Toronto Condo Market?

[wonkyknee]

some girl at my work who just got married bought a house this week, talk about the worst time. everyone was congratulating her and I couldnt bring myself to tell her what a big mistake she just made.

Noone really knows what's going to happen. We shouldn't deter a young family from buying a home but rather make sure they buy something very affordable to their finances. I do agree that prices in many areas are out of whack and some areas should expect larger declines than other areas going forward. My guess is that the condo market will indeed see much better buying opportunities in the future, but don't really know. If our economy falters we may actually see interest rates drop further and the price on this young lady's home might still appreciate for years.
Don't get me wrong, my gut agrees that real estate "investment" will be bad looking back 10 years from today, and could well be that we see a spike in inflation followed by a spike in interest rates. Keep in mind however that a spike in inflation is what governments "say they are trying to avoid" but in reality they "welcome it". Inflation is the only way to get government debt back on side. So Real Estate could very well enjoy moderate increases for a long time(it could) To say that anyone knows for sure that Real Estate will "burst" is impossible. Its possible it does well.

 

[MyHobbyist]

too many condos.. not enough people... crash looming!

 

[Sniper Jr.]

If our economy falters we may actually see interest rates drop further and the price on this young lady's home might still appreciate for years.

If our economy falters, I would actually expect home prices to fall... you know, on account of the faltering economy.

 

[wonkyknee]

If our economy falters, I would actually expect home prices to fall... you know, on account of the faltering economy.

Yeah you're right, but interest rates will go lower making homes even more affordable...remember the reason why interest rates are so low now is because the economy is not so good.

 

[fun-guy]

Not so quick there, that was a bit of fear mongering today by the BoC hinting they're bullish on rates in the future, IMO. I don't see them raising rates unless inflation is out of control and if you read the latest inflation rates is very low, under 1.5% for core inflation. Raising rates is a strategy to cool off the economy as prices are out of control but they're not, and now that housing seems to be leveling off and correcting due to other fiscal policies I don't see rates going up. Canada runs the risk of higher unemployment if rates go up, the dollar goes up, exports go down and thus employment goes up.

One of the sore spots for Canada is the debt to household income, over 165%, which is very close to the US number prior to the housing collapse, but in Canada it won't be a housing collapse but a credit collapse as Canadians leveraged themselves too much using their homes as a bank to get credit. It's a tricky balancing act and the government is watching all the economic indicators closely every second, not only their indicators but those of countries around the world. Not an easy job, I sure wouldn't want it.

 

[wonkyknee]

.. but rates are not going any lower

Just about every country in the world has lower rates than we do. The federal govt lowered the amortization from 40 -35, then 35 to30, and now 30 to 25....shouldn't people have been unable to afford their mortgages already?? It's a complex market. Once again, I'm not saying you're wrong and certainly we seem to be going in the direction of higher rates, but why is that one lady who bought a house the only one who got it wrong? If you are right then you should be selling your home now too?? How do we know that her house purchase that might be in the ideal location for her work or her husband's work(saving them the cost of an extra car possibley), which might be close to the schools she prefers, and be close to her parents or inlaws that would provide thousands of dollars of free childcare??? Why get down on this one lady's home purchase when the interest rate spread is about 1.6% for banks and when looking historically certainly has room to tighten??

 

[legmann]

Not so quick there, that was a bit of fear mongering today by the BoC hinting they're bullish on rates in the future, IMO. I don't see them raising rates unless inflation is out of control

Actually, the BoC in a latest comment removed the ambiguity that had existed in previous statements by asserting that a 'reduction in monetary stimulus' will be necessary [sic]; the only question is, when.

 

[msog87]

Actually, the BoC in a latest comment removed the ambiguity that had existed in previous statements by asserting that a 'reduction in monetary stimulus' will be necessary [sic]; the only question is, when.

the Boc has done shit, they are full of it. today they again reiterated we need higher rates yet at the same time they said due to the "low inflation" data that it didnt need to be anytime soon. Its also funny how they predict stronger growth next year as the world economy is steadily deteriorating, just take a look at world wide econ data its getting worse and worse

 

[msog87]

the fact of the matter is we will have ultra low interest rates for as far as the eye can see, it may be a another 10 years believe it or not. even if carney raises rates to 1.5%, thats still very very low. rates are gonna be well under 1.5% for a very long time people and statscan is always gonna claim inflation is low

 

[wonkyknee]

and remember people, the BoC has run up a TON of DEBT. They've been saying higher interest rates are coming for years now...and for what?.... to curb inflation???? They don't want to curb inflation. They NEED inflation to make the debts they've run up worth less!!!! They also fear monger with inflation stories because what they TRULY FEAR is DEFLATION.

I for one one would love to see inflation and higher rates, but is it coming?...maybe many years still. The world is deleveraging now. For many years growth was funded by leverage. I think the only thing that can help bring some inflation to erase out all the govermment ineptitude(and careless spending) around the world would be for China and India(and other emerging markets) to bring in their own social programs so that their own people would start spending more freely thus creating their own internal economies; freeing them from dependence on American demand. This could in turn open up new markets for existing companies to sell into.

 

[Brandon123]

It's not going to crash however it's getting saturated and the value isnt going to go up that much compared to a house. Still you won't go wrong with buying a condo. Lower east side is the place to buy right now.

 

[fun-guy]

the fact of the matter is we will have ultra low interest rates for as far as the eye can see, it may be a another 10 years believe it or not. even if carney raises rates to 1.5%, thats still very very low. rates are gonna be well under 1.5% for a very long time people and statscan is always gonna claim inflation is low

Can anyone say Japan?

 

[HEYHEY]

5 years from today prices for condos will on average be higher than they are now. There is just too much momentum in this city for things to slow down. The overhang of supply will get absorbed quickly as new buyers enter the scene. Condos in the core & desirable areas will increase by at least 10% over that period.

Toronto is the best city in the world to live- we are so lucky to live here!

ummmm you might wanna look into that lool

 

[GG2]

5 years from today prices for condos will on average be higher than they are now. There is just too much momentum in this city for things to slow down. The overhang of supply will get absorbed quickly as new buyers enter the scene. Condos in the core & desirable areas will increase by at least 10% over that period.

Toronto is the best city in the world to live- we are so lucky to live here!

I agree, especially for homes. If you own a home in Toronto you're going to coast on increasing property values for a long long time. Maybe not in some surrounding areas in the GTA, but in Toronto you're golden.

 

[msog87]

Cities Of Opportunity Report: PwC Ranks Toronto 3rd In World On Ranking Of Economic Strength

http://www.huffingtonpost.ca/2012/10/11/toronto-economic-opportunity-ranking_n_1958840.html

thats all nice, but if an asset is overpriced it will always correct itself. what your saying is irrelevant condo prices are way too high period

 

[fun-guy]

ummmm you might wanna look into that lool

He's not far off when you look at comparables and take all factors into consideration, ie. cost of real estate, transportation, municipal systems, crime, etc...., don't just look at real estate prices, try living in cities like London, Paris, Rome, New York, LA, Barcelona, etc..

Besides, we also have the best mayor, ever! lmao

 

[spendin2much]

I do not understand how the average working guy (white collar) can afford a condo in TO. If you assume a price of $500k with 20% down, which in itself is quite impressive....then a $400k mortgage will cost you $2,100 per month for 300 months. You will pay over $230k in interest....oh yeah...I forgot the condo fees and property taxes which will push you over $3k per month. If you are single with a salary of $120k, you have take home pay of about $6700 per month which means almost half your after tax income is to pay for a small box. The Chinese money has dried up so be aware if you are buying now at market peak.

 

[dexter187187]

5 years from today prices for condos will on average be higher than they are now. There is just too much momentum in this city for things to slow down. The overhang of supply will get absorbed quickly as new buyers enter the scene. Condos in the core & desirable areas will increase by at least 10% over that period.

Toronto is the best city in the world to live- we are so lucky to live here!

LOL!!! No one can predict what 1 year will bring much less 5 years.


So if prices continue to rise like this in 5 years a 1200 sq ft home should be around 3.4 million. That makes sense. Just like it did in pre ww2 Germany.

If you guys don't believe a huge correction is coming you are crazy. House owners are so deluded that's why they borrow up to 75% on their home.

Condos will be the first disaster, the second will be housing. If you think the market is "so great" go talk to a BMW dealer. All the construction workers are bring them back and you can buy a used one for a 10 cents on the dollar.

 

[dexter187187]

and remember people, the BoC has run up a TON of DEBT. They've been saying higher interest rates are coming for years now...and for what?.... to curb inflation???? They don't want to curb inflation. They NEED inflation to make the debts they've run up worth less!!!! They also fear monger with inflation stories because what they TRULY FEAR is DEFLATION.

I for one one would love to see inflation and higher rates, but is it coming?...maybe many years still. The world is deleveraging now. For many years growth was funded by leverage. I think the only thing that can help bring some inflation to erase out all the govermment ineptitude(and careless spending) around the world would be for China and India(and other emerging markets) to bring in their own social programs so that their own people would start spending more freely thus creating their own internal economies; freeing them from dependence on American demand. This could in turn open up new markets for existing companies to sell into.

Don't hold your breath. My friend just returned from a 2 year contract in Shanghai. He said it's slowing down big time.

 

[dexter187187]

Not so quick there, that was a bit of fear mongering today by the BoC hinting they're bullish on rates in the future, IMO. I don't see them raising rates unless inflation is out of control and if you read the latest inflation rates is very low, under 1.5% for core inflation. Raising rates is a strategy to cool off the economy as prices are out of control but they're not, and now that housing seems to be leveling off and correcting due to other fiscal policies I don't see rates going up. Canada runs the risk of higher unemployment if rates go up, the dollar goes up, exports go down and thus employment goes up.

One of the sore spots for Canada is the debt to household income, over 165%, which is very close to the US number prior to the housing collapse, but in Canada it won't be a housing collapse but a credit collapse as Canadians leveraged themselves too much using their homes as a bank to get credit. It's a tricky balancing act and the government is watching all the economic indicators closely every second, not only their indicators but those of countries around the world. Not an easy job, I sure wouldn't want it.

2013 won't be kind to Canadians. Even Harper admitted dark days ahead.