Only had a chance to skim through the thread but like someone said earlier we are in the middle of a housing bubble. When that bubble pops...well...remember what happened to the United States from 2006 to 2008?.....So unless you are a mathematical super genius I don't suggest playing around with your money.
real estate..... is it true??
- Thread starter parisbeautiful222
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Good news for condos. Demand outstrips supply thus far in 2016.
https://www.thestar.com/life/homes/2016/07/02/gta-condo-sales-overtake-supply.html
The concern for condos has always been about overbuilding so if this trend continues, the condo sector will be healthy.
https://www.thestar.com/life/homes/2016/07/02/gta-condo-sales-overtake-supply.html
The concern for condos has always been about overbuilding so if this trend continues, the condo sector will be healthy.
https://www.youtube.com/watch?v=beh16OyKT8A
interesting stuff no?
perhaps a shift from foreign investors from vancouver to the gta?
interesting stuff no?
perhaps a shift from foreign investors from vancouver to the gta?
Its too early to say. I've been following this tax for a while. Apparently Christie Clark promised Liquid Natural Gas plants years earlier that would make 100,000 jobs and it would be so successful BC could scrap sales tax. Well she failed to deliver (LNG dropped in price) and election time is coming so this tax is sort of like a distraction. Very popular though with 90% approval in the polls. The tax is here to stay.
Oil has dropped so the CAD will follow suit which gives foreigners a further discount on the homes here. Currently the deals in limbo are from the buyers taking out the biggest mortgage possible to buy the most house possible. Then they are slapped with this tax and they have to bail since they don't have the cash. Even if they did they wouldn't be able to transfer it here from China since there is that 50K usd limit per year. The foreign buyers who are shopping for homes in Vancouver after the new tax will just take into account this 15% when they put in offers. This reduces their purchasing power but I don't think it will do much to push them to Toronto. Even if some do we won't notice it unless we are in the Asian areas like Richmond Hill, Markham, Agincourt, maybe Scarborough.
Usually with taxes like these you will have to observe for several years to understand where things are going. Even though sales have gone down 80% in Vancouver home prices are still rising. We can see if this tax works earliest in the next 2-4 months as homeowners take their property off the market just to put them back again at a reduced price.
Oil has dropped so the CAD will follow suit which gives foreigners a further discount on the homes here. Currently the deals in limbo are from the buyers taking out the biggest mortgage possible to buy the most house possible. Then they are slapped with this tax and they have to bail since they don't have the cash. Even if they did they wouldn't be able to transfer it here from China since there is that 50K usd limit per year. The foreign buyers who are shopping for homes in Vancouver after the new tax will just take into account this 15% when they put in offers. This reduces their purchasing power but I don't think it will do much to push them to Toronto. Even if some do we won't notice it unless we are in the Asian areas like Richmond Hill, Markham, Agincourt, maybe Scarborough.
Usually with taxes like these you will have to observe for several years to understand where things are going. Even though sales have gone down 80% in Vancouver home prices are still rising. We can see if this tax works earliest in the next 2-4 months as homeowners take their property off the market just to put them back again at a reduced price.
Lots of differences between the US crash and what is going on in the Canadian real estate market.Only had a chance to skim through the thread but like someone said earlier we are in the middle of a housing bubble. When that bubble pops...well...remember what happened to the United States from 2006 to 2008?.....So unless you are a mathematical super genius I don't suggest playing around with your money.
The US crash was nationwide due to large banks given out loans that people could never afford to pay. In Canada, borrowers have to qualify at the benchmark of 5% interest and underwriting is better. There is also mortgage insurance and owners cannot walk away from their houses like in the US. The rate of anything that could be considered subprime is very low compared to what it was in the US. Finally, in Canada we're only talking about two major markets - Toronto and Vancouver - not anything insane nationwide. As population grows and jobs concentrate in these markets, while supply of housing drops and demand grows, the likelihood of a bubble bursting (i.e. Crash) is rather small. Plateau, soft landing, minor correction sure. But nothing dramatic.
Job growth and an influx of wealthy immigrants may be enough to keep one or both of these markets afloat for some time. Interest rates are not going up anytime soon so that won't cause a crash. Unlike the US Which has many pricey markets, there are two entry points in Canada for immigrants, investors, and business - Toronto and Vancouver.
I'm skeptical about the Vancouver market as it seems to have shot way beyond fundamentals and there really does appear to be significant foreign investor impact there. I think Toronto is much more sound all around and has room to continue steady price increases without crashing for some time.
Or so I hope!
Article: Here’s why the Toronto real estate market is so crazy
The first is restricted supply. Eleven years ago, the Liberal government froze development on 1.4 million acres across 325 km of land from the Niagara River through Hamilton (Golden Horseshoe area), all across the north of the GTA and over to Lake Scugog and Rice Lake, under the Greenbelt Act 2005. This had the effect of creating the “GTA Island”, and like Manhattan in New York City, if you can’t afford to buy there, you will commute one to two hours to get to there.
The second factor is rapid population growth that increases demand.
The population of GTA and surrounding area has grown from 3.7 million people in 1986, to 5.5 million in 2005, to 6.3 million now. It will be 7.3 million people in 2021 and 9.1 million in 2036!
If you remember taking an economics course, you will recall a concept called supply and demand. If there is an increase in demand, there must either be a price or quantity adjustment. Right now, we have no capacity to increase the quantity of land available in the GTA and as a result, land prices have soared for building lots and condo development sites.
We also have record low interest rates. A $500,000 mortgage carries for $2,117/month at today’s interest rate. The same mortgage at 10 per cent interest is $4,472/month. A $1 million mortgage at today’s rates carries for $4,234/month.
The last time we had 10 per cent interest rates was 20 years ago and they have been falling ever since. In the last 20 years, there have only been two quarters when prices dropped in Toronto…see the correlation between prices and interest rates?
Another factor is increased “revenue tools” by the government. These are not revenue tools, they are flat out taxes and development fees. Let’s call them what they are. They can add an extra $100,000 to $200,000 to the price of a home.
Labour and material costs keep going up and will never come down.
Canada is seen as a safe haven for money, because we have a stable government, clear rules and we are governed by the rule of law and not by whim. There has been a huge influx of capital from China, Russia, Iran and host of other countries.
From mainland China, more than $1 trillion dollars has left that country in the past 12 months and I am told we have a few more years of this coming (plus their currency has gained a lot against the Canadian dollar).
...
There is not one or two reasons why this market is going crazy. It is a multitude of factors and the last thing we need is for the governments to impose more fees and taxes or impose some silly regulations on the marketplace. It’s called an economic cycle, and what goes up above the historic mean, will eventually adjust back to the long term four per cent appreciation that real estate has had for centuries.
Article: Here’s why the Toronto real estate market is so crazy
Agree TOTALLY.
Governments are the biggest debtors out there.....so.....and as long as they have a suitable GDP ratio.... Interest rates are not going up anytime soon..... Specially with Wynn and Trudeau indebting us even further.
On a side note, wouldn't it be wonderful if Toronto approves of a Central Park in the downtown core.
http://torontolife.com/city/toronto-politics/jennifer-keesmaat-qa-2/
The "UnderGardiner" is already underway. Having a huge Central Park would add so much dynamism to the heart of the city.
http://torontolife.com/city/toronto-politics/jennifer-keesmaat-qa-2/
The "UnderGardiner" is already underway. Having a huge Central Park would add so much dynamism to the heart of the city.
Buying a home in the GTA requires a six-figure income
https://www.thestar.com/business/20...-in-the-gta-requires-a-six-figure-income.html
https://www.thestar.com/business/20...-in-the-gta-requires-a-six-figure-income.html
This is going to be the condo or commute 2-4 hours a day generation.Buying a home in the GTA requires a six-figure income
https://www.thestar.com/business/20...-in-the-gta-requires-a-six-figure-income.html
heres a way to be able to afford a house. dont live near a major city. not many people want to live in the sticks or up north.
the problem is that everyone wants to live in the gta and the supply and demand.
the problem is that everyone wants to live in the gta and the supply and demand.
Anyone else's HELOC LTV go down significantly due to the government? Wasn't it supposed to be 80% LTV on the value of your home? It's now suddenly 10% from TD. RBC is giving us 12%. I can't find this anywhere in the news. Apparently they are preferring first time home buyers now and reducing HELOC LTV. If this isn't from the government I guess the big banks are preparing for something.
Housing sales volume is going down however prices are still going up due to decreased supply.
Housing sales volume is going down however prices are still going up due to decreased supply.
I prefer the real estate market now and a thriving beautiful city compared to the lower prices, barren and boring, parking lot city that Toronto used to be in the 60s and 70s.
This is what Toronto used to look like mere decades ago: http://www.blogto.com/city/2011/10/that_time_when_toronto_was_a_city_of_parking_lots/
Toronto has come a long way. With a greater population, greater density, greater demand, and more reasons than ever to live and work here, prices had nowhere to go but up.
I'm in favor of the proposal to expand the Greenbelt. More clean air, protected green land, protected farmland, clean water is better than turning everywhere into concrete and poison and destroyed wildlife. The sustainability is something future generations will thank us for.
This is what Toronto used to look like mere decades ago: http://www.blogto.com/city/2011/10/that_time_when_toronto_was_a_city_of_parking_lots/
Toronto has come a long way. With a greater population, greater density, greater demand, and more reasons than ever to live and work here, prices had nowhere to go but up.
I'm in favor of the proposal to expand the Greenbelt. More clean air, protected green land, protected farmland, clean water is better than turning everywhere into concrete and poison and destroyed wildlife. The sustainability is something future generations will thank us for.
The green belt is one those contributing factors which drives price of homes where is at, not solely do to fact it restricted lands builder can use but it also creates better air quality for public.I prefer the real estate market now and a thriving beautiful city compared to the lower prices, barren and boring, parking lot city that Toronto used to be in the 60s and 70s.
This is what Toronto used to look like mere decades ago: http://www.blogto.com/city/2011/10/that_time_when_toronto_was_a_city_of_parking_lots/
Toronto has come a long way. With a greater population, greater density, greater demand, and more reasons than ever to live and work here, prices had nowhere to go but up.
I'm in favor of the proposal to expand the Greenbelt. More clean air, protected green land, protected farmland, clean water is better than turning everywhere into concrete and poison and destroyed wildlife. The sustainability is something future generations will thank us for.
I agree and I have no problem with it. I think Torontonians need to change their attitudes toward home ownership. In other major cities owning a single detached home is unheard of. In fact, even owning a condo apartment is often unheard of - most people rent.
We're at the stage where people can still get a place to live relatively cheap but it's in the sky rather than on the ground.
For the sheer magnitude of the Supply/Demand differentials we're experiencing in the city look at the charted info on http://torontorealtyblog.com/archives/14422
A good summary of all factors responsible: http://torontorealtyblog.com/archives/14529
We're at the stage where people can still get a place to live relatively cheap but it's in the sky rather than on the ground.
For the sheer magnitude of the Supply/Demand differentials we're experiencing in the city look at the charted info on http://torontorealtyblog.com/archives/14422
A good summary of all factors responsible: http://torontorealtyblog.com/archives/14529
Suddenly Scared of Vancouver’s Commercial Property Bubble?
http://wolfstreet.com/2016/08/23/smart-money-scared-of-vancouvers-commercial-real-estate-bubble/
Wolf Richter
August 23, 2016
For investors, Vancouver real estate has been a heavenly gift. But now, suddenly, some of the biggest institutional investors, including Canada’s third largest pension fund, are getting cold feet and want out.
Just over the past 12 months, the “benchmark price” soared 27% for apartments and 38% for detached houses! The term “housing bubble” doesn’t even do it justice.
But in July, British Columbia implemented a 15% transfer tax on home purchases involving foreign investors, an effort to put a lid on the price spiral that’s threatening to price an entire generation out of the housing market. By the end of July, the first squiggles appeared, as prices still soared but year over year sales volume plunged nearly 20% [read…Vancouver Housing Bubble, Meet Pin].
Preliminary reports for August are now trickling in as anecdotal and incomplete data in a slow summer month, and therefore not necessarily indicative. For example, the Canadian publication, Global News, summarized the August move with plenty of caveats: “Vancouver real estate market is in the midst of a major slowdown, with prices dropping and sales plummeting.”
We will know more when the monthly data emerges.
Similarly powerful dynamics, including the influx of foreign money and a strong local economy, have driven the commercial real estate market. According to the second-quarter report by commercial real estate firm Colliers International, “Vancouver’s FIRE sector” – Finance, Insurance, Real Estate – is hot. Housing construction is hot. Office construction is even hotter, “set to be the fastest-growing sector” in the city, expected to expand by 5% in 2016, with 1.5 million square feet currently under construction. Alas:
The delivery of 2.1 million square feet of new office supply in 2015 has contributed to the office vacancy increasing slightly from 9.8% in Q1 to 10% this quarter.
Citing commercial real estate firm Avison Young, Bloomberg pegs the vacancy rate at 10.4%, “a 12-year high”:
Additional space is set to flood the market, with six office towers under construction for delivery as soon as this year totaling about 802,700 square feet, and 10 buildings proposed for the city….
Despite the vacancy, rental rates for the best quality assets in Vancouver are the highest in Canada and some U.S. cities such as Chicago and L.A. at about $30 a square foot, Avison Young said.
A perfect time to unload: with office rental rates at record levels and optimism still riding high, while a tsunami of new supply is piling on the market and vacancy rates are rising, this would be the definition of a peak.
The Ontario Teachers’ Pension Plan, Canada’s third-biggest pension fund, has $4 billion invested in Vancouver’s white-hot commercial real estate. But it is now trying to unload $2 billion worth of these holdings, “people familiar with the matter” told Bloomberg.
These properties are held by the fund’s real estate unit, Cadillac Fairview:
The Cadillac Fairview portfolio, which hasn’t yet started marketing, includes 14 properties in downtown Vancouver and Richmond, with some of Canada’s largest shopping centers, office towers, and historic buildings up for grabs.
The assets include a portfolio of waterfront properties including Waterfront Centre, a 21-story tower on the harbor built in 1990; the 238,000-square-foot PricewaterhouseCoopers Place; and The Station, a historic property built in 1912 that serves as North America’s largest transport hub, currently pending approval for an added office tower.
Some of the country’s biggest retail assets are also in the mix, such as the Pacific Centre, a downtown retailer with 1.6 million square feet for which Cadillac Fairview submitted a proposal this year to expand. It’s the third-most profitable shopping mall in Canada, according to brokerage Avison Young, with $1,599 in sales per square foot. The center also contains eight office towers of two million square feet, including 701 West Georgia and the HSBC building.
According to “the people familiar with the matter,” the fund has hired CBRE Group and Royal Bank of Canada to work the sale.
Other pension funds have already decided to unload some of their properties in Metro Vancouver, according to Bloomberg, including the Healthcare of Ontario Pension Plan and Ivanhoe Cambridge, which are trying to get about $800 million for their office towers in Burnaby.
What do they see that the market doesn’t see, or doesn’t want to see?
For pension funds, which have to achieve predictable and fat returns, this is a bleak environment, with the Canadian 10-year yield at 1.02%, and the US 10-year yield at 1.56%. Stocks are at dizzying levels, even as corporate profits and sales have declined for nearly two years. If these pension funds want to expand into government bonds and high-grade corporate bonds in Europe and Japan, they’ll make the acquaintance with negative yields.
So why are they selling hot assets with a predictable yield when the investment options for the proceeds are so dismal? Preservation of capital?
A commercial real estate bust can take 40% or more off the top. The last one in the US did. They take years to unfold. When prices go down, real estate markets become illiquid. Trying to sell a property at a survivable price might be impossible. And cutting the price far enough to where liquidity reappears might be devastating to the seller.
The key is to get out while optimism makes these transactions possible and before the market becomes illiquid. Perhaps find a Chinese company, such as Anbang Insurance Group, which already scooped up the Bentall Centre in Vancouver, a 1.5-million-square-foot office complex and shopping mall.
Even as Canada’s debt-fueled economy is bogged down, consumer debt rose to a new record and delinquences are are soaring among Millennials. Read… Canadian Debt Slaves Pile it on, Millennials Fall Behind
http://wolfstreet.com/2016/08/23/smart-money-scared-of-vancouvers-commercial-real-estate-bubble/
Wolf Richter
August 23, 2016
For investors, Vancouver real estate has been a heavenly gift. But now, suddenly, some of the biggest institutional investors, including Canada’s third largest pension fund, are getting cold feet and want out.
Just over the past 12 months, the “benchmark price” soared 27% for apartments and 38% for detached houses! The term “housing bubble” doesn’t even do it justice.
But in July, British Columbia implemented a 15% transfer tax on home purchases involving foreign investors, an effort to put a lid on the price spiral that’s threatening to price an entire generation out of the housing market. By the end of July, the first squiggles appeared, as prices still soared but year over year sales volume plunged nearly 20% [read…Vancouver Housing Bubble, Meet Pin].
Preliminary reports for August are now trickling in as anecdotal and incomplete data in a slow summer month, and therefore not necessarily indicative. For example, the Canadian publication, Global News, summarized the August move with plenty of caveats: “Vancouver real estate market is in the midst of a major slowdown, with prices dropping and sales plummeting.”
We will know more when the monthly data emerges.
Similarly powerful dynamics, including the influx of foreign money and a strong local economy, have driven the commercial real estate market. According to the second-quarter report by commercial real estate firm Colliers International, “Vancouver’s FIRE sector” – Finance, Insurance, Real Estate – is hot. Housing construction is hot. Office construction is even hotter, “set to be the fastest-growing sector” in the city, expected to expand by 5% in 2016, with 1.5 million square feet currently under construction. Alas:
The delivery of 2.1 million square feet of new office supply in 2015 has contributed to the office vacancy increasing slightly from 9.8% in Q1 to 10% this quarter.
Citing commercial real estate firm Avison Young, Bloomberg pegs the vacancy rate at 10.4%, “a 12-year high”:
Additional space is set to flood the market, with six office towers under construction for delivery as soon as this year totaling about 802,700 square feet, and 10 buildings proposed for the city….
Despite the vacancy, rental rates for the best quality assets in Vancouver are the highest in Canada and some U.S. cities such as Chicago and L.A. at about $30 a square foot, Avison Young said.
A perfect time to unload: with office rental rates at record levels and optimism still riding high, while a tsunami of new supply is piling on the market and vacancy rates are rising, this would be the definition of a peak.
The Ontario Teachers’ Pension Plan, Canada’s third-biggest pension fund, has $4 billion invested in Vancouver’s white-hot commercial real estate. But it is now trying to unload $2 billion worth of these holdings, “people familiar with the matter” told Bloomberg.
These properties are held by the fund’s real estate unit, Cadillac Fairview:
The Cadillac Fairview portfolio, which hasn’t yet started marketing, includes 14 properties in downtown Vancouver and Richmond, with some of Canada’s largest shopping centers, office towers, and historic buildings up for grabs.
The assets include a portfolio of waterfront properties including Waterfront Centre, a 21-story tower on the harbor built in 1990; the 238,000-square-foot PricewaterhouseCoopers Place; and The Station, a historic property built in 1912 that serves as North America’s largest transport hub, currently pending approval for an added office tower.
Some of the country’s biggest retail assets are also in the mix, such as the Pacific Centre, a downtown retailer with 1.6 million square feet for which Cadillac Fairview submitted a proposal this year to expand. It’s the third-most profitable shopping mall in Canada, according to brokerage Avison Young, with $1,599 in sales per square foot. The center also contains eight office towers of two million square feet, including 701 West Georgia and the HSBC building.
According to “the people familiar with the matter,” the fund has hired CBRE Group and Royal Bank of Canada to work the sale.
Other pension funds have already decided to unload some of their properties in Metro Vancouver, according to Bloomberg, including the Healthcare of Ontario Pension Plan and Ivanhoe Cambridge, which are trying to get about $800 million for their office towers in Burnaby.
What do they see that the market doesn’t see, or doesn’t want to see?
For pension funds, which have to achieve predictable and fat returns, this is a bleak environment, with the Canadian 10-year yield at 1.02%, and the US 10-year yield at 1.56%. Stocks are at dizzying levels, even as corporate profits and sales have declined for nearly two years. If these pension funds want to expand into government bonds and high-grade corporate bonds in Europe and Japan, they’ll make the acquaintance with negative yields.
So why are they selling hot assets with a predictable yield when the investment options for the proceeds are so dismal? Preservation of capital?
A commercial real estate bust can take 40% or more off the top. The last one in the US did. They take years to unfold. When prices go down, real estate markets become illiquid. Trying to sell a property at a survivable price might be impossible. And cutting the price far enough to where liquidity reappears might be devastating to the seller.
The key is to get out while optimism makes these transactions possible and before the market becomes illiquid. Perhaps find a Chinese company, such as Anbang Insurance Group, which already scooped up the Bentall Centre in Vancouver, a 1.5-million-square-foot office complex and shopping mall.
Even as Canada’s debt-fueled economy is bogged down, consumer debt rose to a new record and delinquences are are soaring among Millennials. Read… Canadian Debt Slaves Pile it on, Millennials Fall Behind
Looks like cracks are beginning to show in the Vancouver market. The 15% tax didn't create the problem but it's probably accelerating it to some degree. If I owned a home there I'd sell for top dollar and move to Toronto.
Ontario should NOT introduce a foriegn real estate tax.
Ontario should NOT introduce a foriegn real estate tax.
The majority of employment is in the city, and even when these mini recessions happen you feel it much more up north in "the sticks". I'd hazard to say they are feeling it even now.heres a way to be able to afford a house. dont live near a major city. not many people want to live in the sticks or up north.
the problem is that everyone wants to live in the gta and the supply and demand.
Real estate will falter at some point. Big banks have exposure to about 5 billion each to the oil and gas sector. That's a pin drop next to their exposure to real estate. Residential mortgages are about 180 billion each bank, or 35X the exposure to resources. And that's just residential mortgages. Our country is just waaaaay to reliant on real estate. It falters and the country crumbles.....so just keep selling your houses to each other and keep the ponzie scheme going!!!!! Better hope the real estate agents, mortgage brokers, lawyers and construction workers keep making money, or we're in deep deep doodoo.
Sure we've climbed the "world class city" ladder, but no one said it would ever be a steady climb up. We might easily slip a few steps and wait 5-10 years to get going again. That mortgage calculation cited early was close, but I'd say it's at least 1000/month more expensive today on the difference between 500k and 1million mortgages. Now add about 800 more per month on property taxes and the ever growing hydro bill. 20 years ago I didn't have extra garbage billing either. Then add 1 per cent increase to a mortgage rate over the next 2 renewals and shit hits the fan. All it takes is a slow down and all those realtors, mortgage brokers, and construction guys start feeling it from the income side too....and so will everyone else. It's a cyclical fact of life. Things go up and they go down.
