Is it really that surprising the economy shrank when fuel prices were down and eastern canada was in the worst winter in decades?
Canada's housing bubble?
- Thread starter stinkynuts
- Start date
The US and Canada should experience similar housing trends, as their economies are usually correlated to each other. However:
In 1997 a Professor Eicholtz of Maastricht University published his study: A long run house price index : The Herengracht index, 1628-1973 which is available on the Weebs and has been much commented.
Amsterdam city records show the selling price of all the houses along the Herengracht for those 250-some years (built then, still standing now, and occupied by successful folks then and ever since), and he pulled them together and adjusted for currency fluctuations to get prices as comparable as he could, year over year, century over century. Apart from occasional bubbles — like when the Tulip Craze made as many overnight millionaires as Dot-Com — which inflated then burst and deflated in a couple of years, the increase in price was steady and slow, averaging a few percent a year. Year to year the swings may have been wider, and there were those bubbles, but over the space of a generation, the growth in price seemed pretty much to track growth in overall wealth (GDP, had anyone been using the term) and the spurts and plunges evened back into the gentle slope.
Doesn't help with stinky's decision today — stats seldom do that — but it does reflect that if you get in and hold, you can't really lose. Although you might occasionally do better with bulbs than buildings.
Amsterdam city records show the selling price of all the houses along the Herengracht for those 250-some years (built then, still standing now, and occupied by successful folks then and ever since), and he pulled them together and adjusted for currency fluctuations to get prices as comparable as he could, year over year, century over century. Apart from occasional bubbles — like when the Tulip Craze made as many overnight millionaires as Dot-Com — which inflated then burst and deflated in a couple of years, the increase in price was steady and slow, averaging a few percent a year. Year to year the swings may have been wider, and there were those bubbles, but over the space of a generation, the growth in price seemed pretty much to track growth in overall wealth (GDP, had anyone been using the term) and the spurts and plunges evened back into the gentle slope.
Doesn't help with stinky's decision today — stats seldom do that — but it does reflect that if you get in and hold, you can't really lose. Although you might occasionally do better with bulbs than buildings.
The house price is really irrelevant, what is more important is the carrying cost.This graph also shows what's going on:
^^^
That's right.
Prices are higher but low interest rates have offset this. Carrying costs are no more expensive today than in years past.
What these critiques are also missing are the adjustments people are making to cope with higher home prices. Buyers are tackling this new reality in an informed way.
"More than half of buyers in [Toronto and Vancouver] said it was important to be able to rent out parts of their homes to help pay their mortgages." - http://www.bnn.ca/News/2015/4/7/One...home-buyers-had-family-help-survey-finds.aspx
This can also offset costs tremendously.
Speaking about Toronto specifically, the article points out a number of other refreshing stats:
"buyers in Toronto paid the most for their homes . . .and put down the largest down payments ($90,000...).
"Torontonians were also the wealthiest buyers, with 40 per cent earning $100,000 a year or more"
"Despite having big down payments and good salaries, Toronto buyers were also among the most likely to have been living with their parents while they saved for a home. They put down an average of 21 per cent of the purchase price, the highest in the country."
I don't see a bubble or crash. I see an eventual plateau that may last years.
Toronto is in good shape.
That's right.
Prices are higher but low interest rates have offset this. Carrying costs are no more expensive today than in years past.
What these critiques are also missing are the adjustments people are making to cope with higher home prices. Buyers are tackling this new reality in an informed way.
"More than half of buyers in [Toronto and Vancouver] said it was important to be able to rent out parts of their homes to help pay their mortgages." - http://www.bnn.ca/News/2015/4/7/One...home-buyers-had-family-help-survey-finds.aspx
This can also offset costs tremendously.
Speaking about Toronto specifically, the article points out a number of other refreshing stats:
"buyers in Toronto paid the most for their homes . . .and put down the largest down payments ($90,000...).
"Torontonians were also the wealthiest buyers, with 40 per cent earning $100,000 a year or more"
"Despite having big down payments and good salaries, Toronto buyers were also among the most likely to have been living with their parents while they saved for a home. They put down an average of 21 per cent of the purchase price, the highest in the country."
I don't see a bubble or crash. I see an eventual plateau that may last years.
Toronto is in good shape.
If interest rates went up a couple of points there would be a lot of people in trouble.
I don't think interest rates can make up for the huge difference. Even at a low interest rate, you are paying much more.
What is a "a lot" in the city of Toronto and what stats can you cite that show this?
With home prices as high as they are now mortgages are bigger and more dependant on rates that have never been this low for this long before.
You don't remember the '80s?
A lot of people in Toronto don't own 1 or 2 cars so that is an extra $10,000 annually they can put towards paying down their mortgage.
Canadian home prices should have tanked in 07/08 but NOOOOOOOOOOO our government elected by the majority of idiots did what? anyone wanna guess?The US and Canada should experience similar housing trends, as their economies are usually correlated to each other. However:
that's right, 40 year 0 down mortgage.
What should have been a correction was put off for another time, we didn't avoid it just put it off for another time down the road.
The houses that are for sale in toronto for 800K aren't even worth 200. Anyone who thinks otherwise has absolutely zero knowledge about construction and costs associated with it. The same house that's 800k in toronto costs 150k in windosor, same province, same material. Must be something in the water in the gta.
Builders are already scaling back condo builds. Some pre-construction condos are being converted into rental buildings instead.
Thus far, even demand for condos has outpaced supply of condos hence the small appreciation of condos year after year. We have not seen price decreases in condos yet, let alone signs of a crash.
It may be that cheap condos will offer affordable entry level for single first-time buyers and long term investors.
No doubt condos will be hit first when the market begins correcting itself, but will it take the form of a crash or a moderate price drop?
Obviously, home prices are not solely determined by construction costs. The cost of building materials will be similar across the province, however it's the land that costs money in a major urban city. Few people want to live in Windsor. More people flock to Toronto, and it's reflected in the price to own land here. It's also reflected in property taxes.
Go and play around with a mortgage calculator and you will see the difference between 2.7% interest rates and 7,8,9%. Its pretty huge.
That's a good point and also why each market is different and needs to be analyzed on its own. Also the demand dynamics are important-. The gta is projected to have 100k migrants every year for the next ten years. And this is with a flat economy
Not really because then you need to factor in public transit + delivery costs for things larger than a breadbox
I also am willing to speculate the average Torontonian who is above the poverty line does have a car anyways
It might not be a primary vehicle (eg 2 siblings/friends/roomates sharing) but it is still an expense
econ 101 says price is determined by supply and demand... it is worth how much they buyer is going to pay for it. period. It is not a bubble if ppl wants to come to toronto and unload the cash into houses. It will be a bubble when ppl no longer choose stay/invest/speculate in Toronto houses. Predicting when to crash is a fools game. If fundamental matter then the crash have happen long ago. I used to think gov't intervention saved in 08/09, maybe, maybe not. No more 40 yr mortage anymore and ppl still pouring hot money into RE. Still waiting for a pull back after 14 yrs... oh well. If interest rate goes up and kills the market then not because ppl can't afford it but ppl think there's better place to invest/park the cash. Vancouver has never been affordable ages ago.
