Real Estate

GTA house prices, will be going even higher?

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  • Aug 22nd, 2017 7:03 pm
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GrandePike wrote:
Aug 1st, 2016 2:13 am
divx wrote:
Aug 1st, 2016 2:04 am
tax is not the way to do it, the solution is to build more, always
We are building lots....just people want a detached home in the city to be affordable for an average wage which is idiotic

We can't build more detached homes in the city ..there's literally no more land ..
interest rate is going even lower in the next few months, and we are really behind on construction, price will skyrocket
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If you wanna truly speak in historical terms, then over long term 20-40 yrs a so called real estate bubble or stock market bubble would never even register, Just look at how the Dow,and SP indicies have Nearly doubled from their 2000 bubble pre crash high, even the troubled Nasdaq where so many here today gone tomorrow dot com firms went bust still managed to recover and gain over this 16 years period. When it comes to housing, prices in the US have reached above their 07 crash peak too, some of the major cities like San Fran, LA, NYC was never truly affected, price stagnated during the downturn and shot back as soon as the us market started to recover in 2011.

Pulling up a 40 year price chart on Toronto, back in 1970 Toronto avg sales price $29429.00 currently $690103.00 so this translates into approx 9.2% annualized increase year over year, impressive ROI inline with the performance of some of the best of mutual funds. Mind u these prices include condos, Detache housing appreciation is even greater. Many has the mentality that longer term housing apprecitation would equal that of overall inflation, well when was the last time Canadian inflation was at 9.2%? long term 50 yrs inflation in Canada has been around 3-4% which would translates into approx an avg Toronto sales price of only $120000.00 by 2016 base on 1970 numbers, you would be missing out on $570k of potential profit over the last 36 yrs!!

Where do you think most of the Chinese mainlanders got their money, back in the early 90s, housing prices in China were mere a fraction that of a Canada, now they cost 5 times as much or more. A avg size condo unit in Shanghai would cost $2mil CDN, they sold for merely $120k CDN 16 years ago. People has been calling a market top, and ghost towns in China for the longest time, after numerous gov interventions Shanghai prices are still increasing on a 15% pace yr/yr. This is not a Toronto, or Vancouver phenomenon, it's been happening worldwide, as long as the world economies are still engaging in currency devaluation and quantitative easing I see no sign of crash if ever, historical data proves it!

Everytime you think of the word crash just ask yourself this question how much was a house selling for in 1970s 1950s 1930s. all within ones lifetime? Ans: $6000 for a new detached house in Toronto in the 30s was the norm. $12000 in the 50s, $30000 in the 70s 500% ROI in 40 years, how much can u earn putting the money in a savings acct where it earns next to nothing buying other depreciating assets cars, boats etc.
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Afv1234 wrote:
Aug 12th, 2016 12:10 pm
If you wanna truly speak in historical terms, then over long term 20-40 yrs a so called real estate bubble or stock market bubble would never even register, Just look at how the Dow,and SP indicies have Nearly doubled from their 2000 bubble pre crash high, even the troubled Nasdaq where so many here today gone tomorrow dot com firms went bust still managed to recover and gain over this 16 years period. When it comes to housing, prices in the US have reached above their 07 crash peak too, some of the major cities like San Fran, LA, NYC was never truly affected, price stagnated during the downturn and shot back as soon as the us market started to recover in 2011.

Pulling up a 40 year price chart on Toronto, back in 1970 Toronto avg sales price $29429.00 currently $690103.00 so this translates into approx 9.2% annualized increase year over year, impressive ROI inline with the performance of some of the best of mutual funds. Mind u these prices include condos, Detache housing appreciation is even greater. Many has the mentality that longer term housing apprecitation would equal that of overall inflation, well when was the last time Canadian inflation was at 9.2%? long term 50 yrs inflation in Canada has been around 3-4% which would translates into approx an avg Toronto sales price of only $120000.00 by 2016 base on 1970 numbers, you would be missing out on $570k of potential profit over the last 36 yrs!!

Where do you think most of the Chinese mainlanders got their money, back in the early 90s, housing prices in China were mere a fraction that of a Canada, now they cost 5 times as much or more. A avg size condo unit in Shanghai would cost $2mil CDN, they sold for merely $120k CDN 16 years ago. People has been calling a market top, and ghost towns in China for the longest time, after numerous gov interventions Shanghai prices are still increasing on a 15% pace yr/yr. This is not a Toronto, or Vancouver phenomenon, it's been happening worldwide, as long as the world economies are still engaging in currency devaluation and quantitative easing I see no sign of crash if ever, historical data proves it!

Everytime you think of the word crash just ask yourself this question how much was a house selling for in 1970s 1950s 1930s. all within ones lifetime? Ans: $6000 for a new detached house in Toronto in the 30s was the norm. $12000 in the 50s, $30000 in the 70s 500% ROI in 40 years, how much can u earn putting the money in a savings acct where it earns next to nothing buying other depreciating assets cars, boats etc.
Great analysis but the pundits and curve fitters will find different ways to discredit the growth in RE prices as "fake" and no more than rate of inflation. 60 years ago the average price of a Mercedes in Canada cost the same as the average price of a house. What about now?
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Afv1234 wrote:
Aug 12th, 2016 12:10 pm
If you wanna truly speak in historical terms, then over long term 20-40 yrs a so called real estate bubble or stock market bubble would never even register, Just look at how the Dow,and SP indicies have Nearly doubled from their 2000 bubble pre crash high, even the troubled Nasdaq where so many here today gone tomorrow dot com firms went bust still managed to recover and gain over this 16 years period. When it comes to housing, prices in the US have reached above their 07 crash peak too, some of the major cities like San Fran, LA, NYC was never truly affected, price stagnated during the downturn and shot back as soon as the us market started to recover in 2011.

Pulling up a 40 year price chart on Toronto, back in 1970 Toronto avg sales price $29429.00 currently $690103.00 so this translates into approx 9.2% annualized increase year over year, impressive ROI inline with the performance of some of the best of mutual funds. Mind u these prices include condos, Detache housing appreciation is even greater. Many has the mentality that longer term housing apprecitation would equal that of overall inflation, well when was the last time Canadian inflation was at 9.2%? long term 50 yrs inflation in Canada has been around 3-4% which would translates into approx an avg Toronto sales price of only $120000.00 by 2016 base on 1970 numbers, you would be missing out on $570k of potential profit over the last 36 yrs!!

Where do you think most of the Chinese mainlanders got their money, back in the early 90s, housing prices in China were mere a fraction that of a Canada, now they cost 5 times as much or more. A avg size condo unit in Shanghai would cost $2mil CDN, they sold for merely $120k CDN 16 years ago. People has been calling a market top, and ghost towns in China for the longest time, after numerous gov interventions Shanghai prices are still increasing on a 15% pace yr/yr. This is not a Toronto, or Vancouver phenomenon, it's been happening worldwide, as long as the world economies are still engaging in currency devaluation and quantitative easing I see no sign of crash if ever, historical data proves it!

Everytime you think of the word crash just ask yourself this question how much was a house selling for in 1970s 1950s 1930s. all within ones lifetime? Ans: $6000 for a new detached house in Toronto in the 30s was the norm. $12000 in the 50s, $30000 in the 70s 500% ROI in 40 years, how much can u earn putting the money in a savings acct where it earns next to nothing buying other depreciating assets cars, boats etc.
Your basing your calculations at the peak of what is arguably a huge bubble. Obvioulsy at current valuations RE has been a great investment but if it falls back to the trend line it's still around inflation or slightly higher.

That said there is Nothing wrong with RE as an investment historically. Lots of money to be made if you know what you are doing, but at current valuations the upside potential is far outweighed by the downside risks. IMO of course.
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Aug 11, 2016
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The most well known & commonly acknolwedged market crash occurred in 1929 where Dow industries reached a intraday high of 380, how high is the Dow trading now? 18500 49X... Our housing market puts it to shame, even Warrent Buffet Himself would be proud of acheiving similar annualized long term ROI as the Toronto Real estate market in the last 80 years.

Mnay amongst here would say " Real estate already had its good run. With economies around the world getting low growth, it's only a matter of time before its drop or stagnate" well so far we have been seeing a 100 years run, it's bound to happen right? Wait it's been a stratospherical run since 1400s where the first European settlers traded beads for land from the natives, well then a crash is gotta be around the corner, hey can you trade me your house for 10 strings of beads hurry maybe tomorrow I would only offer you 5!

Let the truth be told yes there maybe occasional downturns in the market but when it comes to truly long term over an individual's life time there could be no better passive investment than real estate, just think $6000 for a new detached house in Toronto back in the 1930s, 80 yrs later they fetch 1 mil. 167X your money!

Most importantly your prinicple is always guaranteed remember worst case senariror you see 20% gains in a longer stretch instead of in a year or two, same can hardly be said for the stock market remember Nortel? And Blackberry anyone?

No I didn't not base my valuations on peak market performance, Prices rose continuously for the last 100 yrs! Far exceeded the rate of inflation, if I was selectively using trough to peak data points the performance would be even more impressive!

Sure in the last 100 yrs there were periods of stagnation or downward revisions, but any correction eases itself out in time, in the grand scheme of things these corrections did not violate or had any negative affect in the underlying long term uptrend and momentum in price. In fact all Corrections/ crashes proved to be great buying opportunities for the wise, long term they would hardly be felt. ie. Buying in the hardest hit zones like Vegas back in 2011 would yield u 300% returns, had u been unfortunate to have bought the peak at these places you would still have made it out even, but if someone bought their Vegas home back in the early 90s you would still be looking at a 300% gain the difference being over 15 yrs vs 5 yrs. so longer term wise one can't lose in RE investment!! Toronto is hardly Vegas where the local economy purely relies on the gaming industry, we are a self proclaimed world class city therefore can a comparison be made with San Fran, LA, NYC? Where prices hardly suffered during the 2007 US crash.

Today's Toronto isn't the Toronto of the 80s or even 90s, during the last cool off period 1989-1996 there were hardly any great inflow of wealthy immigrants aside from a few originating from Hong Kong. The avg developing nations personal wealth i.e. Chinese mainlander,East Indian, middle eastern were far below that of a avg Canadian, now the opposite is happening!!

What's been happening is external pressure exerting from foreign interest plus wealthy immigrants with cash to buy, domestically we have an overall accommodative low interest rate environment with quantitative easing across the globe which underpins the rising demand in RE investments, and thx to Ont governments greenbelt policy which added fuel to the fire.

Nevertheless numbers don't lie. the avg Toronto housing price from 1970 - 2016 made public by TREB, these numbers are not based on peak performance they are but an accurate factual depiction of RE appreciation over time, last 36 years can't be all boom times? In 1989... were avg price reached 270k yes it took the Toronto market 13 years to next reach that number however since then we took off and never looked back, prices have more than doubled since then and still going and going.... 10 strings of beads maybe high for an acre of land back in the Columbus days where u could traded for 5, $1mil for a detached maybe high where 2 years ago u could traded for $700k, but I bet 20 yrs from now looking back you would wish you had bought all u can back then, think of any period in the last 100 yrs, in each decade or two there may be peaks and troughs but overtime real estate value always go up up and away!

Good luck to all you naysayers, those don't learn from history is doomed to repeat it as they say right ?
Last edited by Afv1234 on Aug 12th, 2016 3:21 pm, edited 4 times in total.
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My question to you Afv1234, with all that information you mentioned.
What have you placed your investment in currently? Real Estate, Securities, RRSP/TFSA, etc?
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Dec 27, 2013
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asa1973 wrote:
Aug 12th, 2016 11:34 am
ValueInvestor wrote:
Aug 12th, 2016 10:38 am
Historically speaking, real estate bubble takes a decade or 2 to implode. So, I believe the inflation of the bubble started in 2005 or something. Slap 20 years into it, we will see price appreciation until 2025. so folks, we still have 9 more years of prosperity.
Year 2025 will be a stretch (so is 20 years), so the implosion will happen sometimes before year 2025.

Who's with me on this one?


Here comes the booo's.
and in 2025 it will fall to 2020 level which is +25% to 2016? ;)
with this train of demand we need intensive construction of NEW homes, not the peanuts of ~300 (~1500 person) properties per year in 160k city with 5% population growth yoy (~7000 NEW person each year) during last 5 years...
The GTA is projected to be the fastest growing region of the province, accounting for over 68 per cent of Ontario's net population growth to 2041. The GTA's population is projected to increase from 6.6 million in 2015 to almost 9.5 million in 2041.
yeah dude for sure... those 1.5 million $$ homes will be $15,000,000 in a few years from now for sure.
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daivey wrote:
Aug 12th, 2016 8:49 pm
asa1973 wrote:
Aug 12th, 2016 11:34 am
ValueInvestor wrote:
Aug 12th, 2016 10:38 am
Historically speaking, real estate bubble takes a decade or 2 to implode. So, I believe the inflation of the bubble started in 2005 or something. Slap 20 years into it, we will see price appreciation until 2025. so folks, we still have 9 more years of prosperity.
Year 2025 will be a stretch (so is 20 years), so the implosion will happen sometimes before year 2025.

Who's with me on this one?


Here comes the booo's.
and in 2025 it will fall to 2020 level which is +25% to 2016? ;)
with this train of demand we need intensive construction of NEW homes, not the peanuts of ~300 (~1500 person) properties per year in 160k city with 5% population growth yoy (~7000 NEW person each year) during last 5 years...
The GTA is projected to be the fastest growing region of the province, accounting for over 68 per cent of Ontario's net population growth to 2041. The GTA's population is projected to increase from 6.6 million in 2015 to almost 9.5 million in 2041.
yeah dude for sure... those 1.5 million $$ homes will be $15,000,000 in a few years from now for sure.
I'm too relaxed at present to verify stats but if this as stated by AFV1234 is correct
back in 1970 Toronto avg sales price $29429.00 currently $690103.00
that's an increase approaching 25 times, within 46 years. Yours is 10 times within a few (3?) years. Not likely to happen in a few - as in 3, but i'm pretty sure that had it been said back in 1970 that the average price would rise to $691,103, they'd probably laugh you out of town.
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I have been looking actively for a place the last few months and the market is a weird beast. Twice this month I went to properties that were dumps and listed for a low price. They were then re-listed at a higher price a week later. An agent with no filter at one of the properties explained that they received a few offers below asking and re-listed because, "the buyers didn't understand the process of under pricing a home and getting higher offers".

One home has a conditional offer that will be final tonight so I will see the selling price tomorrow and the other has another open house this weekend. Prices are growing at an insane rate, not because of one reason but a variety of factors. On the other hand, the market seems to have slowed down, but thats probably because its August.
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House prices are like GOLD Prices ..but can be more than crazy than GOLD when market is hot
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mattdominic wrote:
Aug 12th, 2017 8:50 pm
House prices are like GOLD Prices ..but can be more than crazy than GOLD when market is hot
Why are you bumping all these old threads?
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Afv1234 wrote:
Aug 12th, 2016 2:42 pm

Good luck to all you naysayers, those don't learn from history is doomed to repeat it as they say right ?
I don't think anybody doubts that homes will go up in value over the next 40 years, no debate there. The issue is if I buy at today's prices will I be able to renew my mortgage when it expires, or will I be forced to sell or come up with some serious cash at renewal?

They say you shouldn't time the market, but is it wise to ignore price even if you believe the market is behaving outside of its fundamental limitations? You cant ignore the effect of debt. Price matters.

Learning from history, if one bought in 1989 with 20% down, ($273.7k purchase = 55k down + $218.3 mortgage), you would be renewing a 5 year fixed mortgage in 1994, and would have paid down about $11k in principal over the period of the mortgage. This leaves $207.3k principal owning in 1994.

At time of renewal, in 1994, that same home would have sold for on average $209k. Meaning your equity would have been $209k - $207.3k = $1.7k.

So the question is, would a bank have lent you the $207.3k in 1994, or would you have to sell your house?

Back to present day, I think there is a good chance that average prices could correct to history normal affordability, which I imagine would be an average price in the $600k range. Then I would think that it would be possible that interest rates could rise a percent or two.

If you ignore price altogether, you'll never benefit from the long term appreciation of your RE assets if you can't keep them.

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