Real Estate

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

  • Last Updated:
  • Jun 23rd, 2017 2:34 pm
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Deal Addict
Feb 9, 2009
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Ketchenany wrote:
May 17th, 2017 2:39 pm
Friend of mine did the same for a house in East York March 2016 while in Ireland. He did ok, who's to say this couple will not? Your magic eight ball?
Some people cant accept that there are people with much better jobs and way more money than them.

They feel their jr analyst job at $50k entitles them to a detached home in Toronto.
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May 8, 2017
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Ketchenany wrote:
May 17th, 2017 2:39 pm
Friend of mine did the same for a house in East York March 2016 while in Ireland. He did ok, who's to say this couple will not? Your magic eight ball?
Friend of mine bought some Home Capital stock back in 2014. He did ok, who's to say that you won't? Go ahead, buy some.

Top o' the bubble to you.
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Follow my journey through the Toronto housing bubble on Twitter: @SoSudsy
Sr. Member
Feb 10, 2008
547 posts
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Toronto
Sanyo wrote:
May 17th, 2017 2:41 pm
Some people cant accept that there are people with much better jobs and way more money than them.

They feel their jr analyst job at $50k entitles them to a detached home in Toronto.
I think the point was that the couple in the article bought a $1.3 million home without even setting foot inside it. When I read that article earlier in the week I was suprised someone would do that. People buy houses that expensive in Toronto and the GTA every day, so the price isn't a big deal, but would YOU ever buy the single biggest item of your life without even seeing it?
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mrwally wrote:
May 17th, 2017 2:48 pm
I think the point was that the couple in the article bought a $1.3 million home without even setting foot inside it. When I read that article earlier in the week I was suprised someone would do that. People buy houses that expensive in Toronto and the GTA every day, so the price isn't a big deal, but would YOU ever buy the single biggest item of your life without even seeing it?
They were on vacation and had their families look at it.

What should the sellers do wait while they finished their European vacation and hope they put an offer? It happens, if they were here they would have seen it themselves. They found a great house that suited them and they knew maybe a house of their liking didnt come up everyday so go for it.

Toronto cannot be built anymore (detached) so anything that comes up will likely be snatched pretty fast.
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Feb 9, 2009
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SmugDruggler wrote:
May 17th, 2017 2:45 pm
Friend of mine bought some Home Capital stock back in 2014. He did ok, who's to say that you won't? Go ahead, buy some.

Top o' the bubble to you.
Cherry picking now huh? Sad priced out renter.
Member
Jan 31, 2016
369 posts
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Toronto, ON
SmugDruggler wrote:
May 17th, 2017 2:45 pm
Friend of mine bought some Home Capital stock back in 2014. He did ok, who's to say that you won't? Go ahead, buy some.

Top o' the bubble to you.
Top O'day.

Cha bhi fios aire math an tobair gus an tràigh e
or
The value of the well is not known until it goes dry.
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mrwally wrote:
May 17th, 2017 2:48 pm
I think the point was that the couple in the article bought a $1.3 million home without even setting foot inside it.
Yes, and also that articles like this are always published at the top of bubbles. Not unlike this one from the US in 2005 right before their bubble popped: http://content.time.com/time/covers/0,1 ... 13,00.html
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Sr. Member
Feb 10, 2008
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Toronto
Sanyo wrote:
May 17th, 2017 2:53 pm
What should the sellers do wait while they finished their European vacation and hope they put an offer?
Well whatever works for them, but that's exactly what I would have done...waited until I got back. I've learned that some photos on the realtor listings are flattering to say the least. Unless they were able to put in an inspection or other condition I just think it's a huge gamble for a $1.3 million asset.

A month ago (which is maybe when they actually bought the house), I can MAYBE see the need...but Toronto has had just under 1200 detached houses listed in the last week alone...I don't think the FOMO is as prevalent now.
Last edited by mrwally on May 17th, 2017 3:09 pm, edited 2 times in total.
Deal Addict
Feb 9, 2009
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SmugDruggler wrote:
May 17th, 2017 3:04 pm
Yes, and also that articles like this are always published at the top of bubbles. Not unlike this one from the US in 2005 right before their bubble popped: http://content.time.com/time/covers/0,1 ... 13,00.html
You mean those taking 105% mortgages and then had teaser 0% rates than jumped to like 8% and couldnt afford their payments?

Hey if we have that right now you let me know... I may blow the horn too
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Sanyo wrote:
May 17th, 2017 3:11 pm
You mean those taking 105% mortgages and then had teaser 0% rates than jumped to like 8% and couldnt afford their payments?

Hey if we have that right now you let me know... I may blow the horn too
In a declining market, a 95% mortgage turns into 105% fast. When Americans refer to "teaser rates" they're typically talking about a rate that resets after several years, not unlike a 5 year mortgage. (in contrast to a standard 30 year mortgage that they have down there)

Regardless, we Canadians have our own problems. Bundling, for example. http://www.reuters.com/article/us-canad ... SKBN14V1DY

Top o' the bubble to you.
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Follow my journey through the Toronto housing bubble on Twitter: @SoSudsy
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Jan 22, 2003
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Austin/Markham
The article is misleading, they did a video conferencing viewing of the home, and also had family check it out.

Detached proper houses are basically not the norm anymore in Toronto. Its not a bubble, but its just not a realistic option for 90% of folks. The numbers just don't make sense, its now just a game for rich and upper middle class folks to complain about.


To be in the top 5%, Canadians needed to have a total income of slightly above $102,300 and to be in the top 1% required just over $191,100, nearly seven times the national median income.


I can't see too many regular folks buying these places. Assuming an income of $200k, after income taxes and putting money for retirement, I'm down to $100K or less. Factoring in $3K/month on spending (food/insurance/entertainment) + $6K for an annual family vacation and you're down to $60K for mortgage and taxes. That would be 25 years of payments on a $1M+ mortgage, assuming your property taxes are constant. That's a nasty burden to saddle yourself with when your in your 30s and you'll have other future expenses like kids. Some of it could be offset by having a spouse work or spending less, but that hits quality of life. The other assumption folks make is they'll work until 60 or 70 which is nuts. Who knows what can happen 30-40 years out, how finances or health can change.

I look at Toronto and wonder what folks are smoking to engage in these buys.
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Deal Addict
Feb 9, 2009
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SmugDruggler wrote:
May 17th, 2017 3:22 pm
In a declining market, a 95% mortgage turns into 105% fast. When Americans refer to "teaser rates" they're typically talking about a rate that resets after several years, not unlike a 5 year mortgage. (in contrast to a standard 30 year mortgage that they have down there)

Regardless, we Canadians have our own problems. Bundling, for example. http://www.reuters.com/article/us-canad ... SKBN14V1DY

Top o' the bubble to you.
Most 5 years have been resetting LOWER than previous... even if we have higher rates they would need to be significant enough and new buyers have to be approved at a much higher rate.

Standards that werent there in the US

And we saw a slight correction in Vancouver... where is the large defaults coming??

#jealouspricedoutrenter
Newbie
Apr 17, 2017
82 posts
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Sanyo wrote:
May 17th, 2017 3:57 pm
Most 5 years have been resetting LOWER than previous... even if we have higher rates they would need to be significant enough and new buyers have to be approved at a much higher rate.

Standards that werent there in the US

And we saw a slight correction in Vancouver... where is the large defaults coming??

#jealouspricedoutrenter
Yes that's true. Look at what's now happening in Vancouver...prices on the way up again. I think the same scenario plays out in the GTA.
Jr. Member
May 26, 2008
111 posts
131 upvotes
elpresidente wrote:
May 17th, 2017 8:33 pm
Yes that's true. Look at what's now happening in Vancouver...prices on the way up again. I think the same scenario plays out in the GTA.
Per the BCREA, average prices are actually down YoY in Greater Vancouver - by 8.8%. Check page 3 of the PDF below.

http://www.bcrea.bc.ca/docs/news-2017/2017-04.pdf

Other areas in BC are going up, though the price levels are nowhere close to Vancouver.

The FBT was implemented in Vancouver only. Maybe that has something to do with it.
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Mar 13, 2010
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They are planning a high speed rail. Another step towards Toronto becoming a world class city and sign of future population growth.

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