Real Estate

Did we just hit the peak of the Toronto RE bubble?

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  • Mar 16th, 2019 9:08 am
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Member
Aug 11, 2016
498 posts
151 upvotes
fdl wrote:
Nov 21st, 2016 9:23 pm
Thanks Mr Disco.

This is an important topic to many here , and I feel that next 3-4 months will be especially interesting as the effect of recent mortgage rule changes and interest hikes kick in. Hoping we can all act like adults and have a civil discussion as it all unfolds. Smiling Face With Sunglasses
I second that, I just hope that Mr Disco could have left his original warnings as is, concerning the use of personal insults and highly derogatory terms against fellow posters and possible banishment from the forum for violators of such terms.

Regardless of the opinion let's try to keep it civil, cut the satirical and facetious remarks, denigrating other's intelligence never gets your side of the argument anywhere, let the numbers speak for itself as it always has and will be.

FDL I think for an more accurate overview on the state of the market one has to look pass the next month or two until we hit Feb, March of next year, as base on your posted data, even during the hottest winter RE market in recent memory of 2015/16, we still witnessed a retracement in Nov from Oct 2015 prices, market did not hit new highs until feb/mar of the following year.

2015
Sep: $1.053
Oct: $1.071
Nov: $1.018
Dec: $1.039

2016
Jan: $1.061
Feb: $1.211
Mar: $1.174
[OP]
Deal Fanatic
Dec 5, 2009
5153 posts
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Yes, Feb/Mar is key.
Penalty Box
Dec 27, 2013
8003 posts
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Toronto
Afv1234 wrote:
Nov 21st, 2016 8:13 pm
Please refrain from making these feud inciting wild satirical statements out of respect to the OP. However below are some actual published articles on this exact subject for your consideration.

.What Toronto’s real estate market will be like in 50 years..

.Fifty years in the lives of Toronto homes..
yeah, and by then the average income will be $250,000 so it all makes sense.
Member
Aug 11, 2016
498 posts
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daivey wrote:
Nov 21st, 2016 10:38 pm
yeah, and by then the average income will be $250,000 so it all makes sense.
Never say never, In 1966 the average annual income in Canada for men was $5,483 and for women $3,016. Avg $4250, today average Canadian income is $38700.00, therefore over the last 50 yrs average income has seen a 9.10x increase.

If avg income would to increase by the same magnitude in the next 50 yrs, then it would imply a year 2076 average income of $352400.00 some $100k above your wildest income predictions, your $250k is entirely plausible, many of us here may live to see it... however $350k average income would be highly unlikely as back in the late 70s and early 80s we went through a period of hyper inflation , which won't resurface anytime soon.
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Jun 2, 2012
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GTA
Afv1234 wrote:
Nov 21st, 2016 11:34 pm
Never say never, In 1966 the average annual income in Canada for men was $5,483 and for women $3,016. Avg $4250, today average Canadian income is $38700.00, therefore over the last 50 yrs average income has seen a 9.10x increase.

If avg income would to increase by the same magnitude in the next 50 yrs, then it would imply a year 2076 average income of $352400.00 some $100k above your wildest income predictions, your $250k is entirely plausible, many of us here may live to see it... however $350k average income would be highly unlikely as back in the late 70s and early 80s we went through a period of hyper inflation , which won't resurface anytime soon.
Nope, this would not be sustainable.. if you follow the same increase

1966 - Home Price $22,500
2016 - Home Price $762,975
2066 - Home Price $25,872,482

1966 - Income $8,499
2016 - Income $77,400
2066 - Income $704,878

1966 - 2.6 X Income
2016 - 9.8 X Income
2066 - 36 X Income
Member
Aug 11, 2016
498 posts
151 upvotes
GSpeed wrote:
Nov 22nd, 2016 10:58 am
Nope, this would not be sustainable.. if you follow the same increase

1966 - Home Price $22,500
2016 - Home Price $762,975
2066 - Home Price $25,872,482

1966 - Income $8,499
2016 - Income $77,400
2066 - Income $704,878

1966 - 2.6 X Income
2016 - 9.8 X Income
2066 - 36 X Income
Who is predicting a home price of $25 million by 2066? The Article cited previously from Toronto life is hinting an average price of only $4.4 million by 2066 not $25million, but then again if you think current levels (8.63 mid year Numbeo) are unsustainable then look at the list below, its a worldwide phenomenon, even Taiwan is at a double of our ratio, Toronto currently ranks all the way down at 139 on the global price to income list while holding the 4th most livable city in the world title according to the economist.

Property Prices Index 2016 Mid Year By Numbeo
World home price to income ratio:

1. Shenzhen, China 38.36
2 Mumbai, India 37.67
3 Hanoi, Vietnam 35.86
4 Hong Kong, 34.95
5 Beijing, China 33.32
6 Shanghai, China 30.91
7 London, U.K. 30.88

8 Lviv, Ukraine 28.10
9 Kiev, Ukraine. 25.96
10 Guangzhou, China 25.85
11 Tokyo, Japan 23.65
12 Ho Chi Minh City, Vietnam 23.62
13 Odesa, Ukraine 23.09
14 Kharkiv, Ukraine 22.92 6.67
15 Moscow, Russia 21.35
16 Rome, Italy 21.06

17 Thane, India 21.03
18 Singapore, Singapore 20.94
19 Bangkok, Thailand 20.64

20 Belgrade, Serbia 20.38
21 Bogota, Colombia 20.30
22 Rio De Janeiro, Brazil 20.27
23 Addis Ababa, Ethiopia 19.79
24 Minsk, Belarus 19.31
25 Sao Paulo, Brazil 19.28
26 Tel Aviv-yafo, Israel 19.08
27 Baku, Azerbaijan 18.95
28 Yerevan, Armenia 18.86
29 Chisinau, Moldova 18.74
30 Tirana, Albania 18.71
31 Jakarta, Indonesia 18.43
32 Montevideo, Uruguay 17.94
33 Belo Horizonte, Brazil 17.89
34 Chiang Mai, Thailand 17.79
35 Paris, France 17.65
36 Tashkent, Uzbekistan 17.54
37 Taipei, Taiwan 17.37
139 Toronto, Canada 8.63
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Dec 27, 2011
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Waterloo
Afv1234 wrote:
Nov 22nd, 2016 10:58 am
Who is predicting a home price of $25 million by 2066? The Article cited previously from Toronto life is hinting an average price of only $4.4 million by 2066 not $25million, but then again if you think current levels (8.63 mid year Numbeo) are unsustainable then look at the list below, its a worldwide phenomenon, even Taiwan is at a double of our ratio, Toronto currently ranks all the way down at 139 on the global price to income list while holding the 4th most livable city in the world title according to the economist.

Property Prices Index 2016 Mid Year By Numbeo
World home price to income ratio:

1. Shenzhen, China 38.36
2 Mumbai, India 37.67
3 Hanoi, Vietnam 35.86
4 Hong Kong, 34.95
5 Beijing, China 33.32
6 Shanghai, China 30.91
7 London, U.K. 30.88

8 Lviv, Ukraine 28.10
9 Kiev, Ukraine. 25.96
10 Guangzhou, China 25.85
11 Tokyo, Japan 23.65
12 Ho Chi Minh City, Vietnam 23.62
13 Odesa, Ukraine 23.09
14 Kharkiv, Ukraine 22.92 6.67
15 Moscow, Russia 21.35
16 Rome, Italy 21.06

17 Thane, India 21.03
18 Singapore, Singapore 20.94
19 Bangkok, Thailand 20.64

20 Belgrade, Serbia 20.38
21 Bogota, Colombia 20.30
22 Rio De Janeiro, Brazil 20.27
23 Addis Ababa, Ethiopia 19.79
24 Minsk, Belarus 19.31
25 Sao Paulo, Brazil 19.28
26 Tel Aviv-yafo, Israel 19.08
27 Baku, Azerbaijan 18.95
28 Yerevan, Armenia 18.86
29 Chisinau, Moldova 18.74
30 Tirana, Albania 18.71
31 Jakarta, Indonesia 18.43
32 Montevideo, Uruguay 17.94
33 Belo Horizonte, Brazil 17.89
34 Chiang Mai, Thailand 17.79
35 Paris, France 17.65
36 Tashkent, Uzbekistan 17.54
37 Taipei, Taiwan 17.37
139 Toronto, Canada 8.63
Question about those price to income ratios...how exactly are those people paying for their homes if they're 30 times their income?!
[OP]
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Dec 5, 2009
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crystallight wrote:
Nov 22nd, 2016 12:29 pm
Question about those price to income ratios...how exactly are those people paying for their homes if they're 30 times their income?!
I'm guessing those are average income of the population of the countries , not average income of the home owners specifically. Many of those countries on the list have massive poverty in their population demographics.
Member
Aug 11, 2016
498 posts
151 upvotes
crystallight wrote:
Nov 22nd, 2016 12:29 pm
Question about those price to income ratios...how exactly are those people paying for their homes if they're 30 times their income?!
Well...Just go ask any one of your Chinese acquaintances, the wealth divide in those countries primarily comes down to being either house rich or house poor, people are not in denial of the market momentum, in China a middle class family on average owns 3-4 homes, parents are buying homes for their newborns, flipping and trading is practiced to perfection, and the government fully embrace the idea of a housing bubble as all their measures to cool the market were half hearted, steps are often repelled as soon as first sign of a slowdown is evident, the government realizes consumer confidence surges when people feel wealthy even if ladened by debt, discretionary spending increases which would keep both domestic and import demands strong. I mean we all know 30x price to income ratio didn't put a dent in the Chinese RE buying power, in fact it has emboldened their resolve to buy up properties not only domestically but all over the world where they see similar potential. Manhattan, London, Paris, Melbourne, Vancouver ....

Chinese are absolutely mad for RE, People are literally getting divorces so they could buy more homes, after the recent purchasing restrictions on families holding multiple properties, Fake Divorce Is Path to Riches Buying Hot China Real Estate ..

Even at current staggering home/income ratios, prices are still surging in China, so there is little doubt for those Chinese who truly intents on buying in Vancouver, a mere 15% foreign tax would do little to curb their enthusiasm, "over the past year, residential real estate prices in 10 Chinese cities have risen by an alarming 23 percent. The prices in some cities have ballooned even more; housing prices in the large southern city of Shenzhen rose by a staggering 53 percent over the past year."
Member
Aug 11, 2016
498 posts
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fdl wrote:
Nov 22nd, 2016 1:28 pm
I'm guessing those are average income of the population of the countries , not average income of the home owners specifically. Many of those countries on the list have massive poverty in their population demographics.
Yes, I can understand China being near the top. but for other little known countries I am at a lost, who wants to live in Yerevan, Armenia? Yet people are paying way above their income for the previlige of home ownership, in any case there is no truth that home prices can not be sustained beyond our current ratio of 8.63x income.

From a global perspective, let's place the developing/improverished countries aside, looking at the list below still just about all known major cities in the world are above us in turns of the expensive scale rank 39 to 139, for these nations there are no massive poverty in their population demographics...

Affordability Index
39 New York, NY, United States 16.42
40 Seoul, South Korea 16.33
41 Delhi, India 16.27
45 Stockholm, Sweden 14.71
48 Vienna, Austria 14.41
50 Buenos Aires, Argentina 14.37
51 Brasilia, Brazil 14.35
55 Saint Petersburg, Russia 14.11
57 Manila, Philippines 13.90
59 Jerusalem, Israel 13.47
63 Prague, Czech Republic
76 San Francisco, CA, United States 12.23
77 Warsaw, Poland 12.23
84 Vancouver, Canada 11.82
85 Madrid, Spain 11.60
87 Munich, Germany 11.53
90 Sydney, Australia 11.42
99 Mexico City, Mexico 10.63
101 Barcelona, Spain 10.57
103 Helsinki, Finland 10.50
105 Zurich, Switzerland 10.45
106 Cairo, Egypt 10.40
109 Bologna, Italy 10.17
112 Athens, Greece 10.08
114 Auckland, New Zealand 9.99
116 Honolulu, HI, United States 9.89
119 Geneva, Switzerland 9.47
120 Luxembourg, Luxembourg 9.45
122 Lyon, France 9.30
123 Oslo, Norway 9.29
124 Amsterdam, Netherlands 9.21
126 Kuala Lumpur, Malaysia 9.19
127 Dublin, Ireland 9.10
129 Hamburg, Germany 9.07
139 Toronto, Canada 8.63
Penalty Box
Dec 27, 2013
8003 posts
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Toronto
Afv1234 wrote:
Nov 21st, 2016 11:34 pm
Never say never, In 1966 the average annual income in Canada for men was $5,483 and for women $3,016. Avg $4250, today average Canadian income is $38700.00, therefore over the last 50 yrs average income has seen a 9.10x increase.

If avg income would to increase by the same magnitude in the next 50 yrs, then it would imply a year 2076 average income of $352400.00 some $100k above your wildest income predictions, your $250k is entirely plausible, many of us here may live to see it... however $350k average income would be highly unlikely as back in the late 70s and early 80s we went through a period of hyper inflation , which won't resurface anytime soon.
sweet so we will literally all be millionaires... even renters..... amazing. win win for everyone.
Member
Aug 11, 2016
498 posts
151 upvotes
daivey wrote:
Nov 22nd, 2016 7:27 pm
sweet so we will literally all be millionaires... even renters..... amazing. win win for everyone.
Millionaires in 50 yrs would carry little weight, the phrase was first adopted in the early 1800's when it really meant something, forward another couple hundred years people in future would interpret the word "millionaire"as a form of derogatory insult against the poor. Smiling Face With Sunglasses

Back in the 1950s there was a TV game show called $64,000 dollar question, in today's money the total prize awarded would be $567,000.00. Would you be in awe if someone today has a net worth of $150k? Millionaires 50 years from now would have the same resonance as someone today with only $150k under his name. so yes in time we would all be millionaires, not sure about the renters though as they are still busy paying off others debts...
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Oct 22, 2014
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Toronto
Hyper inflation in the 70s/80s? In Canada or world wide?
Sr. Member
Jan 30, 2006
853 posts
286 upvotes
Afv1234 wrote:
Nov 22nd, 2016 10:58 am
Who is predicting a home price of $25 million by 2066? The Article cited previously from Toronto life is hinting an average price of only $4.4 million by 2066 not $25million, but then again if you think current levels (8.63 mid year Numbeo) are unsustainable then look at the list below, its a worldwide phenomenon, even Taiwan is at a double of our ratio, Toronto currently ranks all the way down at 139 on the global price to income list while holding the 4th most livable city in the world title according to the economist.

Property Prices Index 2016 Mid Year By Numbeo
World home price to income ratio:

1. Shenzhen, China 38.36
2 Mumbai, India 37.67
3 Hanoi, Vietnam 35.86
4 Hong Kong, 34.95
5 Beijing, China 33.32
6 Shanghai, China 30.91
7 London, U.K. 30.88

8 Lviv, Ukraine 28.10
9 Kiev, Ukraine. 25.96
10 Guangzhou, China 25.85
11 Tokyo, Japan 23.65
12 Ho Chi Minh City, Vietnam 23.62
13 Odesa, Ukraine 23.09
14 Kharkiv, Ukraine 22.92 6.67
15 Moscow, Russia 21.35
16 Rome, Italy 21.06

17 Thane, India 21.03
18 Singapore, Singapore 20.94
19 Bangkok, Thailand 20.64

20 Belgrade, Serbia 20.38
21 Bogota, Colombia 20.30
22 Rio De Janeiro, Brazil 20.27
23 Addis Ababa, Ethiopia 19.79
24 Minsk, Belarus 19.31
25 Sao Paulo, Brazil 19.28
26 Tel Aviv-yafo, Israel 19.08
27 Baku, Azerbaijan 18.95
28 Yerevan, Armenia 18.86
29 Chisinau, Moldova 18.74
30 Tirana, Albania 18.71
31 Jakarta, Indonesia 18.43
32 Montevideo, Uruguay 17.94
33 Belo Horizonte, Brazil 17.89
34 Chiang Mai, Thailand 17.79
35 Paris, France 17.65
36 Tashkent, Uzbekistan 17.54
37 Taipei, Taiwan 17.37
139 Toronto, Canada 8.63
most of the places listed are in massive poverty

increase in price to income ratio for Toronto above 10 will mean increase in poverty and basically will mean decrease in property prices and incomes
Member
Aug 11, 2016
498 posts
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Elfwood wrote:
Nov 22nd, 2016 11:53 pm
Hyper inflation in the 70s/80s? In Canada or world wide?
Not sure why you are driving at, some of those top ranking countries in turns of price/income ratio Russia, China were still operating under tight communist central planned economies, globalism is still a decade or so away, locally we have see mortgage rates as high as 21% back in 1981, look back those years see how home prices have performed. With globalism there is less chance that inflation will gain ground in the first place, as the globalization of the past few decades has been a significant disinflationary force. Low-priced imports from developing countries have helped keep domestic prices down, and that situation is not likely to change significantly in the next while.

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