Real Estate

If the market is "crashing"...why are all new builds still above $1.3M? Same houses were $800k 2.5 years ago...

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  • Sep 16th, 2017 10:10 am
Deal Guru
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Sep 8, 2007
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Way Out of GTA
switcheroo wrote: hold back for 2-3 yrs. new builds wont lower there prices anytime soon, as the market goes down they'll start giving 50k+ free upgrades free appliance special financing ect.
why new? new homes have additional costs from driveway ac fence upgrades etc. just wait and buy >5 yr old house. let some1 else pay for it. in a down market upgrades are pennies on the dollar
True about the "free" upgrades. In many case because upgrades are huge mark up items for builders...giving away $50k of what they charge for upgrades might be only $15-20k cost to the builder. Much better for their profit than cutting prices by $50k. Cutting prices destabilizes the situation for the people who just bought at the higher prices. Free upgrades avoids much (not all) of that issue also.
Sr. Member
Feb 3, 2015
970 posts
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Toronto
Rocko24 wrote: I'm trying to find a new detached home. Nothing crazy....2500sqft max...and obviously they are all on tiny lots...I want to stay in Oakville (where my family currently is).

I cannot for the life of me find something under $1.3M....if something is under 1.3M (I saw Remington phase 3) start at 1.2M, there is only like a dozen for sale..and they sell out immediately...

All these homes (phase 1), were starting at $800k just 2.5 years ago....

Where is this crash everyone is talking about?
They will even go down. My email is flooded of new builds still remaining. Hurry last chance etc. They aren't selling like they were in March. So wait wait wait. That's what I'm doing.
Deal Guru
Feb 9, 2009
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Generalbrock wrote: I think we may see a major decline soon. Many of the big homebuilders are rushing like mad to get municipal site plan approval and building permits, so they can start pre-selling the units. And banks have dropped the assessed prices by 50% for new projects in the GTA.

Whether they're correct or not, all of the big homebuilders are preparing for a crash.
Source?
Newbie
Mar 1, 2017
19 posts
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Sanyo wrote: Source?
I went to school for urban planning and used to work in the field so I still know a lot of people working in building. I've heard it from a few different people both at the municipal level and people working for the homebuilders that they think a price decline is coming.

I don't know if anything will come of it, but they're trying to prepare for a big downturn.
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Feb 9, 2009
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Generalbrock wrote: I went to school for urban planning and used to work in the field so I still know a lot of people working in building. I've heard it from a few different people both at the municipal level and people working for the homebuilders that they think a price decline is coming.

I don't know if anything will come of it, but they're trying to prepare for a big downturn.
If 10-20% down in 3-4 months is not a big downturn already I dont know what is -- they already missed the big downturn lol. Prices are stabilizing already. Are you saying 50% in 3 months now?
Newbie
Mar 1, 2017
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Sanyo wrote: If 10-20% down in 3-4 months is not a big downturn already I dont know what is -- they already missed the big downturn lol. Prices are stabilizing already. Are you saying 50% in 3 months now?
I'm not saying anything. But the pressure on municipal departments to approve site plan files is apparently like nothing they've ever seen before. Everyone wants to get to presale immediately.

And the banks have also been lowering assessments by a huge margin. I don't know exactly what it means when a bank lowers the assessment on a large project by 50% , but I imagine it probably reflects a projected decline.

And the decline so far means nothing to most of those builders. They're buying 30 years out, and most of these projects have been in the works for many years - long before the crazy price increases. But I think they want to cash in while the prices are still relatively high.

But who knows what will happen. It will be interesting going forward.
Deal Guru
Feb 9, 2009
12381 posts
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Generalbrock wrote: I'm not saying anything. But the pressure on municipal departments to approve site plan files is apparently like nothing they've ever seen before. Everyone wants to get to presale immediately.

And the banks have also been lowering assessments by a huge margin. I don't know exactly what it means when a bank lowers the assessment on a large project by 50% , but I imagine it probably reflects a projected decline.

And the decline so far means nothing to most of those builders. They're buying 30 years out, and most of these projects have been in the works for many years - long before the crazy price increases. But I think they want to cash in while the prices are still relatively high.

But who knows what will happen. It will be interesting going forward.
No way it's 50%... you better get a real documented source on this or Im calling BS...
Deal Expert
Feb 22, 2011
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Sanyo wrote: No way it's 50%... you better get a real documented source on this or Im calling BS...
That's the problem with this forum someone just states something and everyone up votes but there is 0 proof. Then when you post proof presale prices are up 45% in 12 months and inventory is 1/3 what it was 10 years ago it gets downvoted.

People would literally rather read anecdotal conjecture than proof.
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Sep 12, 2006
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rjg4235 wrote: Then when you post proof presale prices are up 45% in 12 months and inventory is 1/3 what it was 10 years ago
This may be true but if you think back to the lineups in March for these releases, going around the block, everything selling out in hours etc... Demand was crazy, partly due to speculators. This has dried up in the last 3 months. Prices are up, but they aren't selling as much.

Go on kijiji and you'll see a crap ton of people trying to sell their "booked" houses on assignment. Asking prices 10-15% lower than the builder is currently asking. I personally know a family that booked 4 houses in Innisfil. Closings are in the next few months and I expect they'll get burned to the tune of 100k+. This wasn't happening last year.
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Aug 19, 2016
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Things will play out slowly, in real estate at least.

But it is given that the market has cooled. No doubt about that.

But it is rather scary when Warren Buffett said that he wouldn't even qualify for a mortgage if he applied for one in Canada.
The banks here have strict lending criteria and it is solely based on your stable income (not other sources that fluctuate).
His stable income is 100K USD for like 50 years (~120k CAD). That would qualify him for a ~500k mortgage. Assume he will need to cough up 20%, the house he can afford is ~675k. Don't think any good detached is going for that right now.
He is right that the banks in Canada are safe and stable and won't cause a bank run.

Ben Bernanke, former Federal Chair testified that when banks tighten, they really tighten. He couldn't renew his mortgage because he switched job (his term was up). The banks he mentioned we're US banks.

Let's hope the Canadian banks doesn't go too far and shoot themselves in the foot.

When you play with credits, this is what will happen. It is not like the Canadian housing market was prop up by people with cash (though they make us believe that mainland Chinese are to blame for their excessive cash).

This is how they do it. They come here and bring/borrow (friends and family) a million. Put it in GIC for 90 days and apply for a mortgage. Guaranteed mortgage approval because of lock-in assets and being a new immigrants and all. Take that money out of GIC and return them to friends and family. Poof, credit created out of nowhere. Rinse and repeat, that and you see what is happening now.

Do we really think the houses you see owned by mainland Chinese people were all paid by cash? No man. A friend of mine works at RBC as mortgage specialist. He told me that these mainland Chinese (new immigrants) came in and brags about how rich they are and said they will give the business to the bank. This sounds better because they are doing the banks a favour rather than asking them for money.

This is the trend these days. Mainland Chinese relative of mine recently asked me to invest with them. However, I don't get to sign any paperwork. All I need to do is wire them the money. I don't get to own anything. But he made it sound like he's doing me a favour because he will make me rich by lending him money. So I said I am all locked up in stocks and losing my pants. Since he is a relative and I can't shut my door completely, I said I have 10k sitting around somewhere. I will lend him the money but I don't need it back anytime soon. Although he was not happy about 10k, but still took it.

My guess is that he owns 2 houses here and 2 pre-cons that is coming online soon. He needed money to finance them. His pre-cons can't be sold until a year later (after taking possession of the houses).
Last edited by CollegeGraduate on Sep 9th, 2017 10:40 am, edited 1 time in total.
Deal Addict
May 10, 2006
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Recent mattamy condo release had 200 units available in milton. The line started yesterday at 2pm ish and this morning at 7am they had a little over 200 people in line, they open at 11am I believe. Demand looks to still be quite strong for new builds.
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Feb 22, 2011
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alex_d10 wrote: This may be true but if you think back to the lineups in March for these releases, going around the block, everything selling out in hours etc... Demand was crazy, partly due to speculators. This has dried up in the last 3 months. Prices are up, but they aren't selling as much.

Go on kijiji and you'll see a crap ton of people trying to sell their "booked" houses on assignment. Asking prices 10-15% lower than the builder is currently asking. I personally know a family that booked 4 houses in Innisfil. Closings are in the next few months and I expect they'll get burned to the tune of 100k+. This wasn't happening last year.
If there are a crap ton you should surely be able to provide just one as an example
Deal Guru
Feb 9, 2009
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marcopolo85 wrote: Recent mattamy condo release had 200 units available in milton. The line started yesterday at 2pm ish and this morning at 7am they had a little over 200 people in line, they open at 11am I believe. Demand looks to still be quite strong for new builds.
Just went outside as I live close by it is a hugeeeeee line I couldn't even turn onto the next street. We'll see how much they sell
Deal Addict
May 9, 2017
1261 posts
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CollegeGraduate wrote: Things will play out slowly, in real estate at least.

But it is given that the market has cooled. No doubt about that.

But it is rather scary when Warren Buffett said that he wouldn't even qualify for a mortgage if he applied for one in Canada.
The banks here have strict lending criteria and it is solely based on your stable income (not other sources that fluctuate).
His stable income is 100K USD for like 50 years (~120k CAD). That would qualify him for a ~500k mortgage. Assume he will need to cough up 20%, the house he can afford is ~675k. Don't think any good detached is going for that right now.
He is right that the banks in Canada are safe and stable and won't cause a bank run.

Ben Bernanke, former Federal Chair testified that when banks tighten, they really tighten. He couldn't renew his mortgage because he switched job (his term was up). The banks he mentioned we're US banks.

Let's hope the Canadian banks doesn't go too far and shoot themselves in the foot.

When you play with credits, this is what will happen. It is not like the Canadian housing market was prop up by people with cash (though they make us believe that mainland Chinese are to blame for their excessive cash).

This is how they do it. They come here and bring/borrow (friends and family) a million. Put it in GIC for 90 days and apply for a mortgage. Guaranteed mortgage approval because of lock-in assets and being a new immigrants and all. Take that money out of GIC and return them to friends and family. Poof, credit created out of nowhere. Rinse and repeat, that and you see what is happening now.

Do we really think the houses you see owned by mainland Chinese people were all paid by cash? No man. A friend of mine works at RBC as mortgage specialist. He told me that these mainland Chinese (new immigrants) came in and brags about how rich they are and said they will give the business to the bank. This sounds better because they are doing the banks a favour rather than asking them for money.

This is the trend these days. Mainland Chinese relative of mine recently asked me to invest with them. However, I don't get to sign any paperwork. All I need to do is wire them the money. I don't get to own anything. But he made it sound like he's doing me a favour because he will make me rich by lending him money. So I said I am all locked up in stocks and losing my pants. Since he is a relative and I can't shut my door completely, I said I have 10k sitting around somewhere. I will lend him the money but I don't need it back anytime soon. Although he was not happy about 10k, but still took it.

My guess is that he owns 2 houses here and 2 pre-cons that is coming online soon. He needed money to finance them. His pre-cons can't be sold until a year later (after taking possession of the houses).
Ok, so how do these people pay the mortgage and re-pay there family and friends.

Anecdotally, the people buying the new builds ($3M) in my area seem to have a lot of money. Persians, Chinese and Russians. I here from both lawyers and real estate agents that I trust that a lot of the purchases are payed primarily with cash.
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Sanyo wrote: Just went outside as I live close by it is a hugeeeeee line I couldn't even turn onto the next street. We'll see how much they sell
No smartphone so no pics?

It's common courtesy to post some. Should still be some time to snap a few.
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Sep 25, 2012
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Toronto
OP my friend you can get a fairly new house on resale in Milton for $900-$950k. 2500 sq ft.
And Milton isn't that far from Oakville. You can even look at South Milton which is 10 mins from Oakville.
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alex_d10 wrote: This may be true but if you think back to the lineups in March for these releases, going around the block, everything selling out in hours etc... Demand was crazy, partly due to speculators. This has dried up in the last 3 months. Prices are up, but they aren't selling as much.

Go on kijiji and you'll see a crap ton of people trying to sell their "booked" houses on assignment. Asking prices 10-15% lower than the builder is currently asking. I personally know a family that booked 4 houses in Innisfil. Closings are in the next few months and I expect they'll get burned to the tune of 100k+. This wasn't happening last year.
Lol, you are one of few who recognized the "book a house" lingo also. Like it's so casual and cool to book a house, no big deal.

Pre con book-a-house flippers is their full name.
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Aug 19, 2016
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cartfan123 wrote: No smartphone so no pics?

It's common courtesy to post some. Should still be some time to snap a few.
I would just use a picture taken from a boxing day line up and call it a day.
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Nov 24, 2013
2547 posts
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GTA
CollegeGraduate wrote: Things will play out slowly, in real estate at least.

But it is given that the market has cooled. No doubt about that.

But it is rather scary when Warren Buffett said that he wouldn't even qualify for a mortgage if he applied for one in Canada.
The banks here have strict lending criteria and it is solely based on your stable income (not other sources that fluctuate).
His stable income is 100K USD for like 50 years (~120k CAD). That would qualify him for a ~500k mortgage. Assume he will need to cough up 20%, the house he can afford is ~675k. Don't think any good detached is going for that right now.
He is right that the banks in Canada are safe and stable and won't cause a bank run.

Ben Bernanke, former Federal Chair testified that when banks tighten, they really tighten. He couldn't renew his mortgage because he switched job (his term was up). The banks he mentioned we're US banks.

Let's hope the Canadian banks doesn't go too far and shoot themselves in the foot.

When you play with credits, this is what will happen. It is not like the Canadian housing market was prop up by people with cash (though they make us believe that mainland Chinese are to blame for their excessive cash).

This is how they do it. They come here and bring/borrow (friends and family) a million. Put it in GIC for 90 days and apply for a mortgage. Guaranteed mortgage approval because of lock-in assets and being a new immigrants and all. Take that money out of GIC and return them to friends and family. Poof, credit created out of nowhere. Rinse and repeat, that and you see what is happening now.

Do we really think the houses you see owned by mainland Chinese people were all paid by cash? No man. A friend of mine works at RBC as mortgage specialist. He told me that these mainland Chinese (new immigrants) came in and brags about how rich they are and said they will give the business to the bank. This sounds better because they are doing the banks a favour rather than asking them for money.

This is the trend these days. Mainland Chinese relative of mine recently asked me to invest with them. However, I don't get to sign any paperwork. All I need to do is wire them the money. I don't get to own anything. But he made it sound like he's doing me a favour because he will make me rich by lending him money. So I said I am all locked up in stocks and losing my pants. Since he is a relative and I can't shut my door completely, I said I have 10k sitting around somewhere. I will lend him the money but I don't need it back anytime soon. Although he was not happy about 10k, but still took it.

My guess is that he owns 2 houses here and 2 pre-cons that is coming online soon. He needed money to finance them. His pre-cons can't be sold until a year later (after taking possession of the houses).
Would he be similarly obligated if you then asked him for (higher) loan and would he offer the same terms?

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