller to the buyer.                                                                                                                               

Counter-offer: One party's written response to the other party's offer during purchase negotiations between buyer and seller.                                                                                                          

Debt service ratio: The percentage of a borrower's gross income that can be used for housing costs, including mortgage payment and taxes (and condominium fees, when applicable).                         

Deed: A legal document that conveys (transfers) ownership of a property to the buyer.             

Easement: A legal right to use or cross (right-of-way) another person's land for limited purposes. A common example is a utility company's right to run wires or lay pipe across a property.      

Encroachment: An intrusion onto an adjoining property -- such as a neighbour's fence, storage shed or overhanging roof line that partially (or even fully) intrudes onto your property.                              

Equity: The difference between the price for which a property can be sold and the mortgage(s) on the property. Equity is the owner's "stake" in a property.                                                           

Foreclosure: A legal process by which the lender takes possession and ownership of a property when the borrower defaults on the mortgage obligations.                                                                           

High-ratio mortgage: A mortgage for more than 75 per cent of a property's appraised value or purchase price.                                                                                                                                      

Land transfer tax: Payment to the provincial government for transferring property from the seller to the buyer.                                                                                                                                           

Lien: Any legal claim against a property, filed to ensure payment of a debt.                                 

Multiple listing service: A system for relaying information to realtors about properties for sale.    

Principal: The mortgage amount initially borrowed, or the portion still owing on the mortgage. Interest is calculated on the principal amount.                                                                                        

Variable-rate mortgage: A mortgage for which payments are fixed, but whose interest rate changes in relationship to fluctuating market interest rates. If market rates go up, a larger portion of the payment goes to interest. If rates go down, a larger portion of the payment is applied to the principal.

After weeks of searching for your next home, you now have it narrowed down to two great options. One offers a shorter commute, but the other offers more square footage for your growing family. How can you make the best choice?

There are several strategies you can employ in your decision making process. Above all, be confident in your decision making abilities. "The fear of making serious decisions is a new kind of fear, called decidophobia," proclaimed by Walter Kaufmann at Princeton University in 1973. Worry and procrastination do nothing to aid the process, so buyers, be confident that you will make a sound choice.

Pro/Con list: In this case, you are deciding between two houses as your prospective home. For each house, divide a sheet of paper into two columns: pro and con. Be realistic about what the positive and negative factors would be for each purchase. Considerations could include: price, location, schools, repairs, square footage, floorplans, street noise, neighborhood value, comparables, and gut intuition.

Brainstorm scenarios: Chances are, whatever house you decided upon will be your residence for many years to come. Try and think ahead to situations that may arise in the future, and how each residence would affect those situations. Do you have aging parents that could move in? If so, then which house provides the best floorplan for this? Planning on having children? Check out ratings on local schools.

Do the math: Business executives might call this the "cost/benefit analysis." Buying a home is a huge financial decision, and while personal preferences (e.g. location, schools, square footage) all come into play in homebuying, many purchases are based on what makes the best financial sense. Discuss numbers and neighborhood comparables with your real estate agent. One home may be a smaller dollar amount, but the other may be a better deal in the long run. Some neighborhoods are up and coming, while others have come and gone. Are either homes overpriced or underpriced for their neighborhoods? Do either homes need repairs or updates?

Priorities list: Yes, you know you want the pool, landscaping, granite counters, close proximity to work, extra bath, and the list goes on. But when push comes to shove, and it might, what items are your priority, really? For some, driving a longer commute is worth having a larger house or a cheaper price. For other buyers, the exact opposite can be true.

Change perspectives: Sometimes you simply must step out of your own shoes to see a situation clearly. There are many different ways to approach this decision. You can look at it from an emotional point of view (which home do you love), an intuitive view (what does your gut tell you), and even a devil's advocate view (what if). Experts consider this the "Six Thinking Hats," introduced by Edward de Bono in a book of the same title, where you put on six different hats during a decision making process. Try and see the buying process from the perspective of your spouse, your children, friends, and even your worst enemy.

Finally, be realistic in your own abilities. While the final decision rests on your capable shoulders, you should rely on the professionals that are by your side. This includes your agent, lender, attorney, and even your family. And while you are the final say, remember that you have a team to help give you information to fuel that sound decision.

Written by Carla Hill

Members of the Ottawa Real Estate Board sold 1,149 residential properties in July through the Board's Multiple Listing Service® system compared with 1,578 in July 2009, a decrease of 27.2 per cent.

Of those sales, 294 were in the condominium property class, while 855 were in the residential property class. The condominium property class includes any property, regardless of style (i.e. detached, semi-detached, apartment, stacked etc.) which is registered as a condominium, as well as properties which are co-operatives, life leases and timeshares. The residential property class includes all other residential properties.

"Last July saw a record high number of sales in Ottawa, which was the result of pent-up demand as the market came out of  a downturn. What we see this year is a return to more seasonal sales volumes," said Board President Pierre de Varennes. "The ratio of listed properties to sold properties indicates that Ottawa remained in a seller's market last month, and sale prices continued to rise at a steady pace, as they generally do here in the national capital," he added.

The average sale price of residential properties, including condominiums, sold in July in the Ottawa area was $321,827 , an increase of 7.1 per cent over July 2009. The average sale price for a condominium-class property was $249,674 , an increase of 15.2 per cent over July 2009. The average sale price of a residential-class property was $346,638, an increase of 7.1  per cent over July 2009. The Board cautions that average sale price information can be useful in establishing trends over time but should not be used as an indicator that specific properties have increased or decreased in value. The average sale price is calculated based on the total dollar volume of all properties sold.

Source: OREB

“A lot of young Generation professionals in their 20s and 30s are buying these smaller places. They work for government, they have a lifestyle, so they buy a one-bedroom luxury condo that’s 500 square feet, where the space is incredibly well utilized,” says O’Connell. “Their world is downtown and with the smaller units, they’re still able to enjoy their lives and not be mortgage-poor.”

That’s not the only allure. Of Urban Capital’s three condo developments

East Market, the Mondrian and Central — phases one and two of Central have already earned 40 points towards LEEDs Certification, an eco-responsible building code that is increasingly being adopted by the industry.

Central’s condos at Bank Street and Gladstone Avenue are finished with sustainable hardwood floors, man-made stone kitchen counters that, unlike granite, don’t emit gases and dual flush toilets to reduce waste water.

There’s also energy-efficient lighting, a Virtucar hybrid car sharing program and a green-planted roof to create oxygen. Water from the roof is also collected for use so residents can wash their cars.

Then there are the beautifully-appointed common areas — a lounge, media room, gym, multipurpose room and landscaped outdoor barbecue area. Together, says Grant Algar, whose Toronto-based company handles the buildings’ interior design, “it’s really a lifestyle choice — a very continental lifestyle — where you live in a smaller space, you sleep there, but you’re out a lot.

“I think Generation Y realizes that they can get a job, have a career and have the freedom of a home base without a yard. They’re building equity sooner than their parents, and that gives them freedom to travel. My friends are seeing how much we’re saving by not renting, so they’re buying in.”

Source: Ottawa Citizen