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- Thread starter simuls
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KA1, we made some money on another condo, which was nice. We bought this one to live in, hopefully for a long time to come, so bubbles weren't as much of a concern as if we had bought strictly for investment reasons. I also don't think that the larger units are really great in terms of investment -- much harder to flip than the smaller ones. The PH has been sitting unsold for a couple of months now -- although of course I don't know if the original purchaser bought it to live or to flip.
interested
Senior Member
Inteested, if I were to take your latest post to its next logical level, then, the obvious conclusion is that there is no bubble in Toronto R/E -- not for PinkLucy, not for me and, if you were to decide to move downtown, then, there will not be a bubble for you either. If there is no bubble, then, there is no burst either. What happens to the 'flippers' or spectulators is for them to worry.
For the past 2 or so years, you have been shouting from the pulpit about upcoming 'bubble burst'. Time for you to move away from this line of reasoning. Relax. There is not going to be a 'burst' for PinkLucy, myself, yourself and the others in the same situation.
Time to move on to another thread?
I don't quite know how Ka1 you conclude there is no bubble from what I posted. I don't follow your logic. I have said before that a place that I live in is more than just a financial investment. Of course I prefer that my choice of place to live work out well financially but I have to live somewhere and like Pink Lucy says in her post if I can extrapolate I am not really worried whether the price goes down on that.
The other thing is I think you misunderstand my reason for posting. I am not nervous and hence have no need to "relax." I will not be happy if real estate heads 50% south. The difference in my situation is that I will still not be forced to sell. Unfortunately for a lot of people that will not be the case and while a 50% southward drift would be a tremendous hit for me, it will have the devastating effects on countless others. I find posting and listing to views on this forum intellectually stimulating on a topic that interests me.
My larger concerns for the state of the economies of the developed world do worry me. Just because I am well read enough and perhaps appreciate the precarious state of the world finances, especially Europe and the US (and Canada will not act as an island if these economies do not do well) does not mean that it should be suggested that I should "relax". Perhaps I am just that much more informed as opposed to others who may not appreciate the dangers or the problems and merrily walk towards the hole in the ground without even appreciating there may be a hole to fall into.
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interested
Senior Member
I concur with Wooba.
interested
Senior Member
Larger units tend to be end user units. For rental purposes more people can afford smaller places than larger ones, hence the premium usually for smaller units. Overall condos have not been great investments when compared to single family homes. They are easy to manage and for flippers with price escalation and small down payments and leverage has made them the big winners.
Larger units correspondingly command higher prices by virtue of their size and this of course drastically thins the potential pool of buyers. Since one cannot rent out a 2 bedroom 1000 sq.ft. unit in the same building for as much as 2 - 1 bedrooms at 500 sq.ft., the 2 1bedrooms should command a higher price. As well, there is some savings as one does not have to put in the 2nd kitchen which is more expensive than a corresponding bedroom as well as having to buy 2 sets of washer/dryers vs. 1 set for the 2 bedroom.
Now if there is a meltdown my suspicion is that bachelors will be hit hard because people will be willing to spend the current rent and I think the bachelors will make people ask themselves if rents were to decrease will I pay less rent or continue at present rent but trade up to a 1 bedroom. Similarly a 1 bedroom/den renter may go to a 2 bedroom, especially if what I am hearing is true that people are renting 1 bedroom/dens and sharing with 2 people because they save money vs. a 2 bedroom condo.
KA1
Senior Member
http://www.ottawacitizen.com/business/Housing+bubble+prudent+investment/6206935/story.html
Another kick in the shins for Interested and the likes, who firmly believe that R/E in Canada in is 'bubble' territory.
Go read the article.
Another kick in the shins for Interested and the likes, who firmly believe that R/E in Canada in is 'bubble' territory.
Go read the article.
redfirm
Active Member
Inteested, if I were to take your latest post to its next logical level, then, the obvious conclusion is that there is no bubble in Toronto R/E -- not for PinkLucy, not for me and, if you were to decide to move downtown, then, there will not be a bubble for you either. If there is no bubble, then, there is no burst either. What happens to the 'flippers' or spectulators is for them to worry.
Since 2006, my small unit has increased in price 100%. It would not bother me at all if it goes another 20% North or 50% South. I chose to move to 'core' downtown. That is important.
For the past 2 or so years, you have been shouting from the pulpit about upcoming 'bubble burst'. Time for you to move away from this line of reasoning. Relax. There is not going to be a 'burst' for PinkLucy, myself, yourself and the others in the same situation.
Time to move on to another thread?
Hi KA1,
Question: when the time comes to move to your new Aura condo, will you be selling your current place?
In one of the previous posts you noted that you're saving every penny these days in order to put as much down as possible .... which means you will have mortgage on your personal residence? And you are retired? And 50% movement south does not bother you? What if the interest rates go up sharply, forcing you to sell RoCP at deflated price? That scenario wouldn't bother you?
interested
Senior Member
^^^^
Read the article Ka1.
Nothing new.
Why do you choose to accept these metrics and not others?
Remember, can a bank economist come out and say that the bank, which is exposed to all these mortgages, believes his management is being reckless?
The article says it best:"There’s room for debate over which yardstick makes the most sense, since each has its virtues. The answer: it depends where you think interest rates are going."
I have said before and I agree with the author on the following. If interest rates rise slowly and not by too much, then things will keep going. If there is anything that happens and a big jolt, then the bets are off.
Please remember Ka1; I am happy if prices stay up personally as I have a fair amount of property. That said, I am not sure how much of the demographic that the article points out to will have the money to buy the homes, even if by metrics the mortgage carrying is at 28.7%. The 2 and 1/2% worst case scenario still would leave interest / mortgage rates below historical norms and this in no way allows for a major shock to the system. The other thing is that we are committing a lot of young people to be enslaved to meeting the house payments for a very long time, something which I believe is inherently unfair.
Read the article Ka1.
Nothing new.
Why do you choose to accept these metrics and not others?
Remember, can a bank economist come out and say that the bank, which is exposed to all these mortgages, believes his management is being reckless?
The article says it best:"There’s room for debate over which yardstick makes the most sense, since each has its virtues. The answer: it depends where you think interest rates are going."
I have said before and I agree with the author on the following. If interest rates rise slowly and not by too much, then things will keep going. If there is anything that happens and a big jolt, then the bets are off.
Please remember Ka1; I am happy if prices stay up personally as I have a fair amount of property. That said, I am not sure how much of the demographic that the article points out to will have the money to buy the homes, even if by metrics the mortgage carrying is at 28.7%. The 2 and 1/2% worst case scenario still would leave interest / mortgage rates below historical norms and this in no way allows for a major shock to the system. The other thing is that we are committing a lot of young people to be enslaved to meeting the house payments for a very long time, something which I believe is inherently unfair.
Wooba
Active Member
KA1
Senior Member
Finally you woke up from your hibernation, Redfirm.
Current condo is fully paid -- was fully paid from the day one. No, I don't intend to sell it.
On AURA, I will be making 50% down payment -- 20% already given to the builder and 30% to be given at the time of closing.
No, I am not retired. That is for the sissys.
With the income alone from business -- I am, just like you, a bean counter with some emphasis on taxes -- I should be able to pay the mortgage. Any rental income from the current condo or from renting AURA will be a 'bonus'. The only time I will be in trouble if we are in a situation like 'dirty 30s'. But the, so will be the savy investors like Interested.
Smile.
interested
Senior Member
KA1
Senior Member
I didn't know you are retired, Interested.
cdr108
Senior Member
if AURA is to be your principal residence, would it not be more financially savy to refinance RoCP to the hilt to pay off as much AURA so that you don't have a mortgage, since PR mortgage interest payments are not tax deductible ?
you'll crystallize a tax free capital gain and have a higher cost base for the 'rental' condo.
redfirm
Active Member
Hibernation, eh? No, I'm working ...
Anyways, my next set of questions/comments would be along the lines of cdr's comments above ... or is it that you don't care about tax advantages the same way you don't care about 50% adjustment south?
Finally, I understand that you're still working... but you are retired from your gov't job, right? Point being that normally retired people are not as risk inclined as younger people with longer horizon....
Talk to you in 10 days ... little trip coming ... mix of business and pleasure ...
ISYM
New Member
50% south? Can anyone give any reasoned analysis as to this size decline, even 40%, 30% whether on historic, known equity values or some substantive valuation?
At some point in time the market will correct slowly even crash overnight – either of these is inevitable in real estate and regardless of whether it is 10% or 50% the majority will be able to weather the tide.
I’m not so sure that I understand the extreme prevailing sides in this thread or the media for that matter - it seems a duel is being fought. There are those who long for housing prices to drop off the cliff even though they may be investors and it is not in their best interests for this to happen; those who do not yet see a decline in the very near future and by that I mean this year and those who presume they have nothing to lose. It all centres around the value of high rise condos – pre-construction at that with very little regard for the freehold housing market.
PinkLucy’s personal story is a revelation that really should be given careful consideration. Hers is far from unique and I say this because as a REALTOR who deals with clients in York region and Toronto I have been witnessing this same thing plus other factors for the past 9 months. My clients in YR have either: been giving up their empty nester homes to move to 1000sf+ TO condos mostly to be near their children who insist on being in the core; made enough money on their suburban home to finally afford one in the city albeit often smaller but of greater value, or can no longer stand the commute. Of my typical Toronto clients the few who look to move out of TO for affordability no longer consider this a worthwhile option. The majority consists largely of investors, first time buyers, those moving up and to all of those I have strongly been advising them since last fall to suspend such thoughts, they listen and I had better be right.
Aside from all the nonsense put forward about the pundits from either side who speak on national terms, the above are inalienable facts which first found support in the results of the analyses I perform and now corroborated by the census as mentioned in a previous post.
That prices are still climbing is not of itself representative of a continued boom because what is not being reported is that a) the spread between listings and sales for the last two years particularly the last is increasing – the same thing happened in the run-up to the 1990 bust b) The number of terminated and expired listings has also increased exponentially – important numbers which in my opinion no REALTOR should ignore yet most do c) Attempts at multiple offers in YR is not producing desired results and d) C1 seems to be suffering a severe drought in sales.
All of that may seem irrelevant in the face of rising prices but don't get me wrong, I do see the end of this run already in play. Any REALTOR worth their salt will tell you that when in a sellers market sellers don’t list it is because they don’t intend nor need to and the buyers at this point are those who for the most part like to arrive too late to the ball.
At some point in time the market will correct slowly even crash overnight – either of these is inevitable in real estate and regardless of whether it is 10% or 50% the majority will be able to weather the tide.
I’m not so sure that I understand the extreme prevailing sides in this thread or the media for that matter - it seems a duel is being fought. There are those who long for housing prices to drop off the cliff even though they may be investors and it is not in their best interests for this to happen; those who do not yet see a decline in the very near future and by that I mean this year and those who presume they have nothing to lose. It all centres around the value of high rise condos – pre-construction at that with very little regard for the freehold housing market.
PinkLucy’s personal story is a revelation that really should be given careful consideration. Hers is far from unique and I say this because as a REALTOR who deals with clients in York region and Toronto I have been witnessing this same thing plus other factors for the past 9 months. My clients in YR have either: been giving up their empty nester homes to move to 1000sf+ TO condos mostly to be near their children who insist on being in the core; made enough money on their suburban home to finally afford one in the city albeit often smaller but of greater value, or can no longer stand the commute. Of my typical Toronto clients the few who look to move out of TO for affordability no longer consider this a worthwhile option. The majority consists largely of investors, first time buyers, those moving up and to all of those I have strongly been advising them since last fall to suspend such thoughts, they listen and I had better be right.
Aside from all the nonsense put forward about the pundits from either side who speak on national terms, the above are inalienable facts which first found support in the results of the analyses I perform and now corroborated by the census as mentioned in a previous post.
That prices are still climbing is not of itself representative of a continued boom because what is not being reported is that a) the spread between listings and sales for the last two years particularly the last is increasing – the same thing happened in the run-up to the 1990 bust b) The number of terminated and expired listings has also increased exponentially – important numbers which in my opinion no REALTOR should ignore yet most do c) Attempts at multiple offers in YR is not producing desired results and d) C1 seems to be suffering a severe drought in sales.
All of that may seem irrelevant in the face of rising prices but don't get me wrong, I do see the end of this run already in play. Any REALTOR worth their salt will tell you that when in a sellers market sellers don’t list it is because they don’t intend nor need to and the buyers at this point are those who for the most part like to arrive too late to the ball.
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