Real Estate

GTA housing pricing argument in 20 years

  • Last Updated:
  • Oct 5th, 2020 10:39 am
Member
Jul 15, 2019
387 posts
266 upvotes
ediasn wrote: I've been pretty silent on the bear bull debate of greater toronto housing, but what has bothered me for the Last 10 years of bull arguments and historic data has been its future target price.

So we all know housing and condos in some gta areas has seen over 20% annualized gains in last 20 years.
From 2007 to now...a small housing in pickering was 200k...is now 1 mill. 500% gain. Same in markham Richmond hill etc

People think housing can go up 5%+ a year for next 20 years because immigration and no land..

That would mean a 3 bedroom junk old house with small lot would cost 2 mill...

That would mean a 4 bedroom big detached house in the suburbs that is 1.4 million now would be 3.5 million.

Do we think most suburb houses are going to be 3.5 million?

Incomes for computer engineers in 2007 at big banks was 50k starting from uft and waterloo. Now its 75k

In 20 years it may be 120k starting. How will they afford a 1m+ house in the shittiest areas and a 3.5m in a decent area. Of course good areas will be at least 5 m.

2% annualized gains I get....but people think 5 to 10% annualized gains in 20 20 years...

Thoughts?

The difference between bulls and bears is very simple, now I won’t speak for all bulls but... they don’t expect prices to rise at double digits forever or even for every year. Things can stagnant, and that fine in the long run the prices will always be up. But, bears on the other hand keep calling for a correction to bring it back to “normalized” prices. They hope for this large crash to finally be able to enter the market they wish they had entered 10years ago.
Newbie
Sep 14, 2020
54 posts
61 upvotes
Make sure you are not over leveraged and you can be comfortable with worst case scenario (Flat prices over a decade) then you should be comfortable with taking on investment risk.

If you are not, and you cannot handle that level of volatility (based on your leverage) you should reconsider your investment thesis and your appetite for risk tolerance.

I personally will not take leverage of over 75% of my net worth. Everyone should have their own formula they are comfortable.
Deal Fanatic
User avatar
Dec 8, 2007
5068 posts
1240 upvotes
People have been doing this mental math for decades, for at least 10 years with Garth Turner and his constant doom and gloom nonsense and oh look, there was no crash, there was never even a semblance of a crash, and housing prices are up significantly ... but, but, but the bearded man on the internet with the authoritative writing style told me it was going to collapse and I should hold off on buying now so I could buy cheaper later!!

Will there be a correction? Bro, sure. Sure, bro. When will it be? How long will it last? How low will prices go? How quickly will there be a rebound? You know, the questions that actually matter. No one has a clue. Anyone who does is trying to sell you something even if it is only a subscription to their world view to justify their own beliefs and being left out of the real estate bull run.
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Deal Fanatic
Feb 22, 2011
8846 posts
10695 upvotes
Toronto
I don't understand why everyone is wasting their time with this argument. You are never going to convince anyone. If you want to own buy. If you don't then rent. End of discussion.
[OP]
Jr. Member
Feb 2, 2011
197 posts
24 upvotes
DisneyKruze wrote: Interesting discussion. Looking at my situation, I bought my house in York region for $400K in 1995. It's now worth $1.8 M. So, it's gone up 4.5 times in 25 years. No way it will go up 4.5 times in another 25 years.
Exactly my point. An average Subarb house in york region is not going to be 10 million when millenials retire. Canada will not see hyper inflation. That would imply the average salary in Toronto would be 500k....
Last edited by ediasn on Oct 4th, 2020 12:00 pm, edited 1 time in total.
[OP]
Jr. Member
Feb 2, 2011
197 posts
24 upvotes
SubjectivelyObjective wrote: The whole computer engineer making $75k out of school should basically have no relevance to this discussion.

So a 22 or 23 year old graduation from one of the better programs into a high demand field makes $75k out of school, so what? If this person is in a relationship with someone who say makes $50k, they already have a household income at $125k at age 22. Not only this, based on their careers, their incomes will probably increase sustainably well before they are age 30. If this is our "average person" we are using for an argument. Then for sure, prices are going to the moon because people like this can easily afford to support most of these home prices.

Additionally with how low interest rates have dipped and the stimulus that is most likely coming will probably fuel prices hire so long as most of the population or homebuyers maintain their jobs/salary.

Cant have cake and eat it too. All ststicians and demographic analysts are conclusive that nuclear families and marriage will only reduce, especially in urban areas.


If more single incomes...and the avg house in burbs is 5 mill plus, then how would they afford unless incomes are 400k on average.

Mix this with guaranteed end of manufacturing jobs and most jobs and likely a low bracket universal income.

This is the difference of single and comprehensive analysis
[OP]
Jr. Member
Feb 2, 2011
197 posts
24 upvotes
Lol lots of kids on here that do t have much Insight it seems.

Comparing stocks and housing is irrelevant in terms of better returns. No one is expected to take 20 times their income in leverage for a necessity with stocks. People need to live somewhere.

In a country like canada, one thing isncertwin, good or for bad, canada will only get more socialist, more progressive, more urban, more individualist, less marriage rate. Higher immigration.

No matter how you look at it, there will be bigger gap between have and have nots. This will evoke the socialist values...I dont care if some engineers will make 300k...the vast majority will still make minimum wage and spend against non priorities.

Back to the single argument. Does anyone think a avg house in suburbs of Toronto will be 5 mil to 10m in Toronto and if that trends inflation then it means nothing and housing as investment is stupid
Jr. Member
Apr 6, 2019
160 posts
42 upvotes
GTA
Perhaps people aren't taking into account the increase in wages/income over time. Average hourly wages have more than doubled in last 20 years
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Sr. Member
Jun 26, 2019
645 posts
494 upvotes
ediasn wrote: Back to the single argument. Does anyone think a avg house in suburbs of Toronto will be 5 mil to 10m in Toronto and if that trends inflation then it means nothing and housing as investment is stupid
At some point in time it most likely will reach that level. It will reach that level when it can be supported, when is that? Who knows?

Negative interest rates, immigration by wealthy people, speculation, more "green" policies restricting land development or hyper inflation will get us there faster.

Wage stagnation, depressions, decrease in immigration, other bad stuff, etc etc, will make it slower.

So really, your guess is as good as mine, or maybe one of ours is better. Generally speaking housing will most likely trend upwards for a while, and if it starts trending downwards for a variety of reasons we may have bigger things to worry about at that time.
Deal Fanatic
May 1, 2012
9611 posts
8984 upvotes
Markham
This is one of those discussions that go no where and is absolutely worthless.

If you can do well with investments and prefer to rent, go ahead... you'll have plenty of money when you retire to rent and still live well.

If you just want a place that you call home and that you can grow with... well buy a house and budget for retirement another way.

Whats there to discuss? We all know what housing prices are like right now... it's tough for anyone to buy anything, even condos at this point.

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