Is there a housing Bubble in the GTA!!!

[tboy]

James:

Lots of people THINK you can frame a house for 4 grand, but they are living in fantasy land where framers work for 10 bucks an hour and lumber is dirt cheap.....

I can see the 10K profit/unit situation. With Townhouses you have 2 less exterior walls to build, less brickwork, incorporated 1 car garage, common roof, etc. Still only about a 5% profit though, not a lot considering the risk factor.

 

[james t kirk]

James:

Lots of people THINK you can frame a house for 4 grand, but they are living in fantasy land where framers work for 10 bucks an hour and lumber is dirt cheap.....

I agree.

You can't get a basement strapped for 4 grand.

A good framing crew is around 4 guys, perhaps 3 at the least in my eyes.

Usually, you have 2 very good guys, one guy who is learning, and one slave.

The guys who KNOW what they are doing are being charged out at 50 to 75 an hour.

 

[Mr. Downtown]

Lets see....

interest rates (albeit rising) are still low and are predicted in some corners as falling off by mid summer (long term yields are beginning).

banks are still lending construction financing. these are anal retentive organizations yet they consider investing in this type of product as being ok, so as long as the pre-sale count is high.

people (owner occupants) are still buying. the "investor" catagory (re: condos) is still relatively low.

there is no (perhaps scant) speculation occuring.

there are approx 100,000 people landing on Toronto's doorstep each year. They need rooves over their heads.

unemployment stats are at or near all time low despite the occasional catchy newpaper headliner of a plant closing.

bubble.....what bubble. People, please, go chew some gum instead.

 

[Questor]

You never know.

Over the loooonnnnngggggg term, real estate is nothing but up.

You might see the curve level off, even drop, but it' s not going to crash unless there is something catastrophic coming our way in the economy (terrorism, US currency crisis, etc.)

Well, we don't have to worry about that do we? Dubya has everything under control in Iraq and besides, Canada wouldn't be a target for terrorism because...oh, that's right, we are front and centre in the War Without End Against Terror in Afganistan. Still, we can keep our fingers crossed that terrorism does not strike Canada. But anyway, the US$ has never been so strong. It couldn't possibly crash....oh, wait, they are running up trillion dollar deficits and their economy is based on an ever growing supply of cheap oil? Well, anyway we should all believe in blind faith because God is on our side! Right? LOL

 

[Papi Chulo]

I am hoping the prime rate soon returns to a fair level of 8-9%

 

[james t kirk]

I am hoping the prime rate soon returns to a fair level of 8-9%

Not currently in the market right.

 

[MYSITEONLY]

Thanks for all the input, most of you are very confident that the market is stable, and home prices are for the most part okay in the gta area.

 

[MYSITEONLY]

I thought I would bring this back out of the archive to see what everyone thinks months later. I have since sold my home of 10years and purchased another home. Just curious as to what your thought are?

 

[lickrolaine]

I thought I would bring this back out of the archive to see what everyone thinks months later. I have since sold my home of 10years and purchased another home. Just curious as to what your thought are?

chances are a lot of the money you made from the sale went into the new home to cover the increases on it.The more expensive the home the more it has gone up.So if you bought for 200,000 10 yrs ago and sold for 400,000 now,the house you bought for (1) 600,000 would have been 300,000 grand 10 yrs ago,(2) 300,000 would have been 100,000 grand 10 yrs ago.The deal is ok if you end up with more equity or the house you want to be in,location you want to live in.The housing wave moved outwards from Toronto starting in the 60's,all through the 70' to 90's it was booming and still is.There is an increase in the reverse wave,with people wanting to move back into the city,thus the hot condo market.
This market is going to be a lot like the game musical chairs,when the music stops you want to be seated.Who will buy all the monster homes for 2 million,when all the boomers want to retire?What new immigrant will be able to pay the taxes and utilities of around 1500 per month,plus the mortgage payment.

How many people's kids here can afford a new home now and say in 5yrs.The bubble will burst when ownership costs cripple the average buyer.Imagine a starter home going for 375,000 dollars,in Barrie.Oh man are we headed down a sorted path.

 

[tboy]

Lick, "how can people's kids here..."? the same as I, my parents and my parents parents did....just grin and jump....I never thought in my lifetime I'd be able to afford a place within the core but I did make the jump and am glad I did. Put it this way, I paid 7 times for my 800 sq ft loft what my parents did for their house in '71 but while their place is worth $250,000.00 now mine is worth about the same in 8 yrs.

As you have seen around town, builders are putting up condos, townhouses and anything else they can fit onto any postage stamp sized lot.

For many of us, $180K for a condo may seem like a lot but that will carry for what a decent sized apartment will so anyone just entering the market, this will be their start.

 

[fuji]

Canadians only have 1.6 kids per woman. The population is going to peak, and then start falling. House prices go up partly because we have more and more people, but the same amount of land. When we have less and less people, but the same amount of land, prices will start falling.

 

[Serpent]

Based on what happened to people in California, housing was (and largely still is) out of the reach of the first time buyer. Aggressive mortgages like ARMs and interest-onlys were offered, folks didn't have to put down the significant downpayments and the whole..bubble.. was sustained by this madness.

Over a trillion dollars worth of ARMs are going to re-adjust in the US in 2007. It's going to be scary -- sales, foreclosures or re-financing are going to be the options available to the folks who won't be able to meet their new payments.

If your underlying principles are solid here in the GTA - downpayments required, people buying because mortgage is more or less equal to their rent....then you don't have a bubble.

 

[Powershot]

Canadians only have 1.6 kids per woman. The population is going to peak, and then start falling. House prices go up partly because we have more and more people, but the same amount of land. When we have less and less people, but the same amount of land, prices will start falling.

?? Immigration more than makes up for the < 2 children per woman stat.

 

[orkut]

...
If your underlying principles are solid here in the GTA - downpayments required, people buying because mortgage is more or less equal to their rent....then you don't have a bubble.

Scotia Bank is offering a mortgage without a downpayment:

http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20061006/mortgage_deal_061006/20061006?hub=TopStories

 

[MYSITEONLY]

I think in Canada our prices are okay at the current levels, they may seem high to some but based on pricing of some homes in the US I think were still ok here!!

 

[hapkido]

I think you need to assess the following general guidelines:

1) Quality of Investment
2) Investment Horizon
3) Investment Risk and Margin of Safety- under the worst case scenario can you manage it?
4) Tenant management and maintenance head aches
5) Are there better options relative to real estate?

I personally wouldn't invest in real estate now. But if it was during 1995 at the start of the housing bull cycle hell ya! hindsight is 20/20.

I analyze and invest in stocks now. And please spare me the comments that stocks are risky and realestate is better in the long run. What alot of people tend to forget when calculating their BIG price increase is all the other expenses in purchasing that house (property tax, agent fees, maintenance, insurance, carrying cost, switching costetc etc)

 

[MYSITEONLY]

Now that its two years later since this thread was posted, just wondering what the consensus is now, with our housing market. I have since bought a larger home and moved up. Hopefully my investment was a good one.

 

[21pro]

generally speaking, the closer you are to the Toronto core, the better your real estate has performed over the last 2 years. (with fluctuations from neighbourhood to neighbourhood). and apparently, the best areas were the formerly unsightly neighbourhoods such as regent park, etc...

generally, most of the urban suburbs have performed well, though, the outlining perimeter is seeing a correction in the last 6 months. Caledon, King west of 400, Erin, though are beautiful areas, are in the middle of experiencing the highest recorded 'days on market' DOM in the last 16 years. My belief is that the manufacturing and transportation centres in Brampton in Mississauga is going through hard times- that and commuting expenses and times have increased dramatically in those areas as traffic increases, but without any real upgrade to infrastructure along those routes... Still, no real deal in those areas, though...

Everywhere else in the gta still seems reasonably healthy.

 

[3Tees]

generally speaking, the closer you are to the Toronto core, the better your real estate has performed over the last 2 years. (with fluctuations from neighbourhood to neighbourhood). and apparently, the best areas were the formerly unsightly neighbourhoods such as regent park, etc...

generally, most of the urban suburbs have performed well, though, the outlining perimeter is seeing a correction in the last 6 months. Caledon, King west of 400, Erin, though are beautiful areas, are in the middle of experiencing the highest recorded 'days on market' DOM in the last 16 years. My belief is that the manufacturing and transportation centres in Brampton in Mississauga is going through hard times- that and commuting expenses and times have increased dramatically in those areas as traffic increases, but without any real upgrade to infrastructure along those routes... Still, no real deal in those areas, though...

Everywhere else in the gta still seems reasonably healthy.

Couldn't agree more. I live in one of those downtown urban areas you refer to and have seen my real estate values increase a fair bit over the last two and a half years.

I'm also doing some desperate selling investing in those exact outlying areas, and the DOM in some areas of Oshawa, Ajax and Courtice is as high as six months!! I budget 3 months DOM for my deals and working with my Real Estate Agent will not go near areas higher than that. Brampton on average has a 3 month DOM.

 

[21pro]

The slumping U.S. economy has already hit Canada's manufacturing sector hard since demand has been squeezed for Canadian shipments of everything from cement and auto parts to lumber, industrial products and roofing supplies, which come mainly from the industrial provinces of Ontario and Quebec. But an even greater drop in economic activity south of the border will eventually spread to all provinces and cut growth projections for all parts of Canada.

yes, Brampton's DOM aren't bad right now, but the DOM in Caledon have jumped from 60 days to an average of 18 months!!

If you take a look at the quote above, you'll notice that the 'sensitive' industries are also, unfortunately a core deal of what is comprised of in some 905 areas and outside, main industries.... ie, Brampton, Oshawa, Ajax, St. Catharines, London, Cambridge, Brantford, etc...

and the cities are taking action... this is a recent economic publishing from the city of Brampton that shows a 92% decrease in building permits issued from 1 year ago!!!!
http://www.brampton.ca/economic-development/links_publications/MonitoringBramptonEconomyJan08.pdf

also note in the article that the average house only increased in value of 1.6% in one year in Brampton- a far cry from the recent 2001-06 increases of between 6% and 16%. ... and this is PRE-recession. in fact, job growth was staggering at over 146% during that same period... that spells something simple... housing is NO LONGER AFFORDABLE in this area. It would be interesting to compile similar data for other gta areas... vaughan anyone?, or what about certain toronto areas?... both still appear to be booming... i wonder what the stats show, though...