Baby, we got a bubble!?

[James]

Really? The LTT which hasn't changed since 2008 caused a decrease in sales between 2011 and 2012?

It's no surprise people have a low opinion of real-estate agents. Look at what their representatives say in the media.


Perhaps sales are slower downtown because they are the highest priced and most likely to be at the margin of what people can afford? I know prices in the building I current live in are well above what I would pay for a condo unit.

I recall when the Toronto LTT was being phased in. There was definitely a perceived rush from buyers to beat the deadline, however, there most certainly was no significant decrease in buyer interest even after the TLTT was in place. Does it make a difference in purchase price? Sure. Is it a big enough factor to push someone who is looking to buy in Toronto to decide to move into the 905? Nope. Most people would simply budget for it and carry on. Status quo.

 

[taal]

I doubt LTT are playing any role whatsoever, maybe it would effect properties very near to Steeles or other municipal boundaries but even the "school zone" for families is likely a much more important factor.

Anyway, to me it makes sense downtown would slow first, that's where by far and large most of the inventory is.

Does anyone know about MCC sales ? I'd expect MCC to slowdown as well afterwords. But other areas of the 905 i.e. Markham / Vaughan. I can see these developments selling well for some time still.

 

[LostinTO]

THe elimination of both the LTT and RE agent fees would make housing so much more affordable...

I recall when the Toronto LTT was being phased in. There was definitely a perceived rush from buyers to beat the deadline, however, there most certainly was no significant decrease in buyer interest even after the TLTT was in place. Does it make a difference in purchase price? Sure. Is it a big enough factor to push someone who is looking to buy in Toronto to decide to move into the 905? Nope. Most people would simply budget for it and carry on. Status quo.

 

[cdr108]

THe elimination of both the LTT and RE agent fees would make housing so much more affordable...

reversal and elimination of ultra-cheap credit would make housing much more affordable also

 

[interested]

reversal and elimination of ultra-cheap credit would make housing much more affordable also

Actually not sure this is correct cdr.
Prices would come down but mortgage rates would presumably come up thereby not changing affordability much. However the sticker price of the house would come down making it cheaper for those paying cash or who have very small mortgages.

 

[brockm]

Actually not sure this is correct cdr.
Prices would come down but mortgage rates would presumably come up thereby not changing affordability much. However the sticker price of the house would come down making it cheaper for those paying cash or who have very small mortgages.

Half of the baby boomers are relying on their home equity to retire. So I'll wager that housing in North America are about to become a LOT more affordable. And with a lot of them already borrowing against their homes now, I'd say we are in for financial hilarity in the next 10 years.

 

[interested]

Half of the baby boomers are relying on their home equity to retire. So I'll wager that housing in North America are about to become a LOT more affordable. And with a lot of them already borrowing against their homes now, I'd say we are in for financial hilarity in the next 10 years.

A thought brockm.
Our parents worked to 65, retired, used the equity in their homes to downsize.
Reality for many boomers as you point out is: they are carrying debt into retirement: Many will work (if they can) beyond 65.
Many are finding themselves sandwiched and that when factoring costs to move and downsize one does not get as much equity as one might think since 10% is lost to move (real estate commissions/moving expenses/LTT/ legal costs etc.)
Houses may deteriorate in value but I would look to everything else deteriorating at that point....stock market, bond yields staying low etc. since if these consumers can't spend buying things we all suffer as a society.

Not saying it won't happen, but maybe those boomers won't be moving...especially if say their $800K home has a 50% mortgage still which leaves $400 of equity, but if there is a 20% drop, that is $320 equity, factor in 10% fees and other expenses to move based on $800K) leaves $240 equity. You get the point...there may not be that much savings to be had since then they might have to rent which may cost as much as carrying the house once all the costs are figured in.

 

[AKS]

And, of course, I do not speculate or gamble -- buying multiple properties by, say, 5 or 10% down and 30/35 years amortization or buying a property in soon to become a 'slum' otherwise known as City Place. At one time, I lived in St. James Town -- a chick/groovy place to live, meet and enjoy the company of your 'sweet' things.

I don't know what's your problem with City place. It's not like you've ever lived in or been near the area, but you keep badmouthing it. The area isn't as bad as any other areas in downtown. It's definitely way better than Regent Park area. The area has potential to be better than it is now, but 50% of it is still a construction zone or needs to be built. You might as well call East bay front area a slum. There's hardly anything there except warehouses and a club. Only 2 routes serving the area. Teenagers club and party there and puke or urinate any where.

 

[interested]

AKS,

I too share some concerns with City Place.

I looked to invest about 4 years ago. I went with my daughter and we walked City Place and walked Liberty Village.
Somehow and I can't fully explain it, there was a sense of community that both my daughter and I felt in Liberty Village which we did not feel at all at City Place. It just seemed like a concrete / glass jungle.

Interestingly, at least for now, I believe City Place sells and rents very well. I just get a feeling that it is mainly a rental community whereas in Liberty Village for comparison I would say it seems to be 1/2 owners and 1/2 renters. It just seems to me that City Place is more transient. I share some of Ka1's concerns about the long term prognosis of City Place. Frankly, as they continue to build more and more at Liberty Village I am getting somewhat concerned with it as well.

I agree neither is a Regent Park comparable but I would be concerned as City Place ages a bit more, it has that potential to head in that direction.

 

[AKS]

I looked to invest about 4 years ago. I went with my daughter and we walked City Place and walked Liberty Village.
Somehow and I can't fully explain it, there was a sense of community that both my daughter and I felt in Liberty Village which we did not feel at all at City Place. It just seemed like a concrete / glass jungle.

Quite a bit has changed within 4 years on the west side of Spadina. Within 4 years, 3 more parcel of lands have been filled and 4 other parcels are under construction with two of which will have occupancy late this year or next. There's 2 more parcels of land left sitting empty (the beer company bought by Concord and the pit slated for a school). There's a lot of people hanging around the area either at Sobeys or at the Park playing soccer, doing martial arts or walking dogs. As for concrete jungle, it's like that everywhere. I think once everything gets built, it won't be so bad. I find the missing connection to Bathurst a pain. The roads probably won't be open for another 3 years. The pit is a eyesore as well when I walk pass it. It makes the walk to the park uninviting. Another part of the area that bothers me is the tilt of the hill at the park. It's either that or the Spectra's pit right now. But walking by, I feel it divides the area and feels uninviting. If it's an open area, I would feel much safer walking past. But having the hill there blocking the park, it feels a bit disconcerting.

At college park, there's a lot of glass buildings going up. Aura will be a HUGE glass tower and the ROCP are twin glasses as well. Ryerson is also expanding with glass towers for school. I think they've started digging. I'm not too sure. I saw rubble in the area.

King St West will become a glass jungle too. I don't know if you realize, but on 1 single plot of land, there's 3 tall buildings going up at Festival Tower. Now, that is stifling. Plus there's a lot of towers proposed for the area and several others under construction.

Southcore is surrounded by glass as well. 2 clones of infinity, 2 twins of Ice and MLS, 10 York, 1 York, Telus, PWC, Delta hotel, another office tower.

 

[interested]

^^^
Interesting observations and insight.

I personally do not get the area around ICE and MLS. These are buildings at $700/sq.ft. and neither on the water nor in the core.
both are walkable. The Gardner is just there. There will be the Ripley's and I guess if you are a hockey fan it doesn't get much better. Yet there are the new office towers and that makes them desirable I guess.

You may in fact be right that all of the Entertainment district may eventually look like City Place.

Aura will be a huge monster for sure. Very imposing. I already find ROCP 1 and 2 imposing at that location so I can't imagine how Aura will look other than it will be huge. Also, along Yonge street with so much small buildings it will definitely be the obvious pin in the hay stack.

Maybe I will have to go around City Place again and get a feel.

Like I said, it was not something all that tangible...more of a feeling of a lack of sense of community. Just felt different than Liberty Village though clearly City Place is more valuable for its location close to the core.

 

[AKS]

I personally do not get the area around ICE and MLS. These are buildings at $700/sq.ft. and neither on the water nor in the core.
both are walkable. The Gardner is just there. There will be the Ripley's and I guess if you are a hockey fan it doesn't get much better. Yet there are the new office towers and that makes them desirable I guess.

Ice and MLS have a lot going for it. Mostly for it's location near Union Station. It's the transit hub of downtown. You can get anywhere from Union. I think the bus terminal will probably be relocating near there as well. So you have a choice of bus, train or plane (ARL). The island airport is nearby without having to live too close to it. I think this is a very important factor especially if you travel. After a long flight or long distance travel, you want to get home to rest as soon as possible, not making transfers after transfers. Other positives, the buildings are smacked between financial district and the lake making both easy to access. It's near most of the downtown entertainment venues (ACC, skydome, aquarium, harbourfront, roundhouse, convention centre). Theatres on King West is only a few blocks away.

Contrary to that however, I wonder what is the attraction with 300 front. It's right in front of the hydro towers and beside the CBC building both emitting waves. It's further to talk to Union station than say Ice or MLS. But the building is at $700psf.

 

[LostinTO]

If interest rates were to rise, I would dump RE in a heartbeat and put my money in something liquid (CDs, MM funds etc.) that doesn't come with LTT, realtor fees, strata fees, property taxes ...

Actually not sure this is correct cdr.
Prices would come down but mortgage rates would presumably come up thereby not changing affordability much. However the sticker price of the house would come down making it cheaper for those paying cash or who have very small mortgages.

 

[brockm]

A thought brockm.
Our parents worked to 65, retired, used the equity in their homes to downsize.
Reality for many boomers as you point out is: they are carrying debt into retirement: Many will work (if they can) beyond 65.
Many are finding themselves sandwiched and that when factoring costs to move and downsize one does not get as much equity as one might think since 10% is lost to move (real estate commissions/moving expenses/LTT/ legal costs etc.)
Houses may deteriorate in value but I would look to everything else deteriorating at that point....stock market, bond yields staying low etc. since if these consumers can't spend buying things we all suffer as a society.

Not saying it won't happen, but maybe those boomers won't be moving...especially if say their $800K home has a 50% mortgage still which leaves $400 of equity, but if there is a 20% drop, that is $320 equity, factor in 10% fees and other expenses to move based on $800K) leaves $240 equity. You get the point...there may not be that much savings to be had since then they might have to rent which may cost as much as carrying the house once all the costs are figured in.

I think you're erring on the side of holding current variables constant; the boomers represent a major demographic crunch. Whether they sell their homes or die and pass off their property as inheritance there will be massive negative pressure on housing demand. The property which boomers vacate, either by cashing in or croaking represents new housing supply from the perspective of the market.

Personally, I think house prices in the 905 are going to start nosediving as more and more baby boomers start hitting 65-67 and try to wind down their lives and cash in. The problem will be that only the first batch of boomers will make it out safe. Prices are set at the margins, and boomers looking to sell their homes and downsize to condos is not going to work out in their favor -- their home equity will evaporate from under them, and the retirement home and condo stock they're looking to downsize to will conversely face upward price pressure as boomers try to move to them.

Basically what I'm saying is: boomers using their houses as retirement investment vehicles in North America have made a huge god damned mistake.

 

[daveto]

However, someone by the name Daveto had appointed himself as the chief of the 'Morality Squad' of this Board. In response to one of my jabs at Interested, he took upon himself to answer my post and called me a 'troll'. In response, I had sent him a PM basically stating that some of the comments are make with tounge-in-cheek and as long as Interested, or any one else, does not take offense to it, then, it should be alright. He had completely ignored my PM. He was very serious about his self-appointed role as a Chief of 'Morality Squad'. A little later, he took upon himself to respond to another of my posts by calling me 'odious troll'. Instead of responding to his post with equally insulting choicest English words, I decided to throw insult back at him the best way I know. I completely denied his existence and ignored his comments with the contempt they deserved.

Such a delicate little flower. You poor thing.