[rbt]

I'm confused then. Then what is the point of doing a re-assessment if property tax is not determined by valuations?

It determines your %age of the total property tax bill.

Your property tax bill increases, someone else who had a lower (or no) change in value gets a decrease in their property tax bill. The cities revenue isn't changed.

 

[Eug]

Happy New Year! We are now in calendar year 9 of this thread (2009-2017), and the bubble has not yet burst. Remarkable.

At this point, if the Teranet Index is any indication, the market would have to lose 48% of its value for my house to go back to what I paid for it in 2007, since the index has gone up 92% in those 9+ years. Truthfully, my local market hasn't gone up quite that much during that period, but you get the picture nonetheless.

Can we keep this thread going until 2019 without a burst bubble for a full decade? I guess it depends on how much rates spike this year, since everyone seems to be predicting that now.

 

[CITY_LOVER]

What is really the definition of a housing bubble burst? Is it just the overall price of a housing unit? If yes, by what percentage would the price need to decline from the peak? Or, are other factors considered too, such as the number of sales (of existing homes and new homes), number of realtors working/employed, mortgage delinquency rate, etc.? For example, over the last two years, the Calgary real estate market has had it tough (probably the toughest in Canada), with a sharp decline in sales, a rise in delinquency rate, etc., however, the price of a home didn't move much - so did Calgary's real estate bubble burst?

 

[shal1n]

Calgary's RE bubble did not burst. We still have distorted mortgage rates. So while there were some tough times in the oil patch you still had cheap credit available to anyone and I imagine the Chinese have not been absent in the Alberta housing market. I worked in Calgary for a few years between 2010-2012. Chinese immigrants were everywhere. On the ground in the suburbs I felt like it was no different than any suburb of Toronto - huge Chinese, Indian populations.

The day of reckoning will come.

New Sherif in town south of the border. Huge changes are coming.

 

[solrevie]

New Sherif in town south of the border. Huge changes are coming.

Generally, I'm not a big fan of such definitive statements. You don't know that "Huge changes are coming" one way or the other. Just go to page one of this thread and read the first post, or any of the first 20 posts. It is the exact same 'bubble is obvious' comments.

By no means am I a bubble nay-sayer. I do believe it exists. But I'm also unclear as to where this is is headed.

 

[Ric]

Happy New Year! We are now in calendar year 9 of this thread (2009-2017), and the bubble has not yet burst. Remarkable.

At this point, if the Teranet Index is any indication, the market would have to lose 48% of its value for my house to go back to what I paid for it in 2007, since the index has gone up 92% in those 9+ years. Truthfully, my local market hasn't gone up quite that much during that period, but you get the picture nonetheless.

Can we keep this thread going until 2019 without a burst bubble for a full decade? I guess it depends on how much rates spike this year, since everyone seems to be predicting that now.

9 years Eh???? Thank goodness I didn't put my life on hold waiting for the sky to fall (even though I was one of those naysayers at the start of this thread).....A house, a couple investment properties, wife and kids later we are still going......

Move on with your lives people, markets move up and they move down...the U.S. market has fully recovered all its losses plus some from the Great Recession..those who sold out and put everything under the mattress are still kicking themselves...Happy 2017

 

[LiberalForLife]

9 years Eh???? Thank goodness I didn't put my life on hold waiting for the sky to fall (even though I was one of those naysayers at the start of this thread).....A house, a couple investment properties, wife and kids later we are still going......

Move on with your lives people, markets move up and they move down...the U.S. market has fully recovered all its losses plus some from the Great Recession..those who sold out and put everything under the mattress are still kicking themselves...Happy 2017

Totally agree. We will never see a housing correction or one higher than 10 % in Toronto. Even if the interest rates rise, the amount of foreign investment in Toronto plus immigration levels will keep the housing prices up. But I think that's a good thing for those that own at least .

 

[NorthYorkEd]

Totally agree. We will never see a housing correction or one higher than 10 % in Toronto. Even if the interest rates rise, the amount of foreign investment in Toronto plus immigration levels will keep the housing prices up. But I think that's a good thing for those that own at least .

Right, because it's different here, and it's different this time. Just like in every other bubble.

And if there is any reliable, sure-clad way to predict the future, it is to look at the recent past.

 

[LiberalForLife]

Right, because it's different here, and it's different this time. Just like in every other bubble.

And if there is any reliable, sure-clad way to predict the future, it is to look at the recent past.

Predicting the future is difficult but I just can't see it happening. There is a lot of pressure to keep housing prices high from the banking and real industry and also the boomers that invested their life savings into their home. I could be wrong but I just can't see it in the near future.

 

[rbt]

... and also the boomers that invested their life savings into their home. I could be wrong but I just can't see it in the near future.

Really? If Boomers are one of the primary things keeping housing prices high then a future crash is easy to predict as 75% of them will die within 20 years and another 20% will be in retirement homes.

We know there will be crash at some point in the future, be it later this year or in 2317. Putting a time-frame on it is very very hard but this thread stopped saying "within a year or 2" a long time ago.

 

[NorthYorkEd]

There is a lot of pressure to keep housing prices high from the banking and real industry and also the boomers that invested their life savings into their home. I could be wrong but I just can't see it in the near future.

This is also a characteristic of major bubbles. They become "too big too fail". The same pressure was felt just before the sub-prime mortgage crisis, when S&P and other ratings agencies (and the willfully ignorant SEC) did everything they could to keep the party going. This is what makes bubbles so dangerous -- the system will actually corrupt itself to the breaking point, worsening the eventual "pop" and fallout.

And guess who'll be left to pick up the pieces and pay the price for all the greed and recklessness? Hint: It won't be the banks.

When will it pop? When people simply stop wanting to pay for overvalued houses. Could be tomorrow, could be in 20 years. But at some point, there will either be greener grass elsewhere, or people will snap out of the mania.

 

[TrickyRicky]

We couldn't predict the length of the market boom and we can't predict the nature of the market bust. It could as easily be a long stagnation (say for instance a period of 10 years where prices are flat) as a sudden drop off the cliff. It seems however that policy makers both political and "arms length" from government have become more sensitive to the political and greater economic implications of their decisions as the science and amount of information around how markets work increases. If markets start to turn around you can be sure that people will be trying to "do something about it". The good news for buyers and particularly single-family home buyers who have made poor financial choices, the government will try to protect you as best as it can because of your juicy votes. The bad news is that much of the Canadian real estate market is benign so marginal owners in Toronto and Vancouver might be acceptable casualties politically (less so for the Liberals more so for Conservatives).

I agree with Ric in the sense you have to live your life. Fortune always favours action over inaction. My neighbour made every wrong investment decision in the book. He bought real estate at the height prior to the last two real estate crashes, he invested large sums of money in Nortel etc. and lost everything. But the one thing he did is hang on and keep going and he is probably better of financially than 90+% of Canadians.

On the other hand I personally have not purchased anything in the last 8 years using resources instead to de-leverage and invest in existing property.

 

[interested]

We couldn't predict the length of the market boom and we can't predict the nature of the market bust. It could as easily be a long stagnation (say for instance a period of 10 years where prices are flat) as a sudden drop off the cliff. It seems however that policy makers both political and "arms length" from government have become more sensitive to the political and greater economic implications of their decisions as the science and amount of information around how markets work increases. If markets start to turn around you can be sure that people will be trying to "do something about it". The good news for buyers and particularly single-family home buyers who have made poor financial choices, the government will try to protect you as best as it can because of your juicy votes. The bad news is that much of the Canadian real estate market is benign so marginal owners in Toronto and Vancouver might be acceptable casualties politically (less so for the Liberals more so for Conservatives).

I agree with Ric in the sense you have to live your life. Fortune always favours action over inaction. My neighbour made every wrong investment decision in the book. He bought real estate at the height prior to the last two real estate crashes, he invested large sums of money in Nortel etc. and lost everything. But the one thing he did is hang on and keep going and he is probably better of financially than 90+% of Canadians.

On the other hand I personally have not purchased anything in the last 8 years using resources instead to de-leverage and invest in existing property.

2 thoughts regarding the highlighted comments:

1) I do not think we will actually have a period of long stagnation. I suspect if/when the sentiment changes, if it changes radically, there will be a drop in price...though the question is at what time do the "bargain hunters" reenter. My feeling unless there is a catastrophic meltdown 10 to 15% will be about the drop from present day value if it occurs. So I suspect there will be a correction at some time but not a sudden drop off the cliff as happened in the US.


2) I like you Tricky Ricky, have not purchased in 8 years more since the economics of investment real estate have failed to make sense to me. So far, this has proven wrong. On the other hand, I have invested with developers...more risky and remains to see if it will bear out on the assumption and hope that others still feel it is reasonable to buy real estate for living mostly and hopefully some who want investment. I hope to make some profit on the willingness of others to pay present day asking prices. Should prove interesting and I hope not to lose my money in the projects I have invested in. I suspect the 2014 and 2015 investments will be in the black. The 2016 ones I am more worried about. Time will tell. However, one can't stay paralyzed and do nothing. One makes investments accepting there is risk and does so to a level where one can afford the losses should they occur.

 

[riverridgekw]

believe me, price will still go up in GTA area

 

[Gurkan Gurbuzer]

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....and I hear it from everyone day in and day out, actually Ive been hearing for years....this so called bubble is going to pop....those potential clients I couldn't convince to buy 3-4 years ago, are most likely crying that they didn't. The people today who aren't buying because they're waiting, will be doing the same 3-4 years down the road as well....people don't seem to realise but Canada's infrastucture is not developed enough to be accepting the number of immigrants that this country accepts...more now than ever on a yearly basis as well....not only are home prices going up, but there was an article the other day about the steep climb in condo rental prices as well....there is an extreme shortage of homes, this is the main reason the market keeps climbing, that combined with low lending rates and fairly easy approvals (for those of us that know what we're doing for our clients)....if you wanted to purchase a home today...you will most likely end up in a bidding war, and pay more than list price, why? Because you have limited options in the market....Canada's situation is truly unique in that we are a heavily under populated country given the geographical area, yet with the influx of new comers, we aren't ready for them. Unless the government steps in and solves the shortage problem, fiddling with mortgage rules won't stop anyone from buying a home and prices will continue to sky rocket the way they are going. That's just my two sence anyways.