Real Estate

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

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  • Oct 21st, 2018 12:35 pm
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Jungle wrote:
Jul 10th, 2017 2:03 pm
Agreed too. We'll see what happens in Sept. A more "level" support for market might be normal now.

However I don't see any support return to the craziness of bidding wars and 100-200K monthly increases like we did late winter.

SO buyers and RE owners need to lower their expectations going forward and this is why speculating/ flipping can be do dangerous. No one thought they would get caught when market "turned on a dime"
Historically, The biggest impact of a RE crash isn't necessarily the decline, but the very long period of market stagnation with relatively flat growth.
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rjg4235 wrote:
Jul 10th, 2017 1:53 pm
Considering the fact that it's highly regional and some places are up while others are down makes me think it's more speculation than anything. Once the short term investors are all gone the market would stabilize. Longterm investors and landlords aren't going anywhere. People still need places to live and can still afford the new cheaper prices. I highly doubt the masses will leave Toronto or all convert to renters. In a few months people will have no choice but to buy again. Or rent forever?
The problem with convert to renters is:
a) lack of good quality "rental" housing. Not the "amateur" landlords condo units or houses, but rental buildings. Yes, Toronto do have some old (20-30y old) crap rentals, most without washer/dryer ensuite, with 2 from 3 elevators broken 100% time etc. But in terms of modern and "diversified" rentals (e.g. high-rises, low-rises, townhomes) it's almost zero. I can compare with Houston, for example, and Toronto (GTA) just dozen years behind. Where will go the family with two kids, full garage of camp staff etc? to the shoe-sized condo?? Meanwhile SFH rentals are quite expensive (partially because of lack of supply on on-apartment style rentals)
b) each year GTA got influx of ~50k-100k people. With almost non-existing NEW rental buildings, where they will go even all 100% would like to rent? To "amateur" landlords who have to buy these NEW properties on the market...
Thus, even if enmasse will decide to rent, this will not reduce the demand on the market.

With supply/demand equation, either you need to decrease demand - reduce immigration or make GTA unattractive (which Wynne is trying in her best, lol), or increase supply - via easier access to land, building permits , more rentals built. I didn't see so far any real movement about building more, except the PR and BS on April declaration of affordable housing....
Last edited by asa1973 on Jul 10th, 2017 2:32 pm, edited 1 time in total.
Make the Trudeau drama teacher again!
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fdl wrote:
Jul 10th, 2017 2:22 pm
Historically, The biggest impact of a RE crash isn't necessarily the decline, but the very long period of market stagnation with relatively flat growth.
The decline in housing prices doesn't bother me. Equity is unproductive anyway other than providing the utility house was bought for. (shelter) So more RE doesn't make sense for productive long term growth.

The impact this might have on the economy if we get a bad crash is actually very concerning, especially since the DEBT being held doesn't go away, when prices decline. Don't really want to see everyone lose jobs and country go into recession thanks to the greed of speculators, flipper, foreign buyers and hoarders.

This is why some bears so angry.
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fdl wrote:
Jul 10th, 2017 2:22 pm
Historically, The biggest impact of a RE crash isn't necessarily the decline, but the very long period of market stagnation with relatively flat growth.
+1

There is a chart from Realosophy with actual YoY decreases (non-inflation adjusted), and the LARGEST single YoY decrease in average prices going back to the 50's was only 8%. Obviously there are years of loses which compound, but you're right, historically, it's prolonged decline, not instant and catastrophic as some people believe. I mean, if people are going to say, 'history will repeat itself', then at least talk about what historically happened. :)
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Jun 12, 2017
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ahlaker wrote:
Jul 10th, 2017 2:21 pm
This is from an article from the Toronto Star circa May 1989. I have no idea what will happen to the GTA housing market by next September and I have no horse in the race. Fascinating read, whatever your opinion is:
Thanks for posting this, it was a very interesting read and certainly a lot of parallels to what is happening today.

If we have a recession, I have no doubt that our prices will drop; but it is hard to see a large dip without a recession and right now all signs point to economy growing, not shrinking... in the last line it even specifically said that they are looking at a recession is rates rise and rates did rise and that is precisely what happened. I would like to think BoC has learned from those fiascos but we'll see.
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Germack wrote:
Jul 9th, 2017 11:55 pm

However cost of homeownership (Taxes, utilities, repair and interest/opportunity costs) never really increased:
There are 3 types of lies:
1. Plain lie
2. Bold lie
3. Statistics

:)
In Burlington MY house taxes increased 50% over 5 years, so did hydro cost (even doubled - from plain 5.5c we had "averaged" ~11c with "smart" tariffs)
House prices doubled however, so in total home expenses proportion probably remained the same, but NOT in absolute values.

P.s. probably they took TORONTO taxes, which a) lower than in GTA and b) due to political reasons have been not raised last years (Tory refused to raise Toronto taxes to finance Toronto transit, instead wanted to tax ALL Ontarians, from Ottawa to Windsor, Niagara to Thunder Bay to get the money...)
Anyway hydro and water cost was not static, so quite fishy stat imo
Make the Trudeau drama teacher again!
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Everyone says "wait till sept" but if what @licenced says is correct, thousands out cancelled listings will flood the market again and empty homes tax possible, + interest rates gone up I see a lot of investors going to be very disappointed if they expect prices will increase.
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asa1973 wrote:
Jul 10th, 2017 2:42 pm
There are 3 types of lies:
1. Plain lie
2. Bold lie
3. Statistics

:)
In Burlington MY house taxes increased 50% over 5 years, so did hydro cost (even doubled - from plain 5.5c we had "averaged" ~11c with "smart" tariffs)
House prices doubled however, so in total home expenses proportion probably remained the same, but NOT in absolute values.

P.s. probably they took TORONTO taxes, which a) lower than in GTA and b) due to political reasons have been not raised last years (Tory refused to raise Toronto taxes to finance Toronto transit, instead wanted to tax ALL Ontarians, from Ottawa to Windsor, Niagara to Thunder Bay to get the money...)
Anyway hydro and water cost was not static, so quite fishy stat imo
Toronto likes to hide taxes increases in other areas like your garbage on your water bill? double your car sticker price, and double your land transfer tax.
Toronto will be hitting a wall soon if they'll have to raise taxes by large amounts. The land transfer tax revenue could easily be down 20-50% id sales continue to slump. thats like 140-350m dollars.
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Jungle wrote:
Jul 10th, 2017 3:01 pm
Toronto likes to hide taxes increases in other areas like your garbage on your water bill? double your car sticker price, and double your land transfer tax.
Toronto will be hitting a wall soon if they'll have to raise taxes by large amounts. The land transfer tax revenue could easily be down 20-50% id sales continue to slump. thats like 140-350m dollars.
While it's true, the PROPERTY taxes itself stayed quite static, which make this "fake flat" graph and impression home expenses didn't rise over last 10 years (which they did either in Toronto or GTA, in this or other way)

However Germack didn't know that as he became home owner quite recently ;) (and not in GTA afair ;) )
Make the Trudeau drama teacher again!
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asa1973 wrote:
Jul 10th, 2017 3:08 pm
While it's true, the PROPERTY taxes itself stayed quite static, which make this "fake flat" graph and impression home expenses didn't rise over last 10 years (which they did either in Toronto or GTA, in this or other way)

However Germack didn't know that as he became home owner quite recently ;) (and not in GTA afair ;) )
Toronto has raise property tax typically 2-3% range (not including other hidden tax they won't put on the bill. Also MPAC is raising assessments fast. I feel like they were way behind in the last 10 years.

For example since the bottom of the last recession, Average detach increase almost 4X but MPAC assessment from owners I knew did not keep up (yet)

@Germack 's balance sheet is an amazing example of why affordable housing and rental market in Montreal nets you much better utility of your net worth VS Toronto Housing market and be pocket poor, house rich.

Here, we have housing priced so high and affordability shot, average people must assume dangerous amounts of debt, sacrifice savings and investing, and put more $ into RE. (which is unproductive)

I've always said the best utility of your money is to put the least amount of $ into RE (if possible), and the most into the stock market VIA couch potato.
Newbie
Feb 19, 2015
33 posts
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Toronto, ON
crocp8 wrote:
Jul 9th, 2017 6:41 pm
good luck with that.

Timing the market is not wise....

My prediction, you cashed out, and in 2-3 years with prices going back up (like they always do), you wont be able to afford to enter the market again.
Like they always do? Just curious, what are the fundamentals behind that assertion?
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Feb 13, 2017
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Ameloch wrote:
Jul 10th, 2017 6:59 pm
Like they always do? Just curious, what are the fundamentals behind that assertion?

look at housing for the last 50 years in the GTA....the graph always slopes up.
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Dec 13, 2010
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Interesting article from Globe and Mail about the high levels of Canadian debt ...according to the CIBC economist, the rise in the debt-to-income ratio reflects a normally functioning economy.


Canadians are worrying about debt all wrong: CIBC


"The latest numbers from Statistics Canada indicate that household debt now stands at 167.3 per cent of disposable income, a record high. This suggests that, on average, Canadians owe $1.67 for every $1 of disposable income.

The debt-to-income ratio is “likely the most quoted economic number out there,” CIBC economist Benjamin Tal said in a report last week. But how seriously should Canadians take that measure as a cause for concern? Not very, if you ask him. In a brief report titled, “On the Fallacy of the Debt-to-Income Ratio,” Tal wrote that the debt-to-income ratio is “probably the most useless economic indicator out there.”

http://globalnews.ca/news/3329246/canad ... atio-cibc/
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Dec 3, 2013
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zabee wrote:
Jul 10th, 2017 7:27 pm
Interesting article from Globe and Mail about the high levels of Canadian debt ...according to the CIBC economist, the rise in the debt-to-income ratio reflects a normally functioning economy.


Canadians are worrying about debt all wrong: CIBC


"The latest numbers from Statistics Canada indicate that household debt now stands at 167.3 per cent of disposable income, a record high. This suggests that, on average, Canadians owe $1.67 for every $1 of disposable income.

The debt-to-income ratio is “likely the most quoted economic number out there,” CIBC economist Benjamin Tal said in a report last week. But how seriously should Canadians take that measure as a cause for concern? Not very, if you ask him. In a brief report titled, “On the Fallacy of the Debt-to-Income Ratio,” Tal wrote that the debt-to-income ratio is “probably the most useless economic indicator out there.”

http://globalnews.ca/news/3329246/canad ... atio-cibc/
Does this include mortgage? since isnt a mortgage usually 400% of income? so a 400k mortgage while an income of 100k?
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Jan 16, 2009
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zabee wrote:
Jul 10th, 2017 7:27 pm
Interesting article from Globe and Mail about the high levels of Canadian debt ...according to the CIBC economist, the rise in the debt-to-income ratio reflects a normally functioning economy.


Canadians are worrying about debt all wrong: CIBC


"The latest numbers from Statistics Canada indicate that household debt now stands at 167.3 per cent of disposable income, a record high. This suggests that, on average, Canadians owe $1.67 for every $1 of disposable income.

The debt-to-income ratio is “likely the most quoted economic number out there,” CIBC economist Benjamin Tal said in a report last week. But how seriously should Canadians take that measure as a cause for concern? Not very, if you ask him. In a brief report titled, “On the Fallacy of the Debt-to-Income Ratio,” Tal wrote that the debt-to-income ratio is “probably the most useless economic indicator out there.”

http://globalnews.ca/news/3329246/canad ... atio-cibc/
Why is it dropping in US?

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