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

[wonkyknee]

I feel bad for the to-be homeowners who bought the Phrase 1 homes for $75,000-$90,000 more than the Phrase 2 buyers who bought the same types of cookies-cutter homes in the past 2 months.

All of the phrase 1 homes have yet been built or not even pour the concrete foundation which makes it feeling worse to see just dirts for two very different prices of the same type and size of homes.

It's like a business. There are winners and losers. The losers are the people who bought the homes a year ago.

The strategy right now is to wait for another two or three years for the home prices to drop further before purchasing a home.

should we feel bad for people in the past that paid $100 000 more for phase II properties over phase I???? Why feel bad now? Is it some kind of entitlement that prices have to go up?

Every indication is that interest rates continue to rise. This can only get worse if that's the case. I feel somewhat informed about these things, yet even I was somewhat shocked to see the current rate on my variable rate mortgage and credit lines. I'm not in any crunch with such increases by any means. In fact my credit lines haven't even been used. I can only imagine what some people are going through, or what they will if they are stretched already on $500 000 mortgages and rates go up another 1/2percent this year.

 

[richaceg]

So much for all the house pumpers around here. Clear evidence prices have dropped. $90 000 less than last year! And that's just the asking price; the sales are even lower. These new homes dropped $90 000 and up to $50 000 in extras being thrown in, more than last year.
3 more rate increases this year and we're back to prices from over 5 years ago.

There is no pump...like someone has mentioned...this is now a game of chicken...you fold you lose. there are homeowners who are eager to sell and homebuyers eager to buy....5 years ago, a purchased a townhome in Durham Region for a measily $275k...in the past 2 years...a few neigbors have sold for about $550-$600k max on a bidding war...it had mellowed down but not a lot of sellers now...average is $500-$525...too much development in Durham is sustaining the price IMO. Ajax Downs will close down and that area will probably turn into another community...but from what I've heard there will be a bigger Casino + Powerplant close down? Either you go north to Barrie or East to Oshawa....the pricing are still climbing.

 

[Chiroden]

I used to take a loan in order to buy the house I really liked in Ottawa. It cost too much so I had to ask my family and friends for help. After that I also took a loan at imsgcanada.com. I needed money fast and the company proved to match my expectations. Three thousand dollars were transacted one hour later. So, this is how I managed to move to Ottawa, the city where I live now.

 

[Samranchoi]

I have seen many individuals who have appeared to have taken some really bad advice from real estate agents. Going in firm on a purchase without selling their property. When their existing property did not sell they had to close on the new purchase and keep their existing home. Problem is, they didn't have the required funds to close. Solution? Some creative financing where they had to pay upfront fees of $40,000 to the mortgage broker and the lender (private) as the individuals didn't qualify for regular type financing and a good rate. Such a shame. $40,000 down the drain and now that the market is gone down slightly where they own both properties, good luck trying to refinance that one year mortgage they had to get. Sell for much less than what they originally wanted or pay more fees. At least the real estate agents and mortgage brokers and lenders made their tens of thousands of dollars each on the back of their clients misfortunes.

 

[wonkyknee]

Latest indication on interest rates in the US are 3 more increases this year, 2 more in 2019, and two more in 2020. They have been clearly laying out interest rate maps for years now? Told us years ago when rates were going nowhere? Now its upward. Why fight the FED??? The mortgage rates are the single greatest factor in determining home values. More than foreign buyers, and more than proximity to subway lines.
What will people do when they can barely make their payments at 2.5% rates and their renewal comes up in 2020 at 5%. Never mind having to qualify at 2% higher than the posted rates. The government will probably drop that rule once the rates have risen that much though.

And there are people still dropping deposits as if they are options on new home/condo construction? difference is with an option you just lose your option premium. With new home deposits you are on the hook to buy the home in 3 years!!

 

[Smallcock]

Detached is deflating primarily in 905 regions where they were increasing 50% yoy, but other home types are humming along. We're just returning to a normal market. Mind you, it's all a fallout of government intervention.

 

[wonkyknee]

Its true Government shouldn't poke their nose in the markets like they do. Had it not been for, RSP homebuyers plans, Home Ownership Plans, increasing amortizations, and the biggest government tampering in the world, CMHC INSURANCE, this bubble would have never started. When the losses pile up we know where to point the finger.
Last year Realtors said there was nothing wrong with the prices of detached homes. Market was healthy. Then it came tumbling down. Now, we keep hearing the condo market is fine. No problem there either. It wasn't long ago, builders were throwing in "free interest for a year", or " a free BMW" with the purchase of their condos. Too many of these condos are being purchased as investment. Every area in the GTA and surroundings is an "up and coming area". LOL.

Real Estate purchases today in the GTA just aren't a good investment right now. Maybe condos won't come down for a few more months. Maybe a little higher interest in the US and Canadian rates holding firm will collapse our dollar to bring in more foreign buyers. Torontonians certainly can't afford to pay much higher prices. I'd rather have affordable housing in our city and a stronger dollar. Just feels better to travel once in awhile and buy foreign goods and be able to afford it. Maybe that's just me.

 

[Smallcock]

I agree with you that prices are too high and there will likely be a reckoning down the road. But this is part of a global phenomenon that all major cities have seen post-2008. Prices have spiked everywhere beyond what locals can pay and the driver was low interest rates and foreign money. Big money (gained legally or otherwise) sought safe havens following the 2008 crash and stable major real estate markets were one place to park money safely.

Canada may not have actually avoided the 2008 crash that saw world markets collapse, but may have instead delayed it via government interventions. I think what's happening in Canada, especially the GTA, is that millennials are buying in large numbers, with the help of their parents who have large stores of equity in their existing homes. Since rates are still historically very low, mom and dad can take out $300k in equity for their kids home down payment allowing their kid to buy that insanely expensive $500k starter downtown condo.

Once this inter-generational bridge of wealth runs dry, I think we might see years of stagnation in prices or a few years of decline in prices. I think a 20% - 30% decline would actually be healthy. Because real estate is sticky it could take years for this to unfold. After the 1989 crash it took 6 years for prices to hit bottom so even in a crash prices take years to fall down substantially.

 

[Smallcock]

I have seen many individuals who have appeared to have taken some really bad advice from real estate agents. Going in firm on a purchase without selling their property. When their existing property did not sell they had to close on the new purchase and keep their existing home. Problem is, they didn't have the required funds to close. Solution? Some creative financing where they had to pay upfront fees of $40,000 to the mortgage broker and the lender (private) as the individuals didn't qualify for regular type financing and a good rate. Such a shame. $40,000 down the drain and now that the market is gone down slightly where they own both properties, good luck trying to refinance that one year mortgage they had to get. Sell for much less than what they originally wanted or pay more fees. At least the real estate agents and mortgage brokers and lenders made their tens of thousands of dollars each on the back of their clients misfortunes.

Similar horror stories here: https://www.thespec.com/news-story/...e-market-s-peak-now-they-face-financial-ruin/

 

[wonkyknee]

they really shouldn't have bought something if a $100 000 drop in value means they can't afford to close? Why does everyone have to take care of stupid people?

 

[Smallcock]

^^
I agree

On a different note RBC is predicting prices to rise again after spring. Their reasoning is confusing. They say that interest rates will continue to edge up... which tends to have a dampening effect on price.

https://www.bnn.ca/housing-affordability-rising-but-toronto-prices-near-bottom-rbc-1.1047920

 

[Smallcock]

Great insights into who condo investors are: https://www.thestar.com/business/re...-in-toronto-a-new-study-sheds-some-light.html

Only about 10 per cent of condo investors are international buyers. They are far more likely to be local immigrants aged 40 to 60..

...


Many are purchasing real estate as a retirement investment or a way to help their children get a foothold on the property ladder.


....

The majority of these investors will hold onto them in the rental market...


...

But 44 per cent of investors that took possession of their units in 2017 are seeing their rental income fall short of their mortgage payments and their building maintenance fees.


....

That’s not cause for alarm, said Hildebrand because the investors’ assets have appreciated significantly before they even take possession of their apartments.

The average re-sale price of units in newly registered buildings was 51 per cent higher than the pre-construction price per sq.ft.


....


It would take a severe recession or rate hike to really shake investors..

....


But when a larger supply comes on the market in 2021 rents will need to be 17 per cent higher than they are now even if interest rates stay the same for investors to cover their carrying costs.

 

[Smallcock]

Different article on the same report. The numbers don't look good (healthy):
http://business.financialpost.com/p...-but-nearly-half-in-negative-cash-flow-report

I think we can expect a massive selloff of these condos that are losing money - half are losing more than $500/month. Better to cash out on 155% ROI than rent out the unit for a monthly loss.

This could cause a tailspin - a huge glut in the condo market followed by price declines similar to (but steeper) than those seen in the detached market last year.

 

[Samranchoi]

Sometimes it nice to have to have the power to make the lives of others filled with happiness.

 

[Smallcock]

416 freehold sales are the lowest in 23 years.

 

[wonkyknee]

builders are such scumbags..

In Vaughan, the condos by the new Jane/7 station are claiming they couldn't get financing to finish the project. They are returning deposits they collected on sold out buildings from 2 years ago.

No doubt they reincarnate the project at higher prices later this year.....

 

[NiceToMeetYou]

There are some buyers who have bought new constructions about a year ago who will be disadvantages when they will close their homes. Certainly, they are pointing their fingers to other people such as government, builders, lenders and perhaps the so-called foreign buyers BUT themselves when they were seeing $$$ everywhere from their believes of forever pricing appreciation. It's all about basic mindset of greed. LOL

The current price reduction is the benefits to the mass and the rest of Ontario residents by bringing the homes prices down further to affordable levels.

You are kidding me to buy a home between $1 and $1.6 million dollars of a descent 2-car garage home which is selling elsewhere for about $500K by an average office job's salary of $80,000 per year. LOL

 

[Smallcock]

Scary stats:
https://www.bnn.ca/1-3-of-canadians-fear-bankruptcy-amid-debt-trap-warning-survey-1.1058013

 

[NiceToMeetYou]

"'Reckless' Toronto market saw sold homes lose $135M in value in 2017: Report"


https://www.bnn.ca/reckless-toronto...s-lose-135m-in-value-in-2017-report-1.1053979


"Toronto housing sales slow"

https://www.bnn.ca/real-estate/video/toronto-housing-sales-slow~1341577

 

[Samranchoi]

Was talking with my real estate agent. One of her clients sold their home just north of Toronto for $2.1 million and bought a smaller property in the last couple months of 2017. They arranged for a bridge loan since the closing of the home they bought was before the closing of the sold home. Well, the buyers of their property backed out of the deal and are now being sued. Now their lender is asking for the bridge loan to be paid out. They have no choice but to arrange private financing with a huge fee and high rate. Worse yet, the property that sold for $2.1 million is now listed for $300,000 less with no offers. My agent thinks they will only get around $1.6 million at most now. Imagine losing $500,000 and having to pay huge fees. Sad, very sad.