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 Addict
Feb 23, 2009
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Oshawa
dundeal wrote:
Jan 11th, 2018 3:11 pm
You are harping about wrong comparison. You talk about Fiat and Crypto as currencies, while he is talking about RE vs Crypto as investments/speculations. This thread is not about viability of Crypto in the long term.
Yes, Sid and others are in for a shock when the world doesn't end and we are still using dollars and he can't buy anything with the imaginary currency that he suddenly lost when somebody hacked his phone, lost cell service or his imaginary wallet suddenly went to an imaginary place.
Yes, the thread is about RE.
Last edited by pkrash on Jan 11th, 2018 7:16 pm, edited 1 time in total.
Member
Jun 19, 2017
388 posts
590 upvotes
licenced wrote:
Jan 11th, 2018 2:08 pm
Wynne's changes to the RTA, potential vacancy tax, Toronto's uber rentals restrictions all serve to highlight the hidden driver of the condo market last year - short-term rentals.

As I had noted back in May or June as soon as I noticed it, listings for rental properties increased significantly after Wynne's announcements as long-term landlords rushed for the exits.

The nail was driven into the condo coffin when Toronto brought in the Uber restrictions.

The shortage of long-term rental units was as a result of units being diverted for short-term rentals proving that those who insisted that the reason condo sales in mid-to lower level prices condos at 700sf and less was boomed as a result of priced-out homeowners, didn't know what they were talking about.

With that out of the way the condo market will naturally soften and will suffer the most (as it usually does) if the low-rise market doesn't stop dropping in value.
I think you meant airBnB rather than Uber, but that's just semantics. Im glad you brought it up and am surprised I havent seen more posts mentioning the new bylaw proposals for the city of Toronto wrt short-term rentals.

I know some people who live down by Queens Quay, and theyre telling me that there are buildings down there with significant proportions of apartments dedicated to AirBnB rentals. While it's not scientific by any means, they are credible people and I believe there is something to their observations, and likely not limited to that area.

If you believe that there is a meaningful number of apartments being diverted to short-term rentals like I do, then the newly proposed bylaws could have a meaningful increase on supply of long term rentals and/or resale inventory.

I think the reason that the short-term to long term/for sale inventory conversion would happen is due to the requirement to get licensed to offer short term rentals and that the property be limited to primary residences. That means anybody doing short-term rental of non-primary residences would be breaking the city by-laws come June 2018 - the effective date. That could be a lot of condominiums.

Seems like this could be yet another strong headwind buffeting the RE market.
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Jul 3, 2011
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Thornhill
Can't believe I wrote uber. Thanks for noticing and I did mean airBnB. I've had uber on the brain since a family member had a most interesting conversation with an uber driver a few days ago
Qrewpt wrote:
Jan 11th, 2018 8:49 pm
I think you meant airBnB rather than Uber, but that's just semantics. Im glad you brought it up and am surprised I havent seen more posts mentioning the new bylaw proposals for the city of Toronto wrt short-term rentals.

I know some people who live down by Queens Quay, and theyre telling me that there are buildings down there with significant proportions of apartments dedicated to AirBnB rentals. While it's not scientific by any means, they are credible people and I believe there is something to their observations, and likely not limited to that area.

If you believe that there is a meaningful number of apartments being diverted to short-term rentals like I do, then the newly proposed bylaws could have a meaningful increase on supply of long term rentals and/or resale inventory.

I think the reason that the short-term to long term/for sale inventory conversion would happen is due to the requirement to get licensed to offer short term rentals and that the property be limited to primary residences. That means anybody doing short-term rental of non-primary residences would be breaking the city by-laws come June 2018 - the effective date. That could be a lot of condominiums.

Seems like this could be yet another strong headwind buffeting the RE market.
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Oct 23, 2003
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licenced wrote:
Jan 11th, 2018 9:52 pm
Can't believe I wrote uber. Thanks for noticing and I did mean airBnB. I've had uber on the brain since a family member had a most interesting conversation with an uber driver a few days ago
I was wondering what the heck...is that a new thing from uber? short term rentals? haha
Deal Fanatic
Feb 29, 2008
5048 posts
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The thought that condo prices will plunge because of the new short term rental rules is laughable. The demand to live downtown is too high for condos to ever plunge IMO. They are not building rental buildings of any kind. Minimal affordable housing. Toronto is changing and I think some people either don’t or don’t want to realize it. Condos are the future. It’s happening!
Member
Jun 19, 2017
388 posts
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JayLove06 wrote:
Jan 12th, 2018 5:18 am
The thought that condo prices will plunge because of the new short term rental rules is laughable. The demand to live downtown is too high for condos to ever plunge IMO. They are not building rental buildings of any kind. Minimal affordable housing. Toronto is changing and I think some people either don’t or don’t want to realize it. Condos are the future. It’s happening!
Condo prices plunging because of the new rules alone is not likely. Softening up of the resale market and increasing supply of long term rentals is a plausable outcome.

While they aren't buildng rental buildings, they are building condo buildings, units of which are being used as rentals, and affordable alternatives to renting. Additionally the new condo pipeline is continuing to flow.

So while the demand is there, there is also supply being added. While the new bylaws may not cause prices to plummet, it may relatively suddenly increase vacant downtown inventory by 5, 10% or more.

So couple that with rising rates, new qualification rate rules, tighter lending practices, the may be enough headwinds there to begin moving the price needle lower. If that occurs there is a chance that the perception that you and many others have, that it is inconcevable that prices could plummet because of demand may change.

If the psychology of the market changes, then condo prices may begin losing their stickiness... Which in turn my make them decline more than expected.
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Feb 29, 2008
5048 posts
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Qrewpt wrote:
Jan 12th, 2018 8:03 am
Condo prices plunging because of the new rules alone is not likely. Softening up of the resale market and increasing supply of long term rentals is a plausable outcome.

While they aren't buildng rental buildings, they are building condo buildings, units of which are being used as rentals, and affordable alternatives to renting. Additionally the new condo pipeline is continuing to flow.

So while the demand is there, there is also supply being added. While the new bylaws may not cause prices to plummet, it may relatively suddenly increase vacant downtown inventory by 5, 10% or more.

So couple that with rising rates, new qualification rate rules, tighter lending practices, the may be enough headwinds there to begin moving the price needle lower. If that occurs there is a chance that the perception that you and many others have, that it is inconcevable that prices could plummet because of demand may change.

If the psychology of the market changes, then condo prices may begin losing their stickiness... Which in turn my make them decline more than expected.
I just don’t see it. But I guess we shall see what the future holds.
Deal Addict
Feb 22, 2011
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Toronto
Qrewpt wrote:
Jan 12th, 2018 8:03 am
Condo prices plunging because of the new rules alone is not likely. Softening up of the resale market and increasing supply of long term rentals is a plausable outcome.

While they aren't buildng rental buildings, they are building condo buildings, units of which are being used as rentals, and affordable alternatives to renting. Additionally the new condo pipeline is continuing to flow.

So while the demand is there, there is also supply being added. While the new bylaws may not cause prices to plummet, it may relatively suddenly increase vacant downtown inventory by 5, 10% or more.

So couple that with rising rates, new qualification rate rules, tighter lending practices, the may be enough headwinds there to begin moving the price needle lower. If that occurs there is a chance that the perception that you and many others have, that it is inconcevable that prices could plummet because of demand may change.

If the psychology of the market changes, then condo prices may begin losing their stickiness... Which in turn my make them decline more than expected.
It's definitely possible, I just think it's incredibly unlikely. When 1 bedroom condos are renting for $2100-$2500 you can't be surprised that people will choose to buy. That's $25k-$30k per year, for a 1 bedroom condo. Unless you think rent will go down, which to me is a ridiculous expectation.

https://www.realtor.ca/Residential/Sing ... unities-C1
https://www.realtor.ca/Residential/Sing ... unities-C1
https://www.realtor.ca/Residential/Sing ... unities-C1
Member
Jun 19, 2017
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rjg4235 wrote:
Jan 12th, 2018 8:29 am
It's definitely possible, I just think it's incredibly unlikely. When 1 bedroom condos are renting for $2100-$2500 you can't be surprised that people will choose to buy. That's $25k-$30k per year, for a 1 bedroom condo. Unless you think rent will go down, which to me is a ridiculous expectation.

https://www.realtor.ca/Residential/Sing ... unities-C1
https://www.realtor.ca/Residential/Sing ... unities-C1
https://www.realtor.ca/Residential/Sing ... unities-C1
Those apartments are between $550 to $650+ to buy. Even the cheapest one has parking, lake view and most utilities included.

To make your mortgage in the $2100 range you would need $100k down, plus your expenses would be an additional apporox $1k monthly. Buying doesn't sound like a compelling alternative to me at these prices.

You may not be able to count on somebody willing to pay $2700 in rent long term for a one bedroom cookie cutter. There is non trivial risk that your rent may go down.

Just my two cents.
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Feb 22, 2011
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Toronto
Qrewpt wrote:
Jan 12th, 2018 1:41 pm
Those apartments are between $550 to $650+ to buy. Even the cheapest one has parking, lake view and most utilities included.

To make your mortgage in the $2100 range you would need $100k down, plus your expenses would be an additional apporox $1k monthly. Buying doesn't sound like a compelling alternative to me at these prices.

You may not be able to count on somebody willing to pay $2700 in rent long term for a one bedroom cookie cutter. There is non trivial risk that your rent may go down.

Just my two cents.
I never said you should buy it though. I said it's hard to imagine the prices would plummet given the rent they get. What do you think is going to happen rent drops? Or do you think you will be able to buy one of these places for $350k and rent it for $2500?

Also $550k with $100k down (which is actually impossible because you need 20% minimum but whatever) and a 30 year mortgage is like $1800 a month mortgage. How you get to it being $1000 negative is magical.
Deal Addict
Jul 14, 2002
1436 posts
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i see places for just over $400k for sale with a current market rent of $2100.
quite an abundance in mississauga, but not selling like hot cakes. what gives?
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Jul 3, 2011
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Thornhill
Buggy166 wrote:
Jan 12th, 2018 1:38 am
I was wondering what the heck...is that a new thing from uber? short term rentals? haha
I know. I laughed at me too.
Member
Dec 4, 2016
395 posts
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For a 600k unit renting for $2100:

1. $2100 is the rent posted on realtor.ca, with a realtor in between. Landlord pays the agent fee. The norm seems to be 5% for an agent.
2. Property tax is probably in the range of $300+.
3. Maintenance is in the order of $300, and they always go up.
All these considered, the negative cash flow is quite significant. Note that as condo gets older, special assessments become more frequent and costly. If you buy one to rent out, you really need to count on rent going up to make it worth while. In the past decade, it's been the case. Rent generally go up even as building gets older.
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Dec 4, 2016
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dantey wrote:
Jan 12th, 2018 1:58 pm
i see places for just over $400k for sale with a current market rent of $2100.
quite an abundance in mississauga, but not selling like hot cakes. what gives?
Older buildings with higher maintenance fees that are expected to go up further, at a rate faster than inflation or rent increase. 2100 rent in mississauga gets pretty big place. More square footage means higher maintenance cost.
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Jul 14, 2002
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BlueSolstice wrote:
Jan 12th, 2018 2:07 pm
Older buildings with higher maintenance fees that are expected to go up further, at a rate faster than inflation or rent increase. 2100 rent in mississauga gets pretty big place. More square footage means higher maintenance cost.
you answered part of my question, but is the reality of this "hot" segment of the market unhinged from reality then?
i'm trying to reconcile sold TREB reports with reality and something is not lining up.
maybe it's a bit specific to an area/building, but from what i see the investment ROI are much better than purchasing a 1.2 million dollar home and renting out for 3000/month.

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