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Baby, we got a bubble!?
- Thread starter simuls
- Start date
daveto
Active Member
Interesting logic.
KA1
Senior Member
Answer is simple, my friend. Very simple.
It is 'Foreign (read Chinese)' investors from mainland China.
Soon they will be at our door, together with East Indians and others as well.
If you have not yet dipped your toe in the Toronto market, you gona regret. At that time, it will be too late to jump in.
CN Tower
Banned
Ireland
I believe at the peak, you could rent a home in Dublin worth one million for $833/month.
If/when Hongcouver reaches that irrational peak please share your findings and the short sale will become blatantly obvious.
I believe at the peak, you could rent a home in Dublin worth one million for $833/month.
If/when Hongcouver reaches that irrational peak please share your findings and the short sale will become blatantly obvious.
redfirm
Active Member
Yeah, but that's Ireland. The same logic that applies to the rest of the world somehow does not apply here because this is Toronto. Only in TO and VanCity r/e prices, rent levels, debt loads, and salary levels do not matter at all. Hmmmm ....
klb86
Active Member
'Sizable minority' at risk, mortgage group warns
About 12 per cent of Canadian mortgage holders would be challenged if their rate went up by less than one percentage point, a report from the Canadian Association of Accredited Mortgage Professionals found Wednesday.
CAAMP is a national agency that represents 12,300 people who work somewhere in the mortgage industry.
Some 650,000 out of 5.8 million Canadians who have some sort of mortgage would be at risk if their rate went up by as little as less than one percentage point, the agency said in its annual report Wednesday.
Many of those people are on fixed-rate mortgages, and the agency says by the time their mortgages are due for renewal, their financial capacity will have increased and the amount of mortgage debt will be reduced. Indeed, the group's annual report paints a picture of a mortgage market in gradual recovery from the recession. All in all, there's a "gradually falling rate" of people falling behind on their mortgages, the report notes.
But the report also says as many as 175,000 Canadian homeowners — as much as two per cent of the market — may owe more on their mortgages than their homes are worth on the market.
On the other side of the ledger, the report found there are 2.85 million Canadian homeowners who are debt-free on their homes — meaning, they owe nothing on their homes either in terms of a mortgage or home-equity line of credit. And 94 per cent of Canadian homeowners own at least 10 per cent of the equity in their homes, the report finds. Within that, more than three-quarters (78 per cent) own more than 25 per cent of their homes.
But about 75,000 Canadian homeowners own less than 10 per cent of their homes. That figure represents less than two per cent of mortgage holders, but those are the people who could be susceptible to a modest pullback in home prices, as has happened in large parts of Europe and the United States in recent years.
For much of the past year, the Bank of Canada, federal government officials and private sector economists have warned Canadians to get their finances in order and reduce their debt loads ahead of higher interest rates to come.
"While the forecasts for the economy, housing market, and mortgage market are encouraging, there is, as always, uncertainty about the outlook," the report warns.
And to be sure, the picture of Canada's housing market painted in the CAAMP report looks significantly better than the picture in the United States. A report from real estate data firm Zillow released Tuesday found that 28.6 per cent of U.S. homeowners are underwater — meaning, they owe more on their mortgages than their homes would be worth if they sold them.
Nonetheless, the CAAMP report says a "sizable minority" of Canadian homeowners would be unable to withstand even a one percentage point rise in their mortgage. Although 60 per cent of Canadians are in fixed rate mortgages (the average rate was at 3.92 per cent in 2011, a drop from 4.22 per cent a year earlier) the budgets for a number of homeowners are squeezed enough that they would be in trouble if their rates went up by that comparatively small amount.
"A vast majority of mortgage holders has considerable capacity to afford rises in mortgage interest rates," the report stated. CAAMP estimates that the typical mortgage-holder could withstand an increase of about $750 a month without succumbing.
Canadians owe a collective $982 billion of debt on their homes, and the report estimates that there are about 13.6 million occupied dwellings in Canada.
Within that, about 9.55 million are owner-occupied, including about 5.80 million with mortgages and 3.75 million without mortgages.
Across all homeowners, the average amount owed on a mortgage is $90,000 and the average home-equity line of credit is $12,000.
About 12 per cent of Canadian mortgage holders would be challenged if their rate went up by less than one percentage point, a report from the Canadian Association of Accredited Mortgage Professionals found Wednesday.
CAAMP is a national agency that represents 12,300 people who work somewhere in the mortgage industry.
Some 650,000 out of 5.8 million Canadians who have some sort of mortgage would be at risk if their rate went up by as little as less than one percentage point, the agency said in its annual report Wednesday.
Many of those people are on fixed-rate mortgages, and the agency says by the time their mortgages are due for renewal, their financial capacity will have increased and the amount of mortgage debt will be reduced. Indeed, the group's annual report paints a picture of a mortgage market in gradual recovery from the recession. All in all, there's a "gradually falling rate" of people falling behind on their mortgages, the report notes.
But the report also says as many as 175,000 Canadian homeowners — as much as two per cent of the market — may owe more on their mortgages than their homes are worth on the market.
On the other side of the ledger, the report found there are 2.85 million Canadian homeowners who are debt-free on their homes — meaning, they owe nothing on their homes either in terms of a mortgage or home-equity line of credit. And 94 per cent of Canadian homeowners own at least 10 per cent of the equity in their homes, the report finds. Within that, more than three-quarters (78 per cent) own more than 25 per cent of their homes.
But about 75,000 Canadian homeowners own less than 10 per cent of their homes. That figure represents less than two per cent of mortgage holders, but those are the people who could be susceptible to a modest pullback in home prices, as has happened in large parts of Europe and the United States in recent years.
For much of the past year, the Bank of Canada, federal government officials and private sector economists have warned Canadians to get their finances in order and reduce their debt loads ahead of higher interest rates to come.
"While the forecasts for the economy, housing market, and mortgage market are encouraging, there is, as always, uncertainty about the outlook," the report warns.
And to be sure, the picture of Canada's housing market painted in the CAAMP report looks significantly better than the picture in the United States. A report from real estate data firm Zillow released Tuesday found that 28.6 per cent of U.S. homeowners are underwater — meaning, they owe more on their mortgages than their homes would be worth if they sold them.
Nonetheless, the CAAMP report says a "sizable minority" of Canadian homeowners would be unable to withstand even a one percentage point rise in their mortgage. Although 60 per cent of Canadians are in fixed rate mortgages (the average rate was at 3.92 per cent in 2011, a drop from 4.22 per cent a year earlier) the budgets for a number of homeowners are squeezed enough that they would be in trouble if their rates went up by that comparatively small amount.
"A vast majority of mortgage holders has considerable capacity to afford rises in mortgage interest rates," the report stated. CAAMP estimates that the typical mortgage-holder could withstand an increase of about $750 a month without succumbing.
Canadians owe a collective $982 billion of debt on their homes, and the report estimates that there are about 13.6 million occupied dwellings in Canada.
Within that, about 9.55 million are owner-occupied, including about 5.80 million with mortgages and 3.75 million without mortgages.
Across all homeowners, the average amount owed on a mortgage is $90,000 and the average home-equity line of credit is $12,000.
js97
Senior Member
650k/5.8 mill = 11.2%.... I would say that's a buble... Even more reason for Mark Carney Not to raise the rates?
kkgg7
Banned
Maybe for Vancouver, but Toronto is not that bad at all.
If you look at New York, real estate price seems irrelevant to rent and salary levels. A condo renting for $3000 a month in Manhattan can easily sell for over a million. Not so much a "bubble" talk about the big apple but the ratios are much worse than Toronto. For example, NYC's housing price can easily be 2X or 3X of Toronto, do they all make 2X or 3X the money? I doubt that.
kkgg7
Banned
If less than 1% of mortgage rate increase will make their payment a problem, those people are stupid enough to buy that house in the first place. Isn't housing expense not supposed to exceed 35% of net income? How did they get mortgages? After mortgage and other household expenses, you at least should be able to save $500 a month in order to even think about getting that mortgage.
Apparently too many people are buying too big a house than their financial ability allows. Will it kill them to live in smaller spaces?
redfirm
Active Member
NYC consists of 5 boroughs but people on this tread like to ignore the other four and only compare Toronto to Manhattan. As much as I like my TO such comparison is just silly. Nothing in this city comes even close to Manhattan, no matter which way you look at it... Nothing on this planet can or should be compared to Manhattan. Until couple of years ago TO didn't even have a true 5 star hotel. UN, diplomats, Wall Street, actors, writers.... You just can't compare. Manhattan is unique. And yes, people there do make 2-3 times the money: finance, IT, doctors, lawyers, etc. Most of the lower paid workers take ferries from Jersey across Hudson.
daveto
Active Member
I appreciate your opinions, but please don't just toss out unsupported or substantiated facts. It just muddies the discussion. A condo renting for $3000 in Manhattan, selling at easily more then a million? Could you provide an example?
Ps. According to Demographia, the NYC ratio was 6.1 as at 2010, as compared with Toronto at 5.1.
http://www.demographia.com/dhi.pdf
avenirv
New Member
generally speking you are right.
but i want to let you know that in IT the rates in Manhattan are not necessarily higher that those in toronto. since the indian invasion a rate of 70/h in manhattan, i talk about financial companies, is common. as is in toronto.
but i want to let you know that in IT the rates in Manhattan are not necessarily higher that those in toronto. since the indian invasion a rate of 70/h in manhattan, i talk about financial companies, is common. as is in toronto.
kkgg7
Banned
You are right. I agree that Toronto should never compare with New York City. Toronto+Montreal+Vancouver is not even a close match. there are other cities that can though.
Yes, people in New York can make 2-3 times the money. But the average/medium salary won't be that much different. I doubt it will be even 50% more.
ILuvTO
Active Member
Do you have any facts to substantiate this claim?
redfirm
Active Member
This whole discussion on Manhattan vs Toronto, salaries here and there, etc. is irrelevant. My only point was that Manhattan is not the best example to use when trying to prove / substantiate your point in relationship to Toronto. Manhattan is too unique.
Over the last 10 years I've been to NYC on average 5-6 times a year. Yes, I wondered about their prices. Yes, I always look at that skyline and wonder if TO will ever catch up. It's just natural to do that. But the bottom line is: there's no comparison.
Over the last 10 years I've been to NYC on average 5-6 times a year. Yes, I wondered about their prices. Yes, I always look at that skyline and wonder if TO will ever catch up. It's just natural to do that. But the bottom line is: there's no comparison.
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