# Worth investing into Peterborough real estate?



## not_a_virus.exe (Feb 23, 2012)

I'm 23 and live in Toronto with my mother and brother. I have 8 thousand dollars saved sitting in my TFSA and we're thinking of moving to Peterborough in the future. Within the next 2 or 3 years. She tells me the prices in real estate there will skyrocket when this alleged 407 express route from Toronto to Peterborough gets built. An average size home in Toronto costs about 400k. A home just as nice, if not nicer in Peterborough costs half that. I'm thinking of putting all of the money I have now, as well as the money I have saved in the next 2 - 3 years (should be around 30 grand altogether), into part of the home. Not only would it provide us with a nicer home, but it would get my foot in the door to the world of real estate. To anyone that lives in Peterborough and knows a thing or two about the real estate status of it in the future, would this be a wise investment to make?


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## crazyjackcsa (Aug 8, 2010)

You're out of your mind. Truly. Of all the half baked ideas, this is one of the worst ideas I've read in a long time. You should feel bad for asking.


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## dubmac (Jan 9, 2011)

I don't live in peterborough, but, I do have an observation that may be pertinent - 

My brother has a lovely place in Squamish BC - which has appreciated significantly since he purchased in 1990. The new sea-to-sky highway (built in 2010 during the olympics) was supposed to bring many more people to squamish - money in hand. But this hasn't happened, largely because squamish has few jobs and limited prospects. I don't know if peterborough is in a similar cirumstance in being attractive to the "older retired set", or whether people looking for work and career opportunities are expected to arrive.

If you are investing in real estate and in a home, I think you'll be fine. If you are speculating on real estate ..then..caveat emptor. 
(How much of your decision is determined by the 407 highway and someone's prediction that the real estate market will increase ?)


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## DanFo (Apr 9, 2011)

You might get decent price on a place to live .....but for short term investment not so sure...interest rates only have one way to go and as they rise the housing market should come down a bit...Over a long period you may be rewarded but only time will tell.... perhaps in 2-3 years when your ready to buy things might be clearer...either way saving that cash till then will be benificial for you...Consider what will happens in the future if one of you wants to sell when the others want to still live in the house.......


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## not_a_virus.exe (Feb 23, 2012)

crazyjackcsa said:


> You're out of your mind. Truly. Of all the half baked ideas, this is one of the worst ideas I've read in a long time. You should feel bad for asking.


You're too kind, but this wasn't a half baked idea. It was fully baked and perhaps a little overdone. But I would prefer overdone than underdone.

To the other two gents, This isn't supposed to be a short term investment. Living with my mother allows me to save a fortune so I'm in no way hurting for money. And the money I do earn I save. I spend very, very little of it. So I'm in no hurry to move out. Peterborough as I know it has typically been a low key place to live. Very little as a city and more as an oversized small town (74,000 circa 2006). It has come recently into considerable development however. From what I've read in the last year it has registered 20,000 new opening positions in employment. So things are happening. It will never be a mega metropolis like Toronto, but it won't be as expensive either. I would just hate to see the prices double in real estate and not get a slice of the pie.


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## financialnoob (Feb 26, 2011)

Are you thinking about purchasing a place as an investment property, or actually moving out to Peterborough? I'm assuming you work in Toronto, so not sure if you're going to find a comparable job out there or commute, or rent it out.

If renting, check to see what comparable places are going for out there. The market is much different than Toronto. Just because a house is cheaper than Toronto doesn't mean it's guaranteeing a good ROI. 

If buying, I'm assuming you work in Toronto, so would you plan on commuting or find a comparable job out there?


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## not_a_virus.exe (Feb 23, 2012)

I would work in Toronto and commute until I found a job just as good in Peterborough. There's no way I could justify purchasing a property for investments on the income I have now. No, I would be moving out there to live. And it wouldn't be _my_ property. It would be my mothers primarily. I would just help out 30k of it.


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## MoneyGal (Apr 24, 2009)

My family's been in Pboro for more than a century and for more than a decade I was involved in economic development in that region. I have property in the region now. 

You should be really, really clear what those jobs are and whether they're in industries you'd like to work in at pay grades you'd like to work at. 

It might be useful to think about this plan of action as if someone was proposing it to you. How would you like to take ALL of your savings and put them in an extremely undiversified, leveraged investment which charges a large up-front commission, an ongoing MER, is highly illiquid and charges you the same high commission rate to get out?


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## the-royal-mail (Dec 11, 2009)

What is the commute time/mileage? It strikes me as rather insane that anyone would choose to commute. The gas prices and traffic alone should be deterents.


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## crazyjackcsa (Aug 8, 2010)

Finding a comparable job? Not going to happen.

If he lives in downtown Peterborough and works in downtown Toronto, he's looking at 140km commute. Each way. Probably 2 hours each way.

In the winter? Forget about it. 

280km a day, 4 hours a day.
1400km a week, 20 hours a week.
70,000km a year, 1000 hours a year.

That's a new car every 3-4 years. Oil changes every 3 weeks. Even on a fuel miser, 4k in gas a year. On a standard car, double. Plus parking, repairs and the cost of buying a new car every 3-4 years. Just for work. 
Even if a highway was built from your front door to work. *It's still a 100k commute.*

You have 8k. 8k disappears in closing costs. So at this point, you have a downpayment of 0% in 2-3 years, you have 30k. Which is a downpayment of about 5%. And you'll live with your brother and your mom. On the hopes that a highway is built, and that housing prices continue to rise. But, that they haven't risen to the next 2-3 years all that much.

But lets say all of that is okay. In effect, betting against the Toronto housing market. That Toronto will rise slower than Peterborough, and you're completely writing off the potential of a bubble.

But really, the crux is this: "And it wouldn't be my property. It would be my mothers primarily. I would just help out 30k of it."

So with all that said, you're going to mix family with investing? 

I stand by what I said. It's a terrible idea.


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## Harper77 (Nov 11, 2009)

I grew up near Peterpatch. A commute like that will kill you. Trust me.

My advice: don't do it. You will regret it.


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## kcowan (Jul 1, 2010)

The price to take Go to Union station is about $17 one way. So do the math on paying that to go each way for five days, then add on the costs to get to the station at each end. That will give you the cost equivalence of living there for most people. 

Also proximity to a highway right-of-way can depress property values so be careful where/if you buy.


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## HaroldCrump (Jun 10, 2009)

kcowan said:


> The price to take Go to Union station is about $17 one way. So do the math on paying that to go each way for five days, then add on the costs to get to the station at each end. That will give you the cost equivalence of living there for most people.


But that is not the true cost.
What about the _time_ it will take to commute from Peterborough to Toronto Union every day, day after day, month after month, year after year.

Where is the value of that time?

I'm sorry, there is more to life.


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## MoneyGal (Apr 24, 2009)

Also: FWIW - I lived on a farm in a small town south of Ottawa during the decade when the final twinning of Highway 416 was completed. No appreciable effect on housing prices (distinct from general trends in the Ottawa Valley), despite YEARS (decades, really) of speculation to that effect.


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## canadianbanks (Jun 5, 2009)

I don't think commuting from Peterborough to Toronto makes sense and I don't think investing in real estate there makes sense either. If you buy a house there to live make sure you have a stable local job with good prospects.


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## MoneyGal (Apr 24, 2009)

The PBoro job market is very different than the Toronto job market. You can't assume you are going to find similar jobs, with similar pay - unless you are a civil servant. 

A stable non-service local job will pay less than in Toronto (all other factors held constant) and the overall market for these jobs is thinner, so if you lose that job, it will be longer before you find another one. 

The economic argument for moving to a place with lower housing costs is generally pretty hard to defend - for someone in the OP's position.


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## kcowan (Jul 1, 2010)

HaroldCrump said:


> But that is not the true cost.
> What about the _time_ it will take to commute from Peterborough to Toronto Union every day, day after day, month after month, year after year.
> 
> Where is the value of that time?
> ...


If you observe the GO patrons, they are always doing something "productive" even if it is just sleeping. But there is a tradeoff on the time spent with family. Commuting to downtown Toronto is a fact of life. 

But if OP is employed in the burbs, then driving is the only practical choice and not a very good one.


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## jamesbe (May 8, 2010)

MoneyGal said:


> Also: FWIW - I lived on a farm in a small town south of Ottawa during the decade when the final twinning of Highway 416 was completed. No appreciable effect on housing prices (distinct from general trends in the Ottawa Valley), despite YEARS (decades, really) of speculation to that effect.


This is happening now though (in kemptville).


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## MoneyGal (Apr 24, 2009)

What is happening - real estate values are appreciating, or you are noting the lack of expected higher-than-average appreciation?

I lived only a few minutes north of Kemptville, on a farm in North Gower.


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## Cal (Jun 17, 2009)

I thought the 407 extension was to only go to the 115, near Kirby. I think your family is seriously over estimating the effect of this extension of the RE values in Peterborough.

It would still be a good hour or two into the city depending upon where you have to work.


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## ddkay (Nov 20, 2010)

If you want to make millions fast in a semi-legal way, find a war zone, start smuggling cigarettes and booze. Never fails. What do you know about Iran? Nothing? That's all you need to know. Get out there!


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## Berubeland (Sep 6, 2009)

Save your money, wait until people are bleeding in the streets, then buy when no one wants real estate. If you discuss your plan to buy with your friends and they tell you you're crazy that's when you should buying. 

It'll happen.


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## Mall Guy (Sep 14, 2011)

Even Peterborough doesn't think the 407 is going to get to them anytime soon, and think of this as a weakness in their SWOT analysis. Didn't you guys just have the Drummond Report in Ontario? (I know, toll road . . .) Pepsi/Quaker Oats laying off 350 people. Unless you work in education, hospital, tourism/hospitality, government . . . very limited job opportunities. Oh, and an aging population base. 

Ontario is heading towards two very separate economies . . . GTA, and areas outside the influence of the GTA . . . Peterborough is the later.

So, OMG NO! Send me half your money, stay put, and you will still have the other half, instead of none! 

http://www.gpaedc.on.ca/pdf/GPA EDC.92648.StratPlan.pdf


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## jamesbe (May 8, 2010)

MoneyGal said:


> What is happening - real estate values are appreciating, or you are noting the lack of expected higher-than-average appreciation?
> 
> I lived only a few minutes north of Kemptville, on a farm in North Gower.


Well like everywhere else it has been flat the last year, but there was a huge spike. When 2 bedroom town homes are 270k in kemptville while they are essentially the same in Kanata or Orleans only 15min from downtown Ottawa instead of 45 min. Also singles for $400 the same as in the city. Irrational, people moved out for the cheap real estate and the boom no longer cheap.


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## Jungle (Feb 17, 2010)

That would be a 1.5 hour drive to downtown Toronto. That should keep property prices low. Also the 407 is very expensive toll road.


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## ddkay (Nov 20, 2010)

It takes about 1 hour to get from Pearson airport to downtown by TTC. So you can live "in" the city but your commute time by public transit is the same as Peterborough by car, or longer if busses are running off schedule. Commuting any where any mode in Toronto absolutely sucks, but at least public transit is cheaper.

Remember next time you're idling bumper to bumper on some road, you aren't stuck in traffic, you are traffic!

Also Rob Ford is going to begin taxing parking lots so driving anywhere is looking less attractive every day: http://www.thestar.com/news/cityhal...r-on-parking-tax-to-fund-sheppard-subway?bn=1

If Ontario gets the fabled Quebec City-Windsor High Speed Rail line and Peterborough is a stop in between, that might actually have more worth than another highway. But these are exceptions and not the rule. Peterborough could remain like an uninhabited island in the middle of nowhere. Warden Avenue didn't turn any nicer once they were blessed with presence of the Bloor–Danforth subway line:


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## stephenheath (Apr 3, 2009)

I'm with a lot of the other posters thinking now is not the time to pony down on real estate because of the big picture factors like upcoming reductions in amortization and likely interest rate increases resulting in lower house prices, but forget that for now, let's assume we're talking a normal time.

Your three main options seem to be 

Work in Toronto, Live in Toronto
Work in Toronto, Live in Pboro
Work in Pboro, Live in Pboro

In the second case, as many said, the commute is brutal and you'll pay the price... instead of paying that money in interest on a higher mortgage cost in Toronto, you're paying it on commuting fees.

The third case, IMHO, is a trap.... friends I had from high school/university went both ways (one actually in Pboro itself), and the problem is that when you live and work in smaller towns, costs are cheaper and so are revenues, but that also means your net worth tends to grow slower over the long term. In both cases you might spend 40% on housing, 20% on meals, 10% on savings, what have you, but 10% of a 100,000 salary compounded over 30 years will make a big difference compared to 10% of a 50,000 salary, and a $500,000 house that grows 2% in value per year will, over 30 years, be worth a LOT more than a $150,000 house that grows 2% in value per year. We've seen a bubble in prices which causes the GTA to fly faster than some other areas like Pboro... but interest rates were lower everywhere so why didn't they all go up equally? I think the bubble just accelerated the trend that would have happened without the bubble, Toronto going up faster than more distant areas.

So how is it a trap? Well, over time the people from small towns become unable to move to bigger, more expensive areas... even if they were to move to a higher paying job, they have too few years left in their life to afford the new mortgage that would be involved. But in reverse, the person living in Toronto with the high salary can either continue to do so, or if they want to move to a slower paced smaller town, can do so by selling their more expensive house, buying a cheaper one, and acheiving bonus savings with the difference.

Therefore my recommendation is don't just think of it as a real estate investment, think of it as you having a limited working life to turn your human capital into wealth, so what lifeplan will let you maximize that value for your circumstances... then invest to support that lifeplan.


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## kcowan (Jul 1, 2010)

stephenheath said:


> Therefore my recommendation is don't just think of it as a real estate investment, think of it as you having a limited working life to turn your human capital into wealth, so what lifeplan will let you maximize that value for your circumstances... then invest to support that lifeplan.


+1 
The OP is thinking strategically. That is wise. And so is this post.


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## not_a_virus.exe (Feb 23, 2012)

Almost every single reply to this topic has been extremely helpful. Thanks for all the advice everyone.


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