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Pop? (Commentary on Toronto Housing Market)

Is Toronto's bubble bursting?

  • Yes, expect values down 20% from peak

    Votes: 0 0.0%
  • Yes, but adjustment already in prices

    Votes: 0 0.0%
  • Toronto's market is going to turn around and increase shortly

    Votes: 0 0.0%

  • Total voters
    2

Matt Crowley

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Dec 14, 2013
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Two people with direct knowledge of the matter said that lenders had reduced their average valuation on properties by 12 to 15 per cent since March.

Source: http://business.financialpost.com/p...ash-wreak-havoc-in-canadas-top-housing-market

“I would say about 20 per cent of our files are now asking for secondary financing. That is a marked increase,” said Brewer.

Is this an asset bubble bursting? My two cents...long overdue.
 

Thomas Beyer

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Is this an asset bubble bursting? My two cents...long overdue.

Yup .. but with prices up 40% from a year ago a 20% retraction is still up if you had bought 2 or 3 years ago, or even last year.

https://beta.theglobeandmail.com/re...-as-sellers-move-to-sidelines/article35870812

But then, averages are misleading amid smaller and smaller condos and few new single family house sub-divisions with ever skinnier lots and smaller houses on them. Immigration won't stop in an uncertain world and neither will the desire to own a house by most millenials or immigrants.

With rising interest rates and a more muted real estate market it is getting ever more difficult - but not impossible - to make money in real estate than say 10 years ago. Same rules apply though: good understanding of market, good understanding of landlording techniques, good price, good location, positive cash flow after all expenses so you can hold, impeccably managed. Likely more cash down is required than the usual 20-25%.

Which city in Canada - or the world even -is easier with more likely upside for the same $ invested ? Halifax ? Victoria ? Regina ? Brampton ? Surrey ? Edmonton ? Phoenix ? Dallas ? Houston ? Ottawa ? Tampa ? Cairo ? Teheran ? Dublin ? Moscow ? Sydney ?
 
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Matt Crowley

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Dec 14, 2013
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We are seeing good upside in Calgary and Edmonton in excellent millennial-focused neighbourhoods where infill is in high demand. Affordability, income, and upside story all make sense to me.

IMHO, Toronto / Vancouver / Victoria markets pricing in economic perfection, perpetual 3% growth / year. It is a fine strategy for deep pocketed investors but 80% LTV would be keeping me up at night.

Outside of Canada, we are buying in Atlanta and evaluating other opportunities in southeast U.S.. Value and growth story making a lot more sense to us there.
 

Willyboy

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Aug 19, 2016
Messages
115
According to teranet house price index, prices are still rising in Toronto.
 

Willyboy

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Aug 19, 2016
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115
Yes it's true but they say the drop in price is only due to high end houses in which case the average price is a misleading indicator.
according to Teranet the price of the same normal typical house is up in July about 2% from June in Toronto.
 

KhoaN

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Oct 22, 2012
Messages
76
I was in Toronto 2 weeks ago. My friend's house in Vaughan dropped 20% and cousin's house in Pickering dropped 25%. What i found out that the mortgage brokers could make a fake income and charge people 1%, so I think price could fall little further due to the real affordability, also with the recent interest hike from BOC doesn't help.
 

Willyboy

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Aug 19, 2016
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@Willyboy what do you think about the elevated sales to new listings ratio? Just a temporary blip? Seems to be a correlation between Teranet and sales to listing ratio.
http://i.huffpost.com/gen/5366250/original.jpg
(I am not as close to the Toronto market as you are...I am legitimately asking)

Actually I forgot to mention that the statistics of the real estate board of Toronto are different than those of Teranet. Some say there's a difference because each one reports sales differently like closed sales instead of sales to be closed but I'm not sure about it.

Anyways in the next few months we'll have a clearer picture of what's happening but you're right about what's going on in terms of sales dropping.

What I personally see is they're trying to deflate the bubble slowly so we don't experience a US style crash if they keep fueling it. This will lead to softening in the market in the next while I think.
 
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