Real Estate

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

  • Last Updated:
  • Aug 17th, 2017 5:32 pm
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Sr. Member
Feb 22, 2011
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Toronto
A bit of an aside but I saw this show recently added to Netflix called "Buy Herself" from 2012. It's really weird watching a show about Toronto from 4 years ago about single income women wanting to buy houses or 2-3 bedroom condos.

What I'm wondering is whether or not Toronto is crazy now with prices or 4 years ago when a single income could get a house.

The sad part is about 1/3 of the women in the show refuse to buy because $250k is too much for a condo, they will save up and buy later...
[OP]
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Dec 5, 2009
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drwoodward wrote:
Aug 8th, 2017 10:40 pm
Really pertinent thread for the current real estate situation many of us face today.

The key factor is political. Will Wynne and the Libs alter the rules in September and allow a more "open" market to return?
Absolutely zero chance of that happening.
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Jul 29, 2013
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Toronto
fdl wrote:
Aug 8th, 2017 9:31 pm
If you mean the overall average, I think it's just a big shift in sales mix. Looks like the percentage of sales in the detached home segment took a nose dive this period vs last. Chart on the right a bit lower down shows this. I never look at overall average, it's too skewed by sales mix changes.
This seems to be the new norm detached nose diving, and attached/condos rising, in golden horse shoe and Van. I would take that as meaning that local buyers ca no longer afford detached houses so they are piling into condos and towns and foreign buyers have exited the picture. I overheard some one on the subway the other day say that a huge majority of Torontonians wouldn't be able to afford their own house (detached) if they had to buy it in today's market. That would be a great statistic. I'd guess less that 3%.
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thediamondshopper wrote:
Aug 10th, 2017 6:26 am
. I overheard some one on the subway the other day say that a huge majority of Torontonians wouldn't be able to afford their own house (detached) if they had to buy it in today's market. That would be a great statistic. I'd guess less that 3%.
Ya, I've heard this before, but I'm not sure what this hypothetical scenario really means. Does it mean you take away all of a homeowners equity and they start at zero? Or they keep their equity, but assume zero appreciation. I don't think either is a fair analysis. I think a lot more than 3% of home owners could afford to buy their own home, but they would need to take on a lot more debt to do it.
Sr. Member
Feb 9, 2013
834 posts
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Richmond Hill
thediamondshopper wrote:
Aug 10th, 2017 6:26 am
This seems to be the new norm detached nose diving, and attached/condos rising, in golden horse shoe and Van. I would take that as meaning that local buyers ca no longer afford detached houses so they are piling into condos and towns and foreign buyers have exited the picture. I overheard some one on the subway the other day say that a huge majority of Torontonians wouldn't be able to afford their own house (detached) if they had to buy it in today's market. That would be a great statistic. I'd guess less that 3%.
Has something similar like this happened back in the 90s or previously, where majority feel detached are too expensive? What was the outcome
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jdu0ng wrote:
Aug 10th, 2017 12:34 pm
Has something similar like this happened back in the 90s or previously, where majority feel detached are too expensive? What was the outcome
Yes, late 80's/early 90's. The outcome was a sharp drop/correction in prices, followed by many years of stagnation (flat to very moderate price movement) in prices. Took 6 or 7 years to all play out. The stagnation hurts more than the correction IMO.
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Jan 22, 2003
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Austin/Markham
jdu0ng wrote:
Aug 10th, 2017 12:34 pm
Has something similar like this happened back in the 90s or previously, where majority feel detached are too expensive? What was the outcome
I'm not 100 years old, but honestly I've never seen something like this. Toronto traditionally had areas where first time home buyers starting families would move out with small ranch bungalos and commute into the downtown core. Now these areas are $2+M:

$3.2M
https://www.remax.ca/on/toronto-real-es ... 57615-lst/

$3.5M
https://www.remax.ca/on/toronto-real-es ... 53228-lst/

This area sucks for driving since its not close to 404/407/401, so traditionally the expectation was you'd be taking transit along Yonge. Who would pay $3M+ and than ride the TTC? These homes aren't even special, just the simple remodels of counter/floor material changes. Same crappy HVAC system from 30 years ago.

I was driving through this area and shocked at the differences between homes, some completely run down and others $3M+. Usually the homes in an area are all within 10-20% price of each other, but here there's massive swings since some folks have rebuilt the entire house on the same lot. If I was starting a family I'd just leave the city and move elsewhere, $2M+ would be my entire retirement account.I'd basically have to die and use the life insurance to afford to have my kids there.
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Sr. Member
Oct 21, 2014
579 posts
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Burlington, ON
webdoctors wrote:
Aug 10th, 2017 1:11 pm
I'm not 100 years old, but honestly I've never seen something like this. Toronto traditionally had areas where first time home buyers starting families would move out with small ranch bungalos and commute into the downtown core. Now these areas are $2+M:

$3.2M
https://www.remax.ca/on/toronto-real-es ... 57615-lst/

$3.5M
https://www.remax.ca/on/toronto-real-es ... 53228-lst/

This area sucks for driving since its not close to 404/407/401, so traditionally the expectation was you'd be taking transit along Yonge. Who would pay $3M+ and than ride the TTC? These homes aren't even special, just the simple remodels of counter/floor material changes. Same crappy HVAC system from 30 years ago.

I was driving through this area and shocked at the differences between homes, some completely run down and others $3M+. Usually the homes in an area are all within 10-20% price of each other, but here there's massive swings since some folks have rebuilt the entire house on the same lot. If I was starting a family I'd just leave the city and move elsewhere, $2M+ would be my entire retirement account.I'd basically have to die and use the life insurance to afford to have my kids there.
To be fair, that house on 205 Newton looks like it is far in excess of a starter home. It is way nicer than anything I have even lived in. 55 Wedgewood is able to be split in to two separate lots. I'm not saying those prices aren't high, but those are definitely not to be compared with starter homes.
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Gungnir wrote:
Aug 10th, 2017 1:22 pm
To be fair, that house on 205 Newton looks like it is far in excess of a starter home. It is way nicer than anything I have even lived in. 55 Wedgewood is able to be split in to two separate lots. I'm not saying those prices aren't high, but those are definitely not to be compared with starter homes.
I agree those are not starter homes. But ultimately you can't try and value a house because of its HVAC or countertops. It's all about land value and location. That first lot is massive, can hold two big Houses, close to younge subway and backs to a ravine.
Deal Addict
Jan 22, 2003
4130 posts
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Austin/Markham
Gungnir wrote:
Aug 10th, 2017 1:22 pm
To be fair, that house on 205 Newton looks like it is far in excess of a starter home. It is way nicer than anything I have even lived in. 55 Wedgewood is able to be split in to two separate lots. I'm not saying those prices aren't high, but those are definitely not to be compared with starter homes.
My house is semi-custom and pretty similar to 55 Wedgewood so I have an idea of what it costs to build that (~500K or less as the woodpanelling is cheap, no idea what it cost to remove the old house/debris). Its valuing the land at over $2.5M.

I agree these are no longer starter homes, but these areas used to be started homes but now they've been priced into something crazy. Not clear who this neighborhood is intended for now. 55 Wedgewood still has <10 ft clearance to neighbors and power line cables blocking the front window views. Hardly luxurious and no privacy from front or back with a lack of large trees.

Obviously these homes shouldn't be priced at just $700K, but are $3M or $7M or $10M the next price targets?
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Sr. Member
Oct 21, 2014
579 posts
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Burlington, ON
webdoctors wrote:
Aug 10th, 2017 1:54 pm
My house is semi-custom and pretty similar to 55 Wedgewood so I have an idea of what it costs to build that (~500K or less as the woodpanelling is cheap, no idea what it cost to remove the old house/debris). Its valuing the land at over $2.5M.

I agree these are no longer starter homes, but these areas used to be started homes but now they've been priced into something crazy. Not clear who this neighborhood is intended for now. 55 Wedgewood still has <10 ft clearance to neighbors and power line cables blocking the front window views. Hardly luxurious and no privacy from front or back with a lack of large trees.

Obviously these homes shouldn't be priced at just $700K, but are $3M or $7M or $10M the next price targets?
What is the next price target? I've no idea, but what I do know is that we have many more people and roughly the same amount of land. So more demand and constant supply is going to cause the prices you see now. Those parcels of land could theoretically be turned in to towns or condos (if zoning permits) which would allow many more people to use the land to reduce costs.

So the price might continue to go higher, but we have to remember that some of these relics of our low density past will fall by the wayside. Anecdotally, I sold a tiny detach in Burlington a few months ago and I was shocked at what it sold for.
Sr. Member
Feb 9, 2013
834 posts
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Richmond Hill
fdl wrote:
Aug 10th, 2017 1:04 pm
Yes, late 80's/early 90's. The outcome was a sharp drop/correction in prices, followed by many years of stagnation (flat to very moderate price movement) in prices. Took 6 or 7 years to all play out. The stagnation hurts more than the correction IMO.
How did it play out in terms of sales mix? Were detached nose diving, while high rise and attached continued to rise? What about during the recovery period?
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Dec 5, 2009
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jdu0ng wrote:
Aug 10th, 2017 2:13 pm
How did it play out in terms of sales mix? Were detached nose diving, while high rise and attached continued to rise? What about during the recovery period?
Information is harder to come by, no internet back then, etc. But condos were hit pretty hard, especially downtown. There is a good analysis here : http://www.torontocondobubble.com/2013/ ... 1980s.html
Jr. Member
May 9, 2017
121 posts
137 upvotes
webdoctors wrote:
Aug 10th, 2017 1:54 pm
My house is semi-custom and pretty similar to 55 Wedgewood so I have an idea of what it costs to build that (~500K or less as the woodpanelling is cheap, no idea what it cost to remove the old house/debris). Its valuing the land at over $2.5M.

I agree these are no longer starter homes, but these areas used to be started homes but now they've been priced into something crazy. Not clear who this neighborhood is intended for now. 55 Wedgewood still has <10 ft clearance to neighbors and power line cables blocking the front window views. Hardly luxurious and no privacy from front or back with a lack of large trees.

Obviously these homes shouldn't be priced at just $700K, but are $3M or $7M or $10M the next price targets?
I'm pretty sure you couldn't build 55 Wedgewood for 500k.

The standard rate in this neighbourhood is about $200 per sqft and this home is close to 4000 sqft so I would say cost would be $750k to 800k

My neighbour builds in this area and he showed me the costs. I don't think he was lying.
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Jul 29, 2013
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Toronto
fdl wrote:
Aug 10th, 2017 12:29 pm
Ya, I've heard this before, but I'm not sure what this hypothetical scenario really means. Does it mean you take away all of a homeowners equity and they start at zero? Or they keep their equity, but assume zero appreciation. I don't think either is a fair analysis. I think a lot more than 3% of home owners could afford to buy their own home, but they would need to take on a lot more debt to do it.
I would say without the built up equity, let's say if everyone was buying in new ring it's their current savings and house hold income. With current lending climate and prices where they are at around 1.3m for detached I don't see many who would qualify to buy their current house and lead a normal life style, i.e. Not spending every penny they have on mortgage interest.

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