[cdr108]

Wow, awesome info. That was exactly the kind of discussion I was hoping this thread might strike up, lots of good links too!

This all pretty much confirms what I've been reading elsewhere, that prices have dropped since this time last year. What I'm wondering though is, since prices have dropped wouldn't it be better to get into the market at a lower price or is that a bad idea because we don't know how much prices will continue to fall or how long it will take for them to rebound?

buying now isn't a bad idea, HOWEVER, that means offering and getting the property for 20% BELOW list asking/market value.
that will lessen the risks when a correction occurs, and let you take the benefit of current low rates.
otherwise, paying full price or over asking now, is just looking for a load of pain in the next 10-15 years.

by various metrics, i calcuated Toronto RE is over-priced by 25% ... some economists have recently come out with figures ranging from 5-25%.

i wouldn't consider myself a bear, just a realist. it took those who bought in 1989 until 2005 to get the same dollar value back, AND that doesn't take inflation and interest paid into consideration, assuming one didn't lose the property because they couldn't continue to pay for it or were forced to sell for whatever reason(s).

 

[interested]

buying now isn't a bad idea, HOWEVER, that means offering and getting the property for 20% BELOW list asking/market value.
that will lessen the risks when a correction occurs, and let you take the benefit of current low rates.
otherwise, paying full price or over asking now, is just looking for a load of pain in the next 10-15 years.

by various metrics, i calcuated Toronto RE is over-priced by 25% ... some economists have recently come out with figures ranging from 5-25%.

i wouldn't consider myself a bear, just a realist. it took those who bought in 1989 until 2005 to get the same dollar value back, AND that doesn't take inflation and interest paid into consideration, assuming one didn't lose the property because they couldn't continue to pay for it or were forced to sell for whatever reason(s).

I think cdr we need to be more practical here. Unless someone is very desperate, they are not going to take a 20% reduction below list. If the property is realistically priced, one can maybe hope for 5% below this and that is alot. My experience is sellers are very slow to adjust to downward price changes. I would think a 20% below current market will just insult the vendor and will lead nowhere.
I understand your rationale but I think it will be very difficult if not close to impossible to find this type of reduction.
So in fairness to TO apprentice, I think we should set an attainable target.

Now, if the property has been sitting a long time, and needs work and assuming TO apprentice can and is willing to do that work, he may find something closer to the range you are suggesting. I can't give an exact figure but 20% (from current prices: down 5% already) is a significant correction and accounts for close to the worst case scenarios before they have even occured. I am not saying we won't have downward pressure but 20% is a very significant correction and most vendors will need to see it approaching those levels before just accepting that the prices will drop this much, even if you are absolutely correct and all the economists predicting these type of corrections are also on the money.

 

[TO-apprentice]

So Basically, the market is fairly stable although prices are dropping slowly. Which means as long as you make a smart investment (hard to go wrong at 20% below market value) you're in the clear?

 

[interested]

So Basically, the market is fairly stable although prices are dropping slowly. Which means as long as you make a smart investment (hard to go wrong at 20% below market value) you're in the clear?

Realize TO apprentice: All of us are just giving you our best collective wisdom. None of us has a crystal ball. I think 20% below fair market value would be reasonable but when a pendulum swings, it tends to overswing in both directions. We can't guarantee a drop of 20%. It may be 10, it may be 30%. It may not even drop that much because governments intervene, world events happen, and outside things occur that one can't plan for. So long as you understand you can "never be in the clear and only reduce but not eliminate risk" and plan accordingly, you will hopefully be OK.

 

[TO-apprentice]

Definitely, all of your advice has really helped. I'm still really early in the research phase of things so nowhere near making any decisions yet. Thanks very much everyone for your valuable input.

 

[kaidenjons]

Toronto is the best and developed city in Canada where lots of people migrate. there are many business and job opportunities in this city, so it is very beneficial to invest in Toronto real estate market to achieve higher return on investment.

 

[marsh]

A cautionary tale: A good friend of mine and her husband tried to make money flipping houses about 2 years ago. They bought one house and renovated with the expectation of selling at a profit; before it sold, they bought another one to flip. Well the first one didn't sell (they do have it rented out); the second one they had to sell at a loss. The problem is that the renos cost more than expected (and took longer than expected) and they went into a lot of debt. They can't afford the mortgage on the first house so if they can't keep the house rented, they will be in deep trouble.

 

[BrianPersaud]

Flipping

I know a number of folks that are doing flips in The Beach and Whitby right now. They all have made a substantial profit.

Earlier this year a renovator flipped a property for a $90,000 profit. It was a complete gut, he was actually a guest on my tv show last year.

Another friend just bought one and he is going to start the process right now. This flip is a little different since he's going to refinance to pull out his renovation money then keep it as cashflowing property.