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- Thread starter JayBee
- Start date
Eug
Senior Member
Maybe, to a certain extent. However, to that certain extent it's been true for just about forever. I don't know why it would be any different now, or a year from now.
Nebakenezer
Active Member
Toronto prices wont drop significantly. The prices people bought at were affordable to begin with even if they bought at 500 psf, there wasnt that much speculation as other high profile areas around the world, fundamentals of the canadian currency and inflation is sound, equity to debt ratios have a lot of cushion to absorb price fluctuations. And mainly prices still need to appreciate before reaching international prices.
Unless the american economy completely tanks, the prices will remain stable in toronto. Prices in Manhatten and chicago have a higher correlation with whats happening in toronto then other canadian cities such as vancouver and calgary.
But the americans keep printing notes, and chinese keep buying them to save the day. Unless this changes, I'm not that worried. Also you got to remember, everyone has more to lose then gain if there wasn't a bailout. So its in everyone best interest to sustain current prices as much as possible.
Unless the american economy completely tanks, the prices will remain stable in toronto. Prices in Manhatten and chicago have a higher correlation with whats happening in toronto then other canadian cities such as vancouver and calgary.
But the americans keep printing notes, and chinese keep buying them to save the day. Unless this changes, I'm not that worried. Also you got to remember, everyone has more to lose then gain if there wasn't a bailout. So its in everyone best interest to sustain current prices as much as possible.
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iheartproperty
Banned
Ahhhh, the oft-quoted and erroneous 'cheap by international standards' tag line! Don't be fooled by slick marketing ploys concocted by slippery and unscrupulous salesmen like Bob Rennie.
What makes you think the price of residential real estate in other cities is relevant to the price of residential real estate in Toronto? There is no arbitrage on housing. You can't acquire property in Toronto and consume it in Hong Kong.
Unless you are looking at a location that is primarily vacation/recreation driven (ie Aspen v. Whistler- there's no jetset crowd flocking to Toronto afaik) the fact that prices in one city are higher or lower than prices in another city is of no significance unless the local economic suppply/demand conditions (employment, wages, services, etc.) are equalized. Something tells me that even with the calamity that's occurred on Wall Street that incomes in Manhattan, London, Toyko, Hong Kong, etc. are still significantly higher than Toronto. Cost of construction- land, hard costs, soft costs, etc.) also vary dramatically from location to location and are a factor in pricing.
By your logic rents in Toronto are low by 'international standards' and therefore are sure to rise as well. Tell that to a landlord in Toronto who sees steady increases in operating expenses and stagnant rental growth since 2002.
Are you following?
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cdr108
Senior Member
can i have some of what you're smoking ?
how is $500 PSF affordable and sustainable for the average Cdn buyer ???
re: printing notes ... if you noticed, there were several market pullbacks when the treasury issued notes and was a lack of purchasers ... the Fed had to step in and buy the rest. As well, the Chinese gov't have issued public statements about their concern over the US gov't QE policies.
sorry, who's best interest is it again to keep the bubble inflated ??!!??
dt_toronto_geek
Superstar
1995 could have been lower, I paid $147/sq. ft. on Bay Street before parking, locker & upgrades.
cdr108
Senior Member
interesting ... when and where on Bay St?
that means within 14 years, values have appreciated from $147 to about $500 PSF for the average building on Bay St. ... up 340% (ie. 240% appreciation) ... that's ~10% compounded per annum !?!?
no bubble here folks ... keep on walking and look straight ahead
Nebakenezer
Active Member
I'm following, and you have point. But you gotta look who is buying mostly in Toronto, it's mostly local people. Your right toronto isn't a vacation destination or high on tourism with the jetset crowd so there isn't as much speculation built into the rise here like there was in resort/tourism zones such as florida, whistler, vegas, dubai etc. which was built on mostly speculation. But toronto is a business and financial hub of Canada, as much as we hate to admit it, our economy is drastically linked with the american economy. The whole world is for that matter. So when you look at places like chicago and manhatten, which are 2 major financial and business hubs of the american economy, if those cities begin to falter, then its a clear indication that the driving force of the canadian economy, which is the american economy is going into the danger zone. Cities such as whistler and calgary, have very little to do with toronto pricing comparatively.
I wouldn't worry about toronto prices falling on the macro level much if manhatten and chicago are fairly resilient.
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Nebakenezer
Active Member
can i have some of what you're smoking ?
how is $500 PSF affordable and sustainable for the average Cdn buyer ???
Maybe the argument that toronto is cheap compared to international standards is not as valid as they used to be in say 05'.
But I lived in Australia for 2 years, so toronto is still cheap by my standards.
I wouldn't be afraid of plunking say 500 psf for a condo such as m5v or festival tower. If you can still get it at that.
cabbagetowner
Active Member
i've got one to sell you for 500. courage my friend.
AKS
Senior Member
With the rate costs, taxes and fees are increasing, it would be impossible to purchase at lower prices than 400 psf in Toronto. Hence the tiny rooms to make prices affordable. As noted from a post from the fly thread, Canada has a lot of costs built into a pre-construction. Unless you're buying resale older buildings which were built at a cheaper price so you can purchase at a cheaper price, it will be hard to buy newer ones as costs are sky rocketing. Also from the article, after HST is implemented, Toronto will be the taxed the highest in North America. It's true rental rate is stagnate and wages have not increased much. However, tell that to the government who thinks if people can afford a home, they can afford to get taxed to death. If you think it's bad right now, wait until the land transfer tax increases 2% from 1% and Toronto Land Transfer tax increases to 2% on top of the HST.
Nebakenezer
Active Member
First of all, I wouldn't call toronto real estate prices a bubble. It had a natural run up to its current prices, much slower then most other cities, and much lower run up at that.
The people that have the most to lose are the hundreds of millions of people around the world that have bought property in the last 5 years.
The people who have the most to gain are the people who have nothing to lose, which is everyone that doesn't own property or any assets.
You can't expect people to sell for less when they paid more for it, unless it's out of desperation.
The goverment is more inclined to keep its citizens happy rather then miserable for fear of revolts, riots, poverty, war, etc. So the pressure is to sustain current prices or help in a soft landing at the worst. Or otherwise fear an economic collapse. Which is good for absolutely no-one.
The only places there was a bubble in canada was vancouver and calgary, and they are feeling the effects of the bubble bursting, toronto had no bubble. I bet in 5 years toronto prices will be even higher then today.
Nebakenezer
Active Member
Sorry I bought already.
Nebakenezer
Active Member
iheartproperty
Banned
I suggest you re-read this sentence a few times and try to understand the illogic of it. If you can then perhaps you can appreciate the basics of supply/demand. Here's an easy to understand analogy for you although by the tone of your posts it sounds as if you might be too young to recall this event- when nortel went from $100+ to $1 in a matter of months did it matter whether an investor had to sell at $1 or not? I believe you know the answer.
The same applies here. The market dictates the price, not the seller. Tell your theory above to buyers in Miami that bought condos for $500-$600 per square foot (and cost $400+ per square to build) that are now worth $250 per square foot. Does it make any difference whether they have to sell? If you are selling then the market meets you at the market price.
Real estate 101.