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Baby, we got a bubble!?

ILuvTO said:
Wow! That is expensive for such a new building. Does anyone have more info on MLS and why maint fees are so high? Does it have a large number of amenities that require significant upkeep costs?
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I am surprised by that number too. Also, there are a lot of units and a lot of footage sharing the expenses. I am not sure this is right.
 
^^^
I went on the web site of MLS: Fees are about 67 cents based on the posted sizes but these may not be accurate for both 55 and 65 Bremner (MLS). I don't know what is included.

I believe that in a lot of these new buildings the increase in fees is due to the HST being added onto the reserve fund. Since the initial development fees quoted I believe do not include the reserve fund when this is added or even if the reserve fund is there when the 13% on the reserve fund is added it bumps up a lot of condo fees.

I know a condo I own in a very well run building in midtown condo fees are now 60 cents. 7 cents of that was to increase the HST on the reserve fund. When Ontario passed the HST, it added 8% on the reserve fund (over the 5% GST) and hence for a $1million dollar reserve, suddenly an additional $80,000 had to be funded. If I assume the building has 200 units approximately that is $400/unit. Assuming 1500 sq.ft average unit this added almost 3 cents of fees. I believe our actual reserve was closer to 1.5 million dollars and hence closer to 5 cents.

I suspect MLS and other new buildings have this now. Even if I am wrong and the reserve funds were initially included, when MLS would have first been marketed, Ontario had not adopted the HST and hence the reserve figures would be underrepresented by 8%.
 
interested said:
^^^
I went on the web site of MLS: Fees are about 67 cents based on the posted sizes but these may not be accurate for both 55 and 65 Bremner (MLS). I don't know what is included.

I believe that in a lot of these new buildings the increase in fees is due to the HST being added onto the reserve fund. Since the initial development fees quoted I believe do not include the reserve fund when this is added or even if the reserve fund is there when the 13% on the reserve fund is added it bumps up a lot of condo fees.

I know a condo I own in a very well run building in midtown condo fees are now 60 cents. 7 cents of that was to increase the HST on the reserve fund. When Ontario passed the HST, it added 8% on the reserve fund (over the 5% GST) and hence for a $1million dollar reserve, suddenly an additional $80,000 had to be funded. If I assume the building has 200 units approximately that is $400/unit. Assuming 1500 sq.ft average unit this added almost 3 cents of fees. I believe our actual reserve was closer to 1.5 million dollars and hence closer to 5 cents.

I suspect MLS and other new buildings have this now. Even if I am wrong and the reserve funds were initially included, when MLS would have first been marketed, Ontario had not adopted the HST and hence the reserve figures would be underrepresented by 8%.
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Thanks Interested. HST did not even occur to me. In any event, 73 cents is quite expensive. You have to be rich to live in a condo these days, never mind a house.
 
Southcore said:
Problem is he's self-employed, little debt, lots of cash on hand looking to burn it (no pun intended?)
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Based on above it sounds as though your father in law knows a bit more about investing that you do! If you were wise maybe you'd consider listening to his rationale for investing. Many today are land banking condos in prime spots instead of cash banking dollars that may get inflated away in value in years to come. It's not such a crazy thought.

Turner's blog is pure garbage. Not because the market isn't vulnerable but because he embelisshes it in an ultra pathetic attempt to serve his self-interest of creating chaos. He has been so wrong for so long than even a 20% price correction would not vindicate him.
 
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^^^
I was just talking to my neighbour's son. He is "in the investment business". MBA. Knowledgeable pleasant and quite knowledgeable 30 year old.
He has told his father to sell his home for the past 2 years. Our home prices are up about 15% I would say in 2 years.
There would be another 10% of soft costs to sell. So 25%.
His parents have not followed. 25% would be quite a correction.

To hope for 25-30% drop from present prices will inflict a lot of pain on a lot of people and probably the economy as a whole.

Timing is difficult in anything. I agree a correction is due. I even believe it has started in the condo Precon and the luxury markets. The degree and the exact timing however is difficult to know.
 
^^^
800K of mortgage? Will that really be painful if interest rates go up.

Personally, I would not sleep at night worrying that my 3% mortgage went to 5% and my payments increased by about 25%. Also, if the asset were to depreciate, I would worry that at time to refinance, my equity will not have grown or worse may have declined and wonder whether I would qualify to refinance at all.

The problem is unfortunately with the commoditization of the housing stock, it is trading like a commodity instead of shelter. If the investment starts to falter, people treat it less like a commodity, then young people will be able to afford homes without mortgaging their first born child. That said, those saddling themselves with large debt will be stuck with it for a very long time going forward.

Not to be unkind ponyboy, but maybe Leslieville is beyond what you should be looking for. The decision boils down to wants vs. needs. There are walkable neighbourhoods, granted not in the hot areas, and possibly even in the burbs. If you and wife's wants are such that you "have to have it", appreciate you may have to give up a lot in return.
 
How long can prices stay at this level given the high multiples relative to income and rent? Isn't a "fundamentals analysis" ultimately right? Predicting when ratios return to equilibrium, whatever that is, seems impossible given political interference in distorting markets. We can afford a nice place, but I don't want my shelter costs to take such a chunk out of our incomes, and also lose flexibility of moving when we want without huge transaction costs. Unfortunately, the supply of rentals suitable for a young family is small relative to the single family homes for sale. I'd prefer to rent, and think a toddler can thrive in a large condo in a walkable neighbourhood, but my wife is set on us borrowing 800K for a semi in a place like Leslieville. We're being displaced from our lovely rental of two years so the owner can use it, and currently looking. We both hate having to move, and renting includes the risk of the owner taking over or selling at any time with 60 days notice. Being in a quality school district is important to us both, but that is years away. Any comments/advice?
 
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just chiming in on the discussion, with $800k mortgage, that assumes you have at least 20% deposit ($200k) if you dont want to pay mortgage insurance. that means Leslieville is selling for around a million. I think that sounds reasonable for that area in this still hot market. I live in North York around Yonge-Finch and SFHs easily go for at least a million.

ponyboy: I'm just curious if you are trading up from an existing house/condo, or currently renting and have saved up a large deposit.

edit: didn't see your last post. I guess you answered part of my question currently renting. how much down payment have u saved up? I'd be careful of the debt ratio buying at this time.
 
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ponyboy said:
How long can prices stay at this level given the high multiples relative to income and rent? Isn't a "fundamentals analysis" ultimately right? Predicting when ratios return to equilibrium, whatever that is, seems impossible given political interference in distorting markets. We can afford a nice place, but I don't want my shelter costs to take such a chunk out of our incomes, and also loose flexibility of moving when we want. Unfortunately, the supply of rentals for a young family is small relative to the single family homes for sale. I'd prefer to rent, and think a toddler will do well in a large condo in a walkable neighbourhood, but my wife is set on borrowing 800K for a semi in a place like Leslieville. School districts are important to us both, but that is years away. any comments/advice?
Click to expand...

"The market can stay wrong longer than you can stay solvent" is an oft-quoted statement about the stock market, and real estate has a much longer lead time before a crash due to the low liquidity factor (i.e. a sale takes weeks, not minutes.)

Why not split the difference with your wife by renting a semi- or townhouse in Leslieville for a year, with the intention of investigating the school/daycare/livability? If you love the 'nabe, you'll be happy to buy a place with the intention of living there for years, so if there's a correction, you can (probably) ignore it over the long run. On your wife's side (assuming you're not already living in Leslieville), she'll get the chance to spend a year deciding whether this is where she wants to live for the rest of her life/the kids' schooling/pick your timeline.

We did just that with Cabbagetown, and decided the high prices and crappy 'high street' that is/was Parliament (this was 15 years ago), and the fear factor my wife had with the vagrants/crack addicts when pushing the baby carriage, convinced us to move across the Don to Riverdale when we bought. We loved, loved, loved our apartment in Cabbagetown (triplex on Ontario where we had the 3rd floor and therefore exclusive use of the rooftop deck) as a couple and not there during the day, but Mrs. RRR was not a fan once the first ratling was born.

Renting for a year gives you the 'excuse' to not buy now, or the incentive a year from now to buy, as you've grown to love the quartier and have no intention of moving elsewhere.
 
ponyboy said:
but my wife is set on borrowing 800K for a semi in a place like Leslieville.
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umm, sorry but where in the h*ll are you looking in Leslieville that requires a $800K mortgage?
assuming you put at least 20% down payment, that means you're looking at $1MM property !?!? in Leslieville ?!?!??
 
Dipping a toe into the 'nabe 'water'

ponyboy said:
How long can prices stay at this level given the high multiples relative to income and rent? Isn't a "fundamentals analysis" ultimately right? Predicting when ratios return to equilibrium, whatever that is, seems impossible given political interference in distorting markets. We can afford a nice place, but I don't want my shelter costs to take such a chunk out of our incomes, and also loose flexibility of moving when we want. Unfortunately, the supply of rentals for a young family is small relative to the single family homes for sale. I'd prefer to rent, and think a toddler will do well in a large condo in a walkable neighbourhood, but my wife is set on borrowing 800K for a semi in a place like Leslieville. School districts are important to us both, but that is years away. any comments/advice?
Click to expand...

"The market can stay wrong longer than you can stay solvent" is an oft-quoted statement about the stock market, and real estate has a much longer lead time before a crash due to the low liquidity factor (i.e. a sale takes weeks, not minutes.)

Why not split the difference with your wife by renting a semi- or townhouse in Leslieville for a year, with the intention of investigating the school/daycare/livability? If you love the 'nabe, you'll be happy to buy a place with the intention of living there for years, so if there's a correction, you can (probably) ignore it over the long run. On your wife's side (assuming you're not already living in Leslieville), she'll get the chance to spend a year deciding whether this is where she wants to live for the rest of her life/the kids' schooling/pick your timeline.

We did just that with Cabbagetown, and decided the high prices and crappy 'high street' that is/was Parliament (this was 15 years ago), and the fear factor my wife had with the vagrants/crack addicts when pushing the baby carriage, convinced us to move across the Don to Riverdale when we bought. We loved, loved, loved our apartment in Cabbagetown (triplex on Ontario where we had the 3rd floor and therefore exclusive use of the rooftop deck) as a couple as we were not there during the day, but Mrs. RRR was not a fan once the first ratling was born.

Renting for a year gives you the 'excuse' to not buy now, or the incentive a year from now to buy, as you've grown to love the quartier and have no intention of moving elsewhere.
 
Riverdale Rink Rat said:
Why not split the difference with your wife by renting a semi- or townhouse in Leslieville for a year, with the intention of investigating the school/daycare/livability?

Renting for a year gives you the 'excuse' to not buy now, or the incentive a year from now to buy, as you've grown to love the quartier and have no intention of moving elsewhere.
Click to expand...

That is so reasonable that I doubt many wives would agree to it :p

This bubble is being pushed more by granite/hardwood home hungry wives than anything else, even more than Chinese investors.
 
thanks for the interest in our (my) situation

dlam -- we're currently renting. We've saved a sizeable deposit and can put 20-30% down, but I would rather keep those funds in stocks and other investments for retirement 25 years from now. Our non-housing retirement savings would basically be cut in half to put down 200k. I would prefer to put 100k down on a 500K property than 200K down on a 1M property, but nice places are twice the price they were 10 years ago. We can afford 1M as 4x our income, but I would prefer something less. I've never liked the t

interested -- I'm ready financially, but perhaps not emotionally -- For me there are other negatives, not all financial (responsibilities of maintaining an old house, something I would surely be the point person in the household... I own a triplex rental property, so I'm weary of all the responsibilities of upkeep). Renting these past 2.5 years has been a nice dose of freedom.
 
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