[Merged] Real estate crash - yes, no, maybe?

[mrbeachman]

Been reading some of Neil's posts on Canadian real estate. Since I plan on buying a condo, I was wondering if I am buying at the top, or are prices only going higher?

While I do agree that real estate is overpriced and a lot of people are taking loans that they can't afford to pay, I am also looking at the real estate as an inflationary hegde. I mean, when you listen to economists, they always talk about risk of deflation, but the fact is things are not getting cheaper. Your buspass in not getting cheaper, food is not getting cheaper, gas is not getting cheaper and the scary part is gold is at the record high. That inflationary trend can also play against me as taxes on condo will go up and so will condo fees. At the and, I may be paying in taxes/fees as much as I could be paying to rent the place (not including the mortgage).

But let's stop blabbing.

Crash - yes, no maybe?

[James_TheVirus]

I personally think that house prices will drop a little bit over the next 2-3 years, somewhere in the neighbourhood of 5-10%. I think we will then see a steady incline.

I don't forsee a major crash per se, simply because people need somewhere to live, the economy is back on the upswing, and people will now hold onto the notion that they will sell only if they get a certain price. As that price drops, more people are willing to wait it out.

[stevezed]

I voted yes; but I'm expecting the magnitude of the crash to be more of a market correction rather than a crash.

The price of gold however, will be a full-out crash.

[mrbeachman]

I don't think market correction is a crash. Crash is something I would consider to last 10 years, like at the end of 80's.

So, if you think it is just a market correction, maybe you should vote "maybe"

[stevezed]

I personally think that house prices will drop a little bit over the next 2-3 years, somewhere in the neighbourhood of 5-10%. I think we will then see a steady incline.

I'd agree...

also as a word of caution, be careful what you read in the papers, most of the time they are quoting real estate agents, who obviously benefit from high market prices, and know jack s**t about the market & economics. These are sales people for christs sake.

[stevezed]

I don't think market correction is a crash. Crash is something I would consider to last 10 years, like at the end of 80's.

So, if you think it is just a market correction, maybe you should vote "maybe"

too late

besides maybe is too ambiguous, and I hate voting maybe in polls...It's like throwing your vote away (kinda like voting for the green party)

You should revise your poll (if possible); to include large crash, or small correction...

[Jaytee]

I think there will be a correction in the downtown Toronto core, not a crash.

My condo is up 13% since last January. I just sold it. I think there is a lot of inventory coming online in the next year and interest rates are only going to go up from here on in.

That said, some people have been predicting a crash for the last 3 years.

[michelb]

I think some areas might go down but overall I think there will likely be a bit of a slow down but no real decrease over the next 2-3 years and then it will pick up again at a moderate pace (people that are waiting for prices to fall will decide that it's not happening and get into the market again).

That said, what's really only important is your area; what do you care if prices across the nation are going up / down since it has very little impact on local markets.

[LarryLat]

up to -70% "correction" in some areas of Vancouver and Toronto
up to -40% in some other select areas (Alberta, outskirts of GTA, etc)
about -25% to -%30 elsewhere

timeframe: over the period of next 4 years

I say what I want to say. I've been wrong before, and I'll be wrong in the future. But, OP, you've been warned.

[mrbeachman]

up to -70% "correction" in some areas of Vancouver and Toronto
up to -40% in some other select areas (Alberta, outskirts of GTA, etc)
about -25% to -%30 elsewhere

timeframe: over the period of next 4 years

I say what I want to say. I've been wrong before, and I'll be wrong in the future. But, OP, you've been warned.

Then I ask you this.

Will it be realistic to expect the average price of a condo to cost the same as an upscale BMW?

How much do you expect interest rates will be?

I am not saying you are wrong.

[rocking23nf]

I cant see a 70% drop ever happening, cities would go under from the lack of property taxes.

Im in edmonton, we are still getting nice raises, my company has had no layoffs in a few years now.

The malls are packed, the food courts are packed. Go shopping on a saturday and its insanely busy.

I just dont see this crash happening in Alberta unless oil tanks down below 30$ a barrel.

[ssainani]

up to -70% "correction" in some areas of Vancouver and Toronto

[mrbeachman]

The malls are packed, the food courts are packed. Go shopping on a saturday and its insanely busy.

The cafes and shops are packed in Greece too. This has nothing to do with the economy.

[LarryLat]

The real estate prices are now above historic fundamental averages.

At some point in the future the prices WILL swing below historic fundamental averages. I believe that future is not far away (within next 5 years).

A bimmer is a disposable deprecating asset that should only be acquired by people with means, and not someone who needs to look at its price.

I believe that interest rates will eventually return to historic averages (6%-8%), and I expect to see them by 2015 at the latest.

I'd rather be wrong than unprepared.

I certainly believe that a crack shack just outside downtown Toronto or Vancouver that is currently being pushed for $900,000 can come down in price to more realistic land value of $270,000, which would give a 70% drop in real estate price.

[Jaytee]

You expect some areas in Toronto to drop 70% in value? So a $400K place is going to sell for $120K?

Who in their right mind would sell their place for 70% less than its worth right now? They would just hold on to the property then take a 70% loss.