Real Estate

Merged: GTA RE Bubble Bursting Bearish news and updates

  • Last Updated:
  • May 28th, 2017 3:10 am
[OP]
Jr. Member
May 18, 2015
172 posts
225 upvotes
Thornhill, ON

Merged: GTA RE Bubble Bursting Bearish news and updates

*I saw the original 1988 article posted on greaterfool and was blown away by the similarities between then and now, felt compelled to share here.

Excerpts from a 1988 Toronto Star article, entitled:

" HOT, HOT HOUSES Forget all those conspiracy theories about what's behind the crazy Toronto real estate market. Here are the real reasons why house prices are soaring - and why they'll stay high"

Friday, July 15, 1988
MICHAEL SALTER
Absolutely everyone from cab drivers to chief executives has a story about Toronto’s crazy housing market. Politicians and tenants’ groups have declared a housing ‘affordability crisis’ – again – and have called for a tax on speculators’ profits to cool down the frenzy. Dark words are muttered about how foreign money is to blame.
In fact, the price explosion has occurred for simpler reasons. Mortgage rates are low… Residents of this huge, rich, expensive urban conglomeration have taken somewhat hopefully to calling their city ‘world class. But the price of being world class is ‘Manhattanization.’ Torontonians are getting a taste of the housing problems of the world’s major cities.
Owning a house is now the investment of choice for most of the middle class. Because inflation has outpaced wage gains for most of the decade, salary earners feel they can gain ground only by possessing property. The equity in a house provides – tax free – a major portion of most people’s retirement nest egg. To cope with the high costs, it’s become standard practice for house-poor owners to build and rent out a self-contained apartment.
For many Torontonians, the North American dream of home ownership has already faded, and they’ve joined the ranks of renters, probably for good. Those intent on owning will find themselves forced to think small.
^ Does any of this sound familiar?

Full article, circa 1988 here: https://www.scribd.com/doc/314505251/To ... ubble-1988

Then one year later in 1989, the GTA RE market crashed and sadly, many lost everything.

It took 20 years - A GENERATION - for the Toronto market to recover to 1988 levels, adjusted for inflation:

Image

Maybe it's different this time?
Last edited by jonkoktosen on Mar 8th, 2017 3:52 am, edited 2 times in total.
844 replies
Deal Addict
May 31, 2007
3571 posts
555 upvotes
Yup, when houses are going up 200-400K month, something is going to give.
Sr. Member
Jun 2, 2012
925 posts
259 upvotes
Jungle wrote:
Mar 8th, 2017 7:22 am
Yup, when houses are going up 200-400K month, something is going to give.
Based on that chart it's 100k/per year, after 09
Deal Fanatic
Dec 11, 2008
6758 posts
359 upvotes
Wait? Who in the media is saying these things now?

Also, it may have taken 20 years for the last correction but are we expecting the this crash to be as bad? take as long? or when do we expect it to hit "the price in which it reflects historical trend (inflation)"? Also how come Garth said it took 12 years and not 20?

Last time it looks like it took 7 years to hit bottom as well.
Last edited by speedyforme on Mar 8th, 2017 8:08 am, edited 2 times in total.
Deal Addict
Dec 5, 2009
3726 posts
1208 upvotes
Funny, I posted the same article and scribd link just yesterday in the Vaughan thread, then it got picked up by Garths blog , now back here again. Lots of cross pollination of ideas between sites it seems :) by the way, the article is from the globe and mail , not the star.

Real estate has always been a boom and bust market. People forget, because the last cycle has been so long. If your time horizon is long enough it's not an issue but if you get squeezed in the short term and are over leveraged you get burned.
Member
Jul 25, 2005
388 posts
38 upvotes
GSpeed wrote:
Mar 8th, 2017 7:42 am
Based on that chart it's 100k/per year, after 09
Outdated chart. From TREB Market Watch.

Detached Houses:
Jan 2017 $1,068,670
Feb 2017 $1,205,815

All Homes:
Jan 2017 $770,745
Feb 2017 $875,983
Sr. Member
Nov 18, 2014
588 posts
337 upvotes
Toronto, ON
It's always different here/this time.

Until it's not.
Deal Addict
Feb 5, 2009
2174 posts
382 upvotes
Newmarket
According to the historical chart it will take you up to 20 years to recover even if you buy at the worst possible time, and in the meantime you still have to live somewhere. Not so bad.
Member
Jan 26, 2016
388 posts
252 upvotes
Toronto, ON
Good news for the renters.

I think right after you found the article rental prices went down 10%. Good thing they waited.
Last edited by WinterSleep on Mar 8th, 2017 8:25 am, edited 1 time in total.
Sr. Member
Nov 18, 2014
588 posts
337 upvotes
Toronto, ON
WinterSleep wrote:
Mar 8th, 2017 8:25 am
Good news for the renters.

I think right after you found the article rental prices went down 10%. Good thing rhey waited.
Prices have no impact on rental prices at all LOL. Rental prices are driven by wages. You jack up the prices, people just move to other cities/countries. I think you should stick to NEW PARADIGM since you clearly have no clue what you are talking about.
Member
May 5, 2013
280 posts
73 upvotes
The only differences between this time and last time is we have all the governments in the world printing $ at the same time and all these excess money has to go somewhere. The rich can access these cheap money at no cost while the have not have to sell their soul for it.
Member
Jul 3, 2007
265 posts
182 upvotes
I read this too and it was fascinating , you hear the exact same things from people now as in 1989....market wont stop, even if it does wont fall much, right back up again in a year, too much immigration, rates are low, need a black swan event , Toronto is a world class city (with no subways or insfrastructure lol) yadda yadda yadda....

Sure is getting puffy out there...

Image
Sr. Member
Nov 18, 2014
588 posts
337 upvotes
Toronto, ON
joepipe wrote:
Mar 8th, 2017 8:34 am
I read this too and it was fascinating , you hear the exact same things from people now as in 1989....market wont stop, even if it does wont fall much, right back up again in a year, too much immigration, rates are low, need a black swan event , Toronto is a world class city (with no subways or insfrastructure lol) yadda yadda yadda....

Sure is getting puffy out there...

Image
I laugh at the people calling Milton and Markham world class cities. The next Manhattan! NEW PARADIGM!
Member
Jul 3, 2007
265 posts
182 upvotes
this one is a classic bubble asking price..... small 42x90 lot and unfinished basement!....$2.38 million in markham ?? ... we're hitting new highs of stupidity

https://www.realtor.ca/Residential/Sing ... 0P9-Berczy

Oh and here's another beauty, this realtor is getting ripped on twitter right now, probably the most ridiculous sounding and probably illegally worded MLS listing....

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