Real Estate

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

  • Last Updated:
  • Dec 14th, 2017 3:05 pm
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Sr. Member
Aug 19, 2016
866 posts
310 upvotes
rjg4235 wrote:
Dec 6th, 2017 12:49 pm
I think you are right about YoY in Feb-Apr but the thing is it will be short lived. Once summer roles around it will not be compared to that April peak anymore. It will also end up getting buried in yearly data as once YoY is done they don't look at previous months anymore, just yearly price. The only people who will be comparing to April 2017 will be those who are looking for it.
The thing is with real estate is that people like me (priced-out renters) actually buying them for keeps. If i know that the December price will be lower than November, I am going to wait and save 10's of thousands (yes, I pay 1 month worth of rent, big deal).

If you are buying real estate as an investment, then you can look at YoY or don't need to care about the price all together because you are just buying the trees for the fruits. As long as the tree is still producing the fruits, you are satisfied.

Now then, if I believe the December price will be lower than November. I am going to speculate that January will be cheaper than December. With price deceleration, I am going to hold off for long long time because my money is worth more over time. This is the reason why central banks will never want a deflationary economy. It just doesn't move the economy.

Priced-out renters will wait and wait and wait as long as we see price deceleration.
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Feb 9, 2009
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CollegeGraduate wrote:
Dec 6th, 2017 2:15 pm
The thing is with real estate is that people like me (priced-out renters) actually buying them for keeps. If i know that the December price will be lower than November, I am going to wait and save 10's of thousands (yes, I pay 1 month worth of rent, big deal).

If you are buying real estate as an investment, then you can look at YoY or don't need to care about the price all together because you are just buying the trees for the fruits. As long as the tree is still producing the fruits, you are satisfied.

Now then, if I believe the December price will be lower than November. I am going to speculate that January will be cheaper than December. With price deceleration, I am going to hold off for long long time because my money is worth more over time. This is the reason why central banks will never want a deflationary economy. It just doesn't move the economy.

Priced-out renters will wait and wait and wait as long as we see price deceleration.
Some of you will unfortunately be priced out forever then ... tho there is nothing wrong with renting
Sr. Member
Aug 19, 2016
866 posts
310 upvotes
Sanyo wrote:
Dec 6th, 2017 2:31 pm
Some of you will unfortunately be priced out forever then ... tho there is nothing wrong with renting

We will be priced out forever unless we step over to the dark side lol.
Sr. Member
Jul 19, 2007
682 posts
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Sanyo wrote:
Dec 6th, 2017 2:31 pm
Some of you will unfortunately be priced out forever then ... tho there is nothing wrong with renting
They can just move to a nicer place with higher incomes and lower housing costs.
Pretty simple.
Sr. Member
Aug 19, 2016
866 posts
310 upvotes
KingKuba wrote:
Dec 6th, 2017 2:46 pm
They can just move to a nicer place with higher incomes and lower housing costs.
Pretty simple.
Not that easy when almost half of my pay cheque goes to taxes and deductions.

Middle class is getting screwed.
Newbie
Nov 14, 2017
48 posts
17 upvotes
CollegeGraduate wrote:
Dec 6th, 2017 2:40 pm

We will be priced out forever unless we step over to the dark side lol.
Once you get into the mentality of waiting for lower prices, you never go back.

House pricing could drop 50% tomorrow, and people will still find excuses to rent, even though they have the money to buy.

At some point, most renters have psychologically conditioned themselves that buying a house is bad.
Sr. Member
Aug 19, 2016
866 posts
310 upvotes
LinkPersona wrote:
Dec 6th, 2017 2:56 pm
Once you get into the mentality of waiting for lower prices, you never go back.

House pricing could drop 50% tomorrow, and people will still find excuses to rent, even though they have the money to buy.

At some point, most renters have psychologically conditioned themselves that buying a house is bad.
A house is a luxury. Shelter is a necessity; however, renting is considered to be shelter (just doesn't look/sound good).

My wife is against me renting for so long. I have a good relationship with my landlord and I don't think they will kick me out and reset the rent.
We normally have increases of 2%/year rounded up to the nearest dollar, I have offered him 2.5% this year to ease the pain (starting in Jan. 2018, I will pay 2.5% more) lol.
We rented this place around 8 years ago and started out with $1,000/month.
The market price should now be around $1,800/month give or take $200.
Newbie
Nov 14, 2017
48 posts
17 upvotes
CollegeGraduate wrote:
Dec 6th, 2017 3:04 pm
A house is a luxury. Shelter is a necessity; however, renting is considered to be shelter (just doesn't look/sound good).

My wife is against me renting for so long. I have a good relationship with my landlord and I don't think they will kick me out and reset the rent.
We normally have increases of 2%/year rounded up to the nearest dollar, I have offered him 2.5% this year to ease the pain (starting in Jan. 2018, I will pay 2.5% more) lol.
We rented this place around 8 years ago and started out with $1,000/month.
The market price should now be around $1,800/month give or take $200.
That's crazy. Over $96,000 of your money over 8 years just gone... poof.
Sr. Member
Feb 9, 2013
999 posts
164 upvotes
Mississauga
LinkPersona wrote:
Dec 6th, 2017 3:15 pm
That's crazy. Over $96,000 of your money over 8 years just gone... poof.
Don't forget 2% compounded each year. On 8th year he will be paying ~$1148.68. Comes out to ~$103,000 by end of 8th year.
Deal Addict
Feb 22, 2011
1888 posts
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Toronto
CollegeGraduate wrote:
Dec 6th, 2017 3:04 pm
A house is a luxury. Shelter is a necessity; however, renting is considered to be shelter (just doesn't look/sound good).

My wife is against me renting for so long. I have a good relationship with my landlord and I don't think they will kick me out and reset the rent.
We normally have increases of 2%/year rounded up to the nearest dollar, I have offered him 2.5% this year to ease the pain (starting in Jan. 2018, I will pay 2.5% more) lol.
We rented this place around 8 years ago and started out with $1,000/month.
The market price should now be around $1,800/month give or take $200.
I completely agree with you. It's a lifestyle choice and there are merits to both. Personally I would buy a house even if it wasn't the most financially responsible thing to do. I just like having a house, I like my yard and knowing I can live here 50 years and raise my kids without ever moving. I could definitely go for $1000/mo living expense though. I'd retire very wealthy. That said I still thinking owning a home is the best financially long term. Especially in those later 20-30 years.
Sr. Member
Aug 19, 2016
866 posts
310 upvotes
You young people still don't believe that I am well off even though I am burning money on rent rather than ownership (not addressing you rjg4235)

You wouldn't believe how tight money is to those who bought their houses at the time of purchase.

Then the house price appreciated, and they increased their spending by driving luxury cars by borrowing against their house via HELoC.

Their income didn't increase, just their consumption and borrowing power.

After they have consumed a lot of their net worth (house), the banks tightened. And they are now scrambling to find money.

I even lend a couple of 10's thousands to some close relatives/friends to help them stay afloat.

It is super hard to resist when easy money is everywhere. When they are gone, people are having a hard time adapting.
Last edited by CollegeGraduate on Dec 6th, 2017 3:46 pm, edited 1 time in total.
Newbie
Oct 30, 2017
3 posts
8 upvotes
LinkPersona wrote:
Dec 6th, 2017 3:15 pm
That's crazy. Over $96,000 of your money over 8 years just gone... poof.
Please remind me how much interest he would’ve paid on the mortgage? And how much lost interest on the money invested otherwise?
Newbie
Nov 14, 2017
48 posts
17 upvotes
Oxxxy7 wrote:
Dec 6th, 2017 3:49 pm
Please remind me how much interest he would’ve paid on the mortgage? And how much lost interest on the money invested otherwise?
Sure. Remind me how much the market appreciated in that time as well.
Sr. Member
Aug 19, 2016
866 posts
310 upvotes
Oxxxy7 wrote:
Dec 6th, 2017 3:49 pm
Please remind me how much interest he would’ve paid on the mortgage? And how much lost interest on the money invested otherwise?
Zero lol. Just kidding. However, I would still be a lot well off if I bought the house instead because an investment of $50k (down payment) at that time would yielded 10 times return.

Honestly though, I would have bought the house 8 years ago if I have known the housing market would go this crazy.
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Aug 25, 2009
1462 posts
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LinkPersona wrote:
Dec 6th, 2017 3:15 pm
That's crazy. Over $96,000 of your money over 8 years just gone... poof.
Really? "Poof"?

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