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Thread: Future of Canadian real estate

  1. #11
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    Canada 2015/16 (Stats Can, July to June)

    births 392,902
    deaths 269,012

    immigration per year 300,000

    total est. annual increase = 423,890

    Close to half a million new bodies to house annually. Just the immigration annual number alone is four times the population of my city. Just the immigration number, assuming a family of four, requires 75,000 further two or three bedroom housing units annually. Of course, not all are families of four, some are single, some are couples.

    Regardless, more housing will be needed with 1.5 million immigrants arriving over the next five years. Then add in extra bedrooms that may be required for births, and increased numbers of international students being sought by the colleges and universities, with the assistance and blessing of the feds. FWIW

    Last edited by RCB; 2017-02-17 at 02:11 AM.

  2. #12
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    While these growth numbers are impressive, I am sure this number is not bigger than US. and not bigger than some other big populous countries around the world. But everywhere around the world that experienced such a upward run, has also experienced a following decline. So eventually if income does not go up for average people, number of people might not be enough to sustain the current price GTA market is experiencing. Already Canadians spend almost 40% of their income for housing and it is pretty high.

  3. #13
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    Better numbers to look at is average salary for Canadians, and average house price...I know what the average numbers are for Canada (about $50-60k income and about $450k for house prices), but prices vary widely by city, let alone province, so look it up for a specific area.

    Sincehouses are actually bought by people who work and need to be able to pay for them, plug the average house price number into a mortgage calculator and see what happens when the interest rate gets closer to its historical average of 8%.

    Next, remember that most Canadians lock in their interest rates for 5 years or less, and the majority of mortgage payments for the first 10 years goes towards interest not principle, so renewal time can give current owners a big surprise of a much higher payment. (Hint, it works out to be about $50/month per $100k borrowed for each 1% rise in interest rates. Also remember that interest rates usually changed by .25% each quarter up or down, sometimes more).

    The main reason why the "experts" have been wrong for the last 20 years I'd because interest rates have fallen continuously for the past 20 years, allowing people to pay much more for a house, while still being able to "afford" the payments.

    All the minor "corrections" we've seen over the last 20 years have quickly been reinflated because the cheap interest allowed the fools to quickly bid the prices back up again...

    The silliness will come to an abrupt end however when interest rates rise and these houses suddenly become unaffordable. They'll also be unable to sell, even with a growing population, because none of these people can afford the house prices any better than the ones stuck with overpriced places.

    Supply and demand is meaningless if people can't afford to overpay anymore.
    Last edited by Just a Guy; 2017-02-17 at 09:42 AM.
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  5. #14
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    Quote Originally Posted by Just a Guy View Post
    Better numbers to look at is average salary for Canadians, and average house price...I know what the average numbers are for Canada (about $50-60k income and about $450k for house prices), but prices vary widely by city, let alone province, so look it up for a specific area.

    Sincehouses are actually bought by people who work and need to be able to pay for them, plug the average house price number into a mortgage calculator and see what happens when the interest rate gets closer to its historical average of 8%.

    Next, remember that most Canadians lock in their interest rates for 5 years or less, and the majority of mortgage payments for the first 10 years goes towards interest not principle, so renewal time can give current owners a big surprise of a much higher payment. (Hint, it works out to be about $50/month per $100k borrowed for each 1% rise in interest rates. Also remember that interest rates usually changed by .25% each quarter up or down, sometimes more).

    The main reason why the "experts" have been wrong for the last 20 years I'd because interest rates have fallen continuously for the past 20 years, allowing people to pay much more for a house, while still being able to "afford" the payments.

    All the minor "corrections" we've seen over the last 20 years have quickly been reinflated because the cheap interest allowed the fools to quickly bid the prices back up again...

    The silliness will come to an abrupt end however when interest rates rise and these houses suddenly become unaffordable. They'll also be unable to sell, even with a growing population, because none of these people can afford the house prices any better than the ones stuck with overpriced places.

    Supply and demand is meaningless if people can't afford to overpay anymore.
    Except for those of us socking away cash and waiting to buy in ~5 years when home prices stagnate and/or go dowwwwn Watching the bubble from the outside, waiting to capitalize on the aftermath when the dust settles

    What's your personal prediction of when a major market correction will begin to happen in the GTA? Seems like 2017 won't be the year... everyone still want to buy, and for obscene prices

  6. #15
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    I owe it to very high interest rates in moving me up in the housing market back in 1990. High interest rates were my friend even though payments were a little tough, but then again they always are when you first start out.

  7. #16
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    I don't have a crystal ball that works any better than anyone else. I rely on math, since it doesn't lie, to do forecasting.

    Unfortunately, forecasting only tells you what will happen, not when or even if it'll happen. Though anyone who doesn't believe interest rates will go up at some point is probably delusional.

  8. #17
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    Quote Originally Posted by Just a Guy View Post
    I don't have a crystal ball that works any better than anyone else. I rely on math, since it doesn't lie, to do forecasting.

    Unfortunately, forecasting only tells you what will happen, not when or even if it'll happen. Though anyone who doesn't believe interest rates will go up at some point is probably delusional.
    So you rely on math to do your forecasting but forecasting does not tell you when or if it will happen? Doesnt really sound like forecasting to me.

    Also, to OP, there is no Canadian real estate.

  9. #18
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    Sorry, math can't predict when the government chooses to raise interest rates. I know no one ever thought interest rates would continue to drop for 20 years, nor that they'd get anywhere near 0.

    As for forecasting, I use the word as in running "what if" scenarios. I can only predict what will happen, not when a human will make a decision.

    The math can clearly show how a house worth $100k in a high interest market has the same payments as a 400k house in a low interest market. Which explains why the house prices increased so much.

    It also shows that prices are relative. When the market corrects, that $400k bungalow won't have millionaires bidding for it. All the prices will correct, and that house will probably be in for a huge correction.

    My math predicts a correction won't really happen until interest rates start to rise and continue to do so. When will he government do this? No idea, they've painted themselves into a corner and don't have anywhere to go from what I see...

    Then again Europe has negative interest rates, so who knows.

  10. #19
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    I think we would see 100 year amortizations, before the government will allow a housing collapse.

    Anything to keep the mortgage payments affordable and people in their homes.

    The housing industry is a huge component of Canada's economy and the government simply can't let it collapse.

    In 100 years, some of these new homes will probably have to be bulldozed, but the serviced land will still be there.
    Last edited by sags; 2017-02-17 at 11:32 AM.
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  11. #20
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    And any owners will be long dead. Then again, the banks are already landlords for most people.


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