Question about Toronto housing

[james t kirk]

Markets in the GTA already starting to show significant weakness and some beginning to crash. Oshawa is down 15% in just a few months.

Just the start of a massive, idiotic Ponzi scheme about to blow up.

Real estate is not a Ponzi scheme. A Ponzi scheme is a pyramid scheme where new investors pay dividends to existing investors and there was no assets there in the first place. . Bernie Madoff was running a Ponzi scheme for example where there were no stocks, no investments, indeed no assets of any kind. He just took the money given to him by investors to pay dividends to existing investors.

Kind of like crypto currency. There is nothing there. No asset to back up the furror.

Real estate has become speculation. Simple as that. A mindset where people rush to get into the market because they feel that if they don't get in now, they will miss the boat and prices will be even higher. It's like a feeding frenzie. The speculators just capitalize on that frenzie.

But unlike a Ponzi scheme where there is nothing there, with real estate, you've got land, you've got materials and you've got the labour that went into building the house. That all equals worth. A Ponzi scheme will go to 0. A house can take a hair cut, even a big hair cut, but it's not going to 0.

 

[Malibuk]

Hi guys, I'm not local but I was surfing Realtor.ca for fun and was able to see only 217 houses out of 6247 houses total in the GTA that were 800K and under.
Most of these 217 were in Oshawa and a few in Brampton, aka suburbs. 85% of the houses are asking over 1 million.

Are people really taking a mortgage of 800k+ (20% down) and paying $3500 a month on housing alone ? This is on a median salary of 120K?

Is this the reality or am I missing something?

Yes this is the reality for first time buyers who have no home equity or helping parents.

 

[springbloom]

For those who can't afford to buy , how much are they paying in rent on a GTA $1.6m median house?

 

[mdo2886]

Real estate is not a Ponzi scheme. A Ponzi scheme is a pyramid scheme where new investors pay dividends to existing investors and there was no assets there in the first place. . Bernie Madoff was running a Ponzi scheme for example where there were no stocks, no investments, indeed no assets of any kind. He just took the money given to him by investors to pay dividends to existing investors.

Kind of like crypto currency. There is nothing there. No asset to back up the furror.

Real estate has become speculation. Simple as that. A mindset where people rush to get into the market because they feel that if they don't get in now, they will miss the boat and prices will be even higher. It's like a feeding frenzie. The speculators just capitalize on that frenzie.

But unlike a Ponzi scheme where there is nothing there, with real estate, you've got land, you've got materials and you've got the labour that went into building the house. That all equals worth. A Ponzi scheme will go to 0. A house can take a hair cut, even a big hair cut, but it's not going to 0.

LOL no shit - thanks for the definition of a ponzi scheme. I suppose the hyperbole for effect was a bit over your head.

Real estate in Canada has been bought LIKE a ponzi scheme for many years now - with many "investors" buying just to offload higher onto the next speculator/sucker. Of course just like a ponzi scheme this works while prices go up or until too many people want to cash out.

Tell me in a few years when many are underwater with negative equity that they still have the land or materials value. Actually it will be worse than a real Ponzi because as opposed to just losing all of their money they will be in the hole with no ability in Canada to just walk away.

 

[sanderson3d]

LOL no shit - thanks for the definition of a ponzi scheme. I suppose the hyperbole for effect was a bit over your head.

Real estate in Canada has been bought LIKE a ponzi scheme for many years now - with many "investors" buying just to offload higher onto the next speculator/sucker. Of course just like a ponzi scheme this works while prices go up or until too many people want to cash out.

Tell me in a few years when many are underwater with negative equity that they still have the land or materials value. Actually it will be worse than a real Ponzi because as opposed to just losing all of their money they will be in the hole with no ability in Canada to just walk away.

If you’re a long term investor than negative equity is only an issue when selling / using the asset as collateral. Other then that as long as my rents are coming in i don’t really care what the BV of my assets are.

Are you in the market or are you just an arm chair quarterbac?

 

[Frankfooter]

If you’re a long term investor than negative equity is only an issue when selling / using the asset as collateral. Other then that as long as my rents are coming in i don’t really care what the BV of my assets are.

Are you in the market or are you just an arm chair quarterbac?

That only works as long as interest rates raises don't make your mortgage payments more than your rental income.

 

[sanderson3d]

That only works as long as interest rates raises don't make your mortgage payments more than your rental income.

Thank you for this pearl of wisdom.

i only buy multi units with solid cash flow. these properties can be hard to find but the are out there.

but to your point. Yes many casual investors and most speculators are at risk of being badly burned.

 

[mdo2886]

Thank you for this pearl of wisdom.

i only buy multi units with solid cash flow. these properties can be hard to find but the are out there.

but to your point. Yes many casual investors and most speculators are at risk of being badly burned.

LOL you just answered your own retort.

You will also potentially get burned if inflation continues to run hot and rental increases are pegged far below - which is likely as I am assuming your property is older and subject to rent controls.

And no I could buy in cash but at present would not touch this market with a ten foot pole. Far too much risk even with stable cash flow and better opportunities elsewhere.

 

[sanderson3d]

LOL you just answered your own retort.

You will also potentially get burned if inflation continues to run hot and rental increases are pegged far below - which is likely as I am assuming your property is older and subject to rent controls.

And no I could buy in cash but at present would not touch this market with a ten foot pole. Far too much risk even with stable cash flow and better opportunities elsewhere.

what are the better opportunities that you speak of?

 

[Darts]

i only buy multi units with solid cash flow. these properties can be hard to find but the are out there.

How do you deal with rent control and "tenants from hell"?

 

[Butler1000]

Canada has the second largest land area on the planet.

There is lots of land on which to build a house. The problem is that everyone is concentrating in either Toronto or Vancouver and that needs to stop. If you look at the states, their population is spread out in many population centers. As such, you don't see the same kind of stupidity when it comes to real estate prices. (Well maybe in San Francisco and the Bay area. That is far worse than Toronto.)

New York, Washington, LA. Many other Urban centres in places like Texas, are experiencing the same thing. Hell even Halifax has doubled in recent years. I've been watching as I'm looking for my retirement 5 years down the road.

The power centres always have high RE pricing. We won't see a big correction. Most will just sit on it and wait.

 

[Butler1000]

For those who can't afford to buy , how much are they paying in rent on a GTA $1.6m median house?

People aren't buying those houses to rent. Or if they do they turn them into multi units.

 

[Anbarandy]

Just enjoy the windfalls. I sold three residential properties last year to cash in on high values and still have another three that are nicely rented. There are a ton of rich people in Toronto who have heavily invested in real estate created high demand.

 

[Anbarandy]

Thank you for this pearl of wisdom.

i only buy multi units with solid cash flow. these properties can be hard to find but the are out there.

but to your point. Yes many casual investors and most speculators are at risk of being badly burned.

 

[james t kirk]

LOL no shit - thanks for the definition of a ponzi scheme. I suppose the hyperbole for effect was a bit over your head.

Real estate in Canada has been bought LIKE a ponzi scheme for many years now - with many "investors" buying just to offload higher onto the next speculator/sucker. Of course just like a ponzi scheme this works while prices go up or until too many people want to cash out.

Tell me in a few years when many are underwater with negative equity that they still have the land or materials value. Actually it will be worse than a real Ponzi because as opposed to just losing all of their money they will be in the hole with no ability in Canada to just walk away.

Are you 17 years old?

Cause you definitely strike me as one of those kids continuously whining on line that you'll never be able to afford your own house and how unfair it is.

Now go clean you're room. You promised your mom that you'd do it this weekend and your time is up.

 

[springbloom]

Stats Canada says median salary in ontario is 55k. This stat is pulled from official data from CRA. That's total income, including any interest or non employment form of income. Let's double that figure for GTA because I'm sure Sudbury, Waterloo, London etc are lower. 110K median seems too low for a median house of $1.6m

 

[Butler1000]

Stats Canada says median salary in ontario is 55k. This stat is pulled from official data from CRA. That's total income, including any interest or non employment form of income. Let's double that figure for GTA because I'm sure Sudbury, Waterloo, London etc are lower. 110K median seems too low for a median house of $1.6m

There are lots available below that. Just ti give you examples of what happened within a stones throw of my house in the last ten years.

Five properties with bungalows on 50' wide+ lots were split into either a Semi or two properties. One more on the way now. And one was done on a 40' lot. Three others a 40' lot bungalow torn down and a appox 3000 sq footer was put up. And a longer stretch of several a set of town homes done.

After that you have tons of condos under a million. You can still get in in the 5-6,000,000 range. So yes a 250,000 dual income can get in. They just can't have a big one. The have to buy small, build equity, then buy up if they want it. I agree the days of the 20 something buying a house in the suburbs are over in Toronto. Just like several other big cities. That's what we are now. There are peoole all over the world who live in large cities and never get to buy. Hell there were several in Toronto decades ago.

Thats life.

 

[probyn]

Don't worry, higher interest rates will slow the real estate insanity currently gripping Canada and Toronto in particular.

The BOC has jacked interest rates by 75 basis points to date and by all accounts you can expect another 50 basis point increase in June (some are saying a full 100 basis points). In either case, more interest rate hikes are coming. Once they jack to a point where real estate prices start to decrease, that will lead to a stampede to the exit gates by all those speculating on real estate in Canada (mainly the Chinese). Then the market will flood with units for sale which will tip the scales firmly in favour of buyers. It won't be pretty.

Those of us old enough to remember 1992 / 1993 will recall that real estate prices in the GTA fell by 40 percent and did not recover fully for 10 years. I fully expect something like a 30 to 40 percent hair cut in real estate prices again.

That's exactly what the Uneducated Economist says (although he argues there are other causes besides interest rates) and he has some scary things to say. Apparently, has a good track record with his predictions.Check out his Youtube channel.

 

[mdo2886]

what are the better opportunities that you speak of?

In particular we are beginning a commodities bull market for the ages.

If you still want to invest in real estate for cash flow almost anywhere is better than Canada. Many attractive US markets as well as parts of Central and South America if one has a higher risk tolerance.

 

[mdo2886]

Here is a fine albeit blunt article about Canadian housing:

Canada’s Real Estate Market is a Giant Pyramid Scheme

The northern frauds are about to lose all of their smart young people

survivingtomorrow.org

Exactly right. Taking a giant mortgage out at these prices is basically debt serfdom. Any intelligent and educated young person should leave.

And if (when) it does all blow up it will drag the entire economy down with it. A giant mess!

"So Canada will do what it always does: Limit housing supply while welcoming in another 1.3 million hope-filled immigrants it can exploit for cheap labor and future debt-trapping.

And so the pyramid scheme continues…"