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Toronto Housing Market Implodes: Prices Plunge Most On Record

royaloak

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Jul 30, 2016
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"There are three kinds of lies: lies, damned lies, and statistics"

I believe a lot of luxury homes (2+ plus) are not selling well skewing the average, especially those in the suburbs.

Downtown there are still multi bids on nice houses in central areas listed from 1 to 1.2 million. I'm trying to pick up a deal if I can find one as I believe this will be a short lived dip but they are hard to come by. Lot's of like minded folk looking to buy at a discount right now - but few such listings in prime areas. Buyers may be on strike but so are sellers.
 

Jubee

Well-known member
May 29, 2016
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Ontario
Yeah, the media is doing all this shit. Don't buy into it.


Read plenty of reviews, sources, etc. This is not as bad as they're trying to make it.
Right now, nobody knows what to think, the market needs a few months for the proverbial dust to settle... chill out.

This guy does a pretty good job.
http://torontorealtyblog.com/archives/18445
 
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wonkyknee

Active member
Jan 20, 2006
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Two houses in my neighborhood sold at about 30% discount. Both were foreign buyer speculators? Real estate agent said there's about 5-6 more like that out of his office. This market is getting ugly for recent buyers. I don't think we'll see 50% drop, but 40% is close. Also don't think it'll take 14 years to recover like the last time. 8-10 years and we see some stable real estate again. Probably lower still but real estate will always hold some value.
 

oil&gas

Well-known member
Apr 16, 2002
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I gather you meant 40 or 50% drop in sales. An abrupt 50%
drop in price will precipitate a financial crisis of a magnitude
beyond our imagination.
 

Samranchoi

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Jan 11, 2014
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If you purchased over the past year and have no plans to move, the drop in property values should not have an effect on you. If however, you have overextended yourself and were planning on refinancing relying on a 20 to 30% increase in values, you may have a problem as the equity you thought you may have will not be there. Even if you have some equity and have to sell at a higher price than what you paid for the property, there are expenses that are going to decrease the amount of profit you will make from the sale (ie; real estate commission, legal fees, HST, moving fees and if you are buying another property, land transfer taxes). This"market correction" was coming when the government started tweaking the mortgage guidelines. Real estate agents knew this. Mortgage brokers knew this. Lenders knew this. Mortgage insurers knew this. The majority of those looking to buy did not however.

I told my friend to sell her property 4-5 months ago when the market was hotter and rent for a little while and she was thinking about it. She would have sold her property in a couple of weeks maximum based upon the activity at the time. Her rationale for not doing so was that if she sold and bought in the same market, even if she sold for less, she would also be buying for less. Today, she is swearing at herself.
 
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wonkyknee

Active member
Jan 20, 2006
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I gather you meant 40 or 50% drop in sales. An abrupt 50%
drop in price will precipitate a financial crisis of a magnitude
beyond our imagination.
no in price. those properties I quoted already sold at 30% discounts. They may have been the anomolies for now. Average around GTA is about 20% right now. I went to visit a friend in Oakville. He just moved into brand new townhouses they paid $850k? A whole row of the same townhouses for sale behind him. (8-10) all for sale in the $900s. Remember he closed his deal 2 years ago at $850k. None of these are selling in the last month for $950k. We'll have to wait and see how bad the drop is.
 

Smallcock

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Jun 5, 2009
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no in price. those properties I quoted already sold at 30% discounts. They may have been the anomolies for now. Average around GTA is about 20% right now. I went to visit a friend in Oakville. He just moved into brand new townhouses they paid $850k? A whole row of the same townhouses for sale behind him. (8-10) all for sale in the $900s. Remember he closed his deal 2 years ago at $850k. None of these are selling in the last month for $950k. We'll have to wait and see how bad the drop is.
You're comparing a "drop" in prices by comparing the spring market with the summer market. Prices always drop, every year, in the summer, and shoot up in the spring and fall. If you look at year over year comparisons, the stats are not so dramatic and slightly higher than last year.

A true correction is underway but it's difficult to know for how long and to what degree.
 

Samranchoi

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Jan 11, 2014
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What about "houses of ill repute?" Are they selling? :))
As far as I know the "House of Commons" has not been sold yet although the ones in the "House" seem to be up for sale to the highest bidder.
 

wonkyknee

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Jan 20, 2006
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You're comparing a "drop" in prices by comparing the spring market with the summer market. Prices always drop, every year, in the summer, and shoot up in the spring and fall. If you look at year over year comparisons, the stats are not so dramatic and slightly higher than last year.

A true correction is underway but it's difficult to know for how long and to what degree.
Its definitely different this summer, but we're also following a huge spike in prices last year, so its not surprising to see prices give back some or all of that quick gain. Very hard to gauge what will happen, because Toronto real estate sentiment is so strong. Sentiment is stronger here than most other major cities around the world. Real estate bulls say things won't fall apart because the economy is strong. Well if the economy is strong then we'll see further interest rate hikes. This is not a "wall of worry" like the stock market faces. There are massive headwinds the real estate market is facing. Higher rates, more stringent lending, higher taxes, foreign taxes, lower affordability etc etc. And if it does turn then it will implode because a bad real estate market hits realtors, bankers, mortgage brokers, contractors. This was a great run. I know I enjoyed some amazing gains, but all good things come to an end. The greater the party, the worse the hangover. Some things never change.
 

NiceToMeetYou

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Oct 24, 2010
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A bungalow home on my street has been listing for 5+ months now. I heard it was listed around $950,000 in the beginning. Now it's listing for $849,000. So the owner has dropped the listing price about $100,000 for the past 5+ months. It's mostly an investment home since I haven't seen anyone live in there. LOL

In my opinion, the major price correction in Toronto housing market is on its way as in the late 1980s when the interest rate was up around 18%. Best of luck to everyone who just bought the homes in the six months to three years ago.
 
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wonkyknee

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Jan 20, 2006
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Al Sinclair from the CP24 Hot Properties thinks your're better to wait til the fall, but he can see a ton of stock coming on the market then too. It does look ugly and now it's almost certain we get one more interest rate hike, and maybe the second in the next 4-5 months. Foreign buyers are still dumping this week too. Many more foreigners are listing now too. Al Thinks they'll be heading for the exits now in droves.
 

Smallcock

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Jun 5, 2009
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Al Sinclair from the CP24 Hot Properties thinks your're better to wait til the fall, but he can see a ton of stock coming on the market then too. It does look ugly and now it's almost certain we get one more interest rate hike, and maybe the second in the next 4-5 months. Foreign buyers are still dumping this week too. Many more foreigners are listing now too. Al Thinks they'll be heading for the exits now in droves.
Part of the flood of supply could have been people trying to sell before prices declined. I don't think there are many people that will be forced to sell out of desperation. Interest rates remain at record lows, plenty of well heeled owners, and population continues upward. Long term - in 25 years the GTA is forecasted to have another 2.9 million people living in it.

I've seen no indication that foreign buyers played a significant role in the market nor that they're dumping the real estate (usually at the high price point) they owned. Where is CP24 getting their info.?
 

wonkyknee

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Jan 20, 2006
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average price of a new home in GTA is still 1.3million and $990 000 for a resale. I wonder if buyers are being told this? The minute they buy a new home it drops in value on average by $300 000. I know this is pure speculative option buyers on home sites, but still this is quite the arbitrage play if it was possible.

I do agree with Smallcock that people are rushing before interest rates rise. It looks like we have one more rate increase probably in October. Maybe we get one more rush before the rules change in the fall and everyone will have to qualify at posted rates. Unfortunately that posted rate might now by 5%!!! There is even talk that banks will look at appraisal values at renewal now too. They are devious. If they see that there is reduced equity in the home then they won't be discounting the rate on renewal anymore, and since you'll have a harder time qualifying on a mortgage transfer clients will have to agree to their rate! Banks stocks have been a little shaky this year but this will add to bottom line!!
 

Smallcock

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Jun 5, 2009
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Median price is more useful in gauging price fluctuations in the market. Average price changes can mask what's actually happening because it may simply mean more or less folks on the lower or higher end of the market are buying. How many homes asking $1 million in April are now asking $800k or $700k? I can't think of any.

As crazy as it seems, I wouldn't be surprised if prices slowly begin to rise by late September meaning higher average prices than during the summer. August prices may be flat or worse than July which would make a 4 month decline. If the trend doesn't turn around this fall we have a sustained correction on our hands, but I'm not sure that's what will happen. Maybe prices will stabilize or rise (not to April 2017 levels, mind you).
 

eternalbachelor

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Jan 17, 2017
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average price of a new home in GTA is still 1.3million and $990 000 for a resale. I wonder if buyers are being told this? The minute they buy a new home it drops in value on average by $300 000.
it's like saying the minute they buy a new house it loses its [mandatory] warranty and becomes 50 years old and needs repairs. Give your head a shake!
 

wonkyknee

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Jan 20, 2006
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Some people never learn. Tarion warranty? Lol... 50 year old home. Lol. Try 1 week. Smell the stench. It's over. If yourre still house house horny, you are now the minority. Numbers don't lie. And here endeth the lesson.
 

Garden of Eden Ladies

#1 Gem Finder!
Supporting Member
average price of a new home in GTA is still 1.3million and $990 000 for a resale. I wonder if buyers are being told this? The minute they buy a new home it drops in value on average by $300 000. I know this is pure speculative option buyers on home sites, but still this is quite the arbitrage play if it was possible.

I do agree with Smallcock that people are rushing before interest rates rise. It looks like we have one more rate increase probably in October. Maybe we get one more rush before the rules change in the fall and everyone will have to qualify at posted rates. Unfortunately that posted rate might now by 5%!!! There is even talk that banks will look at appraisal values at renewal now too. They are devious. If they see that there is reduced equity in the home then they won't be discounting the rate on renewal anymore, and since you'll have a harder time qualifying on a mortgage transfer clients will have to agree to their rate! Banks stocks have been a little shaky this year but this will add to bottom line!!
Some people never learn. Tarion warranty? Lol... 50 year old home. Lol. Try 1 week. Smell the stench. It's over. If yourre still house house horny, you are now the minority. Numbers don't lie. And here endeth the lesson.
I am wondering where your getting your numbers.. Houses dropping $300,000 in value the minute you buy?.. I call balderdash! Its true the market has started to soften a little since January, but the average house in the GTA year to date is still up by 17.8%. When it comes to inventory, we are almost back to where we were last year's levels with 2.58 months and the average day on the market is 25 days. This normal and still considered an active market.. The market is still hot when it comes to condos which were up by 21% over last year. This is crazy considering condos normally increase by 5-6% a year. If your looking to invest, I would put my money in downtown pre-construction condos. Sites are running out fast and everyone wants to be in the core.


Just my 2cents..



Nicole King
 
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