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Baby, we got a bubble!?

ponyboy said:
http://www.cbc.ca/news/canada/toronto/5-reasons-toronto-house-prices-won-t-crash-in-2016-1.3393299

The article asks several people who make their livelihood on real estate, and they say there's no reason to be concerned about a housing price crash because there isn't an oversupply, there's no GTA recession on the horizon, mortgage rates aren't going up, "Toronto's not a bubble by any definition", and there are affordable options that allow households to stay in good financial shape. So the message is essentially to not delay that purchase of a house or condo, because it isn't getting cheaper.

Judging from Bank of Canada's recent comments, I suspect that maintaining housing prices is their top priority, even though it means poor savings and investment returns for Canadians, and a brain-drain of top talent for more lucrative U.S. based jobs. Is there no will to try to protect the dollar and make longer term investments in training for the high-value industries and productivity improvements?
Click to expand...

These fluff pieces are always good for a laugh, thanks.
 
Ex-Montreal Girl said:
That's a good question.

I'm also wondering whether snowbirds with places in the US are feeling the dollar pinch. If they need to maintain their places -- mortgages, condo fees, insurance, etc. -- in Florida or Arizona, will they remortgage in Toronto? Or does this even make sense?

Selling in Florida right now is not a good idea because, if lots of Canadians are putting their condos on the market, prices will go down. This will be offset somewhat by the gains made by selling in $US and converting to CAD but it's not a good time to sell, IMO.

Unless you want to get the jump on the climate change rush to bail out. (Pun intended.)
Click to expand...
Fledgling snowbird here. Canadians are definitely feeling the pinch but from what I can see they aren't selling out. Instead, they are more willing to rent out the places they own. If they don't own, they are shortening up or cancelling rental plans. I know a number who are continuing to buy in Florida despite the dollar.
 
Lower the lifeboats ...

Housing is the only thing keeping the Canadian economy afloat. Unfortunately, as the United States saw in 2008, an overreliance on the housing sector can be a recipe for disaster. Pundits can bicker over the differences between the U.S. and Canadian housing booms or whether we are indeed experiencing a bubble, but one simple parallel points to a startling problem: We are building a lot more houses than we really need. From 2006 to 2011, Canada’s population grew by 3 per cent while housing stock grew by 7.1 per cent (Canada Mortgage and Housing Corp. housing stock surveys are compiled every five years, so we should have updated numbers this year). According to Statistics Canada, household sizes stayed steady over that period, so additional production was likely not purchased domestically.

As many have argued, evidence suggests that additional production was and is being bought by foreign investors. Indeed, CMHC reports that the share of foreign ownership of condos in Toronto and Vancouver grew by 22 per cent and 51 per cent respectively – in 2015 alone.

No country in history has been able to sustain continued housing overproduction. Whether there is a price correction now is irrelevant to the fact there will inevitably be a production correction. Foreigners are not attached to a domestic housing market the way locals are, their money can leave just as quickly as it enters, making the eventual correction all the more dramatic.
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http://www.theglobeandmail.com/repo...eaning-on-oil-and-the-loonie/article28083772/
 
Comments from Royal LePage as published by the CBC today:

"...Royal LePage says it expects the national real estate market to slow this year due to eroding affordability in Toronto and Vancouver and the fallout from declining oil prices in Western Canada."

"...we expect that the pace of price increases in Greater Vancouver and the Greater Toronto Area — where real estate appreciation has significantly outpaced job and wage growth — will settle to a more sustainable, single-digit price increase trajectory."

Source: http://www.cbc.ca/news/business/fre...market-to-slow-in-2016-royal-lepage-1.3401804
 
Ex-Montreal Girl said:
I wonder if all this won't send the rents too damn high. All those people streaming into Toronto from Alberta looking for work.
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This is one of the reasons why we are seriously considering buying (gulp!) a condo. Rents have been creeping up to the point where the carrying costs of a mortgage might be a better deal, especially as we'd be going in at 20% down and trying to stay at a max purchase price of $500K (just can't wrap my head around paying so much for a skybox -- and I love the lifestyle).

In just over 3 years, we've seen 2 bed/2 bath units in our 'hood going from approx $1850-$2000 up to $2300 - $2600. Meanwhile, prices are somewhat sticky for the established stock, except for the newer builds (ridiculous at $600+ per sq/ft).

Plus, the dedicated "condo style" rental stock is being priced by lunatics. That new KG building at Roehampton and Mount Pleasant is asking almost $3,000 + for their tiny, tiny suites (789 sq feet, 2 BR, 2 BA).

Still, the gut says run (we are bubble folks), but the fact is we are here in this city for the long haul. Might as well dig in. (Just might end up being a septic pit we are tunnelling into.)
 
My thoughts?

A lot of boomers will soon be looking to downsize, especially to places with no stairs. Like us, they will want a place where they can live comfortably as long as possible. Maybe go out feet first, so to speak.

Unlike new younger buyers, they will come with a lot of baggage, i.e. bigger furniture of better quality (i.e. not IKEA type), cars and years of very-hard-to-dump heirlooms (china, silver etc.) That means newer builds will be out because they lack space, storage, parking and the kind of amenities that older folks like us have come to expect or want. People with gardens will want decent balconies, for example. Those with mobility issues might want pools. I think walking to shop and restaurants and entertainment will be huge. So will easy transit. And those of us a certain age are not so easily impressed by the magic fairy dust sparkly tricks of the trade ... tiny kitchens with eating counters, bar-sized fridges and stone countertops, laminate floors, pot lights. We are used to solidity. We need room for king-sized beds.

The rush will be on for older, better-constructed buildings in good locations.

I have no doubt that such resale condos will start to skyrocket in value, especially since relatively few are out there.

That's what we bought and we see very little availability ever. People have to die before a unit goes up for sale. (I know it's morbid.) Units that are on offer sell instantly. Prices are climbing.

So, if you're planning to dig in, choose carefully.
 
Ex-Montreal Girl said:
Unlike new younger buyers, they will come with a lot of baggage, i.e. bigger furniture of better quality (i.e. not IKEA type), cars and years of very-hard-to-dump heirlooms (china, silver etc.) That means newer builds will be out because they lack space, storage, parking and the kind of amenities that older folks like us have come to expect or want. People with gardens will want decent balconies, for example. Those with mobility issues might want pools. I think walking to shop and restaurants and entertainment will be huge. So will easy transit. And those of us a certain age are not so easily impressed by the magic fairy dust sparkly tricks of the trade ... tiny kitchens with eating counters, bar-sized fridges and stone countertops, laminate floors, pot lights. We are used to solidity. We need room for king-sized beds.

The rush will be on for older, better-constructed buildings in good locations.

I have no doubt that such resale condos will start to skyrocket in value, especially since relatively few are out there.

That's what we bought and we see very little availability ever. People have to die before a unit goes up for sale. (I know it's morbid.) Units that are on offer sell instantly. Prices are climbing.

So, if you're planning to dig in, choose carefully.
Click to expand...

I found it hard to find a condo that I like in Toronto. Most condos built in recent years have open concept kitchens as a "feature".
Perfect for people who never cook at home and don't have families.

I can understand if a studio or 1 bedroom has a small kitchen, but there seems to be a great deal of 2 bedroom units with small "open concept" kitchens as well.

I guess most builders aren't targeting buyers like me.
 
Ex-Montreal Girl said:
My thoughts?

A lot of boomers will soon be looking to downsize, especially to places with no stairs. Like us, they will want a place where they can live comfortably as long as possible. Maybe go out feet first, so to speak.

Unlike new younger buyers, they will come with a lot of baggage, i.e. bigger furniture of better quality (i.e. not IKEA type), cars and years of very-hard-to-dump heirlooms (china, silver etc.) That means newer builds will be out because they lack space, storage, parking and the kind of amenities that older folks like us have come to expect or want. People with gardens will want decent balconies, for example. Those with mobility issues might want pools. I think walking to shop and restaurants and entertainment will be huge. So will easy transit. And those of us a certain age are not so easily impressed by the magic fairy dust sparkly tricks of the trade ... tiny kitchens with eating counters, bar-sized fridges and stone countertops, laminate floors, pot lights. We are used to solidity. We need room for king-sized beds.

The rush will be on for older, better-constructed buildings in good locations.

I have no doubt that such resale condos will start to skyrocket in value, especially since relatively few are out there.

That's what we bought and we see very little availability ever. People have to die before a unit goes up for sale. (I know it's morbid.) Units that are on offer sell instantly. Prices are climbing.

So, if you're planning to dig in, choose carefully.
Click to expand...
My daughter just bought ... she ended up choosing an older resale condo because of the space and particularly the kitchen. She rented in a tiny kitchen unit with condo sized appliances and hated it -- she cooks everything. They have a lovely place and all of their friends say it looks and feels like a home, much different from most of the shiny new units.

The bedroom is also big enough to put in a queen sized bed (king in the master) -- that's also an issue with a lot of the new builds. Tiny bedrooms!
 
Ah yes, a young real estate agent friend of mine teases me that I am too old for "the condo lifestyle."

He means eating out and, at most, cooking a frozen pizza in a toaster oven.

Er ... no thanks.
 
"
Fledgling snowbird here. Canadians are definitely feeling the pinch but from what I can see they aren't selling out. Instead, they are more willing to rent out the places they own. If they don't own, they are shortening up or cancelling rental plans. I know a number who are continuing to buy in Florida despite the dollar."

Ex Montreal girl wrote:

I'm also wondering whether snowbirds with places in the US are feeling the dollar pinch. If they need to maintain their places -- mortgages, condo fees, insurance, etc. -- in Florida or Arizona, will they remortgage in Toronto? Or does this even make sense?

Selling in Florida right now is not a good idea because, if lots of Canadians are putting their condos on the market, prices will go down. This will be offset somewhat by the gains made by selling in $US and converting to CAD but it's not a good time to sell, IMO.

Unless you want to get the jump on the climate change rush to bail out. (Pun intended.)

I am just back from Florida...near Miami:
According to the realtors there, Canadians are not buying as much (Chinese were the number 1 buyers the last 2 years). That said, in the building I was in, a few Canadians are selling. Some who bought at the bottom of the market 2009 to 2011 with a par exchange can virtually double their money and that may drive them to sell. Prices were up 5% -10% year on year from 2014 to 2015 in the building I was in. So I doubt many Canadians will put their homes on the market. In Miami and surrounding area, South Americans, Russians are buying as well as some Europeans. Further North near Port St. Lucie, where there were a lot of Canadians, Ex Montreal girls comment may be accurate but I do not believe that Canadians really drive the market there right now as others have taken a more significant role. Also, the reality is FLorida is growing. The state passed New York as the 3rd largest state by population last year. As people retire, Americans are moving there as there is no state tax and they get homestead which lowers their taxes.
I have heard of some people renting their places out and people staying shorter times....eating out less....but they are adjusting. Remember, in the 1990's the Canadian dollar was as low as 62 cents US.

Relating to Pink Lucy's comment....I concur. I see more willing to rent out places and shortening up trips. Florida's market at least near Miami is still going up...though less Canadians are buying but as Pink Lucy said, I too know of a number who are looking....they are just looking at less expensive places.
 
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