Real Estate

Locked: When will we know that TO/GTA real estate has bottomed?

  • Last Updated:
  • Mar 16th, 2018 10:50 am
Newbie
Feb 10, 2017
71 posts
40 upvotes
Under B-20, borrowers will need to qualify at the Bank of Canada’s five-year benchmark rate (currently 4.99 per cent), or tack 2 per cent onto their contract rate – whichever is higher. For example, a borrower who gets a five-year fixed-mortgage rate pre-approval from their bank at 2.50 per cent would actually need to have the financial assets and credit rating to qualify at 4.99 per cent

............. In all, B-20 is expected to slash about $150,000 from the average buyer’s budget: Assuming a five-year fixed rate of 2.84 per cent and 25-year amortization, a household earning $100,000 annually would see their buying power shrink from $726,145 to $573,791.
Found this quote in an article online....how true is this? If we assume the middle class is a dominant segment of the market (say 1/3), would this not blatantly point towards a downward trend as it starts to trickle into system throughout this year?
Deal Addict
Jan 17, 2006
1143 posts
872 upvotes
Toronto
1LoveToronto wrote:
Jan 7th, 2018 9:23 am
Found this quote in an article online....how true is this? If we assume the middle class is a dominant segment of the market (say 1/3), would this not blatantly point towards a downward trend as it starts to trickle into system throughout this year?
Most people don't take on maximum qualified loan so they will not be affected.
Anyways, that was discussed many times in many threads for last few months.
Read them if you are so curious, otherwise we have to wait and see.
I don't expect big impact.
Deal Fanatic
Feb 9, 2009
6384 posts
3543 upvotes
1LoveToronto wrote:
Jan 7th, 2018 9:23 am
Found this quote in an article online....how true is this? If we assume the middle class is a dominant segment of the market (say 1/3), would this not blatantly point towards a downward trend as it starts to trickle into system throughout this year?
Not as much as some bears make it out to be... Jeremy Rudin who is the head of OSFI was on BNN a short time ago and said these stress test rules were already in the OSFI guideline books for lenders since 2012... so even though it was not mandatory, it was supposed to be good practices to follow them. Many of the big banks including CIBC already said they have some kind of internal stress tests for all buyers anyways (After all the banks also have to manage risk, they aren't going to give you a max mortgage amount and see you dying to pay of it if rates go up slightly).

B20 may effect a small amount of people but it's been taken too aggressively by some people on here. You also have credit unions, many of them who wont be following the policies (tho many have internal stress tests as well). We'll see what happens, just turn to January we'll get more on this over the next few months..
Deal Addict
Jul 3, 2007
1149 posts
1243 upvotes
Toronto
https://www.zolo.ca/toronto-real-estate/trends

December / January prices are dropping fast on the detached side....at some point this will hit condos too

another rate hike probable this week is not going to help the buyers in qualifying at B20 rules.....

we are at 5.39% now for conventional fixed rate qualifying, another bump will put it at 5.64% ....then 6% is around the corner...ouch
Last edited by joepipe on Jan 7th, 2018 10:57 am, edited 1 time in total.
Deal Fanatic
Feb 9, 2009
6384 posts
3543 upvotes
joepipe wrote:
Jan 7th, 2018 10:57 am
https://www.zolo.ca/toronto-real-estate/trends

December / January prices are dropping fast on the detached side....at some point this will hit condos too

another rate hike probable this week is not going to help the buyers in qualifying at B20 rules.....
Caledon shows monthly gains of 20%.

I wouldn’t take these numbers quite to heart.
Deal Addict
Jul 3, 2007
1149 posts
1243 upvotes
Toronto
Sanyo wrote:
Jan 7th, 2018 11:01 am
Caledon shows monthly gains of 20%.

I wouldn’t take these numbers quite to heart.
One big sale in Caledon can skew the numbers,......im sure you know that

bottom line is the prices are trending down and quick , 803k to 748k in one month ....
Deal Fanatic
Feb 9, 2009
6384 posts
3543 upvotes
joepipe wrote:
Jan 7th, 2018 11:05 am
One big sale in Caledon can skew the numbers,......im sure you know that

bottom line is the prices are trending down and quick , 803k to 748k in one month ....
There was a similar drop last year believe it or not Around this time — why? Cause no one shops for houses during the Christmas break (which we were on the midst off) plus record low temps ... wait a few weeks it’ll be back up
Deal Addict
Feb 23, 2009
1351 posts
1230 upvotes
Oshawa
It doesn't matter what TREB or the RE media spin at this point, the herd has moved on to pot stocks and imaginary currencies.
The perception is you can't make money in RE now.
People end the cycle in condos because it's a lower price point, they haven't been built yet so I don't have to actually have any $$ and I still think I can be a landlord and rent it out.
The rates and rules will take even more people out of the market on a technical basis.
Prices go lower.
Deal Addict
Jul 3, 2007
1149 posts
1243 upvotes
Toronto
pkrash wrote:
Jan 7th, 2018 11:35 am
It doesn't matter what TREB or the RE media spin at this point, the herd has moved on to pot stocks and imaginary currencies.
The perception is you can't make money in RE now.
People end the cycle in condos because it's a lower price point, they haven't been built yet so I don't have to actually have any $$ and I still think I can be a landlord and rent it out.
The rates and rules will take even more people out of the market on a technical basis.
Prices go lower.
couldnt agree more , this is what most of the RE bulls dont understand or just dont want to admit, the hype is gone from the market in that
you can make a quick buck by flipping a house in a year.... the speculation "gas on the fire" is done, that is what made
the market boom in a few years....in my hood of don mills there is quite a few price drops on recently built "flips" that are dying
a slow death....
Jr. Member
User avatar
Dec 17, 2009
183 posts
107 upvotes
pkrash wrote:
Jan 7th, 2018 11:35 am
It doesn't matter what TREB or the RE media spin at this point, the herd has moved on to pot stocks and imaginary currencies.
The perception is you can't make money in RE now.
People end the cycle in condos because it's a lower price point, they haven't been built yet so I don't have to actually have any $$ and I still think I can be a landlord and rent it out.
The rates and rules will take even more people out of the market on a technical basis.
Prices go lower.
I am not a bear nor a bull, but this is kind of true. Everyone I know has stopped talking about the real estate market altogether, and are all now discussing about how much money can be made in cannabis stock and "penny" cryptocurrencies.
Deal Fanatic
Feb 9, 2009
6384 posts
3543 upvotes
S52B wrote:
Jan 7th, 2018 2:33 pm
I am not a bear nor a bull, but this is kind of true. Everyone I know has stopped talking about the real estate market altogether, and are all now discussing about how much money can be made in cannabis stock and "penny" cryptocurrencies.
Once those goes away, real estate will still be standing
Jr. Member
User avatar
Dec 17, 2009
183 posts
107 upvotes
Sanyo wrote:
Jan 7th, 2018 2:57 pm
Once those goes away, real estate will still be standing
For sure, just stating it from the point of people who are only out to make money.
Deal Fanatic
Feb 9, 2009
6384 posts
3543 upvotes
S52B wrote:
Jan 7th, 2018 3:00 pm
For sure, just stating it from the point of people who are only out to make money.
Well the whole plan was to balance the housing market anyways. I got a large heloc ready to go if there truly is ever a crash ... tho I see zero chance of it happening... I’m more waiting for the stock market to have a large correction so I can buy in. Now I see too many people getting bearish on real estate , including on this site with a 2 to 1 ratio (or more) of bears to bulls.. I actually like this cause it means more level headed ness in the market.

Cypto is definitely on its last legs when you see people make you tube videos about investing a big chunk in Cypto and they cant even tell you the basics of the technology behind it.
Deal Fanatic
User avatar
Oct 23, 2003
7184 posts
1004 upvotes
Sanyo wrote:
Jan 7th, 2018 2:57 pm
Once those goes away, real estate will still be standing
Bitcoin has "gone away" and "died" 6 times since 2009.

Stocks have "gone away" how many times since inception?

Gold, that's died a ton as well but keeps coming around in popularity when recessions happen.

Real estate will be standing. The question is will the over leveraged type owners still own it. I'm leaning towards "no".

All of these "fads" arent fads, they're just different investment vehicles going through cycles. None of those will ever "go away". They'll just be played like a round of musical chairs throughout the years.
Member
Jun 19, 2017
406 posts
609 upvotes
Buggy166 wrote:
Jan 7th, 2018 4:20 pm
Bitcoin has "gone away" and "died" 6 times since 2009.

Stocks have "gone away" how many times since inception?

Gold, that's died a ton as well but keeps coming around in popularity when recessions happen.

Real estate will be standing. The question is will the over leveraged type owners still own it. I'm leaning towards "no".

All of these "fads" arent fads, they're just different investment vehicles going through cycles. None of those will ever "go away". They'll just be played like a round of musical chairs throughout the years.
It's refreshing to read your post, I think you hit the nail on the head. So many people seem so non-chalant over debt and dismissive of the downside.

We've had declining rates and appreciating prices for so long that it seems unfathomable that it could be any other way.

Year over year the vast majority of housing is not even put on the market, so even if a small percentage of people at the margins are affected and are forced to sell, it's quite possible they can move the market and have potential to cause a cascade as "equity" evapotates on those dependant on it for their Helocs.

Top