Swiss bank UBS says Toronto has 3rd biggest housing bubble in the world

[anon1]

Ominous.

Swiss bank UBS says Toronto has 3rd biggest housing bubble in the world

A Swiss bank has concluded that Toronto's housing market is in bubble territory, as homes in the city are more overpriced based on local rents and incomes than in places like New York, San Francisco, London and Hong Kong.In an annual ranking, UBS looks at 25 major cities in Europe, North...

ca.finance.yahoo.com

 

[HEYHEY]

When the music stops it ain't gonna be pretty. But dont worry, mr dressup will come out with a bailout so everyone pays regardless if the overleveraged themselves or not

 

[NiceToMeetYou]

I think it will depend on the interest rates. In the past 5 or 6 years, people are paying around 3% interest rates. Having a mortgage for 1+ million dollars home, people are stretching out for the monthly mortgage payments perhaps between 4,000 and 6,000 after-taxed dollars when making the 5% down payment.

So when the interest rates will jump a little to double what they are getting in the past 5-6 years to perhaps around 6%, then their monthly mortgage payments will be around 8,000 to 12,000 dollars per month. At that time, a lot of people can no longer afford to pay the increased mortgages. Then there will be flooded of homes sale in the market and lots of people will lose their homes from unable to make the monthly mortgage payments.

It will be a blood bath of the recent home owners who purchased their home in the last 5 years and having 1+ million dollars mortgage on their backs.

 

[Gstep]

What kind of job provides you and your kids that much income to afford it as we know taxes are very high in Canada.

Job? Think you misspelt inheritance there. But no really, that's how a lot of people are managing to afford it.

 

[jalimon]

Job? Think you misspelt inheritance there. But no really, that's how a lot of people are managing to afford it.

Exactly. It's pretty much the situation in Europe where mortgage are paid and passed on to future generation via inheritance.

 

[Dave in Phoenix]

Have been amazed at how folks afford housing in your market since have friends in Toronto including one who might be selling.

In the US I just refinanced for 30 years at 2.5% with no points my mortgage. I understand your mortgages are somewhat like our adjustable rates since mortgage rate can reset after say 5 years so as discussed above if rates increase could quickly become unaffordable.

I note a current 5-year term via TD bank is 1.94% and they do have a 10-year at 2.94%. I will take my 2.5% for 30 years as I never plan to sell.

I have a dual citizen client living in Phoenix considering moving back to Canada - more so if Trump had won the election. Has a daughter in Toronto but I have been pointing out the high living costs. He is 84 years old and has about a 2100 foot home fully paid for in Scottsdale. Value about $350k (this is about average home price in Phoenix metro) but to replace in Toronto probably over $1m.