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Baby, we got a bubble!?

Eug said:
Yes, there are some REITs too that are looking for apts too, but it's still not quite the same thing as individual investors paying high dollar for individual condos.


The business plan should always including costing for maintenance and other costs.
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Agree with the first comment.

Regarding the second (bolded)

Should, but the issue that I read or perhaps saw discussed on BNN was that the maintenance costs were what was driving some of the landlords (smaller ones) to cash out at this time. I agree maintenance should be included in the business plan, just echoing what I remember being said.
 
BTW, maybe my friend is biased, but the comment was made that their impression is that some of these REITs are not doing enough due diligence with some of the rental buildings they purchase. My friend thinks some of the smaller landlords cash out to a REIT because they can get away with it, whereas other small landlords won't touch those buildings.
 
I think that in fact may be part of it. Also, in a lot of cases, the apartments are now being handed down intergenerationally. The families do not wish to incur the big expenses in some case. As well, because of the relative paucity and many people bidding, it is possible that the Reit's are paying "premiums" which just make it attractive enough for the families to sell.
 
KA1 said:
There was a time when a house in the Bloor & Bathurst area was sold for $ 21,200.00. A comparable house on the same street was listed at $ 21,700.00 a few months later. All the neighbours were screaming -- this kind of price increase will never stick. It did and some.

You 'spring chickens' have a lot to learn about gravity yet.
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So, when I grow up, I'll learn the lesson that house prices always go up? Tell me 'wise old man', what were the incomes of your characters back in oldey-time?
 
MAU said:
So, when I grow up, I'll learn the lesson that house prices always go up? Tell me 'wise old man', what were the incomes of your characters back in oldey-time?
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$ 75.00 per week for an entry level job in the accounting department of a manufacturing company on Eastern Avenue. Life used to be a lot more simple and enjoyable then. Among other things, draft beer used to be 25 cents a glass. Oh! do I miss those days.
 
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KA1 said:
There was a time when a house in the Bloor & Bathurst area was sold for $ 21,200.00. A comparable house on the same street was listed at $ 21,700.00 a few months later. All the neighbours were screaming -- this kind of price increase will never stick. It did and some.

You 'spring chickens' have a lot to learn about gravity yet.
Click to expand...

KA1 said:
$ 75.00 per week for an entry level job in the accounting department of a manufacturing company on Eastern Avenue. Life used to be a lot more simple and enjoyable then. Among other things, draft beer used to be 25 cents a glass. Oh! do I miss those days.
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how long ago was this?

i know Bloor & Bathurst is really desirable now and considered the west Annex, and not exactly an area an 'entry level' professional should be looking at ... maybe middle management with at least 5-10 years experience.

by historical price : income standards of 3.5x income:
$21,700 / 3.5 = $6,200 ; $6,200 / 52 weeks = $119.23 per week

would $119.23 per week be considered middle management wage at that time?
 
cdr108 said:
how long ago was this?

i know Bloor & Bathurst is really desirable now and considered the west Annex, and not exactly an area an 'entry level' professional should be looking at ... maybe middle management with at least 5-10 years experience.

by historical price : income standards of 3.5x income:
$21,700 / 3.5 = $6,200 ; $6,200 / 52 weeks = $119.23 per week

would $119.23 per week be considered middle management wage at that time?
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It was in 1965.

In those days, inner cities were considered to be un-desirable areas to live simply because everyone was moving to 'burbs. Don Mills was the 'model community' developed and there was talk of developing more of this type of communities. Transport grid-locks has brought people back to the cities and me to core downtown.

No. $ 119.23 per week was not cosidered to be middle management wage. In 1967, I got an entry level job with the government in the Audit division at $ 5,850 per year or $ 112.50 per week. $ 8,400 per year or $ 161.50 used to be considered middle management level job.

There has been a sharp increase in the price of a glass of beer since then. Funny, no one even talks of ' bubble' bursting as far as beer price is concerned.
 
Eug said:
How much of the beer price was tax in 1965?
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Did not know and did not care either. All what I fondly remember is that a glass of draft beer cost 25 cents. Sadly, no one ever talks of 'bubble' bursting and beer prices going down 25% or more.
 
KA1 said:
Did not know and did not care either. All what I fondly remember is that a glass of draft beer cost 25 cents. Sadly, no one ever talks of 'bubble' bursting and beer prices going down 25% or more.
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Well, like I said, you can get beers in some restaurants right now still for around $2.

Judging by your pay numbers, pay might now be about 8X what they were in 1965. If beer was 25 cents back then, a comparable price might be $2 now.

According to the BoC's Inflation Calculator, that's actually not too far off the mark, as it states that 25¢ is worth around $1.78 today.

That said, it's true that most restaurants and bars these days won't have them for $2. However, the point my question about tax is that perhaps the difference can be largely accounted for by tax. If tax is the issue, it's not a beer bubble.
 
interested said:
All these arguments about rent to own are based on the lowest mortgage rates virtually in history and certainly for the past 50 years. So, owning can only get more expensive as interest rates rise.
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Yup and that's the mistake a lot of new homeowners are making. They're not thinking "what is the rent to ownership ratio going to be in three or five years?" - particularly for condo owners who plan to rent out their units as an investment.

I see all these articles in the papers about what people need to thin about before they buy. But none of them really get at the long-term finances, economics or comparisons of costs. There needs to be a formulaic checklist for people - e.g. 12 steps to go through before you enter the market, with most of them helping people to assess their financial situation, their financial goals, and to try to assess the financial costs five or ten years down the line.
 
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cdr, I watched.
Yes, it is a good time to buy according to them. Also, increases of 6-9%/year are not worrisome.

The good points: Buy in a multiphase project and buy the first phase because the costs will go up in future phases. True assuming the market can sustain it.

They told someone to buy based on making money on the downpayment. Assumes prices just keep going up. They noted that the differene between new build and resale is now $150-200/sq.ft.. that is quite worrisome to me but didnt seem to phase them.

They thought City place was a good location to buy because you can know your rents and carry a $575/sq.ft. place based on $1500 of rent. Sure at the lowest interest rates in 50 years you can break even. And as well, they didn't seem worried that they have 65-70% investors in the buildings. (The 65-70% was their numbers, not mine) That would worry me.

As you said CDR, who buys urbanations data: developers.
Who does Jane Renwick work for: Hunter Milbourne. How realistic is it to say. Don't buy now and we at Milbourne won't make any money.

The other thinking that bothered me was Renwick said it was reasonable that real estate agents get 4% on projects for bringing clients. Why would the developer not give at least 2% discount to those who walked in without a realtor. Because the whole thing is designed to have the realtor who represents "his client" really work to profit from the client by being rewarded by the developer. The realtor tells his client what a great deal. And it is, for the realtor who makes more commission than on a resale. Basically the realtor is being put in the position of being bought off by the developer to sell his client a good at an inflated value. When people hear about a project and have to use the realtor to get into it, it just drives up prices unnecessarily. PLease understand, I am not anti realtor. I just believe if one goes to a site without a realtor, there is no reason that the price should be 4% higher than it ned be. Just developer making more profits at everyone in the markets expense and making housing less affordable for all.
 
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