# Toronto Bubble



## Romy (Jan 14, 2015)

Is Toronto real estate in a bubble?


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## Berubeland (Sep 6, 2009)

Yes


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## Romy (Jan 14, 2015)

Berubeland said:


> Yes


Any predictions when it might pop?


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## andrewf (Mar 1, 2010)

I just have to laugh at this.


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## tygrus (Mar 13, 2012)

Real estate doesn't pop, it usually melts.


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## Romy (Jan 14, 2015)

Any predictions? Will Toronto real estate prices drop in the future, even crash, as they did in the US market in 2008? Or will they continue to climb, albeit more slowly?


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## Rusty O'Toole (Feb 1, 2012)

Define bubble. I wouldn't mind a 40% melt down like we had in 1990 but not expecting one.


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## Romy (Jan 14, 2015)

If prices declined by 40%+, yeah, I'd consider that a bubble popping, Rusty. 

I'm really not sure what to expect. On the one hand, prices in Toronto have skyrocketed like nuts. They doubled within a few years. To me, that screams "Bubble!" The banks have been lending out LOTS of money at VERY low rates. Everyone and their mother suddenly can get half a million bucks (or more) at 3% and compete in bidding wars. Once the interest rates rise, and people are stuck with massive mortgages they can no longer afford, what will happen? Will we see a sudden correction in property values?

On the other hand, there's still a supply and demand problem. Toronto will continue to have rapid population growth, mostly due to immigration. Will supply suddenly outpace that? I'm not sure how. So maybe the insane price run-up we've been experiencing will slow down but not actually correct.

I'm not sure. Anyone have any thoughts?


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## Just a Guy (Mar 27, 2012)

Ever play hot potato? Don't be the one holding when the music stops...but you never know when the music will stop.


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## Ottawa Realtor (Aug 16, 2015)

Romy said:


> Is Toronto real estate in a bubble?


Take a look at CMHC Housing Market Outlook for the Greater Toronto Area and you will see a chart titled "Required vs. Actual Household Income" and you will see that the required exceeds the actual by about 25%. In Ottawa it's reversed. This is not a good sign and it may well cause prices to drop but it also states that the prices will continue to rise but modestly based on a good economy.


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## marina628 (Dec 14, 2010)

Reality is most people are probably buying with 20% cash down from mom and dad or a 3rd person going on the mortgage or all cash investors ,because of these factors I wouldn't be afraid to buy a home in Toronto right now .I will probably kick myself in 3 years for not doing it lol


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## Janus (Oct 23, 2013)

marina628 said:


> Reality is most people are probably buying with 20% cash down from mom and dad or a 3rd person going on the mortgage or all cash investors ,because of these factors I wouldn't be afraid to buy a home in Toronto right now .I will probably kick myself in 3 years for not doing it lol


What's your source on this? My impression has always been the opposite, but it's more anecdotal than anything. Maybe it is indeed transfers of wealth from family... practically nobody in their 20s has $50k to their name, much less 20% of a 700k+ house.


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## marina628 (Dec 14, 2010)

I have a few friends that are agents in GTA ,two of them came to our xmas party this year and they were both discussing their clients ,if not a trade up seller who has owned 20+ years they are their clients going out with their 30ish year old children and providing down payments .One friend has only done 3 deals with 5% down in 2015 of the 60+ deals he has done.


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## sags (May 15, 2010)

Probably a lot of parents are putting a HELOC against their own house to provide down payments to their kids.

Isn't that what parents are for...........risk their own retirement so their kids can get what they want but can't afford ?


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## marina628 (Dec 14, 2010)

Actually the kids need to be able to afford the mortgage on paper , we all do.I never got 5 cents from my parents to purchase my home and I turned out alright


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## Sixth_Circle (Nov 22, 2010)

It's happened again. Our landlord wants to sell his unit at the end of our term. As this is the second time this has happened to us in the past couple years of renting, we are giving serious thought to buying our next condo.

We know that a housing market correction is coming (at some point). But at the same time, a jolt to RE prices might spook the horses and cause more landlords to start cashing out. So even if we keep renting, there might be more disruption and inconvenience in moving or dealing with a landlord in panic mode. Plus, rents are increasing, and so is general interest in renting and being closer to work, transit, and urban amenities. I'm not sure if a slide in condo prices would translate to cheaper rents due to increased competition, especially in prime areas.

We like our neighbourhood and are prepared to stay here long-term. It is not a temporary arrangement, nor a speculative investment. We like the condo lifestyle, have 20% down, and a decent portfolio and rainy-day fund. No plans to relocate and no debt. In our 40's, and getting tired of packing and unpacking and changing addresses.

Are we still being stupid?


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## Romy (Jan 14, 2015)

Sixth_Circle, FYI, you are not legally required to move when your landlord wants to sell the condo where you live. A tenant is only legally required to move if the landlord wants to live in the property him or herself. (However, if your current landlord sells the condo to a new landlord with you still being a tenant, that new landlord can choose to live there and can ask you to move.)


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## Sixth_Circle (Nov 22, 2010)

Romy said:


> Sixth_Circle, FYI, you are not legally required to move when your landlord wants to sell the condo where you live. A tenant is only legally required to move if the landlord wants to live in the property him or herself. (However, if your current landlord sells the condo to a new landlord with you still being a tenant, that new landlord can choose to live there and can ask you to move.)


Thanks. We are not fighting it as we really want to move anyway. We have a decent relationship with the owner, and all parties are ok with this. And in our last place, we had to endure the showings, inconsiderate agents, etc. It sucked. We are tired of going through the motions. The purchaser may take us on as tenants, or give us the boot. Either way, to stay would likely be just delaying the inevitable disruption and pain down the road. We figure we'll just make a clean break.


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## sags (May 15, 2010)

marina628 said:


> Actually the kids need to be able to afford the mortgage on paper , we all do.I never got 5 cents from my parents to purchase my home and I turned out alright


Not really. Home Trust is checking their mortgage porfolio and are 40% of the way through. They won't be renewing 10% of their entire portfolio so far.

That is a lot of mortgages with sketchy incomes and that is only one lender.


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## sags (May 15, 2010)

Sixth Circle..............we rent from a landlord with a large portfolio.......1200 rentals, in part to avoid having to move all the time.

There must be some landlord in your area that is strictly a rental business.


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## Sixth_Circle (Nov 22, 2010)

sags said:


> Sixth Circle..............we rent from a landlord with a large portfolio.......1200 rentals, in part to avoid having to move all the time.
> 
> There must be some landlord in your area that is strictly a rental business.


I'm sure there is, but we have looked at a lot of dedicated rental units and they have left a lot to be desired as far as finishings, cleanliness, and general state of repair. Yes, the stove might work, but it might be 10-20 years old and look battered as old hell. Finding a landlord with the same high standards and pride in their property that we have seems as difficult as, well, finding good AAA tenants who treat the place with respect. 

Since we arrived in the city, we tended towards owner-occupied units that were in really good shape. Unfortunately, this has been a double-edged sword, as it seems we are just keeping the places warm until they are ready to list. The dedicated rental buildings in our style, like the Heathview or KG Group buildings, are very expensive, and no doubt they are increasing rates for tenants every year.


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## Woz (Sep 5, 2013)

You could always sign a longer lease or ask for a renewal option in the lease.


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## naysmitj (Sep 16, 2014)

Sixth_Circle said:


> It's happened again. Our landlord wants to sell his unit at the end of our term. As this is the second time this has happened to us in the past couple years of renting, we are giving serious thought to buying our next condo.
> 
> We know that a housing market correction is coming (at some point). But at the same time, a jolt to RE prices might spook the horses and cause more landlords to start cashing out. So even if we keep renting, there might be more disruption and inconvenience in moving or dealing with a landlord in panic mode. Plus, rents are increasing, and so is general interest in renting and being closer to work, transit, and urban amenities. I'm not sure if a slide in condo prices would translate to cheaper rents due to increased competition, especially in prime areas.
> 
> ...


We bought a house in 1991 that we could afford. The real estate market started dropping the day after we took possession, but it didn't matter, we were living where we wanted to live and we had not planned on selling for years. Buy where you want to live.


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## JeanJean (Feb 12, 2016)

*Set your rule for viewing*

Many buyers are investors who would love to buy a condo with good tenants. 
If you decide to move, it should be because that you want to move or you want to buy a property. I wouldn't be bothered by changing landlord. 
About showing, you should just give a specified time slots (e.g. Once or twice a week, your specified time frame), and let others follow your rule. Potential investors / buyers will respect this rule. My 2 cents. 

Btw. Which area are you in (if you don't mind)? 



Sixth_Circle said:


> It's happened again. Our landlord wants to sell his unit at the end of our term. As this is the second time this has happened to us in the past couple years of renting, we are giving serious thought to buying our next condo.
> 
> We know that a housing market correction is coming (at some point). But at the same time, a jolt to RE prices might spook the horses and cause more landlords to start cashing out. So even if we keep renting, there might be more disruption and inconvenience in moving or dealing with a landlord in panic mode. Plus, rents are increasing, and so is general interest in renting and being closer to work, transit, and urban amenities. I'm not sure if a slide in condo prices would translate to cheaper rents due to increased competition, especially in prime areas.
> 
> ...


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## Berubeland (Sep 6, 2009)

I had a property that was put on the market with a very cooperative tenant this year. The real estate agents couldn't have done more shitty things to her if they tried. They failed on many occasions to give proper notice and because the tenant worked shiftwork a couple times she was sleeping when people came into her condo. She had specified showings. 

Then after the sale the idiot real estate agent didn't allow for proper 60 day notice. The property was sold in mid December for a January 4th closing. This was after I sent her the forms for proper notice after the sale. So she knew but DNGAF. Her idiocy then becomes the owner's problem. 

I recently had another friend this time, the real estate agent emails him with the rules for showing including giving instructions "Don't leave any floaters" Seriously? 

If I were renting and the house was listed the first thing I would do is buy one of those screachy chain alarms that locks. If there is no notice then leave that thing locked when leaving your house. The agents would be a little more respectful of your privacy and better about giving notice. 

There is a Superior court judgement Wrona v somepoorlandlord where they award $1000 per illegal entry. The agent could also be a party to the application. 

Landlords rarely assume a tenant, after all why would a landlord with an AAA tenant sell their property? Not worth the risk.


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## sags (May 15, 2010)

Sixth_Circle said:


> I'm sure there is, but we have looked at a lot of dedicated rental units and they have left a lot to be desired as far as finishings, cleanliness, and general state of repair. Yes, the stove might work, but it might be 10-20 years old and look battered as old hell. Finding a landlord with the same high standards and pride in their property that we have seems as difficult as, well, finding good AAA tenants who treat the place with respect.
> 
> Since we arrived in the city, we tended towards owner-occupied units that were in really good shape. Unfortunately, this has been a double-edged sword, as it seems we are just keeping the places warm until they are ready to list. The dedicated rental buildings in our style, like the Heathview or KG Group buildings, are very expensive, and no doubt they are increasing rates for tenants every year.


I agree with all that, and our townhouse was extremely well maintained but was quite outdated, except for new kitchen cupboards.

We updated the place ourselves to keep the rent base down. It works if you plan to stay a long time.


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## sags (May 15, 2010)

Sixth Circle.........if you like the condo and the area, have you considered buying the unit from the landlord ?

They would save realtor fees and if you trust them you could share lawyer costs. Saves on moving expenses and the hassle of changing addresses as well.

I thought........and I could be wrong on this, but does not the tenant have first option to buy a property being sold by the landlord ? I seem to recall reading something about that.


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## Sixth_Circle (Nov 22, 2010)

sags said:


> Sixth Circle.........if you like the condo and the area, have you considered buying the unit from the landlord ?


We like it enough to rent, but not to buy. Too small. 

Not only that, the average cost per square foot in this building is much higher than other buildings in the area. And honestly? The newer the building, the cheaper the quality, IMO. And this building is still very fresh.


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