Real Estate

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

  • Last Updated:
  • Dec 14th, 2017 10:23 pm
Deal Addict
Feb 22, 2011
1876 posts
1693 upvotes
Toronto
Jungle wrote:
Dec 7th, 2017 9:17 am
Wouldn't looking at m/m right now include most of nov?
Might want to look at 1 week data using mongohouse?
It wouldn't really matter if it's including November, if over the last week the numbers have improved it would indicate it's the newest week that is trending up. The other possibility was there was a drop off this week last year which didn't happen this year.
[OP]
Jr. Member
Jun 8, 2017
103 posts
153 upvotes
rjg4235 wrote:
Dec 6th, 2017 1:05 pm
How will this impact other markets? If people can afford less will they buy cheaper properties or rent? If they buy cheaper properties will condos start surging again? If they rent will that drive up rent prices? I don't think it can have a linear impact of dragging everything down. Especially considering recent wage and employment info plus min wage increase.

Just thinking about if what you say is true. That means more people are working, making more and the floor is rising. Add in less people buying and those that are will be going cheaper. To me this would indicate rental and condo markets about to surge. Ironically this is what most investors are in and care about. Price of condos and how much rent they get. It would actually have double the impact. More intrinsic demand for condos and a higher return from rent.
Thanks for the post rjg. To me, stress test and 50K less buyers next year means increased supply and less demand all around.

Analogy. Think of buyers as a pyramid. The higher you go, buyers have more money but there are fewer of them. Come January, the lowest level (50K buyers) is taken out and each remaining level has less to spend. The number of buyers forced to move down to buy apartment condos is less than the number of apartment condo buyers that were pushed out of the market all together. Yes, very simplistic. Just trying to show that it is not a given that the number of buyers for cheaper homes will increase.

I read on one of your other recent posts that you are thinking of selling one of your condos in a few months when your tenant moves out. Surprised hearing that from you given your prior comments on rising rents and long-term values. Not trying to needle you rjg, just curious. Why the sudden change? Rising cost of borrowing, too heavily invested in one asset- try to take some money off the table, thinking about diversifying, rising condo fees, worries that the entire market will weaken together in the New Year? Do tell.

If you are thinking of selling, I would suggest that you list now while your tenants are still in there. They are leaving in 3 months anyway. If you’re lucky, you may get a quick sale from someone who is rushing to buy before the new rules kick into gear. If you have a change of heart during the listing, don’t sell. When I sold my condo in the summer, tenants were still occupying it. Was a bit more hassle, but everything worked out in the end. Good luck.

So, overnight rate remains the same. Word on the street is that there will be an increase early in the New Year. If there is a rate hike in January, how will that impact mortgage rates and home values… Is now a good time to lock in a good rate? Hmm…
Deal Addict
Feb 22, 2011
1876 posts
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Toronto
inferiorplanet wrote:
Dec 7th, 2017 9:29 am
I read on one of your other recent posts that you are thinking of selling one of your condos in a few months when your tenant moves out. Surprised hearing that from you given your prior comments on rising rents and long-term values. Not trying to needle you rjg, just curious. Why the sudden change? Rising cost of borrowing, too heavily invested in one asset- try to take some money off the table, thinking about diversifying, rising condo fees, worries that the entire market will weaken together in the New Year? Do tell.

If you are thinking of selling, I would suggest that you list now while your tenants are still in there. They are leaving in 3 months anyway. If you’re lucky, you may get a quick sale from someone who is rushing to buy before the new rules kick into gear. If you have a change of heart during the listing, don’t sell. When I sold my condo in the summer, tenants were still occupying it. Was a bit more hassle, but everything worked out in the end. Good luck.

So, overnight rate remains the same. Word on the street is that there will be an increase early in the New Year. If there is a rate hike in January, how will that impact mortgage rates and home values… Is now a good time to lock in a good rate? Hmm…
It's definitely not related to interest rates. When I bought it 5 years ago I had just graduated with low income so my rate was extremely high. I would save a lot at the refinance that is coming up and have substantial positive cashflow.

It's a condo townhouse that is less than 10 years old. I already have issues with furnace, water tank, windows, interlocking and brick work. I see this particular complex as a liability. The good thing is it is very popular for some reason, I suspect because of low maint. fees, around 30 cents a sq ft. Also the units are big at 1000 sq ft. The most recent one that sold was a record high, around 150% higher than when I bought it 5 years ago.

I also don't anticipate much appreciation anymore so it's not worth the time and head ache. I will keep my dt property as it's much more attractive with better ROI.
[OP]
Jr. Member
Jun 8, 2017
103 posts
153 upvotes
rjg4235 wrote:
Dec 7th, 2017 9:40 am
It's definitely not related to interest rates. When I bought it 5 years ago I had just graduated with low income so my rate was extremely high. I would save a lot at the refinance that is coming up and have substantial positive cashflow.

It's a condo townhouse that is less than 10 years old. I already have issues with furnace, water tank, windows, interlocking and brick work. I see this particular complex as a liability. The good thing is it is very popular for some reason, I suspect because of low maint. fees, around 30 cents a sq ft. Also the units are big at 1000 sq ft. The most recent one that sold was a record high, around 150% higher than when I bought it 5 years ago.

I also don't anticipate much appreciation anymore so it's not worth the time and head ache. I will keep my dt property as it's much more attractive with better ROI.
Desirable size for a condo th. Good demand for those types of units I figure.

Nice that you are not forced to sell if you have a change of heart or do not get the price you want.
Deal Addict
Jun 11, 2005
2401 posts
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NotRobot wrote:
Dec 7th, 2017 8:22 am
This was the comparable I was speaking about that sold for 2.8M in August.

https://www.mongohouse.com/soldrecords/ ... 53aa23c128

184 Homewood has better landscaping but is on a corner lot. No idea how the insides compare.

A 600,000 difference is a huge difference in 3-4 months.
Interesting.

Homewood is a better street because it hits neither Bathurst nor Yonge, whereas C hits Yonge.

Homewood has two more bathrooms than Connaught.

Just going by the description, there are marble finishes in Homewood where it is silent as to what C has.

These differences most likely do not account for all of the $600k difference. Based on my observations, I would definitely say the market has not decreased by 25% in value over the last 3 months.
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Aug 20, 2009
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Grimsby
To the OP, there's simply no way of knowing. I personally think it will take higher interest rates to "bottom out" the market. So far we've been able to borrow out way out of trouble as a society but that ability is eroding slowly. So to me, I would expect major market shifts when rates escalate meaningfully. But trying to time that stuff, I will leave that to people with a higher risk tolerance.
[OP]
Jr. Member
Jun 8, 2017
103 posts
153 upvotes
Redmask wrote:
Dec 7th, 2017 1:22 pm
To the OP, there's simply no way of knowing. I personally think it will take higher interest rates to "bottom out" the market. So far we've been able to borrow out way out of trouble as a society but that ability is eroding slowly. So to me, I would expect major market shifts when rates escalate meaningfully. But trying to time that stuff, I will leave that to people with a higher risk tolerance.
Agreed, very difficult to time when the bottom will come. No clue when that will happen.

More interested in what conditions and factors will lead to the ‘bottoming out’ of the market. Example, you say meaningfully higher interest rates. What do you mean by that? .75, 1.0, 1.25 higher than today? Thanks.
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Aug 20, 2009
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Grimsby
Most of my knowledge of others credit is based on stats and anecdotal through our office but utilization seems so high that any increase will be tough. If I had to pick an arbitrary rate increase I would say rates being 1.50% higher than today would be very problematic. We have clients who are very close to only being able to service interest on their debt, its kind of depressing. Sure they're making a small dent in the mortgage but they offset that equity with lifestyle inflation or borrow against. The proliferation of HELOCs is disturbing to me personally.
Deal Fanatic
Dec 11, 2008
7492 posts
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Redmask wrote:
Dec 7th, 2017 1:54 pm
Most of my knowledge of others credit is based on stats and anecdotal through our office but utilization seems so high that any increase will be tough. If I had to pick an arbitrary rate increase I would say rates being 1.50% higher than today would be very problematic. We have clients who are very close to only being able to service interest on their debt, its kind of depressing. Sure they're making a small dent in the mortgage but they offset that equity with lifestyle inflation or borrow against. The proliferation of HELOCs is disturbing to me personally.
It is incredibly sad to see and hear people around you living like that.

Had a co-worker knowing NOTHING about RRSP, investing, who holds what, what banks do with RRSP etc. But she owns real estate, is a landlord and always complains about not having money etc etc.
Member
Jul 3, 2007
486 posts
536 upvotes
when the average detached GTA price hits $600k , no wait $500k , no wait $400k....hold on gotta sell some bitcoin i'll be back in one sec...

Face With Tears Of Joy
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Nov 14, 2010
1048 posts
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Don't listen to the propaganda of the alarmists on here. They've been saying the 'b' word for the better part of a decade now. Most financial professionals and economics experts in the real world are absolutely convinced the housing market is rock solid. In fact, you actually have some of the most savvy investors in the world like Warren Buffet investing in our subprime space. If that doesn't inspire confidence, then nothing will.

B20 will definitely have some affect on the market. The question is the magnitude of it. Most likely, the market will flat-line for a few months as speculators, buyers, and foreign buyers stay on the sidelines and analyze the reaction of the market. Then the frenzy will begin again. Rates will not be moving north anytime soon, given all of the uncertainty surrounding Trump, sluggish exports, and a priority by the Bank to keep the CAD low. There are lots of deflationary pressures on the horizon that will rather cause the BoC to slash rates than hike them.
Deal Addict
Feb 9, 2009
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joepipe wrote:
Dec 7th, 2017 3:54 pm
when the average detached GTA price hits $600k , no wait $500k , no wait $400k....hold on gotta sell some bitcoin i'll be back in one sec...

Face With Tears Of Joy
Pipe dream.
Jr. Member
Jan 15, 2010
146 posts
108 upvotes
Toronto
inferiorplanet wrote:
Dec 7th, 2017 9:29 am
Thanks for the post rjg. To me, stress test and 50K less buyers next year means increased supply and less demand all around.

Analogy. Think of buyers as a pyramid. The higher you go, buyers have more money but there are fewer of them. Come January, the lowest level (50K buyers) is taken out and each remaining level has less to spend. The number of buyers forced to move down to buy apartment condos is less than the number of apartment condo buyers that were pushed out of the market all together. Yes, very simplistic. Just trying to show that it is not a given that the number of buyers for cheaper homes will increase.

I read on one of your other recent posts that you are thinking of selling one of your condos in a few months when your tenant moves out. Surprised hearing that from you given your prior comments on rising rents and long-term values. Not trying to needle you rjg, just curious. Why the sudden change? Rising cost of borrowing, too heavily invested in one asset- try to take some money off the table, thinking about diversifying, rising condo fees, worries that the entire market will weaken together in the New Year? Do tell.

If you are thinking of selling, I would suggest that you list now while your tenants are still in there. They are leaving in 3 months anyway. If you’re lucky, you may get a quick sale from someone who is rushing to buy before the new rules kick into gear. If you have a change of heart during the listing, don’t sell. When I sold my condo in the summer, tenants were still occupying it. Was a bit more hassle, but everything worked out in the end. Good luck.

So, overnight rate remains the same. Word on the street is that there will be an increase early in the New Year. If there is a rate hike in January, how will that impact mortgage rates and home values… Is now a good time to lock in a good rate? Hmm…
This pyramid analogy is great
Deal Addict
Jul 14, 2002
1034 posts
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generally with regard to sentiment, you know something's bottomed when the majority have given up hope and vice versa.
good pyramid analogy and interesting to hear about the 1.5% rate increase being a tipping point.
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Aug 20, 2009
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Grimsby
Metagame wrote:
Dec 7th, 2017 8:54 pm
In fact, you actually have some of the most savvy investors in the world like Warren Buffet investing in our subprime space. If that doesn't inspire confidence, then nothing will.
Ironic because I remember Warren himself offering the following advice:

"Be Fearful When Others Are Greedy and Greedy When Others Are Fearful" :)

I don't know whether rates will go up or not personally, OP just asked my opinion on what I thought people could take. I think there are way too many unknowns to really make a prediction that is anything but just a toss of the coin.

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