Real Estate

Coronavirus impact on Real Estate

  • Last Updated:
  • Oct 24th, 2020 7:51 am
Deal Guru
Jun 26, 2011
13531 posts
3637 upvotes
GTA
Qrewpt wrote: Does that really make it better? Just semantics, should have said in the $1500s but you get the idea.

Do you think price won't get reduced further to $1500? What stops rents from dropping further? Seems like we all of a sudden have a lot of supply coupled with less demand...not sure we've seen bottom yet.
Absolutely it makes a difference to anyone who knows basic math. A tweet picks an outlier and then has to cut almost another $100 off to make their point? Talk to me when rents are down that low across the board.

We probably haven't bottomed but let's stop pretending that the few outliers who are desperate are reflective of all the owners who bought the condo for like 300K a decade ago.
Member
User avatar
May 10, 2008
401 posts
326 upvotes
Vancouver, BC
RolandCouch wrote: We probably haven't bottomed but let's stop pretending that the few outliers who are desperate are reflective of all the owners who bought the condo for like 300K a decade ago.
I know I’m not in the same city as most of you, but I have a number of ppl in my social circles who rent out condos that they bought 4+ years ago. They are all doing well financially and I really can’t see any of them needing to sell due to financial hardship.

One of my tenants just moved out but I’m not too worried. I honestly believe the rental market will pick up again once the international students come back. I left it empty for years before, thinking I would eventually move in, so paying mortgage for an empty place is nothing new to me.
Deal Addict
Jul 3, 2007
2664 posts
2797 upvotes
Toronto
Qrewpt wrote: If condos drop, that will likely dampen the price of houses also as house buyers upsizing from condos lose down payment capacity.
I doubt it ..... demand for detached is strong in GTA.... 10 - 20 offers on average homes in July just shows it....

especially in the under $1 million category.... which is now entry level detached

too many condos were nothing more than a hyped up commodity for years....
Sr. Member
Jun 19, 2017
564 posts
840 upvotes
joepipe wrote: I doubt it ..... demand for detached is strong in GTA.... 10 - 20 offers on average homes in July just shows it....

especially in the under $1 million category.... which is now entry level detached

too many condos were nothing more than a hyped up commodity for years....
Most people that I know who bought detached sold their condos to be able to afford the upgrade.
Banned
Jan 23, 2016
1430 posts
405 upvotes
Kitchener, ON
bobbings wrote: You’re forgetting American “culture” and to a lesser degree, North Americans also go by “my rights and freedom are violated and therefore, I’m not going to comply.”

I agree most will base it on science but as you can see with all these anti-mask and even anti-vaxxers out there, it’s not as simple as you think. You’d think with all the science involved that vaccinations save lives but it seems like many believe that it is false and all a ploy to make money from the rich and elites.
The science in masks is settled. Cloth masks increase infections vs no masks. There is a big difference between surgical masks and the one made from a used pair of jorts. If you go to visit a nursing home they will swap out your home made mask with a surgical mask. Why do you think that is? Cloth masks achieve nothing but let you signal your virtue from a distance. Cloth masks have a 97% penetration rate.

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4420971/

WRT to real estate, private debt to GDP is now 250%. Private debt pulls demand forward. It gives you real estate booms. When that trend reverses, as people deleverage, private debt contraction subtracts from demand. It creates a hyper deflationary spiral because when debt is created, money is created. When debt is repaid, money is destroyed. We are in the early innings of great depression 2.0 because the bad debt wasn't cleansed In 2008. The only cure is to cleanse the bad debt. We need to get down to sub 100% of GDP private debt. The credit theory of money system always ends the same way. Expansion till the debt can't be serviced and then contraction. Corona didn't cause this. Corona was just the catalyst to finally kill a broken system.
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Deal Addict
Jul 3, 2007
2664 posts
2797 upvotes
Toronto
Qrewpt wrote: Most people that I know who bought detached sold their condos to be able to afford the upgrade.
im sure there are some.... but I dont think its what is driving the detached market....
Deal Fanatic
Oct 7, 2007
7448 posts
3555 upvotes
rodrickrod wrote: Pure nonsense and a massive strawman attack against your opponents. Yikes. Tell us more about how you managed to form your opinion based on "skill or knowledge" and anyone who disagrees with you must have formed theirs based on "belief" and lives in an echo chamber. That sounds highly believable and scientific. Face With Tears Of Joy
I never in my life thought I would see so many people who claim to be experts evoke the phrase "the science". In all my years spent studying science or doing research in the lab, I never heard anyone use such a phrase. It just sounds weird and completely odd. Now we are out in the real world (i.e. outside of the academia) and those who want to lecture others evoke this phrase anytime they want to shut down an argument they don't agree with. It is too bad that people who are ill-informed today don't really understand the contributions real scientists have made to getting our society to the place it is today. And the work they do will continue to benefit us in the future. The technology, medicine, therapeutics, and overall quality of life we enjoy today would not be possible without the hard work and persistent efforts of true scientists who are willing to debate different views with a common goal of finding solutions. It is sad to see that even here on RFD less people are interested in having healthy debate and discussion than just a few years ago and instead want to paste labels on other people's viewpoints that differ from theirs and call it a day. Perhaps this is the difference between being taught how to think versus being indoctrinated. In the end, I believe being able to think is an important skill while being indoctrinated leaves one at the mercy of others.
Last edited by choclover on Sep 20th, 2020 11:10 am, edited 2 times in total.
Deal Fanatic
Oct 7, 2007
7448 posts
3555 upvotes
Sparky9087 wrote: The science in masks is settled. Cloth masks increase infections vs no masks. There is a big difference between surgical masks and the one made from a used pair of jorts. If you go to visit a nursing home they will swap out your home made mask with a surgical mask. Why do you think that is? Cloth masks achieve nothing but let you signal your virtue from a distance. Cloth masks have a 97% penetration rate.

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4420971/

WRT to real estate, private debt to GDP is now 250%. Private debt pulls demand forward. It gives you real estate booms. When that trend reverses, as people deleverage, private debt contraction subtracts from demand. It creates a hyper deflationary spiral because when debt is created, money is created. When debt is repaid, money is destroyed. We are in the early innings of great depression 2.0 because the bad debt wasn't cleansed In 2008. The only cure is to cleanse the bad debt. We need to get down to sub 100% of GDP private debt. The credit theory of money system always ends the same way. Expansion till the debt can't be serviced and then contraction. Corona didn't cause this. Corona was just the catalyst to finally kill a broken system.
Yet we will be told otherwise by those who we have entrusted to lead us.
Banned
Jan 23, 2016
1430 posts
405 upvotes
Kitchener, ON
choclover wrote: Yet we will be told otherwise by those who we have entrusted to lead us.
The truth sucks., Every cycle is the same. The debt level grows till it cant be serviced anymore. Commercial banks create money to back up unproductive loans used only for ponzi speculation on real estate and financial instruments. Then crisis. The central bank slashes interest rates 500 basis points and only ever gets 300 basis points back. The cycle starts over again. Refinanced at a lower interest rate with higher and higher levels of debt ratcheting up. Eventually you hit the zero lower bound. The end of the road. Interest rates can go no lower. This is why there is all this talk about negative interest rates. To eek another debt cycle out. Ultimately depends on how the forces of government react. Do they wipe the debts away or enforce the payment. In any case, the next 5 years will be nothing like any of us have ever experienced. Every one who experienced the last mega debt cycle 80 years ago is dead. It's going to be some sort of debt jubilee or hyperdeflation. Both bring massive societal unrest. Debt jubilee transfers wealth from savers to debtors. Hyperdeflation puts neo-feudalism into place and the debtors become slaves to the savers.
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Deal Guru
Feb 29, 2008
12216 posts
7327 upvotes
Qrewpt wrote: Falling rents seem to be a thing right now. How long do negative cash flow landlords hold onto their condos waiting for that trend to reverse?
Here’s the thing. Falling rents is based on WFH and a closed border. As much as people want to act like the maker will tank, it will not. The doom and gloom will eventually be over, border is open and colleges reopen. Businesses tell workers to get back into the office. We know this is going to happen. So I don’t expect prices to tank the way you guys do. Rates are rick bottom. If they stay that way there shouldn’t be a problem.

As hard as some people try (usually they same people) we will get back to normalcy. Just don’t complain when rents and prices go through the roof because investors took advantage of scaredy cars and low rates and invested. It will they be called lucky? Some people need to be smacked in the face before they realize an opportunity.

Oh also another impact in the market would be mass job loss to white collar jobs.
Deal Guru
Feb 29, 2008
12216 posts
7327 upvotes
RolandCouch wrote: Absolutely it makes a difference to anyone who knows basic math. A tweet picks an outlier and then has to cut almost another $100 off to make their point? Talk to me when rents are down that low across the board.

We probably haven't bottomed but let's stop pretending that the few outliers who are desperate are reflective of all the owners who bought the condo for like 300K a decade ago.
Exactly. Who sells a property that is up 250% because rents re down 3%? And if you have a tenant, no change in rent. So no effect on the bottom line.
Deal Fanatic
Oct 7, 2007
7448 posts
3555 upvotes
Sparky9087 wrote: The truth sucks., Every cycle is the same. The debt level grows till it cant be serviced anymore. Commercial banks create money to back up unproductive loans used only for ponzi speculation on real estate and financial instruments. Then crisis. The central bank slashes interest rates 500 basis points and only ever gets 300 basis points back. The cycle starts over again. Refinanced at a lower interest rate with higher and higher levels of debt ratcheting up. Eventually you hit the zero lower bound. The end of the road. Interest rates can go no lower. This is why there is all this talk about negative interest rates. To eek another debt cycle out. Ultimately depends on how the forces of government react. Do they wipe the debts away or enforce the payment. In any case, the next 5 years will be nothing like any of us have ever experienced. Every one who experienced the last mega debt cycle 80 years ago is dead. It's going to be some sort of debt jubilee or hyperdeflation. Both bring massive societal unrest. Debt jubilee transfers wealth from savers to debtors. Hyperdeflation puts neo-feudalism into place and the debtors become slaves to the savers.
I really worry about this stuff. Sometimes I even think about it when I should be sleeping. Society seems to be in a place that none of us could have or would have predicted even a couple of years ago and the trajectory doesn't look good. And I don't even think most of us understand the basics of what you are describing in terms of financial considerations. We just know something is not right and it is not getting any better. Life is becoming unaffordable even for the person who has a jLayer in current politics and our society's reaction to the corona virus and our society has become completely distracted by things that are taking our eyes off of harsh realities in terms of our quality of life and what is at stake for current and future generations to come. I fear high taxes are going to drive all of us into extreme poverty and I just don't know if the average voter thinks about this.
Banned
Jan 23, 2016
1430 posts
405 upvotes
Kitchener, ON
choclover wrote: I really worry about this stuff. Sometimes I even think about it when I should be sleeping. Society seems to be in a place that none of us could have or would have predicted even a couple of years ago and the trajectory doesn't look good. And I don't even think most of us understand the basics of what you are describing in terms of financial considerations. We just know something is not right and it is not getting any better. Life is becoming unaffordable even for the person who has a jLayer in current politics and our society's reaction to the corona virus and our society has become completely distracted by things that are taking our eyes off of harsh realities in terms of our quality of life and what is at stake for current and future generations to come. I fear high taxes are going to drive all of us into extreme poverty and I just don't know if the average voter thinks about this.
I had a long response typed out but its getting off topic. If you want some more info to truly understand the system send me a DM and I'll link you some Steve Keen Economist videos.
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Deal Fanatic
Feb 22, 2011
7248 posts
7657 upvotes
Toronto
choclover wrote: I really worry about this stuff. Sometimes I even think about it when I should be sleeping. Society seems to be in a place that none of us could have or would have predicted even a couple of years ago and the trajectory doesn't look good. And I don't even think most of us understand the basics of what you are describing in terms of financial considerations. We just know something is not right and it is not getting any better. Life is becoming unaffordable even for the person who has a jLayer in current politics and our society's reaction to the corona virus and our society has become completely distracted by things that are taking our eyes off of harsh realities in terms of our quality of life and what is at stake for current and future generations to come. I fear high taxes are going to drive all of us into extreme poverty and I just don't know if the average voter thinks about this.
It's because the west spent a generation monopolizing global resources through literal slavery and war. Now that the west can't do that other countries are catching up and the competition for resources has escalated. Quality of life on the west has been declining for decades and will continue for decades more. The past was not sustainable because it was only possible by suppressing the rest of the world and living like gluttons.
Banned
Jan 23, 2016
1430 posts
405 upvotes
Kitchener, ON
mazerbeaner wrote: It's because the west spent a generation monopolizing global resources through literal slavery and war. Now that the west can't do that other countries are catching up and the competition for resources has escalated. Quality of life on the west has been declining for decades and will continue for decades more. The past was not sustainable because it was only possible by suppressing the rest of the world and living like gluttons.
Fun fact, there is a step by step playbook from, the Imf for this
Step 1 - find a country in financial distress
Step 2- loan them massive amounts of USD in dollar denominated debt to build ports and rail lines
Step 3 - wait. Their cash flow is not in USD. They will default
Step 4 - once default is imminent, demand austerity and sale of utilities and resources to pay the debt.
Step 5 - use the aforementioned rails and ports to get resources out of the country.

The cherry on top is the original USD loan was dollars that were loaned into existence. It costs nothing. Banks are bigger enemies to humanity than standing armies.
If you want to see this live, China is using this playbook on Zambia right now.
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