real estate..... is it true??

[GaryLi]

Bay street is bearish on real estate. Genworth stock down 10% and still on its way down today.

http://www.greaterfool.ca/2016/10/04/risk-on-3

In a statement Genworth had this to say about what happened on Monday: “First-time homebuyers will have difficulty meeting the required debt service ratios and homebuyers would need to consider buying a lower-priced property or increase the size of their down payment.” In fact about half (!) of Genworth’s portfolio of $370 billion in residential mortgages (of the $1.2 trillion in the nation) would no longer be eligible for mortgage insurance, Genworth said, under the new rules popped by money minister Bill Morneau.

“Housing prices will tumble as a sizable minority of first-time buyers and those with higher (debt service) ratios no longer qualify for the mortgage amount they want,” predicts Canadian Mortgage Trends. “Forcing all insured borrowers to prove they can afford a payment at the posted rate (4.64%) will remove up to 15-20% of buyers from the market, say lenders.”

Will the 400,000 Chinese visa students / workers come in time to save us from a housing crash?

 

[Smallcock]

The bubble encompasses much more than Canada, too.
https://betterdwelling.com/the-6-6-trillion-dollar-real-estate-bubble-brewing-in-the-commonwealth/

 

[doggystyle99]

I wouldn't call them investors. More like idiots

While you call them idiots, these investors are purchasing $900k homes spending another $100-200k into renovations and easily selling it for $1.4-1.8M depending on the home size. Making them a quick $300-700K.
Guess who these investors think are idiots?

 

[doggystyle99]

they would sever the lot into two and build two houses each of which would be worth quite a bit more than a mil

Severing a lot is a lot of work and a house that is 60 X 120 not worth severing specially in Agincourt area.

Lots need to be better than half acre to sever the lot I believe. Either way they don't do that here. They do however knock these ones down and put a 2 mil estate up

They don't need to be half acre or better just need to be wide lots for example if this lot was at least 100' wide for example 100 X 120 which would be slightly less than 1/4 of an acre it would be worth it to severe the lot as you would get 2 50' wide lots with a depth of 120' where each house could be worth $1.4-1.6M in that area if newer house.

 

[nuprin001]

Let's look at the numbers:

A 1 bed, 1 bath condo in downtown, on a quick search, goes for around $450k. Assuming a mortgage of around $320k, you're looking at a monthly payment of around $1400, not including insurance and property tax. No idea what that is in Canada.

Rentals in the same area seem to be around $1800/month. I don't know the area well enough to say whether there's a vast difference in the quality of the housing, since I'm just doing a general search, but that's what I see.

So: if the market is overblown, you'll save LESS money buying than renting, but you're not really going to LOSE money. If/when the housing market blows up, rental rates aren't likely to go down: the people who are out of their homes and get foreclosed on will still need a place to live. They might start living 2-3 people to a 1 bedroom, but they'll need a place to live.

Buying is almost always better than renting, on pure dollars and cents. Renting is the premium product. It will cost you more in the long run.

You ALWAYS pay a mortgage. The question is whether you're paying YOUR mortgage or your landlord's.

Now, if you're talking about real estate investment, buying homes for resale or for cash flow and not someplace you're going to be living yourself: that's a different question entirely. But if you're looking for a place to lay your head, always buy if you possibly can.

 

[Butler1000]

For those who don't think severing is easy they have severed now 5 properties with a 2 minute walk of my house. Lot sizes are about 40-50 ft wide and about 120-130 deep.

These are fully detached being squeezed onto 20-25 foot wide lots.

His can easily be split. The city is encouraging it to increase density and the property tax base.

 

[Denmae]

While you call them idiots, these investors are purchasing $900k homes spending another $100-200k into renovations and easily selling it for $1.4-1.8M depending on the home size. Making them a quick $300-700K.
Guess who these investors think are idiots?

That's called speculating. 100k doesn't go very far on older properties.
Your numbers are a little off.
We all know what happened to the so called investors in the 80s

 

[koreanjames]

they would sever the lot into two and build two houses each of which would be worth quite a bit more than a mil

Chances are a full demo and a new massive 5500 sq ft mansion that'll ask for 3m+

 

[rgkv]

There has not been a severing of lots in my or the neighbour hoods in my area of Agincourt that I have ever seen. I don't see it happening any time soon either,, like said above.. knock em down put up a 3 mil

 

[doggystyle99]

That's called speculating. 100k doesn't go very far on older properties.
Your numbers are a little off.
We all know what happened to the so called investors in the 80s

It's not speculating its called a calculated investment. A lot of the older houses that are smaller and well maintained in Agincourt area are in the $900K price range, they have good sized lands. Hence only the need to put about $100-200k into it to flip it fast for a profit.
If it's a knockdown it's slightly worth less than that because the houses are usually a lot older and not maintained well usually between $700-850k.

The same people have been singing the same song for the last 7-8 years about housing prices and how its going to crash, while a lot of builders and investors in the housing market have been increasing their assets in the last 15 years by making calculated investments.
Housing prices are not going to change any time soon, unless there is a major drop in the foreign investors and a major drop in immigration, until then prices will keep on going higher and higher.

 

[doggystyle99]

For those who don't think severing is easy they have severed now 5 properties with a 2 minute walk of my house. Lot sizes are about 40-50 ft wide and about 120-130 deep.

These are fully detached being squeezed onto 20-25 foot wide lots.

His can easily be split. The city is encouraging it to increase density and the property tax base.

Severing lots rarely happens in Agincourt.
Severing a lot is dependent on the area, if there has been severing happening in that specific area yes it is easy, but in areas that severing rarely happens it is not as easy.
For example North York/Willowdale, and Danforth area you can pretty much severe any size lots nowadays, but in areas that the majority of houses are bigger sized lots and detached homes severing rarely happens.

There is lots of severing happening in the Danforth of lot sizes that are 50' X 100'+ in the Danforth area with houses being sold for $1m+ with lots of 25' X 100', but that is just dependent of the area.

There has not been a severing of lots in my or the neighbour hoods in my area of Agincourt that I have ever seen. I don't see it happening any time soon either,, like said above.. knock em down put up a 3 mil

Agincourt area houses at maximum are below $2M at the moment.
Severing of lots in Agincourt rarely happens unless the lost are wider at least over 100' wide.

 

[afterhours]

Housing prices are not going to change any time soon, unless there is a major drop in the foreign investors and a major drop in immigration, until then prices will keep on going higher and higher.

And Canada will be able to afford a major drop in immigration when Canadian women will begin making babies again. Or pigs will begin to fly.

 

[Big_jo]

Let me be very clear and precise.
Canada just can not survive without immigration

 

[rgkv]

Let me be very clear and precise.
Canada just can not survive without immigration

I have a feeling we and the rest of the world will not have much choice in accepting immigration.. Survival will drive people out of their countries... Difference though will be accepting people who will always live off the system, not come to Canada and pay cash for a house

 

[wonkyknee]

This thread still going? Didn't the bubble burst a week or 2 ago here in Toronto? If new home buyers now have to qualify at 4.6 % there will be a big decrease in deals. Foreigners might still buy some multi million dollar homes but there are 1000s of lower priced homes that can't sell now. The chain of deals that still require a first time home buyer are now crumbling. Won't here it in the media for a bit but a pin just burst the bubble.

 

[Smallcock]

This thread still going? Didn't the bubble burst a week or 2 ago here in Toronto? If new home buyers now have to qualify at 4.6 % there will be a big decrease in deals. Foreigners might still buy some multi million dollar homes but there are 1000s of lower priced homes that can't sell now. The chain of deals that still require a first time home buyer are now crumbling. Won't here it in the media for a bit but a pin just burst the bubble.

I think many lenders were already using 5% as a benchmark interest rate.

Nobody knows the impact the change will have in Toronto. When you say the bubble burst, do you mean a housing price correction, plateau, or just slower price (ie. single digit rather than the 10 - 20% year over year we've been seeing lately)?

 

[kodiac]

There was a study done years ago that in order for Canada to be a world power , its population must be around 200,000,000 million people. We are heading that way and it will be with immigration. All those people need housing.

 

[Smallcock]

There was a study done years ago that in order for Canada to be a world power , its population must be around 200,000,000 million people. We are heading that way and it will be with immigration. All those people need housing.

Canada won't reach a population size of 200 million any time soon. We'll all be long dead before it happens.

Projections show that in the next 50 years, Canada's population will grow to high of about 63 million. http://www.statcan.gc.ca/daily-quotidien/140917/dq140917a-eng.htm

 

[wonkyknee]

I think many lenders were already using 5% as a benchmark interest rate.

Nobody knows the impact the change will have in Toronto. When you say the bubble burst, do you mean a housing price correction, plateau, or just slower price (ie. single digit rather than the 10 - 20% year over year we've been seeing lately)?

Nobody and I mean NO LENDER cared if the mortgage was insured. Prices are already stretched. $850 00 for a townhouse in a mediocre area? Payments were already high at 2.2% or 3200/mont, but you have to qualify at 4600/month. Please....you'd need a 25% correction to afford that same townhouse. And of course things always overshoot in any direction, so it could be a 35% correction. God forbid the US raises rates in December.

 

[wonkyknee]

By the way the true crusher of a real estate bubble? A recession!.... In 2030 Germany expects to have no more gasoline powered engines. That's only 13 years away. That means the 10 Billion dollar EV plant in Germany dwarfing Teslas 3 billion dollar plant already being built means Bad News for oil demand. In China the waiting period for a gasoline powered vehicle is months, but they can buy an electric car same day. Last time I checked, Canada was a Petro nation. All of this will be much clearer in 6-12 months. Did I buy a rental property this year. Nah, lithium mining stocks already made 5 times!!! Yeah we'll sell to more foreign buyers when we have a 65 cent dollar again next year, but locals own the lion share of property in Toronto. Not so good in a recession.