Canadian Real Estate

I’m a bit surprised based on what has happened in US, Japan and a lot of Europe . Although we have the clear example that housing markets can correct quite a bit, it seems that the Canadian real estate is defying gravity… it that Superman cape fake?

we talk about this issue everyday…yes, i think its a small bubble…especiallyin the toronto condo sector…

F#$% this bubble

http://fmlistings.tumblr.com/

There seems to be a consensus regarding … let’s call it ‘overpricing’. There are dissensions regarding what the future holds, that range from crash to correction to stability to prices will only go up based on immigration and capital inflow. That might be even more interesting to discuss

Well, the US housing bubble went on for like 10 years. Maybe it will just take a bit longer.

thing is, despite yesterday’s sentiment by BoC, rates are not likely to rise anytime soon…the plan (from my understanding) is to lower the overvaluation gradually…

but the amount of condos going up here is insane…who are these ppl buying 1BR condos for 350k plus…from a cap rate perspective, this doesn’t make sense…rent for 1 BR has to be in the area of 1500-1800 for the planned purchase to payoff…how many ppl can afford that kind of rent? normally those making 80k+ which is less than 10% of the working population and they’re normally not young studs/babes looking to live in a condo…

I have been to a few showings and i think its asians buying a lot of this…

Yes, the bond market would dictate mortgage rates and unless we have high inflation, with current equity markets and govt involvment low yields are the game. I guess the market could be tempered only through restrictive lending but I’ve heard that fraud is not something that unusual. Also, I’m thinking maybe a slowdown in China could potentially stop the capital inflow from outside?

There are no more rental buildings being built anymore. All new construction units have been condos during the last decade. Therefore, many are pushed to buy, and the low rates have helped them.

the question though is…how can you afford this even with low interest rates?

the new stuff being built by my calc (~400-500 sqr ft on the low end) is expensive and there are lots of them popping up.

BUBBLE BUBBLE BUBBLE. It’s the same all over Canada. In my hometown home prices are increasing 15% every year the last couple years and new housing is growing. Bizarre part is this: the population of the city is growing but barely a couple of % per year and wages are stagnant or bumping along with inflation. When I was home this summer and saw a brand new home development, I asked my dad (who owned a sub contracting company) who’s buying all these houses?, he said he really had no idea and that it didn’t make any sense to him either.

Now that I live in the US I think its effing hilarious. I can’t wait for the bubble to pop simply because the attitude I get from lots of people in my hometown is this holier than thou, “Look at the mess those Americans got into…that’ll never happen here.”

I don’t have the link handy, but there was a WSJ article recently about how personal debt to income is now at a higher ratio in Canada and Australia than it ever was in the US at the peak of the housing market.

if condos get really cheap i’m in…i’m hoping i can get 1000sqr feet nice pad for say 400…right now, they’re about 500k plus…

Where I am, I can get 2500 sq ft for $250k. Not downtown, but a great location and only 5 miles from downtown.

5 miles is quite a bit…but i got my little shoebox for a bit under your price downtown toronto…now, i don’t think that is even possible anymore…

Sell at the top frankie, remember that! I forgot to do that with my damn aapl.

  1. A lot of foreign money investing in the Canadian real estate market

  2. There will be no crash as long as rates remain this low. Many are locking in 5 years at 2.99%, so the crash will not be immediate. Never underestimate the potential of a “government put”, where the gov steps in to subsidize voters that are in foreclosure.

a mild downturn is most likely given what i see…a crash is rather unlikely…the cdn banks won’t be impaired in the event of a crash by my calc…

It’s good that Canadians are still generally required to put down, what is it 20%? In the US you can get away with something absolutely insane like 3% down.

One of the Canadian banks is one of my largest and core holdings.

20% if don’t want to pay mortgage insurance…5% down minimum…teranet housing index just came out today…toronto is up 10% y/y…

my biggest position is also in a Cbank though i get it through employee program…