Housing Starts Remained Strong in September

[lowesthangingfruit]

7 % gain annually is modest...as long as employment remains high, the government injects (as they say) some much needed funds into Ontario's manufacturing sector, our banks stay solid, investors abroad keep investing, the government sticks to their infrastructure plan, indebtedness stays relatively low, there isn't widespread panic, there is consistent population growth, and no catastrophic event that creates fear...everything will be fine.

Condo capital of the world in the sense that no where else on Earth our more condos being built in one particuliar place. Foreign investors (both builders and purchasers) are continuing to invest in our city. The condo lifestyle has become the preferred lifestyle of choice in this city and ammenities are outstanding compared to other cities throughout the world. Plus who the hell wants to shovel snow...our winters last 8 months of the year !

So condoboy, you have to admit there are alot of storm clouds gathering so I am curious re. your logic. In your view, what would have to happen to have a 20-30% (or more) drop instead of the rise you predict ??

As for the "preferred" lifestyle, I am not sure I agree. I think the main reason why condos sales have outpaced other lower density/detatched RE is because simply the latter have been priced out of reach for most buyers trying to get into the market. There will always be a market for condos and high rises, but I think most logical and reasonable ppl would prefer to own real land rather than a piece of space in the sky if they had the choice.

 

[cdr108]

Careful cdr....after the age of 40 a man's likelihood of sustaining a heart attack while shoveling snow in the winter rises by 50% . Even though this is somewhat of a joke....it happens more than people think. Plus I like my underground parking, pool, gym, 24 hours security, and many other ammenities right at my doorstep!

LOL ... that's why I said to pay someone else to do it.
If you're willing to pay condo fees, why not just get a lawn care/snow removal service on an annual contract.

 

[condoboy]

LOL ... that's why I said to pay someone else to do it.
If you're willing to pay condo fees, why not just get a lawn care/snow removal service on an annual contract.

I guess because I've been living in condos all my life...I've never lived in a house before. Maybe someday...we'll see.

 

[Roy G Biv]

very dangerous way to think. you're going to be very disappointed the next couple of years.

Agreed.

Since 1994, my house in Cabbagetown has appreciated 4-5% compounded annually.

 

[cdr108]

Agreed.

Since 1994, my house in Cabbagetown has appreciated 4-5% compounded annually.

That's normal appreciation but I am surprised that it hasn't be higher in this recent housing cycle since cabbagetown is a desireable dt neighbourhood.

 

[cabbagetowner]

That's normal appreciation but I am surprised that it hasn't be higher in this recent housing cycle since cabbagetown is a desireable dt neighbourhood.

i think 4-5% is still high! should roughly track inflation. it's funny how people's expections on real estate these last years have become so optomistic.

 

[lowesthangingfruit]

That's normal appreciation but I am surprised that it hasn't be higher in this recent housing cycle since cabbagetown is a desireable dt neighbourhood.

Wow, if that's normal long term appreciation....that really sucks.

After expenses, taxes, inflation etc...I might as well rent and forget this RE thing.

 

[cdr108]

Wow, if that's normal long term appreciation....that really sucks.

After expenses, taxes, inflation etc...I might as well rent and forget this RE thing.

Typically throughout history RE values double every 18 years, so that works out to be 4-5% compounded annually.

So the appreciation in the Toronto area of 125-150% in the past 10 years concerns me that we have reached a peak of this cycle.

 

[TrickyRicky]

"Wow, if that's normal long term appreciation....that really sucks.
After expenses, taxes, inflation etc...I might as well rent and forget this RE thing."

Perhaps, but you are missing several of the key components. Most importantly the 3-5 percent appreciation is on the total value of the asset. You however likely do not own the whole asset so you are leveraging the bank's money and reeping 100% of the appreciated value. Secondly, society subsidizes home ownership by providing tax benefits and policy direction that further augment returns on your investment.

 

[lowesthangingfruit]

"Wow, if that's normal long term appreciation....that really sucks.
After expenses, taxes, inflation etc...I might as well rent and forget this RE thing."

Perhaps, but you are missing several of the key components. Most importantly the 3-5 percent appreciation is on the total value of the asset. You however likely do not own the whole asset so you are leveraging the bank's money and reeping 100% of the appreciated value. Secondly, society subsidizes home ownership by providing tax benefits and policy direction that further augment returns on your investment.

The only tax benefit I can think of is the capital gains exemption if the property is your primary residence. Otherwise the government will tax you to the hilt with indiscriminate property taxes increases that really negates any capital gains exemption if you been paying out taxes for awhile. And unlike the US, one cannot write off mortgage interest payments on primary residence unless you do that Smith manuever thing. So what tax benefits are you referring to ??

 

[TrickyRicky]

Low, the issue of tax policy and policy subsidization for property ownership is too complex and too much of a tangent for this thread. Suffice to say personal residences, income and investment property, and new home ownership are all encouraged in different ways directly through tax policy and indirectly through government spending. Keep in mind that subsidization can be direct (income tax deduction for property taxes, mortgage interest write-off for income property) but it can also be relative (single family home owners pay less than tenants) or deferred (Capital Cost Allowance allows for the depreciation of investment property to offset against income).

 

[androiduk]

One more facet to this real estate market is that a lot of developers lost financing on their projects for various reasons. They then had to turn around and secure new financing in a very unfriendly marketplace. You can be sure that the new financing came at a hefty increase from their original terms. Imagine if they had to pay an additional 1 or 2% on a $350 million condo. They now have 3 choices. Eat it, pass it on to the consumer by raising prices - in a skittish market, or sit on their property and wait until things settle down. I read somewhere recently that banks are now refusing to lend $ on a project until they see a building permit is issued. I don't know at what point a building permit is issued, maybe someone can enlighten me.

 

[Alvar]

Typically throughout history RE values double every 18 years, so that works out to be 4-5% compounded annually.

So the appreciation in the Toronto area of 125-150% in the past 10 years concerns me that we have reached a peak of this cycle.

We have.

 

[lowesthangingfruit]

Low, the issue of tax policy and policy subsidization for property ownership is too complex and too much of a tangent for this thread. Suffice to say personal residences, income and investment property, and new home ownership are all encouraged in different ways directly through tax policy and indirectly through government spending. Keep in mind that subsidization can be direct (income tax deduction for property taxes, mortgage interest write-off for income property) but it can also be relative (single family home owners pay less than tenants) or deferred (Capital Cost Allowance allows for the depreciation of investment property to offset against income).

Rick, if ur looking at the big picture view, let's take another step back and look at this. One can argue it is exactly that (ie. government "subsidization", private/financial sector engineering, media hype, your next door neighbour bragging etc....) has led us here to this quaint thing we call the global credit freeze up.

Not everyone and anyone should be owning homes but somewhere along the lines this got translated to "homes for everyone and we'll make it easy". Then banks started breaking their cardinal rule of "never lend to ppl that need the money". Then,..., well, you get the idea what happened next.

 

[Chromeboy007]

I think the main reason why condos sales have outpaced other lower density/detatched RE is because simply the latter have been priced out of reach for most buyers trying to get into the market. There will always be a market for condos and high rises, but I think most logical and reasonable ppl would prefer to own real land rather than a piece of space in the sky if they had the choice.

Depends on location... I always thought that people who buy condos downtown because they want to live downtown closer to work, bars, shopping and college girls. If I have enough money to buy a house uptown I would still go with a condo downtown... a bigger one! Or a hard loft.

But uptown, I may agree, who would want to live in a condo in Oshawa if they can afford a house there?