Real Estate

Merged: GTA RE Bubble Bursting Bearish news and updates

  • Last Updated:
  • Feb 3rd, 2019 1:41 pm
Member
May 18, 2015
484 posts
686 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.
1423 replies
Deal Fanatic
May 31, 2007
5018 posts
2175 upvotes
Yup, when houses are going up 200-400K month, something is going to give.
Deal Addict
Jun 2, 2012
1600 posts
950 upvotes
GTA
Jungle wrote: 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 Guru
Dec 11, 2008
13064 posts
3755 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 Fanatic
Dec 5, 2009
5768 posts
3612 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
436 posts
129 upvotes
GSpeed wrote: 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
Banned
Nov 18, 2014
824 posts
769 upvotes
Toronto, ON
It's always different here/this time.

Until it's not.
Deal Addict
Feb 5, 2009
2808 posts
940 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.
Deal Addict
Jan 26, 2016
2240 posts
2272 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.
Banned
Nov 18, 2014
824 posts
769 upvotes
Toronto, ON
WinterSleep wrote: 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
311 posts
98 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.
Deal Addict
Jul 3, 2007
4153 posts
4626 upvotes
Toronto
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
Banned
Nov 18, 2014
824 posts
769 upvotes
Toronto, ON
joepipe wrote: 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!
Deal Addict
Jul 3, 2007
4153 posts
4626 upvotes
Toronto
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....

Deal Guru
Dec 11, 2008
13064 posts
3755 upvotes
Is there someone who can dig up something? I would like to see any correlation.

New Builds and Existing Sales in 1989 vs 2016. Were there more homes for sale in 1989 or in 2016 and in proportion to the population.
Banned
Feb 13, 2017
951 posts
1283 upvotes
this thread = circle jerk of renters
Deal Addict
Jun 2, 2012
1600 posts
950 upvotes
GTA
Avi44 wrote: 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
Jan 2016 - $1,061,789
Feb 2016 - $1,211,459

This is typical every year...

https://www.thestar.com/business/2017/0 ... r-ago.html
January to February typically sees the biggest month to month price jump in the calendar. This February, home prices were up $105,238 over January.

If it's gone up 27.7% year vs year
That works out to 20k per month... not 100k
Last edited by GSpeed on Mar 8th, 2017 9:28 am, edited 1 time in total.
Member
User avatar
Dec 30, 2014
307 posts
48 upvotes
booming
crocp8 wrote: this thread = circle jerk of renters
yup.
just like barf turnerz blog.
have to make themselves feel better somehow.
eventually a broken clock is right...might take them 25-30 years but by god they will be right one day, lol. i hope at that point they will be lucid enough to jump in during that *brief* down period.
me? i'm enjoying my 4 bedroom thanks!
too much cash out there this time, amazes me people still do not understand what has happened.
buy it all, especially the s&p, they/we have NO CHOICE but to go up...forever.
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only bet with money you can afford to lose
Deal Fanatic
Dec 5, 2009
5768 posts
3612 upvotes
speedyforme wrote: Is there someone who can dig up something? I would like to see any correlation.

New Builds and Existing Sales in 1989 vs 2016. Were there more homes for sale in 1989 or in 2016 and in proportion to the population.
Not exactly what you are asking for , but related. A chart of the ratio of sales to new listings.

http://www.greaterfool.ca/wp-content/up ... png?x64811

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