Real Estate

Condo Price Correction in Toronto - 2021 (-10 to 15%)

  • Last Updated:
  • Jan 18th, 2020 2:57 pm
[OP]
Banned
Dec 10, 2019
117 posts
41 upvotes

Condo Price Correction in Toronto - 2021 (-10 to 15%)

Hi everyone,

Full disclosure - I am a recent unfortunate buyer of a condo in the Toronto Market.

Over the past few years, I've heard the same narrative told over and over again. We have a critical supply issue of housing in Toronto proper. We need more inventory to
curb demand. There are a lot of net immigration coming into Toronto. The government has to have policies to increase the number of builds.

Unfortunately these myths are perpetuated by real estate agents, who as a result of:

a) using metrics incorrectly (some of their favourite metrics are YoY, Days on Market, Number of active listings),
b) use the "last sold" as a comparable for future prices

Begin to artificially raise the prices of real estate for everyone. After reading reports such as from Realosophy, Urbanation, the fact is:

a) There is no immigration problem
b) Prices have gone out of control, comparatively to a house. You can purchase a house for only in some cases, a couple of hundred thousand dollars more.

I'm predicting that condos will have a correction in prices once the new supply comes in, at -10/15%. Don't say I didn't warn you!
215 replies
Member
Jul 4, 2018
371 posts
292 upvotes
Medeomedeo wrote: Hi everyone,

Full disclosure - I am a recent unfortunate buyer of a condo in the Toronto Market.

Over the past few years, I've heard the same narrative told over and over again. We have a critical supply issue of housing in Toronto proper. We need more inventory to
curb demand. There are a lot of net immigration coming into Toronto. The government has to have policies to increase the number of builds.

Unfortunately these myths are perpetuated by real estate agents, who as a result of:

a) using metrics incorrectly (some of their favourite metrics are YoY, Days on Market, Number of active listings),
b) use the "last sold" as a comparable for future prices

Begin to artificially raise the prices of real estate for everyone. After reading reports such as from Realosophy, Urbanation, the fact is:

a) There is no immigration problem
b) Prices have gone out of control, comparatively to a house. You can purchase a house for only in some cases, a couple of hundred thousand dollars more.

I'm predicting that condos will have a correction in prices once the new supply comes in, at -10/15%. Don't say I didn't warn you!
Everything depends on affordability

Recent surge in condo prices are due to combination of minimum wage increase, CMHC assisted loans and stress test.

At the minimum a couple with minimum wages both earning can buy a condo to live for themselves compared
To basement rental or apartment renting.
Deal Fanatic
Mar 27, 2004
5095 posts
3130 upvotes
Toronto
another bear. that will be proven wrong.

I guess its my imagination that there were 17 offers on a 1 bedroom condo that recently sold in downtown markham.

i guess also my imagination semi detached houses in the danforth area are getting over 20 offers.

while its true some buyers may only need to pay a couple hundred k more to get a freehold in the suburbs this assumes the buyer wants to make the 45 min to 1.5hr commute. many people want to live and walk to work downtown. there are a lot of high paying jobs that help people afford these prices. a lot of the first time buyers im working with are making well over 100k with large down payments.

supply is the issue and it doesnt help that mortgage rates are as low as they were from 4 years ago. there is a lot of money in toronto and tons of investors. you really need to be in it to know this.
Full-time Realtor
Member
Jul 2, 2018
262 posts
256 upvotes
Thanks for your warning.

If prices come down, great I will buy more properties at a discount from their values in 2035.
If prices go up, great I will refinance and pull out some equity to buy more properties at a discount from their values in 2035.


I work with investors and I have some who focus on single family residential, I have a handfull of them who have to qualifications to acquire 2-5 properties each. Now think about how many homes I alone need to acquire for these people, now to compound the problem... I make offers for them sight unseen often and STILL we end up in bidding wars with multiple other parties. There simply are way too many buyers at the moment.
Realtor + Investor
Banned
User avatar
Oct 30, 2019
193 posts
248 upvotes
Toronto
The myth of new supply...it’s nonsense.

There IS a housing shortage in the city. Just look around and look at our vacancy rate.

It’s interesting to see some bear propaganda. With all of the good news coming out of the market, such a post is rare nowadays. Brave on you to stick your neck out but you will be proven wrong like every other bear.
Deal Guru
Feb 9, 2009
10687 posts
9034 upvotes
A new bear has joined the fray... I thought the bears had all gone into hibernation for the winter?
Deal Guru
Feb 29, 2008
13863 posts
10127 upvotes
Sanyo wrote: A new bear has joined the fray... I thought the bears had all gone into hibernation for the winter?
I I’m confused though. He claims to have purchased a condo that he isn’t happy about then goes on to talk about a15% drop. If he bought for long term and not flipping why does this thread even exist? If it’s to flip...how does a flipper turn bearish? Something smells fishy.
Deal Addict
Jul 29, 2006
4120 posts
948 upvotes
if you think prices are going down 10%, sell me your condo at 9% loss to lock-in your losses.
Deal Addict
Jan 17, 2006
2140 posts
2240 upvotes
Toronto
Sanyo wrote: A new bear has joined the fray... I thought the bears had all gone into hibernation for the winter?
He is obviosly not a new bear, one of those been wrong for decade bears who just created new account to restart.
Member
Feb 3, 2012
276 posts
148 upvotes
T.O.
OP, there has been many before you that talked about the looming correction. GTA home prices has been 'artificially' high for over a decade based on this article's graph (since ~2005). I held out for a long time reading similar analysis waiting for the correction, but a growing family led me to buying 6 years ago. There is a supply issue and demand is still there for low-rise homes. Lately more people in my workplace have been talking about family members entering bidding wars. In my neighbourhood, I'm guessing at least 50% of the houses are listed and sold with an 'offer date'.
Last edited by sputnik99112 on Dec 17th, 2019 8:06 am, edited 2 times in total.
[OP]
Banned
Dec 10, 2019
117 posts
41 upvotes
JayLove06 wrote: I I’m confused though. He claims to have purchased a condo that he isn’t happy about then goes on to talk about a15% drop. If he bought for long term and not flipping why does this thread even exist? If it’s to flip...how does a flipper turn bearish? Something smells fishy.
I bought the condo at an artificially high price. Right after I bought it, I have noticed that several condos in the downtown area haven't been selling at all, or have been selling at 94-95% of list price.
[OP]
Banned
Dec 10, 2019
117 posts
41 upvotes
ilim wrote: He is obviosly not a new bear, one of those been wrong for decade bears who just created new account to restart.
I'm not a bear, just a realistic data-driven person
Deal Addict
Jan 17, 2006
2140 posts
2240 upvotes
Toronto
Medeomedeo wrote: I bought the condo at an artificially high price. Right after I bought it, I have noticed that several condos in the downtown area haven't been selling at all, or have been selling at 94-95% of list price.
You obviously confused and looking at wrong data.
Condos at all time highs and selling at 100% or above asking with multiple bids.
Sr. Member
Oct 21, 2016
861 posts
634 upvotes
Medeomedeo wrote:
I bought the condo at an artificially high price. Right after I bought it, I have noticed that several condos in the downtown area haven't been selling at all, or have been selling at 94-95% of list price.
It could be they are selling for 95 percent asking because the owner priced them higher to begin with. Most of the units you linked are older units on low floors in low rise buildings and under 500 square feet.
Last edited by Shaun80 on Dec 17th, 2019 9:18 am, edited 1 time in total.
Deal Addict
Jan 17, 2006
2140 posts
2240 upvotes
Toronto
Nothing to see here, another (actually old but with new account) delusional bear, trying to convince everyone that crash is inevitable, ignoring real data and relying on some cherry picked listings.

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