Real Estate

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

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  • Mar 16th, 2018 10:50 am
Deal Guru
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Jun 26, 2005
10111 posts
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Toronto
rjg4235 wrote: You might be right, I don't really care what the average price is though, it's not like I own an ETF of all condos in Toronto. When I look at specific buildings they are all up, I can't really find any examples that are down. Average changing can be a bunch of things. Maybe those $2m ones aren't selling anymore.

Here's an example that I am familiar with. 1 bedroom in March was $430k;
https://www.mongohouse.com/soldrecords/ ... 238458cb5e

Identical unit, 1 floor lower went for $470k, it's actually 9% higher than a nicer unit sold at "peak";
https://www.mongohouse.com/soldrecords/ ... 9c6391b5f7

Here is another place I am familiar with, hard to find comparable because there are many different types of units but here are two identical side by side ones;

$370k in March;
https://www.mongohouse.com/soldrecords/ ... 1fe8f1f428

$400k in November;
https://www.mongohouse.com/soldrecords/ ... 562fd212fd
Well said. No one (except the govern) should care about an average price.

From my real estate friend, condo prices are going up and bidding wars are here for them. its logical, detached houses are all over $1 mill, townhouses are close to $1 mill, who the heck has that much money?

So next they go down to condos. There are a LOT more middle income families vs. high income. So the demand for "affordable" housing is much much higher.

10 yrs ago, I bought my 2 bedroom condo for $245,000. That's TWO bedroom in North York. Market price now is $500,000 or more.

To the OPs question, it has already bottomed and is going back up now.

It all depends on the type (detached, townhouse, condo) and location. Any good location prices never really dropped much because its location.

If you are looking at condos, its even worse now because the prices went up so much during last year, it pushed people to buy condos (as I mentioned above).

I was looking at a Yonge & downtown condo, 1 bedroom, was listed for $650,000. Give it a few years, its gonna be over 1 million. Unbelieveable
Deal Expert
Feb 22, 2011
16521 posts
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Toronto
rfdrfd wrote: Well said. No one (except the govern) should care about an average price.

From my real estate friend, condo prices are going up and bidding wars are here for them. its logical, detached houses are all over $1 mill, townhouses are close to $1 mill, who the heck has that much money?

So next they go down to condos. There are a LOT more middle income families vs. high income. So the demand for "affordable" housing is much much higher.

10 yrs ago, I bought my 2 bedroom condo for $245,000. That's TWO bedroom in North York. Market price now is $500,000 or more.

To the OPs question, it has already bottomed and is going back up now.

It all depends on the type (detached, townhouse, condo) and location. Any good location prices never really dropped much because its location.

If you are looking at condos, its even worse now because the prices went up so much during last year, it pushed people to buy condos (as I mentioned above).

I was looking at a Yonge & downtown condo, 1 bedroom, was listed for $650,000. Give it a few years, its gonna be over 1 million. Unbelieveable
I can't find the figures right now I will look later but there is a realtor with an MBA CPA who posts great stats. One that is very relevant right now is the difference in price between condos and detached. Historically they were much closer in price, it is only the last few years that it really started to separate. This is a big part of the reason why I am not worried about the condo market. I can see the more expensive property types stagnating while condos catch up. People aren't going to give up and resign to renting just because they qualify for less now. Maybe those looking for a semi settle for a condo town, those looking for a condo town settle for a condo.
Deal Guru
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Jun 26, 2005
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Toronto
Jungle wrote: Yeah it will be interesting to see what happens, I m fully expecting a wash out for condos because I believe they became entry level of re market ( due to detach being so high in price) so first time buyer/ amateur /investor capped the most with ofsi and interest rates going up so fast.

Then dilution of more buildings, thousands of new units expected, even Brad Lamb trying to use fear to sell. Developers trying to catch high tide before it goes.
Don't believe the "dilution" factor in Toronto. 10 years ago when I bought my condo at North York, 10+ other condos were being built. Everyone was telling me I spent too much and prices will drop, too much supply.

They were dead wrong. There isn't enough supply, and especially people can't afford townhouses or detached houses now, MORE demand will be for condos.
Deal Guru
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Jun 26, 2005
10111 posts
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Toronto
Agreed. Because Toronto is an excellent location, just like Vancouver, any type of property will rise in value. The only difference is the speed (rate) of rising:

Detached: rocket ship
Townhouse: Car
Condo: Boat

Depending on your current financial situation, will dictate which vehicle you can climb aboard.

My friend living in a small house in Scarborough said their neighbour last year sold for $980,000. Who would have believed Scarborough could sell for 1 million??
rjg4235 wrote: I can't find the figures right now I will look later but there is a realtor with an MBA CPA who posts great stats. One that is very relevant right now is the difference in price between condos and detached. Historically they were much closer in price, it is only the last few years that it really started to separate. This is a big part of the reason why I am not worried about the condo market. I can see the more expensive property types stagnating while condos catch up. People aren't going to give up and resign to renting just because they qualify for less now. Maybe those looking for a semi settle for a condo town, those looking for a condo town settle for a condo.
Deal Expert
Feb 22, 2011
16521 posts
21871 upvotes
Toronto
rfdrfd wrote: Don't believe the "dilution" factor in Toronto. 10 years ago when I bought my condo at North York, 10+ other condos were being built. Everyone was telling me I spent too much and prices will drop, too much supply.

They were dead wrong. There isn't enough supply, and especially people can't afford townhouses or detached houses now, MORE demand will be for condos.
Don't even try to help these people, they are beyond it.

They fall for the same story every single year, for the last 20 years.

Here is a nice article from 5 years ago saying do not buy a condo, it's about to crash. Prices are up 50% since;

"3) There is an unprecedented supply of new condos in the pipeline, with a record number of units set to complete in 2013"
https://www.theglobeandmail.com/globe-i ... le8440509/
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Dec 17, 2009
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rjg4235 wrote: You might be right, I don't really care what the average price is though, it's not like I own an ETF of all condos in Toronto. When I look at specific buildings they are all up, I can't really find any examples that are down. Average changing can be a bunch of things. Maybe those $2m ones aren't selling anymore.
I don't know why but that made me chuckle.
Deal Guru
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Jun 26, 2005
10111 posts
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Toronto
rjg4235 wrote: Don't even try to help these people, they are beyond it.

They fall for the same story every single year, for the last 20 years.

Here is a nice article from 5 years ago saying do not buy a condo, it's about to crash. Prices are up 50% since;

"3) There is an unprecedented supply of new condos in the pipeline, with a record number of units set to complete in 2013"
https://www.theglobeandmail.com/globe-i ... le8440509/
True. Excellent article find. I'm gonna pdf that one!

My realtor is 57 yrs old(?) And he said he's read sooo many bank or experts in the past many years saying housing markets are heading for a big crash , bubble here and there. None of them have come true. While prices has quadtripled and more. So even if there's a crash, prices will still be unaffordable for the average Canadian.

He says the same thing. Can't help his clients that keep saying it's too expensive, let me wait and see. He has clients like that and have been renting for 5 years now still waiting. That client is simply paying for someone's mortgage.
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Jun 19, 2017
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rfdrfd wrote: True. Excellent article find. I'm gonna pdf that one!

My realtor is 57 yrs old(?) And he said he's read sooo many bank or experts in the past many years saying housing markets are heading for a big crash , bubble here and there. None of them have come true. While prices has quadtripled and more. So even if there's a crash, prices will still be unaffordable for the average Canadian.

He says the same thing. Can't help his clients that keep saying it's too expensive, let me wait and see. He has clients like that and have been renting for 5 years now still waiting. That client is simply paying for someone's mortgage.
For many years now we've seen easy credit and declining interest rates coupled with a good economy. Those have been the most significant price drivers in the recent past. So now rather than extrapolating the past into the future, how would the RE market handle rising rates, or a recession. What's the downside?

Deploying new capital into real estate doesn't look very attractive to me at this moment...particularly given the amount of leverage required at this point in the cycle.
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May 2, 2017
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Gov't :Never
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Oct 21, 2014
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Qrewpt wrote: Deploying new capital into real estate doesn't look very attractive to me at this moment...particularly given the amount of leverage required at this point in the cycle.
I remember that same argument said right to her face when my Mom spent $79,000 on a townhome in Oakville in the 90s. She made it work, and she still loves living there to this day.
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Jun 19, 2017
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Gungnir wrote: I remember that same argument said right to her face when my Mom spent $79,000 on a townhome in Oakville in the 90s. She made it work, and she still loves living there to this day.
If she bought it in 1990 also a time of similar affordability as present, 5 years later she likely would have had zero equity left in the property (loan to value would have been close to 100%), she would have to wait 12 years to sell it at breakeven. That's after BoC lowered rates and increased borrowing power on the order of 55%.

1989/1990 feels similar to where we are in the RE cycle, we won't be able to avoid a period of deleveraging at some point in the near future. Hopefully we don't face a recession as bad as we did in the 90s.

If she bought in 1996, affordability was really really high, prices were too cheap, people were hesitant to buy after 7 years of declining prices. But that was the best time to buy, when affordability was near historic highs, so she would have timed her purchase perfectly.

Now those who think even with hindsite 1990 was a good time to buy anyway, I would rather not have been swimming in debt with no way out for 7 to 13 years. I would not have wanted to be closing on new construction that i bought years before at higher prices, etc. Many people lost money and their homes. Also 1990 to April 2017 highs BoC interest rate dropped from the 15% range to 0.5%....will that be repeated in the future...not likely, even with negative rates we wouldn't be able to increase borrowing power anywhere near what they could in the 90s.

There are many headwinds to RE presently, the cycle is long in the tooth, most properties are priced for perfection. I'm hesitant to deploy new capital in the current market, it wouldnt take much for all that debt out there to become a heavy burden. I'd rather wait, real estate is a great investment but only at the right price.
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Jan 17, 2006
2496 posts
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Toronto
Qrewpt wrote: If she bought it in 1990 also a time of similar affordability as present, 5 years later she likely would have had zero equity left in the property (loan to value would have been close to 100%), she would have to wait 12 years to sell it at breakeven. That's after BoC lowered rates and increased borrowing power on the order of 55%.

1989/1990 feels similar to where we are in the RE cycle, we won't be able to avoid a period of deleveraging at some point in the near future. Hopefully we don't face a recession as bad as we did in the 90s.

If she bought in 1996, affordability was really really high, prices were too cheap, people were hesitant to buy after 7 years of declining prices. But that was the best time to buy, when affordability was near historic highs, so she would have timed her purchase perfectly.

Now those who think even with hindsite 1990 was a good time to buy anyway, I would rather not have been swimming in debt with no way out for 7 to 13 years. I would not have wanted to be closing on new construction that i bought years before at higher prices, etc. Many people lost money and their homes. Also 1990 to April 2017 highs BoC interest rate dropped from the 15% range to 0.5%....will that be repeated in the future...not likely, even with negative rates we wouldn't be able to increase borrowing power anywhere near what they could in the 90s.

There are many headwinds to RE presently, the cycle is long in the tooth, most properties are priced for perfection. I'm hesitant to deploy new capital in the current market, it wouldnt take much for all that debt out there to become a heavy burden. I'd rather wait, real estate is a great investment but only at the right price.
Sure, you are master of market timing and this time you will time it right )
Some, including you probably, have been timing it for last 10 years and you know where it got them.
Don't deploy your capital, I think RE will survive without it, lol.
There are opportunities now to get discounted properties and who know when you get these opportunities again.
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Jun 19, 2017
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ilim wrote: Sure, you are master of market timing and this time you will time it right )
Some, including you probably, have been timing it for last 10 years and you know where it got them.
Don't deploy your capital, I think RE will survive without it, lol.
There are opportunities now to get discounted properties and who know when you get these opportunities again.
Well I think your interpretation of timing the market is different than mine. Warren Buffet always warns against timing the market, and yet here he is sitting on $100b of excess cash, is he timing the market now by not investing now? Did he time the market when he shut down his partnership because he couldn't find any stocks to buy? I would say no, you have to take price into consideration as he does. Timing the market only refers to when the price is fairly valued. I can't find any local RE where the risk/reward is favourable right now in my opinion.

Over the last 10 years interest rates went down substantially. Is it your opinion that they will similarly decline in the next 10 years? I think no, it is more likely they will increase. Inflation may also come back, the US and the EU, and Corporations will have substantial bonds which will begin to mature in the next few years, we may see bond yields start to rise faster than we expect simply due to competition for capital to replace all those maturing bonds.

I think we've reached a point where the path forward is fraught with headwinds. I've heard quite a few bulls use that timing the market line, but it's generally coupled with rhetoric rather than logic or any consideration of headwinds or downside possibilities.
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Jul 14, 2002
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Mid month Jan 2018 stats
Image
Deal Fanatic
Jul 3, 2011
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I don't know who that Alex Prikhodko guy is although I've come across his nonsense elsewhere, or from where he gets his numbers but they are always wrong. I know the greaterfol himself touts him as a Realtor but he is no longer a Realtor and hasn't been for awhile.

If at all truth matters, detached sales for Toronto only to yesterday were 127. As of the time I checked this post it is 143.
dantey wrote: Mid month Jan 2018 stats
Image
Deal Addict
Jan 17, 2006
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dantey wrote: Mid month Jan 2018 stats
Here is right from so popular among the bears Zolo for Toronto.
zolotoronto.png
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Jul 14, 2002
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It does look different than the TREB numbers. There were 454 December detached sales in 2017. Maybe he's using an HPI measure or something else but definately won't be looking at those stats anymore.
licenced wrote: I don't know who that Alex Prikhodko guy is although I've come across his nonsense elsewhere, or from where he gets his numbers but they are always wrong. I know the greaterfol himself touts him as a Realtor but he is no longer a Realtor and hasn't been for awhile.

If at all truth matters, detached sales for Toronto only to yesterday were 127. As of the time I checked this post it is 143.
Deal Fanatic
May 31, 2007
5018 posts
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dantey wrote: It does look different than the TREB numbers. There were 454 December detached sales in 2017. Maybe he's using an HPI measure or something else but definately won't be looking at those stats anymore.
he might be grouping every home type in average as well, which is a silly average, average detach is not 900k (yet, lol)

Anyway i dont like those numbers either and why garth post them shows he bias.

He wants your money to increase his aum (asset under management) not re.
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Jul 3, 2007
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Toronto
Zolo is showing some major tanking going on in Toronto and days on market up quite a bit too,.....there is no bottom in sight yet folks

https://www.zolo.ca/toronto-real-estate/trends
Newbie
Mar 9, 2009
38 posts
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Toronto
Sales abysmal. Can’t see it improving anytime soon.

For those who said B20 would have little/ no effect, or was already priced in last year, what say you now? To answer OP, bottom is on the distant horizon somewhere...

Certain posters remind me of ultra bears who for years would warn of impending doom when momentum was clearly pushing the market up.

The tide has clearly turned, momentum is rushing the other way, and ultra bulls refuse to swim with the current.

Wouldn’t be surprised if most ultra bulls who own investment properties are trying to quietly sell this year bc deep deep down they know that equity will erode over the short and medium term. Also, prob over leveraged and feeling heat from rate hikes. Another one tmrw? Ouch.

Like with stocks, sometimes you got to ride the big waves, otherwise you risk drowning. Losing battle sometimes to swim against the current. Wait til wave loses its energy. Though, seems like this one has some staying power.

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