urbandreamer
recession proof
Anyone care to contact Martin Armstrong for a Toronto housing forecast?
|
|
|
- Thread starter JayBee
- Start date
JayBee
Senior Member
Why do you say that?
cabbagetowner
Active Member
25% down would put us in mid 2002 prices...perhaps some wishful thinking.
TrickyRicky
Senior Member
Not personally wishful, in the sense that I don't deal directly with condos and have no interest in purchasing one in the future.
What I mean is not that I expect the average property in Toronto to devaluate by 25%, nor even the average condo. What I mean is that the average condo buyer profile, someone who puts no where near 25% down on a unit at a mediocre address, purchasing now at spring 2009 prices, may very well find themselves underwater at some point in their first 5-year term.
Put in a different way, I'm saying that I think a further drop in prices of 15% in the next year is likely on the kinds of first-time buyer units that are moving at the moment.
What I mean is not that I expect the average property in Toronto to devaluate by 25%, nor even the average condo. What I mean is that the average condo buyer profile, someone who puts no where near 25% down on a unit at a mediocre address, purchasing now at spring 2009 prices, may very well find themselves underwater at some point in their first 5-year term.
Put in a different way, I'm saying that I think a further drop in prices of 15% in the next year is likely on the kinds of first-time buyer units that are moving at the moment.
taal
Senior Member
So? Why assume all first time buyers are investors ... if they hold on to their unit for 10 years who knows what state the economy will be then.
If anything it's not first time buyers you should be worried - they don't tend to be investors so they really have the least to worry about. That is assuming they can indeed afford their monthly payments.
TrickyRicky
Senior Member
"So?"
As you state there is nothing disasterous about being underwater. Dramatic change is not how most people experience hard times. However, it is these very same first time buyers that are being mislead into believing now is the time to buy. Buyers who may not realize capital gains or improvement in their equity position during their tenure in their units. Buyers who will on average want to sell their units within 5 years because of changing circumstances in their lives and have great trouble doing so. Buyers who upon mortgage renewal or sale of their units will be facing higher borrowing costs and unless their employment situation improves, a potential down-sizing.
For most people in our society very little time is required to cover the real basic necessities of life. This means most of our time is spent stroking our egos, our self-image and identity and our needs and wants and desires. "So" you've got to live somewhere and if that place is a condo and you buy it now and it makes you feel good it's a good choice. But the potential ramifications on your life-style, self-image and wants are sure going to take a hit if that decision ends up hand-cuffing you financially.
As you state there is nothing disasterous about being underwater. Dramatic change is not how most people experience hard times. However, it is these very same first time buyers that are being mislead into believing now is the time to buy. Buyers who may not realize capital gains or improvement in their equity position during their tenure in their units. Buyers who will on average want to sell their units within 5 years because of changing circumstances in their lives and have great trouble doing so. Buyers who upon mortgage renewal or sale of their units will be facing higher borrowing costs and unless their employment situation improves, a potential down-sizing.
For most people in our society very little time is required to cover the real basic necessities of life. This means most of our time is spent stroking our egos, our self-image and identity and our needs and wants and desires. "So" you've got to live somewhere and if that place is a condo and you buy it now and it makes you feel good it's a good choice. But the potential ramifications on your life-style, self-image and wants are sure going to take a hit if that decision ends up hand-cuffing you financially.
Yossi Kaplan MBA
Realtor
further drop of values? maybe... not
Gents,
Real-Estate is not only a place to live, it is a "store of value".
When global inflation looms, and you are sitting on cash, the value of your money erodes quickly. Investors must exchange their cash for other objects of value that maintain that value, such as real-estate.
Gold and stock market are other possibilities, but they don't get you rents, and they may drop in value to zero.
etc etc
- yossi
Gents,
Real-Estate is not only a place to live, it is a "store of value".
When global inflation looms, and you are sitting on cash, the value of your money erodes quickly. Investors must exchange their cash for other objects of value that maintain that value, such as real-estate.
Gold and stock market are other possibilities, but they don't get you rents, and they may drop in value to zero.
etc etc
- yossi
JayBee
Senior Member
still waiting.....
Bentley
Active Member
While technically speaking real estate is a hedge against inflation, it's a piss poor one, especially during the collapse of a real estate bubble (yes, even Toronto had a bubble, condos in particular). For one, the market is illiquid, and second it has a reliance on credit markets. If you want a hedge against inflation, stick to gold. Using real estate for that would be foolish to say the least.
Eug
Senior Member
Colour me surprised: Prices and sales volume up in Toronto 416 in first half of May, as compared to May 2008
In the 905, sales are also up, but prices are slightly lower. Overall, the number of sales and prices are remarkably similar to May 2008.
It could just be a blip though. In fact, IMO that's likely.
In the 905, sales are also up, but prices are slightly lower. Overall, the number of sales and prices are remarkably similar to May 2008.
Code:
Year-Over-Year Regional Breakdown
----------------------------------------------------------------------------
2009 2008
----------------------------------------------------------------------------
Sales Average Price Sales Average Price
----------------------------------------------------------------------------
----------------------------------------------------------------------------
City of Toronto ("416") 1,864 $439,459 1,734 $437,205
Rest of GTA ("905") 2,697 $372,408 2,688 $377,344
GTA 4,561 $399,811 4,422 $400,817
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Last edited:
cabbagetowner
Active Member
I'm very surprised by the may numbers. It seems to me that this miniboom will not have legs. i suspect the prices in the 416 to continue to fall and stay flat for some time.
BobBob
Senior Member
Well, they're not going to fall if they stay flat...
cabbagetowner
Active Member
i meant fall and then stay flat. using the hpi, i would guess that they would go to around 100 and stay around that level for the next several years.
MBS-Guru
Active Member
it's definitely slowed down in may after a hectic couple of months .... but again Mar/April sales were due to a lot of people caving in after sitting on the sidelines from Oct-Feb. Based on early trends, it looks like a rather slow summer ahead of us. I won't be surprised of a further 10% drop in prices by jan of 2010.
cdr108
Senior Member
If inflation adjusted, flat still means a decrease.
What's happening now is that historically low interest rates have somewhat put a floor on prices since 'affordability' based on monthly payments look okay; but some seem to overlook the real issue of higher rates come renewal in 5 years.
By then, one should have reduced the mortgage by at least 10% (and hopefully accumulated at least 10% equity plus the initial downpayment).
The main questions are ...
1) where will property values be in 5 years and
2) will the accumulated equity be sufficient for mortgage renewal; and
3) how high will interest rates be since it's a given that they definitely will be higher as the worlds Federal Reserves have flooded the markets with money in the attempts to prevent a global recession become a depression.