Real Estate

High gas prices + end of covid = drop in freeholds in far away suburbs?

  • Last Updated:
  • May 27th, 2022 10:44 pm
[OP]
Deal Addict
Jan 26, 2016
2232 posts
2262 upvotes
Toronto, ON

High gas prices + end of covid = drop in freeholds in far away suburbs?

It seems the double whammy of the factors will create a situation where all those gains in places as far away as Barrie and Kitchener are suddenly at risk.

Thoughts?
687 replies
Sr. Member
Dec 4, 2009
695 posts
687 upvotes
The reactionary thinking that took people out of the city was always weird. Sooner or later you’re going back to the office, the cost softening was only ever going to be temporary. When the jobs people need only exist in the city, the markets will react again…

The rest of us wait for the massive discounted sell-off of the “stuff” they needed. Cars, Homes, toys, etc…
Sr. Member
Aug 15, 2018
903 posts
902 upvotes
I get the logic, but gas prices fluctuate and companies seem to offer a hybrid WFH/office model now. Not sure what will be the percentage of the population that needs to be back at office 5 days a week. For these people though, yes it sucks.

On the other hand, low supply, record immigration levels to come, record high prices in town etc... people need to go somewhere at the end of the day. I believe companies will keep adapting, at least for high skilled jobs, and will remain flexible with hybrid WFH.
Deal Addict
Jul 3, 2007
4123 posts
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Toronto
the entire economy is at risk of recession if gas prices stay this high for long..... everything will get hit but yes the burbs will get it worse ....
[OP]
Deal Addict
Jan 26, 2016
2232 posts
2262 upvotes
Toronto, ON
joepipe wrote: the entire economy is at risk of recession if gas prices stay this high for long..... everything will get hit but yes the burbs will get it worse ....
Did you ever end up buying back? I remember you timed the market a few years ago
Deal Addict
Jul 3, 2007
4123 posts
4596 upvotes
Toronto
WinterSleep wrote: Did you ever end up buying back? I remember you timed the market a few years ago
yes I bought in summer 2020 , scarborough bungalow near town centre... put in about $45k in renos.......nice crescent im on very quiet......I have been debating selling again , but I think I missed my chance for the highs in February...

we'll see how this months sales go.... this gas price thing is not gonna help the market.....
Sr. Member
Jan 14, 2008
785 posts
531 upvotes
Toronto
I know a couple of families that cashed out of Mississauga properties and settled in the Kitchener area in more spacious homes...

They are not the work from home demographic, but were able to change their jobs and work locally.

If prices soften there, im sure they will not be able to get back to the GTA and live in the same lifestyle.

So not everyone is going to be rushing back to the GTA.
Newbie
Dec 9, 2021
94 posts
97 upvotes
high gas, end of covid and increase in interest rates may soften the demand for outer burbs
Deal Addict
Apr 29, 2010
1527 posts
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GTA
Most companies are doing permanent hybrid and almost everyone I know is getting approved for full remote.

I don’t buy this narrative that people are riding go train downtown 5 days per week. That is likely a thing of the past and I think we can all agree on that.

All you really need is 2-3 days of wfh for a McMansion in suburbs to make sense.

And gas prices are irrelevant. Nobody who is buying 1-2m+ suburb freeholds care about gas going from $100 to $120 per fill. Does it sting when you see the number at the pump? Sure. But nobody will make major lifestyle decisions over freaking $20 per week.

The only factor which is relevant is interest rates.
Last edited by lolbeast on Mar 6th, 2022 11:55 am, edited 1 time in total.
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Mar 10, 2005
11259 posts
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lolbeast wrote: Most companies are doing permanent hybrid and almost everyone I know is getting approved for full remote.

I don’t buy this narrative that people are riding go train downtown 5 days per week. That is likely a thing of the past and I think we can all agree on that.

All you really need is 2-3 days of wfh for a McMansion in suburbs to make sense.
Yes and what most don't realize Hybrid/WFH was common BEFORE the pandemic. It's here to stay
"If you want to improve, be content to be thought foolish and stupid." - Epictetus
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Apr 12, 2013
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Moon
What I noticed is all the big banks and firms are recalling most if not all their employees, they need to justify all of those new/existing fancy buildings. Smaller cap companies are reaping the benefits of not having such a big overhead and are more inclined to allow their employees to work remotely, at least for now.
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Deal Addict
Dec 5, 2009
2033 posts
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No, burb freehold won’t fall unless there’s mass migration back to the city centre. But why would there be a mass migration? Your calculating the potential increase in cost to live in the burbs, but neglecting to calculate the cost to move back. Just in terms of $, it’s a 10-20% increase in gas cost vs. 100k cost to move back. Also consider who moved to the burbs and what lifecycle stage are they in? Were these people eventually going to move to the burbs for more space anyways, and Covid just increased the pace?
Newbie
Apr 29, 2020
91 posts
344 upvotes
Covid caused mass hysteria/fear that led to people thinking everything was changing permanently, ie WFH forever. Now that Covid appears to be nearing its finish, all of the sudden reality is sinking in that hey maybe we won't be in a pandemic forever.

The mass hysteria that caused this flight to the suburbs is slowly fading and people are going to start coming to their senses. The suburb price explosion was a mass exodus caused by fear, which started the ball rolling and then the BOC poured gas on the fire by pushing Canadians to borrow their brains out to help out the economy. Now that the economy is back on track, the BOC is pretty much saying, "Ya ok thanks for the help Canadians by taking on huge amounts of debt, now we need to raise rates, sorry about that lol!" BOC played everyone. Go back to that presser where Tiff was reassuring everyone rates would be low for a "long time".

This was the perfect example of mass hysteria, it was a lot of emotion/irrational decision making, reinforced by the fact that everyone else was doing the same thing. Now it will be an ugly reversal. Never follow the herd. There are still some geniuses paying over asking in the burbs as inventory is rocketing, interest rates are increasing, covid is ending, and people are being called back to the office... :facepalm: I would be dumping suburb RE ASAP. You need to be one step ahead of the herd. Right now that means anticipating a return to normalcy and a reversal of some of the trends of the last two years. Writing is on the wall for the suburbs
Sr. Member
Jul 16, 2013
909 posts
386 upvotes
My thought is
If they can have ppl all working from home
Then why do they pay 120k for someone in Ontario vs. Paying 80k for someone in Edmonton to do the same job?
There will be pay cuts coming since their employee pool is bigger now
Then what?
Ppl all move back to close to their job locations again?
I am not sure what will happen. We shall see.
Deal Addict
Apr 29, 2010
1527 posts
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GTA
ZenaZ927 wrote: My thought is
If they can have ppl all working from home
Then why do they pay 120k for someone in Ontario vs. Paying 80k for someone in Edmonton to do the same job?
There will be pay cuts coming since their employee pool is bigger now
Then what?
Ppl all move back to close to their job locations again?
I am not sure what will happen. We shall see.
Salaries are already adjusted based on your location. But also, ppl in Edmonton are just not competitive. Anyone competent already left for Toronto or another major city in US.

It’s funny how people think outsourcing is some new concept Face With Tears Of Joy
Deal Addict
Nov 23, 2003
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WTHHouses3 wrote: high gas, end of covid and increase in interest rates may soften the demand for outer burbs
Yup, should be an interesting watch.
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Mar 30, 2017
1214 posts
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GVA
lolbeast wrote: Salaries are already adjusted based on your location. But also, ppl in Edmonton are just not competitive. Anyone competent already left for Toronto or another major city in US.

It’s funny how people think outsourcing is some new concept Face With Tears Of Joy
new concept as in the scale of covid.
new concept as in traditional jobs that were not remoteable are now forced to be remote.
new concept enough to cause RE price to change in suburb.

and why stop at Edmonton? New Delhi and Mahalia is much cheaper at 1/5 of the price.
Last edited by seatiger on Mar 6th, 2022 10:51 pm, edited 1 time in total.
profit on 6/23/2021 = 117.61% since 11/10/2020 to be exact😎
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Nov 3, 2011
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STOUFFVILLE
kangarooz wrote: What I noticed is all the big banks and firms are recalling most if not all their employees, they need to justify all of those new/existing fancy buildings. Smaller cap companies are reaping the benefits of not having such a big overhead and are more inclined to allow their employees to work remotely, at least for now.
This sentence is completely untrue. Banks have actually rented out offices, got rid of office space - made more hotel-like spaces. Companies have already migrated to a hybrid model, and see the cost savings in getting rid of their offices. I work at BMO, and they have got rid of a whole building, telling everyone to WFH / going into the office once or twice a week. CIBC has recently done the same, and I doubt the other banks will push and not follow this new standard.

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