Real Estate

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

  • Last Updated:
  • Feb 15th, 2018 2:53 pm
Member
Jun 19, 2017
266 posts
458 upvotes
Gungnir wrote:
Jan 14th, 2018 6:04 pm
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.
Sr. Member
Jan 17, 2006
724 posts
437 upvotes
Toronto
Qrewpt wrote:
Jan 14th, 2018 7:44 pm
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.
Member
Jun 19, 2017
266 posts
458 upvotes
ilim wrote:
Jan 14th, 2018 11:50 pm
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.
Deal Addict
Jul 3, 2011
4510 posts
1755 upvotes
Thornhill
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:
Jan 15th, 2018 5:32 pm
Mid month Jan 2018 stats
Image
Sr. Member
Jan 17, 2006
724 posts
437 upvotes
Toronto
dantey wrote:
Jan 15th, 2018 5:32 pm
Mid month Jan 2018 stats
Here is right from so popular among the bears Zolo for Toronto.
zolotoronto.png
Deal Addict
Jul 14, 2002
1214 posts
442 upvotes
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:
Jan 15th, 2018 6:35 pm
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 Addict
May 31, 2007
4784 posts
1898 upvotes
dantey wrote:
Jan 15th, 2018 10:16 pm
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.
Newbie
Mar 9, 2009
18 posts
18 upvotes
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.
Member
Aug 3, 2006
305 posts
99 upvotes
Interest rates will have an even bigger affect that B20. You have to remember cheap credit played a big part in the gravy train of the last decade and now the market conditions are reversing.
Jr. Member
User avatar
Dec 17, 2009
149 posts
93 upvotes
ilim wrote:
Jan 15th, 2018 9:04 pm
Here is right from so popular among the bears Zolo for Toronto.

zolotoronto.png
How come for Dec 15 - Jan 12 they all show a percentage increase (except 2 bedroom detached), but the actual dollar amount is lower than that of 3 months ago? Am I not reading this correctly?
Member
Jun 19, 2017
266 posts
458 upvotes
Buying is usually dead over the holidays, but this year a plausible explanation could be the rush to beat implentation of OSFI rules.
just happened to read this article.

"CREA said in December it had seen 60 per cent of all local markets surge in activity.

That spike came as no surprise to Toronto-based realtor David Fleming.

While agents typically avoid keeping listings up over the holidays, he saw many bucking their usual habit this year by leaving homes on the market because sales were so strong."
Deal Addict
Feb 22, 2011
2551 posts
2334 upvotes
Toronto
Qrewpt wrote:
Jan 16th, 2018 12:49 pm
Buying is usually dead over the holidays, but this year a plausible explanation could be the rush to beat implentation of OSFI rules.
just happened to read this article.

"CREA said in December it had seen 60 per cent of all local markets surge in activity.

That spike came as no surprise to Toronto-based realtor David Fleming.

While agents typically avoid keeping listings up over the holidays, he saw many bucking their usual habit this year by leaving homes on the market because sales were so strong."
I don't really buy this. Last year sales picked up month over month from July to winter. This is the opposite of previous years. It started picking up well before changes were known.
Member
May 2, 2017
200 posts
337 upvotes
Qrewpt wrote:
Jan 16th, 2018 12:49 pm
Buying is usually dead over the holidays, but this year a plausible explanation could be the rush to beat implentation of OSFI rules.
just happened to read this article.

"CREA said in December it had seen 60 per cent of all local markets surge in activity.

That spike came as no surprise to Toronto-based realtor David Fleming.

While agents typically avoid keeping listings up over the holidays, he saw many bucking their usual habit this year by leaving homes on the market because sales were so strong."
That makes sense people rushing to buy in. I think sales figures and prices for the next few months may not be good indicator of what impact B20 rules may have on market.

I hear that a lot of banks will hold your rates 120 Days if you got pre approved before the end of December deadline. so those people if they buy now or in couple of months will not have been impacted under the new rules

The industry spin will be see Toronto is untouchable even the B20 guidelines had very little to no impact. The summer may be a better indicator where prices sales are headed

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