Real Estate

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

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  • Feb 3rd, 2023 4:08 pm
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May 8, 2017
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Mike15 wrote: That chart is real (normalized to 2016) dollars, btw so you can visualize it excluding inflation. Using your numbers above, 1985 trough - 1996 trough was inflation + 2.27%. That's a big difference compared to "inflation + 1%." If you really think "it's not precisely 1%, but close enough" plug inflation + 2.27% in your rent vs. buy calculator and report back.

So your inflation+1 is a US ~20th century historical average from a 2000/2005 book. Would GTA-info, more current, not be more useful than a US nationwide figure?
I assure you that if I wanted to, I would have been able to find a 10 year period that worked out to inflation +1% precisely. I'm too lazy. The bottom line is that no matter what I say, and no matter how much I source it, you'll deny it because reasons. Ever notice that I'm the one always sourcing things, and you and your coven are throwing out anecdote after anecdote?

As far as I'm concerned, you are more than welcome to buy 200 properties at today's prices and subsidize your tenants. It always makes me smile when I see a landlord not know what they're actually doing. What I don't like is when you guys say painfully ignorant things like "equity is part of my ROI" or "it's not negative cashflow because equity" or "the house is paid for so it's free chortlechortlechortle". It confuses impressionable people.

If you guys want to think that you are geniuses for buying houses, be my guest. But try not to spread misinformation, if you don't mind. It's not good for anyone.

Oh, and inflation +1% applies to Canada as well.
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Nov 24, 2013
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Kingston, ON
SmugDruggler wrote: I assure you that if I wanted to, I would have been able to find a 10 year period that worked out to inflation +1% precisely. I'm too lazy. The bottom line is that no matter what I say, and no matter how much I source it, you'll deny it because reasons.

As far as I'm concerned, you are more than welcome to buy 200 properties at today's prices and subsidize your tenants. What I don't like is when you guys say painfully ignorant things like "equity is part of my ROI" or "it's not negative cashflow because equity" or "the house is paid for so it's free chortlechortlechortle".

If you guys want to think that you are geniuses for buying houses, be my guest. But try not to spread misinformation, if you don't mind. It's not good for anyone.

Oh, and inflation +1% applies to Canada as well.
You've been tooting the "cash out and rent" horn in this thread and linking that rent-vs-buy calculator, so I just think it's healthy for anyone reading to question assumptions therein. Whether the avg growth rate is Inflation+1.0% or 1.5% is a surprisingly huge difference to that calc, so I'm trying to be helpful and get discussion around the reasoning behind the assumption before blanket statements like "it's cheaper to rent than buy in Toronto" as a universal rule get bandied around.

I'm certainly not trying to misinform anyone. Questioning assumptions precisely because generalization is problematic.
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May 8, 2017
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Mike15 wrote: You've been tooting the "cash out and rent" horn in this thread and linking that rent-vs-buy calculator, so I just think it's healthy for anyone reading to question assumptions therein. Whether the avg growth rate is Inflation+1.0% or 1.5% is a surprisingly huge difference to that calc, so I'm trying to be helpful and get discussion around the reasoning behind the assumption before blanket statements like "it's cheaper to rent than buy in Toronto" as a universal rule get bandied around.

I'm certainly not trying to misinform anyone. Questioning assumptions precisely because generalization is problematic.
The bottom line is this: if prices decline this year, it will have been better to rent. If they continue to go up, it will have been better to buy. Now let's put that behind us and talk about what we're supposed to be talking about: Is this the peak of the Toronto RE bubble?
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Aug 19, 2016
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SmugDruggler wrote: Is this the peak of the Toronto RE bubble?
Nope. I will bet you 1 billion dollars that real estate prices will be a lot higher 100 years from now.
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May 31, 2007
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at1212b wrote: Less Chinese, Persian money (the big foreign Money). Also, historically, look at Toronto, all the Rich People gravitated towards the North (when Mid Town was considered North). Then look at Bridle Path, Rosedale, Forest Hill, then North York all North of the core (maybe they hate transferring on the subway and want direct to Union St). However, alot of old School Scarborough Elements with dark skin coloured had moved to Ajax. We all know what that does to property values, and radioactive it is for the many closeted, hypocritical Racist Homeowners wanting the 'Best' for their kids and steering clear of other dark-coloured minorities.

Also, more blue Collar lives East GTA. Cheap property, Pick-ups, big land for their toys. The epicenter being Oshawa before. I remember over 10 years ago, looking through the School ranking when it was relatively new (and to this day), you look at Average Income to Children Ontario School Ranking score. it was always positively correlated. The higher the Avg. Household income, the higher the school ranking. But as you got Closer to Oshawa, it was the opposite. A Household making 100K would have a grd school in the ranking of 2.8/10. It was very noticeable the closer you got to Oshawa. At Mid-Town Toronto, that level of income would have a school ranking at let's say 9/10. Basically Center of Toronto is the historical nobility class which spread North (so today, it's the wannabe Nobility), while the Blacksmith family Class epicenter was Oshawa and the factory plants, which spread from there (earn lots of money but with little education). Today, everybody wants to be a Noble with house prices reflecting that.
I think the Nuke plants and lack of "other" quality employment is/was a big factor as well.
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Mar 31, 2008
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Jungle wrote: I think the Nuke plants and lack of "other" quality employment is/was a big factor as well.
Nah. Nice try though.
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Jan 16, 2009
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Toronto
SmugDruggler wrote: House price : 1,000,000
Mortgage rate: 3%
Down payment: 20%
Amortization: 25 years
Plan to stay: 7 years
Annual change in home value: 3% (inflation +1% -- the historic norm)
Change in rent: 1.9%
Investment return: 5% (extremely conservative and below the historic norm)
Inflation: 1.8%
Property taxes: 0.75%
Land transfer taxes: 32,950
Cost of buying a home: 1.5%
Cost of selling a home: 6% (5% to realtor plus HST; does not include other incidentals that could make it much higher)
Maintenance & renos: 0.5%

Homeowner's insurance: 1200/yr
Condo fees: 0
Other: 0
Deposit: 1 month
Renter's insurance: 240
Other rental costs: 0

Renting is better if...
you can rent a similar home for less than:
$2,808 / MONTH


There are lots of million dollar houses available for 2808/mo in Toronto.
The easier scale will be Rent to price ratio, which basically determined asset value base on its ability to generate income.

Ottawa is currently at 20 while Toronto is almost 40 for detached. This means for the same amount of rent, you have to pay twice as much to buy in Toronto.

If I have a million dollar, wouldn't it make more sense to buy in Ottawa to rent out and rent in Toronto? I will be getting double of the income Vs buying in Toronto. This pretty much says that Toronto housing is built on speculation as the income/rent simply doesn't go up as the price of house.

The bubble usually bust when we start to see credit drying out and hcg is just the beginning. It will take decades for it to come down to align with income. That being said, I think the bond yield goes up will trigger significant correction couple o years down the road.

In any cases, it is a good time to rent in Toronto. You can pay 2000 to live in a 1.2 million house while paying no maintenance and property tax. I don't think why anyone wants to buy to live in the house.

House in Toronto is for speculation for now.
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Sep 8, 2007
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nickelplate wrote: She had me at "We need Home trust back in the market."
She seems nice.
SmugDruggler wrote: Credit is definitely tightening. Check the second pic out:



Edit: Full article here: https://www.linkedin.com/pulse/governme ... ameerullah

Oh, and who said we don't have liar loans in Canada?

*pop*
Another "risky high rate loan 2nd mortgage" originator bites the dust: Paramount Equity Financial Corporation

http://paramountequity.ca/issued-and-en ... appointin/
Member
Jun 8, 2017
214 posts
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My opinion. Prices for the rest of the year will not reach April's highs. When interest rates begin ticking higher in 2018 there will be a lagging further downward pressure on prices. Small increases in interest will have significant impacts on those carrying high debt in relation to income. Home prices at the end of 2018 will be lower than prices at the end of 2017. Yes, I think we hit the peak in April 2017.

Have skin in the game. House and condo in Toronto. Let's see where the chips fall...
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Jan 26, 2016
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Ceryx wrote:

In any cases, it is a good time to rent in Toronto. You can pay 2000 to live in a 1.2 million house while paying no maintenance and property tax. I don't think why anyone wants to buy to live in the house.

This is completely false - I can find you condos at 600k that go way above $2000. We already looked at those numbers in another thread, where DrugSmuggler claimed low rents for 1M houses, but I showed him there are no such low rents.

Go on Realtor.ca and compare the rent prices to purchase prices and you are in a world of shock with regard to how expensive rents have become. I feel the renter crowd living in their existing homes rented years ago think market is still the same. I can see why their landlord doesn't increase the rent, if they are good tenants. But that doesn't mean they can go and find one.

Find me one example PLEASE!!!
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May 8, 2017
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WinterSleep wrote: This is completely false - I can find you condos at 600k that go way above $2000. We already looked at those numbers in another thread, where DrugSmuggler claimed low rents for 1M houses, but I showed him there are no such low rents.
Point me to this thread, please.
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Nov 2, 2014
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SmugDruggler wrote: House price : 1,000,000
Mortgage rate: 3%
Down payment: 20%
Amortization: 25 years
Plan to stay: 7 years
Annual change in home value: 3% (inflation +1% -- the historic norm)
Change in rent: 1.9%
Investment return: 5% (extremely conservative and below the historic norm)
Inflation: 1.8%
Property taxes: 0.75%
Land transfer taxes: 32,950
Cost of buying a home: 1.5%
Cost of selling a home: 6% (5% to realtor plus HST; does not include other incidentals that could make it much higher)
Maintenance & renos: 0.5%

Homeowner's insurance: 1200/yr
Condo fees: 0
Other: 0
Deposit: 1 month
Renter's insurance: 240
Other rental costs: 0

Renting is better if...
you can rent a similar home for less than:
$2,808 / MONTH


There are lots of million dollar houses available for 2808/mo in Toronto.
5% to realtor?
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May 1, 2012
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So... I see Mark is back. Welcome back.
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Jan 26, 2016
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SmugDruggler wrote: Point me to this thread, please.
I don't have time to dig it up - you can find me a 1.2M condo/house that goes for 2k.
In that thread, I found condos in the 600k range going for 2300+.
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May 8, 2017
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Ceryx wrote: The easier scale will be Rent to price ratio, which basically determined asset value base on its ability to generate income.
BELIEVE ME, I've tried using that. The bulls argue it's a new paradigm, so price:rent is meaningless. That's how I ended up relying on that calculator in the first place.
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Feb 13, 2017
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WinterSleep wrote: Here is yet another example
1) Rent = $3,290/Monthly MLS® Number: C3810277
3103 - 9 BOGERT Avenue , Toronto, Ontario M2N0H3
https://www.realtor.ca/Residential/Sing ... g-Westgate

2) Buy = $1,059,900 MLS® Number: C3804366
3303 - 9 BOGERT Avenue , Toronto, Ontario M2N0H3
https://www.realtor.ca/Residential/Sing ... g-Westgate
$1M for a 2+1 condo??? WHAT???????

Will this sell for that high? I have never really followed condo pricing, is this what 2+1's in DT go for now?

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