# Which has further to drop?



## Dmoney (Apr 28, 2011)

In the event of a real estate crash or correction, do you think condos or single family homes would see a sharper decline?

Intuitively I would assume condos because at least with a single family, you own the land which I feel would retain more value than a box in the sky.

What are other people's thoughts?

Specifically I'm curious about the Toronto market, but thoughts on other markets would be interesting.


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## andrewf (Mar 1, 2010)

That is the conventional wisdom. I tend to agree.


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## m3s (Apr 3, 2010)

Besides not owning the land, you also have no control over maint and are at the mercy of extravagant condo fees


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## Quotealex (Aug 1, 2010)

Dmoney said:


> Intuitively I would assume condos because at least with a single family, you own the land which I feel would retain more value than a box in the sky.
> .


 but in a condo, you do own the land , just not all of it


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## Mall Guy (Sep 14, 2011)

While I generally agree that a single family home has traditionally retainer it's value (and in many cases increased in value faster) I wonder what the changing demographics will mean in the future - an aging population (baby boomers are turning 65 with the means to travel may prefer the care free condo life), decrease in the marriage rate = more single person households (increase in single, financially independent women), decrease in the birth rate (fewer young families), and especially true for Toronto, Montreal and Vancouver, an increase in immigration. The price of gas may start to factor in to a greater degree as well. And of course for real estate - location, location, location - house in the suburbs vs. a condo on the subway line. 

Just saying that in as little as 10 years the face of Canada will be very different than it was 10 years ago. The rear view mirror may not be the best guide. Food for thought.


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## Mall Guy (Sep 14, 2011)

Quotealex said:


> but in a condo, you do own the land , just not all of it


More to the point, you own inside the four walls of your unit. Anything outside of this is held as an undivided ownership interest by the condo corporation. The corporation holds the property in trust on behalf of the condo owners as a group.


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## Cal (Jun 17, 2009)

mode3sour said:


> Besides not owning the land, you also have no control over maint and are at the mercy of extravagant condo fees


Completely agree. This is the main reason I couldn't currently live in a condo, I wouldn't have enough control over how the condo corp maintained things to control the fees, or how other owners treated the place.

Having said that....as Mall Guy mentioned....when the day comes that I get to retirement, and can no longer maintain the place I am in....I will probably move into a condo, located near the subway line.


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## ddkay (Nov 20, 2010)

If Miami is any guide, downtown oceanfront has come down significantly but for the most part resale in Brickell is still in lines of what you'd pay in the core of Toronto. IMO the bubble is in new construction, especially outside the core, and purely fabricated by developers demanding outrages prices / sq ft. while the market is still hot.

Many home prices in the GTA underserved by public transit are, in my experience, grossly overvalued. Mid-century semi-detached houses, even single detached regardless of lot size (usually small), bidding $400,000 in LICO neighbourhoods like Kipling Heights, Humbermede or Oakridge will probably see the most severe correction. And IMO the same with many greenfield suburbs they've built in Pickering, Mississauga etc.

On the other hand, if finance and insurance sectors are decimated the entire country could be in ruins and look like a post-apo movie.


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## Jungle (Feb 17, 2010)

Going by supply and demand theory, I would think between now and next 5 years, there are going to be more condos than houses. Not a lot of room to build subdivisions anymore in Toronto. 

However for all of these condos built on the subway line, their location seems to be in demand due to the proximity to transit.


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## meddlesomemarmots (Feb 16, 2011)

I don't think it will be a competition - condos have further to fall. The whole condo industry is far more geared towards investor ownership. SFH is still primarily a owner-occupant based area.

Whilst the SFH housing rise has been the most pronounced recently (in the Vancouver market which I'm most accustomed to) - outside of the mega properties that are going for $1million+ for dated ranchers in the trendy parts of VanCity, I can't see the drop off being too violent,especially as you get easy of the Vancouver-Burnaby borderline. A lot of people have become 'investors' by buying up a downtown condo in recent times, and have invested a lot of their net worth in a second property for rental gains - I'm not sure these people will prove to be the most ballsy in hanging onto their properties in a downward shifting market.


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## andrewf (Mar 1, 2010)

A crash in condo prices would still have some effect on SFH... substitution effect. The value of the land is a much larger % of the value of the property with SFH. A SFH is typically at least 50% land value in the GTA, whereas a condo might be as little as 5 - 10% land/location value with the rest being the residual value of housing. So if the price of land is relatively stable, then SFH will be much less sensitive to changes in the value of housing.


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## Sixth_Circle (Nov 22, 2010)

Mall Guy said:


> Just saying that in as little as 10 years the face of Canada will be very different than it was 10 years ago. The rear view mirror may not be the best guide. Food for thought.


I agree. I think we're in the midst of some interesting shifts and changes.


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## Dmoney (Apr 28, 2011)

andrewf said:


> A crash in condo prices would still have some effect on SFH... substitution effect. The value of the land is a much larger % of the value of the property with SFH. A SFH is typically at least 50% land value in the GTA, whereas a condo might be as little as 5 - 10% land/location value with the rest being the residual value of housing. So if the price of land is relatively stable, then SFH will be much less sensitive to changes in the value of housing.


I'm sure location must play a decent part in a condo's valuation, no? I know even a couple blocks can make a massive difference in the value of these things, but how much of that is location and how much is quality of build/amenities?

I'm new to the big city and Ottawa has pretty much no condos so I haven't seen a condo market firsthand before. I won't be looking to buy until at the earliest next summer, but am trying to absorb as much as I can in the next few months to hopefully make a better decision.


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## LBCfan (Jan 13, 2011)

I'm not in the GTA but here, I'm sure, that whatever I own will suffer the biggest loss. This prediction will probably work for you as well.


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## Dmoney (Apr 28, 2011)

LBCfan said:


> I'm not in the GTA but here, I'm sure, that whatever I own will suffer the biggest loss. This prediction will probably work for you as well.


Tell me what you're buying so I can buy the other.  We can split the difference then.


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## Berubeland (Sep 6, 2009)

My thoughts are that we will see condo prices go down, they are building like crazy and the rental prices are very soft. Compared to a few years ago, even brand new condos with all the amenities are taking a while to rent. Too many people are in on the "preconstruction secret" now. You don't save any money at all. 

SFH will go down too and because they tend to be worth a lot more we'll see their prices go down as well. 

The point is that these corrections start in the burbs, long before I could see anything happening in the Toronto core, I could see streets in Mississauga with open house signs on every street corner. 

It is entirely possible that even those with a 20% downpayment have their entire equity disappear and even have underwater mortgages. 

Houses are more expensive so people will lose more actual money. Condos will probably drop more as a % of the value. 

This is why I tell so many people to buy rental properties as if capital appreciation doesn't exist.


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## Goldfinger (Sep 6, 2011)

*There will be NO REAL ESTATE CORRECTION OR CRASH*

TILL 2015/2016.

The real estate market in Toronto is going to double. Take the 2009 house price average and median and double it and this will give you the average house price in 2014/2015...$800-850,000 in GTA.

From here the prices will crash hard 2016-2020 just like the USA by 62.50-70.30%, some types of property even more to 91%. It will feel like either Las Vegas, Nevada, Arizona, Florida, etc. 

Tens of thousands maybe a total of 1 million properties in Canada will be in power of sale....The US has 8-12 million properties in distress/foreclosure...real number...so take 10% as Canada's.

The TSE should have crashed from a high of 24/28/31,000 all the way down to 12-15,000 and all the baby boomers/zoomers are broke (90 %).

Million dollar homes ( since they were so many in GTA ) are now going for $300,000 and NOBODY WANTS THEM...they are all broke.

Yes, the record being played in America is coming to Toronto/Canada and Austrailia....Spain, Britain, Ireland, USA, Portugal, Greece had theirs....its Canada and Austraila's turn. Notice how Germany and France got off..they control the ECB/Euro zone and Germany had their slow period 1989-2006 and so did France. They all take turns.....for they control the system.

So get ready folks.....BTW, Flaherty and the rest of the Harper Rascal gang cannot do anything about it...."For it is written, so shall it be done."

"There is nothing new under the sun."

"The snake slithers among us all, while the SHEEP are too STUPID/EDUCATED to figure it out at ALL."

The biggest scam in the last 21 years has been higher education. THis has kept the unemployment rate down ( before the guys graduate with $40,000 in debt, NO job, study more, more debt NO job then a Best by job etc.) for if all the teenagers said I'm not going to the big business college or university, they would be 25-40% unemployment rate and a revolution....so the gov't to keep our growth rate low tell you to study...for nothing and boost the growth rate of other countries....China and India...but i digress...

Both their Real Estate markets in China and India have exploded astronomically....and this is one way to destroy a country!!! 

The future is known.....why don't you try to find out....


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## NotMe (Jan 10, 2011)

Is this a joke?


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## andrewf (Mar 1, 2010)

I think it's a troll.


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## Cal (Jun 17, 2009)

Berubeland said:


> This is why I tell so many people to buy rental properties as if capital appreciation doesn't exist.


That is great advice. Then the LL is forced to only look at cashflow to assess the profitablity.


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## Dmoney (Apr 28, 2011)

I don't really care about the value upside, as it will be a place to live when the time comes. If I stay working in the financial district, I'd most likely want a condo within walking distance. I'd say I'm also a candidate for the whole buy vs. rent debate, but if there's a big downside to condos, then I'd like to wait to get in closer to the bottom.


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