Toronto`s Real Estate Bubble

AndreiAngelkovski · Mar 3, 2012

Hello REIN Investors,Is there a `bubble` in Toronto`s Real Estate Market? You`ll hear different opinions from everyone you speak with and every newspaper you read. Tim Syrianos is the Broker of Record and Owner of Remax Ultimate Realty Inc., Brokerage and he has been in the Real Estate Business for over 20 years. Having gone through a couple recessions in his time, Tim`s opinion is that the Market in Toronto is currently strong and healthy, but some things need to change to help balance things out. Being an active investor himself, Tim walks the talk and understands the investor mind. We discuss issues like `what happens if the market dips by 30-40%`? We all have our own goals and expectations and this would have a different impact on all of us. However, `time happens` and if you are in this for the long term then watch this video blog.

Video Blog: Toronto's Real Estate "Bubble"

MaximeValmont · Mar 4, 2012

First of all, if he is such a good investor , why the hell his he selling houses?

I've learned something long time ago : Never listen to people that are trying to sell you something.

He actually says ZERO argument why he thinks the market is not overvaluated in Toronto, ZERO.

The only thing I heard was 2-3 salesman techniques.

There are so many things he could have said to be more convincing. But the only think he could think of is " Well, even if the market drops, the good news is you'll have paid some of the mortgage".

Sorry, but I had to say the truth.

Valmont.

housingrental · Mar 4, 2012

As noted in other posts - being a Realtor does not preclude someone from being a good investor

MaximeValmont · Mar 4, 2012

And being a Realtor does not assure that someone knows Real Estate, at ALL. Specially on a hard subject like bubble.

I'm building my conclusion on the fact that this guy had no argument, not the fact that he is a realtor.

Valmont.

housingrental · Mar 5, 2012

Hi Valmont

Thanks for your response

So for the interests of discussion what signs do you see in Toronto?

MaximeValmont · Mar 5, 2012

I haven't looked really deeply into the Toronto market.

But Real Estate is really really simple : At the end it's all about sypply and demand.

I think There is an over-supply in Toronto. I mean... Even the newspaper is talking about it. This is bad news. I know peole that have been talking about this bubble in the last 5 years.

I know a builder in Toronto and he told be this is crazy what is going on over there. The amount of new building under construction is insane. Every builder saw the demand, and all of them said to themselve " Good time to build".

The problem is if the demand drops ( and it will at some point), the construction must be finish no matter what. You can't stop the construction halfway. A condo tower is a long term project.

I think the market will shift to a more balanced market in 2012.

One thing is sure.. You guys, that are long-term cashflow investors, The is NO reason to invest in Toronto Right now. It's way too risky. Why invest in Toronto when you can invest in Edmonto, Calgary etc.

Realt estate is not a broad business. You can't say : " Ok calgary is good, Toronto suck." This is not how it works at all. I'm an opportunistic investor. I only invest in some crazy good deals where I can raise the value of the building insanily high. But for those that are trying to find good cashlfowing ptoperties for a long term hold, I see no reason to try to find properties in Toronto when you can do the same in Calgary, for exemple.

Valmont.

housingrental · Mar 6, 2012

Thanks Valmont

Calgary also has it's risks - a prolonged downturn in gas and oil prices won't serve it well - and from a GTA perspective many investors are BETTING on sufficient population growth to absorb new condo supply

jazy786 · Mar 9, 2012

Hi

I am new here like my very first hour at this space. I am really bothered and disturbed about the recent talks, blogs, etc about the Canadian RE bubble, particularly the GTA area. All this worrisome talk is making me think of selling my primary residence and cash out the equity I have, as its all paper until its in the bank. I live in Mississauga, ON. Having said that, will really appreciate if any of the old experts in RE investments would please provide their insights on how they feel on this issue e.g. will the GTA, Mississauga Market really can see a 20-30% drop in home values?

Please and thank you.

JK

MaximeValmont · Mar 9, 2012

In my opinion,

It's not going to drop 20-30% really quickly like it did in the US. The difference is huge between what happened in the US and what's going on in Canada right now. There are lots of people that are saying the same will happen in Canada, but that's actually impossible in my opinion. From the numbers that I look at anyway.

Valmont.

jonathanb · Mar 9, 2012

[quote user=MaximeValmont] From the numbers that I look at anyway.

Which numbers are those? Im not trying to disagree, just curious.

jon

MaximeValmont · Mar 9, 2012

Pay me and i'll tell you

Valmont

MaximeValmont · Mar 9, 2012

@ Housingrental,

What downturn in gas and oil prices?

housingrental · Mar 9, 2012

It is possible

It is not guaranteed

No one knows the future

You should ask yourself before selling - Can I afford to own my house? Do I want to live here? What will provide the best quality of life - less house and more $ for other things?

If I asked myself if my house dropped 20% in value in X years would I be better off selling? I'm not sure.... if it's worth 20% less I won't enjoy my home 20% less

[quote user=jazy786]Hi

I am new here like my very first hour at this space. I am really bothered and disturbed about the recent talks, blogs, etc about the Canadian RE bubble, particularly the GTA area. All this worrisome talk is making me think of selling my primary residence and cash out the equity I have, as its all paper until its in the bank. I live in Mississauga, ON. Having said that, will really appreciate if any of the old experts in RE investments would please provide their insights on how they feel on this issue e.g. will the GTA, Mississauga Market really can see a 20-30% drop in home values?

Please and thank you.

JK

housingrental · Mar 9, 2012

My above post can be read with an "If" in front of it if it helps you as it lists some of the potential risks.

As it is..they are both off quite a bit from their peaks currently, and I think many would view gas as well below their previous price expectations - and in turn this HAS impacted housing values in many cities in Alberta through it's impact on jobs

[quote user=MaximeValmont]@ Housingrental,

What downturn in gas and oil prices?

bizaro86 · Mar 9, 2012

[quote user=MaximeValmont]Pay me and i'll tell you

Valmont

That's pretty far from the spirit of the forum here, imo.

Michael

MaximeValmont · Mar 9, 2012

Last time I said my opinion on this forum,

Some people said I don't have the knowledge to give advice.

So who cares where I take my numbers from? I obviously don't know what i'm talking about

Valmont.

bizaro86 · Mar 9, 2012

[quote user=MaximeValmont]

Last time I said my opinion on this forum,

Some people said I don't have the knowledge to give advice.

So who cares where I take my numbers from? I obviously don't know what i'm talking about

Valmont.

Nobody in this thread has said you don't know what you're talking about. I don't even disagree with you about prices, but if you have some back arguments or facts to go with your statements that's always appreciated, as then everyone can learn from it. Saying you'll only disclose your "numbers" to someone who'll pay you for them is a bit silly, imo, since why bother saying anything at all then?

Regards,

Michael

MaximeValmont · Mar 9, 2012

In the US,

From 2000 until mid-2005 the market value of existing homes grew by 50%+ and there was lots of new construction. About 50% of the GDP in 2005 came from Real Estate.

From about 1997 to 2006, consumers cashed out about 9 Trillion out of their home equity.

In 2000's , Home equity financed about 3% of ALL personal consumption. In 2006, it was up to 10%.

By 2005, about 45% of homes purchase were secondary homes.

Banks repackaged really risky loans and sold them as collaterized debt obligations. Banks and rating agencies really underestimated the risks.

There was Also lots of "ninja loan"... No jobs, no income no assets? Not a problem, We'll lend you money!!

I just don't see the same thing in Canada,

Valmont.

Thomas Beyer · Mar 9, 2012

[quote user=MaximeValmont]about 45% of homes purchase were secondary homes.
.. and all that debt was tax deductible. Funny how in the current US presidential debate no one is talking about that benefit for the wealthy and ultra-wealthy .. and one of the causes of the financial crisis in the US.

MaximeValmont · Mar 9, 2012