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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Member
Sep 19, 2012
422 posts
252 upvotes
Calgary
LinkPersona wrote:
Dec 6th, 2017 4:04 pm
You're right. The landlord is happy.
So is the renter who out-earned the return on housing (even after considering tax and leverage effects). Hindsight is 20/20, isn't it? Rental payments don't go "poof", despite what the pro-homeownership crowd (cult?) would have us all believe.
Deal Addict
Feb 22, 2011
1888 posts
1701 upvotes
Toronto
ahlaker wrote:
Dec 6th, 2017 4:18 pm
So is the renter who out-earned the return on housing (even after considering tax and leverage effects). Hindsight is 20/20, isn't it? Rental payments don't go "poof", despite what the pro-homeownership crowd (cult?) would have us all believe.
If he bought the property 8 years ago his initial investment would have been on average $79k (20% down on $395k) today this would be worth $761k. So his down payment of $79k would have earned him $366k or 463%. Where are you earning that in 8 years? You did say after considering leverage. This is with 20% down as well. If he did 5% down then the return would be 1853%. What would the stock market have returned? Like 50%? That's a big big jump from 50% to 1853%.
Deal Addict
Feb 9, 2009
4657 posts
2336 upvotes
CollegeGraduate wrote:
Dec 6th, 2017 2:40 pm
We will be priced out forever unless we step over to the dark side lol.
Step over my child...
Jr. Member
User avatar
Jul 8, 2010
194 posts
114 upvotes
Ontario
boyohboy wrote:
Dec 6th, 2017 11:11 am
And as one of the bear-fanatic here liked to post alot, how lol & lmao about how so many peak transaction from March/Apr didn't actually close (and therefore poor sellers making $100s thousands less profit of several $100s thousands... booo!).... If the dropped peak transactions were really as abundance as the bears were saying, then that peak was not even real.
Can you put some light here, how did TREB dealt with this situation? Have you seen any communication from their side? i haven't, because that inflated number looked very good for them.
Newbie
User avatar
Dec 13, 2010
47 posts
27 upvotes
Toronto
CIBC warns of a bigger shock to housing than interest rates
CIBC Capital Markets' Deputy Chief Economist Benjamin Tal discusses his latest report on risks to the Canadian housing market in a rising rate environment. He says there is a "need to slow down housing, not shock it."
https://www.bnn.ca/video/cibc-warns-of- ... es~1170595
Deal Expert
User avatar
Apr 21, 2004
41602 posts
10236 upvotes
Believe me. Income is the major determinant not interest rates unless we are talking going back to double digits then interest will play a bigger role.

It's common sense. Cut unnecessary expenditure before defaulting on a secured asset such as a house.

So far no signs that auto and restaurant sales are tanking.
Jr. Member
Aug 28, 2017
121 posts
161 upvotes
I've been hearing about a "crash" for over a year now on this board...

Every time the MoM or YoY numbers come in at 1% less than the previous month or year, the bears go crazy and start talking about a crash...so bears, when is it happening?

Seems as though these prices are here to stay....What do you think?
Deal Addict
Dec 6, 2006
3818 posts
712 upvotes
Toronto
Isostar wrote:
Dec 6th, 2017 7:25 pm
Can you put some light here, how did TREB dealt with this situation? Have you seen any communication from their side? i haven't, because that inflated number looked very good for them.
Not quite sure what you're asking of me, I don't work for TREB :)
To me, it really doesn't matter how TREB dealt with that, if at all. As I said, for me RE it's mid to long-term. Two crazy months of insanity (and perhaps with many drop transactions) are just outliers, unless that price level managed to stay but it didn't.
Deal Addict
Dec 6, 2006
3818 posts
712 upvotes
Toronto
CollegeGraduate wrote:
Dec 6th, 2017 3:46 pm
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.
....
Not against your situation, but to those replies who used your numbers about comparing to buying, zero mortgage interest, etc.


You said starting at $1000/month and only 2% increase per for 8 years. That's not even $1200/month now. And the market rate should be $1800 as you said. So a big reason for the not "tight money" is that you're getting a huge discount essentially.

Imagine someone starting to rent now @1800 or more.
Deal Addict
May 31, 2007
4446 posts
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We already have a thread, you couldn't ask in there?
[OP]
Deal Addict
Dec 5, 2009
4695 posts
2496 upvotes
I think we didn’t need another troll thread. Hyperbole from bulls and bears are equally annoying.
Sr. Member
Aug 19, 2016
866 posts
310 upvotes
boyohboy wrote:
Dec 7th, 2017 10:11 am

Imagine someone starting to rent now @1800 or more.
There is a huge risk that my landlord will kick me out for a rate reset if I don't comply.
I will then be forced to rent at $1800/month. In a way, I am just an outlier because a lot of people got a rate reset.
Member
Sep 19, 2012
422 posts
252 upvotes
Calgary
rjg4235 wrote:
Dec 6th, 2017 4:45 pm
If he bought the property 8 years ago his initial investment would have been on average $79k (20% down on $395k) today this would be worth $761k. So his down payment of $79k would have earned him $366k or 463%. Where are you earning that in 8 years? You did say after considering leverage. This is with 20% down as well. If he did 5% down then the return would be 1853%. What would the stock market have returned? Like 50%? That's a big big jump from 50% to 1853%.
One could've earned that kind of return investing in countless other assets. A quick check says Amazon, Facebook and Apple all qualify. Had I invested in any of the Canadian banks in early 2009 I would've made that kind of return too. Investors made that kind of return in 1 year investing in Teck (had they bought in early 2015). I said that "hindsight is 20/20". You've picked an asset class (GTA housing) that's performed well and then you compare that to the "stock market" -- that's not fair. IMO, you should compare "Canadian Housing" to the "Stock Market" and if you do that, you'll see that "housing" isn't the great investment that everyone says it is. That's fine though, generally housing is not supposed to be an investment, it's supposed to be shelter. Here's my bottom line: those who say renting is "flushing money down the drain" and "housing can only go up" and "real estate is the greatest investment ever" have tunnel vision and aren't looking at the big picture.

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