# TD Bank Housing Report



## sags (May 15, 2010)

The TD Bank says that housing is affordable right now............only because of record low interest rates.

If interest rates rise 0.9 %...............homes are overpriced by 10%.

Homes are overvalued by 60% compared to renting, and 30% compared to incomes.

If interest rates ever return to historical norms............homes are overvalued by 25%.

In the article there is a comparison of homes in different areas for $389,000

Quite a difference in lifestyle............across the country.

http://www.huffingtonpost.ca/2014/0...lued-td-bank_n_4718145.html?utm_hp_ref=canada


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## Just a Guy (Mar 27, 2012)

Gee, I wish people on this board would say things like this...good thing we have TD.


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## andrewf (Mar 1, 2010)

^Facetious? Plenty of people here beat the drum about overpriced housing in Canada (relative to fundamentals).


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## Just a Guy (Mar 27, 2012)

Considering I'm one of the ones who do...yes.


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## marina628 (Dec 14, 2010)

Most people I know look at a mortgage as forced savings and are paying extra each month to take advantage of the low interest rates.But most people in my circle are in their 40's and have already owned a house for 15+ years.I would be interested to know what the people who bought in last 2-3 years with 5% down are thinking.


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## none (Jan 15, 2013)

That's the thing if you ever owned a house prior to 2008 you're probably fine and buying a house was likely the most profitable purchase you ever made. 

For those first time buyers post 2008 --- eeeeps.


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## marina628 (Dec 14, 2010)

Well we bought 3 in 2009 in Oshawa that is up about $90,000 each if my agent knows what she is talking about and a home in Whitby in 2011 that is probably up a similar amount.


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## Just a Guy (Mar 27, 2012)

I bought 4 places last year that are worth at least 50% more than I paid, plus they generate about $2k/ month profit, so I also think you're wrong none.

Of course, I also think they're overpriced at their current market value.

If you're a smart shopper, there are always good properties to buy...in a few years, there will probably be a lot more...also a lot less buyers though.

In the states, they're predicting a whole generation which may never want to own a house again after getting burned by the meltdown...


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## none (Jan 15, 2013)

I might be wrong but I don't see why what happened in the states can't happen here. If houses can crash in San Diego they can certainly crash anywhere is Canada - if you are looking at quality of life at least.

Anyway, we'll see.


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## MoreMiles (Apr 20, 2011)

none said:


> I might be wrong but I don't see why what happened in the states can't happen here. If houses can crash in San Diego they can certainly crash anywhere is Canada - if you are looking at quality of life at least.
> 
> Anyway, we'll see.


Canada is friendly to immigrants, has large ethnic shopping malls like China town. It has a "free" health care system once you become its residents.... For these reasons, it will always be the top choice for immigrants unlike other countries.

At this time, the minimum investment to spend in Ontario to qualify for immigration is $3 million. http://www.canadavisa.com/pnp-business-immigration.html

There are tons of wealthy foreigners waiting in line to get in. They buy houses a la cash, sans mortgage... just ask any Chinese realtor. The Chinese newspapers in Toronto has a special real estate magazine EVERY Thursday to get people to buy.

So why are you still pessimistic?


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## sags (May 15, 2010)

Here are some pictures of what an $803,649.00 house looks like in Toronto these days.

Pretty scary..................and there was a bidding war for it.

People buying the house are bonkers..............banks lending them the money is criminal.

If CMHC was involved..........Flaherty has to put a stop to this kind of nonsense.

http://www.greaterfool.ca/2014/02/03/803000/


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## none (Jan 15, 2013)

Because at current prices the only reason to buy is if you are speculating. This is despite the fact that interest rates are at historic lows. The only way I can see houses not coming down is if interest rates don't ever go up EVER.

Also, once people realize the cost of a buy/sell cycle and realize that buying a house costs ~50K which is all lost if houses are not appreciating - people will snap out of the illusion that buying a house is a wise financial investment (at current prices and little upside).

That's the way I see it anyway.


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## newtothegame (Jan 2, 2014)

As a first time buyer, I just bought a new build one bedroom condo for myself. I view ownership as not an investment, but rather a basic human necessity. It doesn't matter to me if the value goes up or down, just as it doesn't matter to me if my long-term hold stocks go up or down. By the time I'm ready to retire, I'm sure there will be another huge recession/dperession, or whatever you want to call it. Makes no difference... If it's worth $200,000 today, and if twice the condo is worth $400,000 today, tomorrow should it be worth half, twice the condo will be worth half also.

The real mistake people make is that they mortgage themselves to the hilt. I could have qualified for a _lot_ more "house" than a one bedroom condo, but I'll be honest... It's all I need. I don't have kids (nor want any), and don't really care for yardwork, so it's a good fit. My money can be better spent elsewhere, like solid investments, nice dinners out, a vacation here and there, etc...

And you know, I paid $184,000 for this 700 sq/ft new build in a Greater Vancouver suburb. Still pricey for what it is, in my opinion, but to me it is a very acceptable alternative to renting in an area that can have some of the highest real estate prices in Canada, or the world for that matter...

The most important thing to me, however, is that it'll be paid off before I'm 60.


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## newtothegame (Jan 2, 2014)

sags said:


> Here are some pictures of what an $803,649.00 house looks like in Toronto these days.
> http://www.greaterfool.ca/2014/02/03/803000/


The excavator will be unloaded shortly to knock it to the ground, and a new build will commence shortly...


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## sags (May 15, 2010)

The investor immigration program was suspended in 2012.

http://www.cic.gc.ca/english/department/media/releases/2012/2012-06-28.asp

Many immigrants coming in today are struggling with low income jobs.

http://www.theglobeandmail.com/news...gh-picture-for-new-canadians/article14979853/


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## none (Jan 15, 2013)

@newtothegame.

For the life of me I can't imagine living in the same 700 sq/ft condo for -- what 30 _*years*_. I cannot fathom for the life of me why anyone would wish that upon themselves. I don't mean offence I just don't get it. I don't care what city it is I would never commit to live in the same place for 30 years. yikes.


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## sags (May 15, 2010)

I think the 1 Million dollar cap on CMHC insured mortgages is driving up the price of anything under that amount.

People are desperate to buy with a minimum down payment.

Unintended consequences.


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## newtothegame (Jan 2, 2014)

@none

It's just like the TV show "Friends!" Kidding...

It suits my lifestyle. People desire more than they need. Look at it this way... I have been into homes that have literally "million dollar views." You know what? They rarely stare out the window. Not even the guests do. It's status symbol, in part.

The important thing to me, is that I have everything I need, it is actually very nice, the patio has ample room for my Weber BBQ, and I am not paying a fortune for four walls and a window.

Of course, I can always sell it should I decide I need a change of locale...


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## sags (May 15, 2010)

I've seen some magazines.........where small condos were pretty tricked out.

Bright...airy......loft style bedroom......

At the price you paid.........it is probably equivalent to.........or less than rent.

If prices go down.......you will lose a little, but bigger homes will lose a lot more..........so an opportunity to move up.

But, I agree..........you may find 700 square feet a little confining after awhile.

It would help, I suppose...........if the building has some nice amenities, such as an indoor pool, outdoor patio areas, library, gym etc.

It is true about the "view". People get bored of anything that doesn't continually change.

I always thought I would rather have a place overlooking a very busy marina.........than looking at the lake.

We had a trailer up north and after 3 days of staring at the trees.........I was ready to come home to the city.


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## newtothegame (Jan 2, 2014)

@sags

It's all about location also. This was the key to my purchase. Without getting too 'political' on certain issues, this location will not become any less desirable any time soon, IMHO.

My building does not have any of those amenities, and I don't want them. Why? Two reasons... First, I want my strata fees to remain low. Secondly, many of those amenities are already located within walking distance!


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## newtothegame (Jan 2, 2014)

I've lived both lifestyles...

_*Detached homeowner lifestyle (unless you are wealthy enough to hire help):*_ "Honey, what will we do this weekend?" _"Mow the lawn, clean off the roof, trim the trees, unclog the gutters."_ "But I thought maybe we could spend some time together?" _"We can. You will be the one pulling weeds."_

_*Condo owner lifestyle:*_ "Honey, what will we do this weekend?" _"Whatever the hell we want to!"_


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## DayTek (Sep 26, 2013)

Hubby and I bought our house young. I was 20, so we got in the market more quickly than a lot of our friends. I feel bad for our friends who are ready to own a home now because prices in our area have gone up 30% since we bought in 2006. Many of them are stuck because they don't want to overpay, especially if rates go up by next year.

I believe there is going to be some sort of "crash". Maybe not as severe as the U.S., but I've been in banking for 8 years and people are swimming not only in mortgage debt, but consumer debt as well...Surviving on the back of low interest payments. I start a new job in Administration with the bank this month and I am looking forward to getting out of retail banking; I don't want to see first-hand the effects of maxed out mortgages, credit lines and credit cards on the general public. Banks will be blamed (and sure, they should take some of the fault), but I'm not sticking around to see it.


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## sags (May 15, 2010)

The prospect of long term low interest rates is a double edged sword.

People can afford more house today...........but people also can step back and wait for prices to fall, assured of low interest rates when they are ready to buy.


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## Just a Guy (Mar 27, 2012)

I think the low interest rates are a factor in why housing prices have increased so much...if they rise, housing prices will crash, if they don't rise, housing prices may maintain their high prices...I don't think you'll see cheap houses with low interest rates though. Cheap houses with higher interest rates is most probable,


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## richard (Jun 20, 2013)

newtothegame said:


> The real mistake people make is that they mortgage themselves to the hilt. I could have qualified for a _lot_ more "house" than a one bedroom condo, but I'll be honest... It's all I need. I don't have kids (nor want any), and don't really care for yardwork, so it's a good fit. My money can be better spent elsewhere, like solid investments, nice dinners out, a vacation here and there, etc...


Ah, that endangered species - buyers who actually consider what each option costs before making a decision  I prefer renting, partly because of the certainty in costs and partly because of the more limited options here, but either way can work if you actually know that you can afford it without having to give up the rest of your life.


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## richard (Jun 20, 2013)

none said:


> I might be wrong but I don't see why what happened in the states can't happen here. If houses can crash in San Diego they can certainly crash anywhere is Canada - if you are looking at quality of life at least.


When you put it that way it makes you wonder why our population is so high  Now that people are aware of those risks it's a lot less likely they'll make the same mistakes in the financial system. And although Canada's economy may have some risks I don't really see the same widespread job losses because we didn't have as many great jobs to begin with. All it takes is a quick drop in the exchange rate and we'll become a place that cheap stuff comes from again, since businesses here don't seem to be willing to invest much in productivity.


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## andrewf (Mar 1, 2010)

It's more a matter of all the "this time it's different" excuses for Canadian overvaluation are just people kidding themselves. People say housing can't fall--Canadian quality of life is awesome. So is that of San Diego, and they had a real estate correction. Then there is the "But, immigration!". The states hardest hit in the US were states with high immigration. 

This time is not different, folks.


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## emperor (Jul 24, 2011)

Get rid of CMHC and return interest rates to normal then the true price of houses will show but the world doesn't believe in free markets any more it's all manipulation. So which way will houses go? How ever they manipulate it. 

I'm a fan of the free market, an economy based on supply and demand with little government control.


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## Sixth_Circle (Nov 22, 2010)

newtothegame said:


> I've lived both lifestyles...
> 
> _*Detached homeowner lifestyle (unless you are wealthy enough to hire help):*_ "Honey, what will we do this weekend?" _"Mow the lawn, clean off the roof, trim the trees, unclog the gutters."_ "But I thought maybe we could spend some time together?" _"We can. You will be the one pulling weeds."_
> 
> _*Condo owner lifestyle:*_ "Honey, what will we do this weekend?" _"Whatever the hell we want to!"_


Same here. We owned a SFH for 10 years, sold in 2011, and now happily rent. We no longer lust for a single detached home. Especially in a job market where mobility and flexibility will be more valuable than growing deep roots. Job offer in Calgary? Be there in 60 days or less. Offices moving and need to shorten that commute? No problem. Notice served, packed and gone. 

The only upside I see to purchasing a home these days is purely emotional. Times are changing. Young people (and older retirees) want to live in cities, or within walkable neighborhoods. They don't even want to own cars anymore. Jobs are no longer "for life"; we are lucky if they last 3-5 years. All the dynamics are shifting towards a lifestyle of efficiency, economy, and enjoyment of time. Last thing I want is some mega-mansion that I have to spend constant money and time on keeping up while it basically becomes a warehouse for a pile of useless crap. I want to travel, dine out, and spend my leisure time strolling parks, etc.

Houses are only as valuable as people make them. What happens when people don't want them anymore? I don't think people like my wife and I are an anomaly.


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## none (Jan 15, 2013)

^ exactly. 

Do I think a house in Edmonton worth 600K+? No way - I've been there, the mall ain't all that great. The high prices of houses is being supported by a general consensus that they are worth as much as they are, much like tulips were during the dutch tulip bubble.

What if everyone just decided, yeah.... I'm not paying 600K for that house, not 500 either, not even 400K. All it takes in a shift in beliefs to gut a market and Canadian are general fearful of 'losing money' (I believe this by the amount of GICs held by sub 40 year olds). I think once the market become flat and people start losing a lot of cash due do transaction costs alone people will stop re-entering the market.

That's just what I think though, I could be wrong - belief is a fickly thing - the dot.com bubble went on a lot longer than anyone thought it would (much like the Canadian housing bubble - I think at least)


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## Just a Guy (Mar 27, 2012)

The one benefit to owning your own home is that it's a forced savings plan in a society that generally doesn't save.


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## Eclectic12 (Oct 20, 2010)

none said:


> I might be wrong but I don't see why what happened in the states can't happen here.
> If houses can crash in San Diego they can certainly crash anywhere is Canada - if you are looking at quality of life at least ...


Let's see ... a highly desirable area, with a warm climate in state that gets a lot of revenue from tourism is supposed to show that Windsor-Essex, ON or Winnipeg, MB or North Bay, ON or Saint John, NB is going to have a crash?

I'm not convinced San Diego is comparable to all of Canada .... never mind the mortgage rules.


Cheers


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## richard (Jun 20, 2013)

Sixth_Circle said:


> Same here. We owned a SFH for 10 years, sold in 2011, and now happily rent. We no longer lust for a single detached home. Especially in a job market where mobility and flexibility will be more valuable than growing deep roots. Job offer in Calgary? Be there in 60 days or less. Offices moving and need to shorten that commute? No problem. Notice served, packed and gone.


Dishwasher breaks? Someone else's problem


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## Eclectic12 (Oct 20, 2010)

sags said:


> ... But, I agree..........you may find 700 square feet a little confining after awhile ...


It all depends on the person ... my buddy's friend thought Vancouver prices were ridiculous so he bought a sail boat. That's far more restricting than 700 square feet.




sags said:


> ... We had a trailer up north and after 3 days of staring at the trees.........I was ready to come home to the city.


... to each their own .... others comment that such a view is relaxing to them. So much so they'd happily work remotely, if they had a choice.


Cheers


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## Chris L (Nov 16, 2011)

By every RE metric, this is becoming absolutely INSANE. For this to continue, people need to pile on more insanity. The fundamentals can only be stripped out for so long before the music suddenly stops - and it will - and it won't have one reason - but many reasons, in fact, RE dropping already has a bunch of rational reasons to tank. Piling in now, is just dumb. Hang tight and stay liquid.

I read a book 4 years ago about the RE cycle, total bunk. I guess it was trying to predict how RE worked, but it was an argument based solely on a definition. It can only be doing one of 2 things, going up, going down. Well, things don't cycle in RE anymore, so even this argument is total B.S. There are no fundamentals that shift this market worth predicting. 20 year bull market with one small dip in 2008-09 is not a RE cycle. This is riding on pure emotion and greed. It's got nothing to do with anything rational.


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## Charlie (May 20, 2011)

I tried to make the numbers work for a Vancouver condo....and even at 'distressed' prices, it just makes no sense. 

Of course the bears have been saying this for a number of years and prices have kept going up, or, at worse, staying steady. So who knows? 

I'm happy owing as it will significantly reduced my retirement cash needs, diversifies my risk from the markets, acts as an inflation hedge, and, most importantly, means my landlord can't force me to move. I'm not depending on cashing out to retire. I've no interest in selling.....but doubt I would buy in my market.


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## RBull (Jan 20, 2013)

newtothegame said:


> I've lived both lifestyles...
> 
> _*Detached homeowner lifestyle (unless you are wealthy enough to hire help):*_ "Honey, what will we do this weekend?" _"Mow the lawn, clean off the roof, trim the trees, unclog the gutters."_ "But I thought maybe we could spend some time together?" _"We can. You will be the one pulling weeds."_
> 
> _*Condo owner lifestyle:*_ "Honey, what will we do this weekend?" _"Whatever the hell we want to!"_


That's one way of looking at it. Here's another:

_*Detached homeowner lifestyle (unless you are wealthy enough to hire help):*_ "Honey, what will we do this weekend?" _Let's go for cruise in the sea kayaks and then come back and sit in the chairs by the beach drinking coffee. Our friends are coming over this afternoon so we can go out in the boat and then have a nice cocktail before barbecuing the pork tenderloin. "But I thought maybe we could spend some time together?" "We can." Do you want to have a beach fire tonight or sit in the gazebo listening to music, or chatting while looking at the moons reflection on the water in our little piece of paradise? 

*Condo owner lifestyle:* "Honey, what will we do this weekend?" the usual, listen to the neighbours fight while they cook that smelly curry dish. And can you help me drag the groceries up from the garage 6 flights down and through 5 sets of doors. It should only be 3 trips. [/QUOTE]_


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## Eclectic12 (Oct 20, 2010)

Just a Guy said:


> The one benefit to owning your own home is that it's a forced savings plan in a society that generally doesn't save.


That's one way of looking at it ... another is after years of moving, hearing more of the neighbours than desired and having to nag the super to get whatever fixed - it's all up to the owner.


Cheers


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## andrewf (Mar 1, 2010)

RBull said:


> That's one way of looking at it. Here's another:
> 
> _*Detached homeowner lifestyle (unless you are wealthy enough to hire help):*_ "Honey, what will we do this weekend?" _Let's go for cruise in the sea kayaks and then come back and sit in the chairs by the beach drinking coffee. Our friends are coming over this afternoon so we can go out in the boat and then have a nice cocktail before barbecuing the pork tenderloin. "But I thought maybe we could spend some time together?" "We can." Do you want to have a beach fire tonight or sit in the gazebo listening to music, or chatting while looking at the moons reflection on the water in our little piece of paradise?
> 
> *Condo owner lifestyle:* "Honey, what will we do this weekend?" the usual, listen to the neighbours fight while they cook that smelly curry dish. And can you help me drag the groceries up from the garage 6 flights down and through 5 sets of doors. It should only be 3 trips. _


_[/QUOTE]

Sounds like an OLG commercial... just imagine (the probability of actually winning was significantly non-zero)._


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## richard (Jun 20, 2013)

andrewf said:


> Sounds like an OLG commercial... just imagine (the probability of actually winning was significantly non-zero).


After you win you can afford a house, a boat, and enough help to make that a reality! Because if there's one thing that makes home ownership easier, it's having a boat too.

If I had a boat the only place I could take it would be the neighbour's pool on the other side of the back yard. If I did that I could drown out the sound of his frequent 3-hour pressure washing sessions and his dogs barking at my constantly. Not to mention the other neighbour who had a hobby of mowing the lawn at 7am on saturdays and threatening lawsuits for having snow in my yard. And the ones who would have their friends come over and park enough Heavy Duty trucks to start a small dealership, leaving me a tiny space to squeeze out of my driveway (if they were feeling generous that day) completely blind to oncoming traffic. I had to go anyways since it took a bit of a drive to do anything outside the house. 

You know you're right. I could have used a boat to get out and enjoy an escape from it all  Now I'll have to give up that dream since I can walk just about anywhere I need to go in 5 minutes, I don't have to spend any time working on the house, and the only noise from the neighbours is the ones upstairs when they're having a good time (I think they could spice it up a little though).


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## MoreMiles (Apr 20, 2011)

Many parts of the world already have real estate prices out of any working class reach.. It not strange. Look at London England, Hong Kong, New York etc. People on salary there know they can only afford rentals and not ownership. You need to have wealthy ancestors or successful business to become an owner. I don't see how this cannot happen in Toronto? One day, detached home ownership = yacht or jet ownership... only reachable by the riches. If you don't have the money then rent a yacht or jet instead.


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## wert (Jan 26, 2014)

It's not even that bad. The stats being used by TD are fudged. When a Saudi prince buys several floors of a luxury condo for tens of millions of dollars, why should this bullish event make the stats bad? The prince brought millions in to the economy, but his actions raised the average sell price by a lot, and since there is no income reported in Canada, brought that side of the ratio down.

What about the city buying a 200 unit hotel to shelter homeless? No change in average sell price of market housing, but the residents association makes an issue of getting each person registered with CRA. Average income goes way down and no change to market sell price. Arguably, though this is a bullish event as total supply of market housing is reduced, ironically leading to the increasing unaffordability!


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## andrewf (Mar 1, 2010)

HK and London both suffer from limited supply of land. HK for geographic reasons, London for regulatory reasons (greenbelt). Canada has land in pretty abundant supply in comparison, even Vancouver.


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## MoreMiles (Apr 20, 2011)

andrewf said:


> HK and London both suffer from limited supply of land. HK for geographic reasons, London for regulatory reasons (greenbelt). Canada has land in pretty abundant supply in comparison, even Vancouver.


That logic does not work as China also has a huge land yet their real estate is also super expensive. It's useless to have undesirable land. The realty is, desirable lands will always cost more and more due to limited supply. I would not want to live in Ajax if I work in Toronto so yes there is still land in Ajax or Trenton. But that would make no difference.


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## none (Jan 15, 2013)

unless people just stop believing Canadian real-estate is worth what people say it is. in most major centres house prices are supported by speculation and not by fundamentals. Speculation is a powerful force though and it can hold up housing until people stop believing.


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## andrewf (Mar 1, 2010)

MoreMiles, if it were just so awesome to live in Toronto and that's why real estate was so expensive, rents would also be very high, such that rents supported the real estate valuation. 1 BR condos have been declining in rents over the past year in TO.


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## Siwash (Sep 1, 2013)

MoreMiles said:


> Canada is friendly to immigrants, has large ethnic shopping malls like China town. It has a "free" health care system once you become its residents.... For these reasons, it will always be the top choice for immigrants unlike other countries.
> 
> At this time, the minimum investment to spend in Ontario to qualify for immigration is $3 million. http://www.canadavisa.com/pnp-business-immigration.html
> 
> ...


Pessimistic perhaps b/c most of us don't have cash to buy a home outright… and some of us are getting resentful that foreigners are driving prices up.. most Cdns haven had virtually no wage increase over past 5 years..

This price increase makes little sense in terms of economic fundamentals… completely detached,, actually


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## none (Jan 15, 2013)

The belief that things should always appreciate in value and cheap credit is all it takes.


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## Siwash (Sep 1, 2013)

newtothegame said:


> As a first time buyer, I just bought a new build one bedroom condo for myself. I view ownership as not an investment, but rather a basic human necessity. It doesn't matter to me if the value goes up or down, just as it doesn't matter to me if my long-term hold stocks go up or down. By the time I'm ready to retire, I'm sure there will be another huge recession/dperession, or whatever you want to call it. Makes no difference... If it's worth $200,000 today, and if twice the condo is worth $400,000 today, tomorrow should it be worth half, twice the condo will be worth half also.
> 
> The real mistake people make is that they mortgage themselves to the hilt. I could have qualified for a _lot_ more "house" than a one bedroom condo, but I'll be honest... It's all I need. I don't have kids (nor want any), and don't really care for yardwork, so it's a good fit. My money can be better spent elsewhere, like solid investments, nice dinners out, a vacation here and there, etc...
> 
> ...


you made a financial mistake to buy that condo… bad time to be buying condos...


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## MoreMiles (Apr 20, 2011)

Siwash said:


> Pessimistic perhaps b/c most of us don't have cash to buy a home outright… and some of us are getting resentful that foreigners are driving prices up.. most Cdns haven had virtually no wage increase over past 5 years..
> 
> This price increase makes little sense in terms of economic fundamentals… completely detached,, actually


Actually it makes perfect sense. The 3 QE's have inflated these wealthy foreigner's asset. They need to diversify if they have $100 million. Then spending $5 million in Canada for a house and passport is really attractive to them.


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## newtothegame (Jan 2, 2014)

Siwash said:


> you made a financial mistake to buy that condo… bad time to be buying condos...


I also made a mistake buying Blackberry shares one week before myself, or anyone else for that matter, ever heard of Chen. That mistake lasted about one week, to my complete surprise.

However, here's the thing... We all need a place to live, and I don't look at home/condo ownership as a short term investment. I don't even look at it as a long term investment. Quite frankly, at the price I paid, I am better off owning compared to renting/leasing, even if we _discount_ the fact that I'll eventually own the place outright.


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## richard (Jun 20, 2013)

newtothegame said:


> However, here's the thing... We all need a place to live, and I don't look at home/condo ownership as a short term investment. I don't even look at it as a long term investment. Quite frankly, at the price I paid, I am better off owning compared to renting/leasing, even if we _discount_ the fact that I'll eventually own the place outright.


Low cost is the goal and it sounds like you have that (depending on your condo fees). Renting should be worse than owning, it's just the cost that makes the difference.


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## andrewf (Mar 1, 2010)

There are pros and cons to renting. When renting, you are not responsible for maintenance, and you have the flexibility to move when you change jobs or your needs change without incurring huge transaction costs (5-7% of the value of a home every 5 years on average is a huge expense).


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## Gimme the Green (Feb 4, 2014)

Wife and I bought our first house just over 8 years ago. Nice little spot in a town of 20,000 people. She was just finishing her masters and I was finishing a course so I could start on my second career. We bought based on a couple things, Buy what we NEED and buy less than we could afford. We got lucky, bought a late 60's built rancher from a retired couple that maintained the house. Have not had any involuntary repair or upgrades to this day. We do upgrades a few at a time, when we feel the need. Thats the beauty of ownership for people that like the challenge, do what you want to it, its yours! Got a mortgage with ING direct, at the time the rate was over 5%. We have taken advantage of ING's payment rules, Negotiated down the rate, bumped payments yearly, principal only here and there, on track to pay the house off in about 11.5 years total. We bought before any of our friends. Its sad to see some of them now. Buying houses they don't need, taking advantage of the cheap rates, but buying to the limit of what they can afford. Most don't leave any wiggle room.


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## none (Jan 15, 2013)

^ That's one thing a lot of rent vs buy calculators are missing - the transaction costs. The excuse is that it's not a buy or rent for ever calculator. Of course, this assumes that people only buy one house in their life-time which as you state is generally not true with the average owing time being 5 years.

Immediately 'losing' 40K (based on a 600K) house is about 1.5 years of how much it costs to rent those place (may be even up to 3 years). That certainly chances the picture.

Of course, these transaction costs have been obscured from people because of rising house prices. If the market becomes 'flat' (only increases with inflation) people are going to feel stung when they still lost tens of thousands of dollars after paying down their house for 5 years. We'll see how 'soft' the landing is when people realize that buying a house in Canada after 2010 is a guaranteed money loser.


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## Charlie (May 20, 2011)

Congrats on the condo nttg. Given the price you paid, your lifestyle and your expectations for the condo, it seems you've made a reasonable buy....My guess is your op costs (interest, maint, tax) are pretty similar to what you'd have to pay in rent.


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## marina628 (Dec 14, 2010)

Most of us who bought homes buy with the 10+ year time frame in mind .I don't know many except for unplanned divorce etc who buy and sell in 5 years.Those who buy their 'starter home' knowing they don't like the place or location the day they move in will always lose on transaction costs if they move around every 5 years or less.My agent does claim to have a couple who buy new from builder and sell every 2 years with a $60,000 or so profit but I don't know about that.


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## Jon_Snow (May 20, 2009)

Congrats, NTTG - I think you did well. 

Buying our condo in 2002 was the perhaps the best financial decision my wife and I have made. Not only did we buy it before the run-up in Vancouver prices - we bought it for 140k, now assessed at 300k+... I view the equity gained as a bonus. The greatest aspect, now that our mortgage is no more, is that we now have ridiculously low housing costs. Maintenance fees are under $200, property tax under $100. All told, our housing costs are less than $400 - if we ditch our second parking spot, that would save us another $50. To rent a similar condo in our area would easily be $1200 monthly.

If anyone wonders how I can pull off retirement at 42, well, this is one of the big reasons.... yearly dividends from CPG pay for all my housing costs and my tv/phone/internet for the year. 

Would I be contemplating ER with expensive rent or a McMansion size mortgage? Nope.


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## Synergy (Mar 18, 2013)

Jon_Snow said:


> property tax under $100.


Wow, I didn't realize how reasonable property taxes are in BC. That's like a 1/3rd of what you'd pay in Ontario.


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## RBull (Jan 20, 2013)

andrewf said:


> Sounds like an OLG commercial... just imagine (the probability of actually winning was significantly non-zero).


LOL, I guess it could. It is our current situation (in the summer of course) and we didn't win it...unfortunately. I've had both lifestyle situations recently after selling my last house and renting for a year while renovating. We are glad to be back with our own space. I can see why different folks make different choices however and ours is not for everyone.


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## Sixth_Circle (Nov 22, 2010)

Jon_Snow said:


> Buying our condo in 2002 was the perhaps the best financial decision my wife and I have made. Not only did we buy it before the run-up in Vancouver prices - we bought it for 140k, now assessed at 300k+... I view the equity gained as a bonus. The greatest aspect, now that our mortgage is no more, is that we now have ridiculously low housing costs. *Maintenance fees are under $200, property tax under $100.*


One of my biggest regrets is not buying a place when we lived in Vancouver in the mid-90's. But back then, a $180K price tag might as well have been a million dollars. 

The only downside to your situation is that you don't see the cash unless you sell or borrow against the equity. And then you still have to live somewhere. The best decision my wife and I made was to sell our place near the top of the same run-up of prices in Halifax (where crickets now chirp). Now the money is invested in a balanced portfolio. We pay our rent and invest a tidy sum each paycheck. 

Also, your maintenance fees and property taxes are insane compared to Toronto. And I mean that in a good way. Average 2 BR/BA condo here has fees from $450-$900/mo, with property taxes in the $2200-2900/yr range. Of course, some of the newer buildings have artificially low fees that quickly jump once everyone has signed on the dotted line.


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## Josh (Jan 15, 2014)

Sixth_Circle said:


> One of my biggest regrets is not buying a place when we lived in Vancouver in the mid-90's. But back then, a $180K price tag might as well have been a million dollars.
> 
> The only downside to your situation is that you don't see the cash unless you sell or borrow against the equity. And then you still have to live somewhere. The best decision my wife and I made was to sell our place near the top of the same run-up of prices in Halifax (where crickets now chirp). Now the money is invested in a balanced portfolio. We pay our rent and invest a tidy sum each paycheck.
> 
> Also, your maintenance fees and property taxes are insane compared to Toronto. And I mean that in a good way. Average 2 BR/BA condo here has fees from $450-$900/mo, with property taxes in the $2200-2900/yr range. Of course, some of the newer buildings have artificially low fees that quickly jump once everyone has signed on the dotted line.


BC is very cheap for that. I own two places in Victoria. My one place is a one bedroom downtown. I only pay $180 a month for strata and $800 (after the discount) a year on property tax.


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## Sixth_Circle (Nov 22, 2010)

Josh said:


> BC is very cheap for that. I own two places in Victoria. My one place is a one bedroom downtown. I only pay $180 a month for strata and $800 (after the discount) a year on property tax.


Yeah, I just checked two places we were considering buying back in the 90's. Both the townhouse and condo we were looking at are still around $200/mo maintenance. Unbelievable. :upset:

It is often the stratospheric maintenance fees that put desirable condos out of reach here in TO. To get an older building, which was actually meant to be inhabited by humans and considered a livable "home", the fees can be north of $800. Even if the asking price is affordable (relatively speaking), the monthly costs and high taxes quickly dash all hopes.


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## RBull (Jan 20, 2013)

Sixth_Circle said:


> One of my biggest regrets is not buying a place when we lived in Vancouver in the mid-90's. But back then, a $180K price tag might as well have been a million dollars.
> 
> The only downside to your situation is that you don't see the cash unless you sell or borrow against the equity. And then you still have to live somewhere. The best decision my wife and I made was to sell our place near the top of the same run-up of prices in Halifax (where crickets now chirp). Now the money is invested in a balanced portfolio. We pay our rent and invest a tidy sum each paycheck.
> 
> Also, your maintenance fees and property taxes are insane compared to Toronto. And I mean that in a good way. Average 2 BR/BA condo here has fees from $450-$900/mo, with property taxes in the $2200-2900/yr range. Of course, some of the newer buildings have artificially low fees that quickly jump once everyone has signed on the dotted line.


Not so sure Halifax has had a run up in condo prices anywhere near what Vancouver has. What does "crickets now chirp" mean?


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## Siwash (Sep 1, 2013)

RBull said:


> Not so sure Halifax has had a run up in condo prices anywhere near what Vancouver has. What does "crickets now chirp" mean?



I think he means Nova Scotia's RE market is quiet… not overheated like toronto/Van


Any report which concludes that the market isn't overvalued is BS. It is coming from an interest that wants to sell you either mortgage or a house or both. 

Wages are barely keeping up with inflation… which is very low itself. How is it that carrying a $500K mortgage is affordable????? I must be missing something. 

This can't go on forever…. eventually, the market will/must correct..

it always does


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## Sixth_Circle (Nov 22, 2010)

RBull said:


> Not so sure Halifax has had a run up in condo prices anywhere near what Vancouver has. What does "crickets now chirp" mean?


Didn't meant to imply it did. But prices there started rising sharply around 2002-2003, and continued until somewhat recently. 

Crickets chirping means that the market was once relatively "hot", but has considerably cooled.


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## none (Jan 15, 2013)

Here's the best source for housing stats in Halifax. Not that great but it's something.

http://www.halifaxrealestateblog.net/


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## Cal (Jun 17, 2009)

IMO buyers should have at least 10% in the game. Considering the financial consequenses of a down market.

Hopefully our economy can make something other than houses, otherwise we may be in for a downturn when rates rise.


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## marina628 (Dec 14, 2010)

What scares me is the people who put down 5% then in 6 months qualify for a $50,000 credit line on the house and this has been happening for a long time now .


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## andrewf (Mar 1, 2010)

Basically all the markets east of Toronto (Ottawa, Mtl, QC, Halifax, etc.) have cooled considerably.


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## marina628 (Dec 14, 2010)

OPPS my post applies to GTA Prices in St.John's are crazy though..


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## steve41 (Apr 18, 2009)

Just looked at my 2014 WestVan property assement..... house value $49,000, land value $1.7M, lot size 7000 square feet. (location, location, location)


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## MoreMiles (Apr 20, 2011)

steve41 said:


> Just looked at my 2014 WestVan property assement..... house value $49,000, land value $1.7M, lot size 7000 square feet. (location, location, location)


Nice you are a multimillionaire! For those crying about the housing bubbles since 10 years ago, they are still renting and saving their $50k downpayment to wait for the big crash. You already have enough to retire...so let those pessimists keep crying. Isn't capitalism beautiful?


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## OurBigFatWallet (Jan 20, 2014)

I never pay too much attention to national housing stats that report the housing market is over or undervalued. The country is far too big to generalize the housing market into one stat. The housing situation in Fort Mac is likely the complete opposite of that in Newfoundland. People don't take into account household incomes when they compare cities such as Calgary and Vancouver


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## SpIcEz (Jan 8, 2013)

Except for Calgary, I dont think median income per household is really a factor in housing prices.

http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/famil108a-eng.htm
http://en.wikipedia.org/wiki/List_of_Median_household_income_of_cities_in_Canada

Compare Montreal to Vancouver for example.

http://crea.ca/content/national-average-price-map


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## andrewf (Mar 1, 2010)

MoreMiles said:


> Nice you are a multimillionaire! For those crying about the housing bubbles since 10 years ago, they are still renting and saving their $50k downpayment to wait for the big crash. You already have enough to retire...so let those pessimists keep crying. Isn't capitalism beautiful?


Also, steve is old. No offense steve.

Just hope all the steves don't try to sell at once to fund their retirement. You can't eat your postage stamp of Vancouver real estate.


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## sags (May 15, 2010)

A revealing question might be..........would people buy their home at today's values............and could they afford to?

Some people have done very well in their home price, but to realize the gains they have to sell their home.

I think that it will be a tough decision for a lot of people, given the memories they might have in their home.

Being forced to sell a home is a lot different than choosing to sell it.

Home prices are already way above normal affordability rates, or equivalent rents and wages aren't keeping pace.

There is a limit to what people can spend.........and we are already past that.

Look at the debt loads.............1.7 Trillion dollars for 15 million Canadians. (60% of the population is between 18-65)

More than 160% of income..........compared to 130% in the US.

And we don't have 30 year fixed mortgages or mortgage deductibility.

Yikes................


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## RBull (Jan 20, 2013)

Sixth_Circle said:


> Didn't meant to imply it did. But prices there started rising sharply around 2002-2003, and continued until somewhat recently.
> 
> Crickets chirping means that the market was once relatively "hot", but has considerably cooled.


Agreed.


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## Just a Guy (Mar 27, 2012)

What I find interesting is that housing is starting to be sold on an "affordable payments" system instead of a "price" basis. The auto industry did this about a decade ago...you can't find out the price of a car easily anymore, all you hear about now is the "affordable" monthly, bi-weekly, or weekly payment...

People are now buying "affordable" homes based on mortgage payment...

I find this very frightening...initially because they don't understand the "full" price. Second, unlike cars, the payment WILL change over the life of the mortgage, and finally because people are locked into hundreds of little payments and don't understand how crippling this is.


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## sags (May 15, 2010)

Well said.

It is pretty well the same as the "adjustable interest rate" mortgages in the US with low introductory "teaser rates" for a couple of years.

If interest rates were to return to normal levels........mortgage payments would double upon renewal for a lot of people.

I wonder if they have any inkling for what that would mean to their personal finances.

It isn't like people are using credit to buy $100,000 homes anymore.


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## sags (May 15, 2010)

Gimme the Green said:


> Wife and I bought our first house just over 8 years ago. Nice little spot in a town of 20,000 people. She was just finishing her masters and I was finishing a course so I could start on my second career. We bought based on a couple things, Buy what we NEED and buy less than we could afford. We got lucky, bought a late 60's built rancher from a retired couple that maintained the house. Have not had any involuntary repair or upgrades to this day. We do upgrades a few at a time, when we feel the need. Thats the beauty of ownership for people that like the challenge, do what you want to it, its yours! Got a mortgage with ING direct, at the time the rate was over 5%. We have taken advantage of ING's payment rules, Negotiated down the rate, bumped payments yearly, principal only here and there, on track to pay the house off in about 11.5 years total. We bought before any of our friends. Its sad to see some of them now. Buying houses they don't need, taking advantage of the cheap rates, but buying to the limit of what they can afford. Most don't leave any wiggle room.


You bought "smart". A lot of young people have no idea what they are getting into and when the bank says....."you qualify for $500,000"........they go shopping for a $500,000 house. I know they do it.........all my nieces and nephews bought that way..........or borrowed a big pile of money on a HELOC to "redo" the entire home inside and out.......immediately. Then they furnish it with top grade appliances, leather furniture, new dining suite, bedrooms, big screens..........on the buy now and pay later plan.

Gosh help them if the overtime money runs out..........never mind if they lose their job entirely.

A few years ago, I read that the largest number of people declaring bankruptcy in the US were autoworkers for the Big Three.

They still had their jobs..........but auto sales had plummeted and all overtime was cancelled.

They couldn't pay their bills on a 40 hour pay.


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## RBull (Jan 20, 2013)

Just a Guy said:


> What I find interesting is that housing is starting to be sold on an "affordable payments" system instead of a "price" basis. The auto industry did this about a decade ago...you can't find out the price of a car easily anymore, all you hear about now is the "affordable" monthly, bi-weekly, or weekly payment...
> 
> People are now buying "affordable" homes based on mortgage payment...
> 
> I find this very frightening...initially because they don't understand the "full" price. Second, unlike cars, the payment WILL change over the life of the mortgage, and finally because people are locked into hundreds of little payments and don't understand how crippling this is.


This is exactly how I think.


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## steve41 (Apr 18, 2009)

andrewf said:


> Also, steve is old. No offense steve.
> 
> Just hope all the steves don't try to sell at once to fund their retirement. You can't eat your postage stamp of Vancouver real estate.


Hey..... be nice now. I may just pull a 'Flappy Bird'


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