# GTA real estate has gone nuts...........



## sags (May 15, 2010)

As people line up to save a couple of dollars on a gas fillup, others are lining up to sign for a $1,00,000 home in a few frenzied minutes anywhere even remotely close to Toronto.

People have lost all their marbles...........

A couple with a $150,000 joint pretax income (or in some cases just saying they do), and $150,000 down payment (or 0 with a cash back mortgage or a "gift" from family), and a decent credit rating, qualify for a $1,000,000, 4,000 square foot home crammed onto a 40-50 foot lot............and they are lining up all night for the right to buy them.

Our government has created a feeding frenzy, and have shown no inclination to apply the brakes. They seem content to wait until it just isn't possible for people to meet the qualifications anymore...........and that will be when it ends.

At the very pinnacle of debt burden possible.

I don't see this ending well.


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## Jungle (Feb 17, 2010)

Nope and we're right in the middle of this trying to sell and buy a place. 

The market scares me and does not make sense anymore. 

Whatever.


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## Saniokca (Sep 5, 2009)

Lol I know someone who bought last year a $1 mil house, leases a $100k car and complains about gas prices


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## ddkay (Nov 20, 2010)

Did you see one of those stories with people lining up to buy homes? Some developers will pay people to stand in line to create hype. Here's one from 2007, Bazi's hiring random people for as much as $2000 per head http://www.torontolife.com/features/whole-lot-nothing/

The gas line up is definitely legitimate, but its harder to believe there is a huge line up for million dollar houses

P.S. Gas costs almost half as much here than the rest of the world, count your blessings guys!


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## Jungle (Feb 17, 2010)

I went to a few of those grand openings over the last year. Some people camped out in tents the night before, just to be the first one to spend half a million dollars. 

I was the 30th person there at 9am. Opening was 11am. 

I stood near the door with my number and spoke aloud to the crowd with concern that the prices were expensive. They were $50-100K more than local resale and did not come with appliances, furnace, etc. 

Well I got no response from the crowd except for some person that said " this is Toronto and what you pay"

Inside people were called and I saw four family generations sitting at tables, each person writing cheques. The grand parents were there. The mom and dad was there. Their sister/ brother was there. Then their kids were there. They were all moving in one house..

We didn't buy, thank god. The street would be too crowded with cars when 10 people live in a 3 bedroom home.


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## Jungle (Feb 17, 2010)

Where my inlaws live, you can buy a 1950's bungalow for a million dollars. Infact one sold last summer for 1.2 million, ravine view. The people accross the street just bought one a few years ago and are under 30 with no kids. They have three cars, bmw X2, infinity, etc. He makes 60-80k, she works in a office (not sure salary). They both pay like $400/ month for parking. 

The bought the house for 500k and spent 200K on renos.. additions and redesign. 

They asked when we were going to buy, we said too much money for that area and they said to just put it on a line of credit like they did......... ahhhhhhhhhh


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## Jungle (Feb 17, 2010)

A guy I work with had someone on his street buy a bungalow for 400k back last fall. Scarbrough. He did absolutely nothing to it, didn't even move in. Put it back up for sale and someone bought it for 470K. 

70K !! Wish I could make that in the stock market right now.


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## ddkay (Nov 20, 2010)

All we need is a little 30% correction and slow recovery for people to know what holding the bag feels like and never try that again. Apparently all the Canadian banks can "handle" that % decline in their mortgage portfolios. Any more than that though and it probs gets messy.


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## marina628 (Dec 14, 2010)

My friend sold her home for full Price about 5 weeks ago and has put offers on 4 houses in the past 3 weeks at full price or over and has lost all of them ,this is Whitby/Ajax not even Toronto!Her offers have been $390,000 -$450,000 range


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## Square Root (Jan 30, 2010)

A little worrisome for sure. The longer it takes to correct, the worse the correction will be. I think the banks will be OK but their growth will certainly decline. I would not be a buyer at these prices.


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## KaeJS (Sep 28, 2010)

Saniokca said:


> Lol I know someone who bought last year a $1 mil house, leases a $100k car and complains about gas prices


I had to read this three times.

I don't even have debt and I still question paying $2.25 for a Coke...


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## KaeJS (Sep 28, 2010)

Square Root said:


> I would not be a buyer at these prices.


Bank stocks, or houses? :tongue:


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## Square Root (Jan 30, 2010)

KaeJS said:


> Bank stocks, or houses? :tongue:


Sorry I meant houses. Bank stocks are always a good buy if you hold them for a while.


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## KaeJS (Sep 28, 2010)

I knew what you meant, SR. I was just trying to be facetious. :tongue:


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## uptoolate (Oct 9, 2011)

KaeJS said:


> I don't even have debt and I still question paying $2.25 for a Coke...


With you on that! I just bought a couple of cases of 12 at 3.33 and felt like I was getting ripped off! Don't even get me started on bottled water!


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## KaeJS (Sep 28, 2010)

uptoolate said:


> With you on that! I just bought a couple of cases of 12 at 3.33 and felt like I was getting ripped off! Don't even get me started on bottled water!


Bottled water is the worst thing on the planet.

It's horrible for our environment, our bodies, and our wallets.

I thoroughly refuse to buy bottled water. I don't understand it!


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## uptoolate (Oct 9, 2011)

Agree! Unbelievable scam!


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## Jungle (Feb 17, 2010)

Up too late, watch for the recent sales in the discount grocery flyer, seems that you can get a 18 pack coke for 4.77 or 24 around 5.99. Much better than 3.33 for 12. Coke did raise their dividend and prices go up.

I got my last coke 18 for $4.44 or about 24 cents a can. It stocked in my fridge. Even better price than costco last time I checked.


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## marina628 (Dec 14, 2010)

I am 45 and was raised on tap water cannot believe how people now think it is gross to drink water from a tap .My friend in Whitby finally managed to get a house , she paid $14,900 over asking price in Whitby!I am fortunate to already have a good real estate portfolio with about 75% equity in each property.My brother in law was over a couple days ago and asked me if i wanted to do a flip with him LOL, I told him I think that time has passed.


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## Jungle (Feb 17, 2010)

Usually that is a red flag when all the sudden people you would never expect, (relatives, co-workers, strangers, taxi drivers etc)approach you about this fantastic idea of real estate investing and buying because of the returns over the last decade..

We had a family member ask for 20k to be pooled with a dozen other people to buy a few rentals with almost nothing down and rent them to people with bad credit.. suppose to beat stock returns according to him. 

Just wait until interest rates go up.


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## sags (May 15, 2010)

Garth Turner has an update on his blog, about that story of the Chinese student who purchased a bungalow listed for 700,000 and paid 400,000 over listing price for it. She paid 1.2 Million cash...........from relatives in China somewhere.

The house is now listed for rent............at 2500 a month.

After the calculations, it works out the proud new owners are losing money each month.........and don't have the 1.2 million anymore.

It is a funny read on his blog at www.greaterfool.ca


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## Jungle (Feb 17, 2010)

That guy is a tool but from the Chinese people I have talked to here in toronto, they are VERY, VERY bullish on Real Estate, especially in that area of Willowdale. 
One is telling me right now our condo will double in 10 years if we hold on. 
Personally I am scared and just want out.


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## ddkay (Nov 20, 2010)

$2 million homes. Natural gas at decade lows, I got all 8 burners going this morning, chili, soup, pasta sauce, other 5 just burning. Wealth effect baby! :excitement::excitement:nthego:


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## ddkay (Nov 20, 2010)

That Willowdale bungalow might have been used to "clean" communist money. What kind of checks are made for all cash transactions?


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## andrewf (Mar 1, 2010)

A lot of wealthy Chinese are just desperate to get their cash out of China. China is imposing negative real yields on savers, so people pile into real estate in the hopes of at least breaking even in real terms. People are willing to go to Macau and gamble at the casinos, lose 50%, and get freshly laundered US dollars when they cash in their chips.


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## bayview (Nov 6, 2011)

Ya prices and transactions are in frenzy. Some chinese are washing but to most asians from the developed regions canadian real estate is cheap relative to their home base notwithstanding it has gone up a lot from its own base. I feel even if a steady rise in interest rates will not slowdown the frenzy as it only means global economy is snaping back to life. We need a major correction in global markets to unnerve potential foreign buyers, IMHO. Until that happens an extended real estate can go on for a long time like a stock market bubble. 

http://viableopposition.blogspot.ca/2012/03/canadas-real-estate-market-sustainable.html


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## HaroldCrump (Jun 10, 2009)

Negative real interest rates is not a phenomenon unique to the Chinese.
We have it here as well, which has helped fuel the RE insanity here.
The Chinese are merely a secondary factor.
The irresponsible and scandalous money printing by the US Fed. has caused the Chinese money to double back across the pacific into our RE market (and resources)


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## CanadianCapitalist (Mar 31, 2009)

Here is Ottawa, real estate is far more sedate. We've been looking for a home and we find many properties that we looked at languishing in the market for months.


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## bayview (Nov 6, 2011)

And Ottawa voted again Best City to live in Canada!!

http://www.moneysense.ca/2012/03/20/canadas-best-places-to-live-2012/


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## Causalien (Apr 4, 2009)

Here's the real question we are not asking.
RE is just adjusting to the world market. Eventually all world renown cities will cost the same.
Why isn't our wage going up to compensate for the inflation?


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## Berubeland (Sep 6, 2009)

If RE is adjusting to globalization...so is the labour market and there are a whole lot of people in other parts of the world who will do what the vast majority of what we do for a whole lot less.


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## Jungle (Feb 17, 2010)

I dunno, I think that will just divide the rich and the poor if this keeps going. What if we end up like a min New York or Hong Kong ?


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## donald (Apr 18, 2011)

It def seems(obviously)that the chinese have cliamed toronto & vancouver(aint nothing anybody can do about that).Hard to disagree with brad lamb in the garth turner article linked in this thread.Vancouver is already like hong kong is'nt it?


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## ghayoor (Apr 4, 2012)

I know a person who buy 50k house. I was astonished that how the champ, is covering all these!!!!!


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## Pigzfly (Dec 2, 2010)

There is a rarely-used immigration policy that basically allows family immigration for an investment in the economy. Houses count as an investment in the economy, provided they are over 500K. I went to school with a number of ex-pats who were here, living with their mother or older sibling, while Dad stayed in their home country working. They wanted a Canadian and English education for their children and this is a way to achieve that end. (Other people I went to school with paid tuition for my public school. I vaguely recall it was 26K a year and all of us ungrateful brats couldn't believe someone would pay that!)


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## Lucy (Mar 10, 2012)

Canadians have now surpassed US 2008 debt to income ratios plus we are more heavily taxedeanong the debt burden is greater. This will be lowered by a real estate correction accompanied by large unemployment, (perhaps US style).

I've been selling real estate in the GTA for 26 years. I went thru the 1990-1995 correction and it was very ugly and negative. This correction should be worse because debt levels are double. Debt to income levels are the indicator that the Canadian economy is a steaming pile of debt.

I am absolutely amazed that the Canadian governments lack of leadership on this. Especially sincethe writing is on the wall and warning signes are all around us. Plus they should Pay attention to the examples of what over indebtedness brings, from around the world and south of the boarder.

Much of the damage has already been done but what happens if this continues at this pace for another 2-3 years. We truly have an immature government steering outmr economy.


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## canadianbanks (Jun 5, 2009)

I see this as the final blow-off phase of a bubble that has been inflating for more than a decade. In the Yonge & Eglinton area semis and detached homes are selling for 20% more than they were selling last fall. I think the end of the bubble is very close now. As for how low we would go after the peak, I don't see problems with 30% down from the top over the next 3 years.


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## Lucy (Mar 10, 2012)

Possibly, or maybe another year or two of madness. I believe the central core has experienced 20% appreciation for a couple of years now according to my fellow realtors.

I noticed your screen name is Canuck Banks. When RE corrects, banks will no longer seem so solid. They have benefitted by this bubble more than anyone, and many of their 30 something emloyees have not experienced a correction including the 30 something condo and homeowners.


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## andrewf (Mar 1, 2010)

Macleans: The under the radar changes that may soon deflate or pop the housing bubble:


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## Dmoney (Apr 28, 2011)

Hurry up and burst already. I'm on the sidelines waiting to buy. Would love a semi under $500K or a detached under a million.


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## marina628 (Dec 14, 2010)

I will be happy with any downtown condo , 2 bedroom 2 bath parking and locker for under $300,000 pls ,we had one in 1997 and really wish I had it back


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## ddkay (Nov 20, 2010)

It's not that hard to find 1+1, 2 baths w/ parking and a locker for < $400K, it's probably smaller (~1000sq ft?) than whatever you had in the 90s though. Just focus on the resale market and stay away from mega-hyped new construction buildings where the seller unjustifiably demands double $/psf


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## Lucy (Mar 10, 2012)

Another point of view in this disastrous bubble!

http://www.financialpost.com/m/wp/d...me-torontos-housing-bubble-ban-foreign-buying


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## HaroldCrump (Jun 10, 2009)

andrewf said:


> Macleans: The under the radar changes that may soon deflate or pop the housing bubble


^ That was an excellent article.

And the wheels are already in motion:

*Flaherty moves to tighten CMHC supervision*
http://www.cbc.ca/news/business/story/2012/04/26/flaherty-budget-update.html

My concern is that this may be just another bureaucratic smoke and mirrors.
More regulation, more paperwork, more paper pushers to be hired, nothing concrete gets done.
The CMHC cap will be raised again.

IMHO, they need to take decisive and explicit action - some of them were highlighted in that article.
In addition, they can temporarily suspend the HBP, further increase down payment requirements of investment properties, tighten lending rules, etc.
Given the state of the housing market, I am no longer sure whether BoC rate hikes of 25 bps or even 50 bps will have any effect whatsoever.
Too little, too late.


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## marina628 (Dec 14, 2010)

I know they are $400,000+ ,if we believe the bubble they will drop $100,000+ soon We sold ours on Prince Arthur in 1999 , miss having a place to crash on weekends .We could not justify to keep it back then but now that kids are older we have the time and freedom to go downtown for weekends again.


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## ddkay (Nov 20, 2010)

Pretty sure a 75% correction could only happen if Canada's entire financials and supporting sectors got wiped out. Remember increasing prices are only supported by what the market will pay aka household income. If Toronto turned into Detroit (avg home cost $55K) I wouldn't want to live here no matter how cheap it is cause the job market would be decimated. :\

Here's a nice place to move instead http://www.ft.com/intl/cms/s/0/7050c298-889b-11e1-a727-00144feab49a.html


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## marina628 (Dec 14, 2010)

25% happened late 80's I am sure it can happen now too.I wont move anywhere into the city lol ,for now nice hotel every other weekend suits our downtown activities.


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## marina628 (Dec 14, 2010)

When I retire you will find me on St.Paul's Bay Malta ,just have to figure when not to go as the black flies can be awful there


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## andrewf (Mar 1, 2010)

Looks like marina meant a fall *by* $100k, not *to* $100k. 

I agree that 75% is not in the cards. I can see a 25% - 35% decrease in GTA, Vancouver and Victoria. For GTA, a 35% decrease would mean a return to prices from around 2005 or so.


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## Jungle (Feb 17, 2010)

CMHC is resonsible for this mess. A co worker just bought with nothing down, got in a bidding war with someone who went back to the bank to get more money because he was maxed out!! 

This euphoria is just insane.


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## donaldmc (Feb 27, 2012)

It's really quite bothersome..Thanks for sharing this information with us. Very interesting!


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## marina628 (Dec 14, 2010)

How do you buy with nothing down?


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## Quotealex (Aug 1, 2010)

marina628 said:


> How do you buy with nothing down?


Based on the CMCH site, the following can be used for the downpayment portion, other than cash:
- Funds borrowed against proven assets, 
- Equity grant (non-repayable grant from federal, provincial or municipal agency).
- Borrowed funds 
- Gifts
- 100% sweat equity
- Lender cash back incentive


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