Migos
Active Member
Gurkan, do you think there is a point where prices can't go up anymore because people simply can't afford the downpayments or mortgage payments?
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- Thread starter simuls
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Gurkan Gurbuzer
New Member
Yes, I believe there is a point, but that's going to be shown through people's purchase power, not through a sudden economic break down in the market. I can see a gradual steady slow down, where as prices go up less clients will be available to pruchase as high as they would like based on their financing abilities...but in terms of bubbles bursting and 2008 in the States...that won't happen here, the causes for our market boom is unique, and it boils down to a shortage of product.
algotr8der
New Member
To start off to all of you who have been here for awhile, this my first post and I'd like to say "Hi"
Now that that's out of the way.....I'm a part of the real estate industry, I do mortgages....
Well, in Trader's language I can say you are speaking your *book* so to speak given ur vested interest in an upward trending housing market.
When the market falls all the pundits will come out and change their tune. Immigrants, Chinese money, Middle East money, low rates, low inventory, blah blah. Every housing bubble on the planet was rationalized away with similar arguments until the market eventually collapsed. No one can predict when or how. Home valuations are in dangerous territory and yes things can go up even higher from here before they collapse.
I wouldn't plan my life waiting for the collapse but I do know it will collapse.
One has to only take a look at the indebtedness of private and public sector. Record household debt levels while the public sector is posting huge increases in EXTERNAL debt - that is Canadian debt owned by foreigners. External debt is hot money and is often a trigger (or supporting factor) for banking/credit crises as hot money leaves the banking system.
Whatever will be the trigger we can't say but there are many unfavorable factors lining up for trouble ahead.
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nrb
Active Member
Do you have any idea how many times this has been said in the history of the boom and bust cycle? It's just comical that people still believe this.
Gurkan Gurbuzer
New Member
The last real estate market crash was in 1989......you sound like you've seen many. I find all the people that almost want a crash to happen comical. for the last 7? 8? maybe even 9 years now people insist there's going to be a crash...that's comical....all the people not buying because they're waiting for this so called crash to happen....that's comical...anyways, algotr8der has some valid points however I still believe what I believe. There's a cycle to everything....however I believe ours will be a gradual cool off in the market, not a dramatic crash.
algotr8der
New Member
It won't be comical in the end for many.
I wouldn't plan my life around the expectation of a crash or go out and buy a property because I *need* to buy a property (because you don't). You also have the option to move. I lived in the SF Bay Area for a good 5 years recently and eventually got sick and tired of the cost of living. So I moved. Now I roam around *fun* cost effective cities as I can work from anywhere. I rent in the various cities I go to and build my nest egg in the mean time. I don't feel compelled to own over priced real estate anywhere.
If I had to make a recommendation - I'd say to anyone to work on building skills that enables you to work from anywhere. Free yourself from the system and wait to scoop up assets for investment when fear is at a maximum. We've already had many opportunities to buy assets in the past 15 years on the lows. It will happen again as it always does.
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NorthYorkEd
Active Member
When I see people scrambling and scraping every cent to buy million dollar homes in North Oshawa, or Milton, or Guelph, etc, not because they want to live there but because they think that one million dollar home will be two million next year, that does not make me feel optimistic about where things are headed. This "party" has been an awesome time for many people, but it feels like a hangover is coming.
Markets driven primarily by fear and speculation are best avoided, IMO. But hey, I'm just a "comical" renter.
Markets driven primarily by fear and speculation are best avoided, IMO. But hey, I'm just a "comical" renter.
Euphoria
Active Member
Home ownership is an important indicator of wealth, for individuals and the society as a whole. Having the ability to eventually own your own home means more of your income can be freed up for other purchases. In Canada you are not taxed on the capital gains or profit from the sale of your primary residence. This makes the home an important tax-sheltered investment, for most people the largest investment they'll make. That's why home affordability is so important, especially for first time homebuyer trying to get a foothold into the market. While there are probably many reasons for high home prices in markets like Toronto and Vancouver, there are few that we can actually do something about. Foreign demand is one. The province should be taxing foreign purchases of homes. No doubt the province could use the revenue. With 7 out of 10 immigrants settling in Southern Ontario, the demand for housing will be very hard to curtail.
ILuvTO
Active Member
When I see people scrambling and scraping every cent to buy million dollar homes in North Oshawa, or Milton, or Guelph, etc, not because they want to live there but because they think that one million dollar home will be two million next year, that does not make me feel optimistic about where things are headed. This "party" has been an awesome time for many people, but it feels like a hangover is coming.
Markets driven primarily by fear and speculation are best avoided, IMO. But hey, I'm just a "comical" renter.
Funny that you mention Oshawa. I was at an open house this past weekend in North Oshawa and I have to say that I have *never* seen such a frenzy before. And it wasn't would be home owners viewing the property. Instead the open house was infested with "investors". Everyone is looking to buy and rent out. Everyone in this city thinks they are a real estate mogul. The property was listed for $350, but the agent was expecting $460 based on a comparable sale a week earlier. Why he priced it at $350 is a question I did not ask. Nevertheless I was not impressed with his pricing strategy.
I have no idea if the market will crash. I thought it would have a long time ago, but if what I saw on the weekend is any indication, we have a long way to go. As long as monthly cash flow numbers make sense I can't see investors shying away. and in places like Oshawa, Hamilton, etc they still do based on some example properties I have looked at.
He priced it to incite a bidding war. An annoying tactic.
ILuvTO
Active Member
The price was so much lower than what he wanted. Such a risky strategy that could backfire. Though in this kind of market not as much of a risk I suppose. He did get a lot more eyeballs on the property.
It has backfired for some. They just don't sell it and relist it at a different price.
TheKingEast
Senior Member
When you price homes well below market value, you will generate a lot of interest. I hate this strategy and wish it didn't exist.
algotr8der
New Member
This just solidifies my conviction that there will be many many divorces in the not too distant future as people end up in financial ruins, ultimately leading to personal life disasters.
nrb
Active Member
Excuse me while I puke. You can take your "indicators of wealth" and stick them where the sun don't shine. Because they mean jack shit.