COVID and the housing market | Page 106 | GTAMotorcycle.com

COVID and the housing market

ifiddles said:
Anyone looking for a job?

www.blogto.com

This Ontario company is giving every employee $20K each to help them buy homes

Health benefits, field trips and free snacks are nice, but the best job perk any employee could ask for is cold hard cash. I mean, you can't pay your…
www.blogto.com www.blogto.com
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One of the comments was that the pay was low. If true that would offset the mortgage assistance.

A blog pushed Bancroft as a top destination for people wanting to buy into a community. WFH could make it work and house prices are well under half the GTA.

The problem is even if Bancroft or other further out communities see the same % real estate number increases, they're dealing with a smaller start point. The real dollar spread will continue to grow. Foreign investment is a big factor and JT is mum on it. If WFH doesn't pan out long term the GTA is the place to be. If WFH from Bancroft can work it can work from India or China.

How does a person who moves to Bancroft build the home equity that comes with the GTA so he / she can have the housing mobility to go somewhere besides the GTA?
 
ifiddles said:
Anyone looking for a job?

www.blogto.com

This Ontario company is giving every employee $20K each to help them buy homes

Health benefits, field trips and free snacks are nice, but the best job perk any employee could ask for is cold hard cash. I mean, you can't pay your…
www.blogto.com www.blogto.com
Click to expand...
While I think it is interesting that Crozier is trying this, I'm not a fan. First of all, it was a press release which always makes me question motives. Secondly, in the crazy markets they have offices in, 20K does very little. You could either afford it before or you couldn't. Sadly 20K doesn't change much. Third, this is probably just a game of moving money around. Are you going to tell employees that have houses that they aren't eligible for this pool of money? Why wouldn't you give me 20K to put on my mortgage? I suspect it will all balance out in bonuses (or lack thereof for those that got the housing subsidy).

If they truly wanted to help, something like an advance of a years salary to be paid back over a decade really could jumpstart someones quest to own.

EDIT:
The more I look at it, the more I think this was a well crafted marketing campaign. They are getting tons of coverage of their company and open positions for free. As this only applies to first homes (why wouldn't the employee that bought a condo at Jane and Finch be eligible as they have a big jump to a safer area?) I think uptake will be incredibly low.
 
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Lightcycle said:
You do know that there are other ways to make money other than real estate, right...?
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I was told a good way to make a small fortune is to open a motorcycle dealership and start with a very large fortune
 
Lightcycle said:
You do know that there are other ways to make money other than real estate, right...?
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While true, real estate is one of the safest ways to make a leveraged investment (imo, in canada, may not apply to all, etc). If you don't have a bunch of money to invest and aren't leveraging it, it takes a very long time to make a lot of money (for the average person not playing stonks).
 
GreyGhost said:
While true, real estate is one of the safest ways to make a leveraged investment (imo, in canada, may not apply to all, etc). If you don't have a bunch of money to invest and aren't leveraging it, it takes a very long time to make a lot of money (for the average person not playing stonks).
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If you've sold a place in the GTA and moved to Bancroft, then it sounds like you may have more than "a bunch of money to invest".

Also, if you're WFH and making a GTA salary living in Bancroft... same deal...
 
Lightcycle said:
If you've sold a place in the GTA and moved to Bancroft, then it sounds like you may have more than "a bunch of money to invest"...
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True, if you've already used the leveraged investment to build the war chest, things are different (and you would probably be smart to buy a cheap house in bancroft and invest the majority of the GTA house profits in something other than housing). For the person starting out trying to buy a house in the GTA where they need close to six figures and then huge leverage, I suspect very few would/could/should use similar leverage on other investments.
 
GreyGhost said:
True, if you've already used the leveraged investment to build the war chest, things are different (and you would probably be smart to buy a cheap house in bancroft and invest the majority of the GTA house profits in something other than housing). For the person starting out trying to buy a house in the GTA where they need close to six figures and then huge leverage, I suspect very few would/could/should use similar leverage on other investments.
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Young people are forked regardless of if they're starting out in Bancroft or GTA.

At this juncture, there's no guarantee that throwing money into a home in the GTA will net you with more equity than real estate in Bancroft if the RE market goes south.
 
Lightcycle said:
Young people are forked regardless of if they're starting out in Bancroft or GTA.

At this juncture, there's no guarantee that throwing money into a home in the GTA will net you with more equity than real estate in Bancroft if the RE market goes south.
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Even if a person could buy a house today, with or without family help, what are the odds of the same level of growth continuing?

Maybe I’m not seeing it, or am too dumb/naive as to how much money there is, but I don’t see things ending well for those that got in the market within the last year or two (includes me).

Im tempted to extend my mortgage as I’ve got 2.5 years remaining as I expect rates to climb further.
 
mimico_polak said:
Even if a person could buy a house today, with or without family help, what are the odds of the same level of growth continuing?

Maybe I’m not seeing it, or am too dumb/naive as to how much money there is, but I don’t see things ending well for those that got in the market within the last year or two (includes me).

Im tempted to extend my mortgage as I’ve got 2.5 years remaining as I expect rates to climb further.
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When we moved to our present house in 1980 the best thing that happened to us was a conditional offer we had made fell through. Our second choice wasn't as much house but it was also wasn't as much money. Also, the owner took back a 13% mortgage with some simple lump sum payment options.

If we had our first choice we would have assumed an existing 7% mortgage that would have come due a year or so later. Rates had risen to 22% and I don't think we could have handled it.

Does history repeat itself?

Do we learn?

I haven't personally checked the two items below but they seem to be in line with my experiences.

According to statistics published by the Toronto Real Estate Board (TREB) at the time, in January 2010 the average sale price of a home in the Greater Toronto Area was $409,058. In the final month of the decade, December 2019, that average sale price had risen to $837,788 – an incredible 104.8% increase.


Interest rates in the 1980s were in double digits for most of the decade and the Bank Rate actually reached 22% in 1981, a far cry from today’s 3%. Despite seeing some heart stopping interest rates, home prices in the 1980s increased by 260% from $76,000 in 1980 to $274,000 in 1989.

Also interesting

Background information​

For much of Canada’s history, 21 was the “age of majority,” when a person was considered mature enough to participate in the democratic process and vote in elections. However, this presented a distinct contradiction, as people under 21 could be called to serve in the military, work and pay taxes, and get married and have children of their own.

In 1867, the minimum voting age was 21. This remained the case, with a couple of exceptions during the two world wars, until 1970, when the voting age was lowered to 18. Throughout these 100-plus years, debates and discussions took place in Parliament and in living rooms across Canada about lowering the voting age. A major change took place when people under 21 were recruited to fight for Canada during the First and Second World Wars. Their service was recognized, and during these conflicts all military personnel were offered the vote, no matter their age. When the wars ended, the privileges that had been granted to them as soldiers disappeared, and the minimum voting age went back to 21.

Starting in the 1940s, things began to change; Saskatchewan offered the vote to 18 year-olds in 1944. Other provinces followed suit, lowering their voting ages to 18 and 19. However, the federal voting age continued to be set at 21 well into the late 1960s, when Canada and much of the world experienced something of a youth revolution. Young Canadians were becoming more socially and politically aware and radicalized. They wanted to be involved, and they pushed for ways to participate in deciding their own democratic present and future. Parliamentarians heard their arguments and debated lowering the voting age. A series of bills proposing legislation were introduced in 1969, and the voting age was eventually lowered to 18 in 1970.

The point:

If a person was born in 1970 they would have seen the phenomenal rise in house prices in the 1980's. They could have, for thirty years, been voting for governments at all levels to stop the carnage. Now they're in middle age or so and "Someone ELSE should have done something"

This to me is the worst part of socialism. We get sucked into thinking someone will take care of our every want and that every want is a right.








 
mimico_polak said:
Even if a person could buy a house today, with or without family help, what are the odds of the same level of growth continuing?

Maybe I’m not seeing it, or am too dumb/naive as to how much money there is, but I don’t see things ending well for those that got in the market within the last year or two (includes me).

Im tempted to extend my mortgage as I’ve got 2.5 years remaining as I expect rates to climb further.
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My parents got our place starting with an average income, before barely hitting 150% vs the average.

My friends that have places who didn't have help (hell even some who did have help lol) are between 300% to 1000% of the national average lol

I think something is gonna hit the fan later.
 
油井緋色 said:
My parents got our place starting with an average income, before barely hitting 150% vs the average.

My friends that have places who didn't have help (hell even some who did have help lol) are between 300% to 1000% of the national average lol

I think something is gonna hit the fan later.
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Interesting, real estate returns may fall off. Purchase price gets so high, only the truly rich or corporations can afford to own. It is hard for rents to climb much as they are directly based on local income which is not increasing much. In the past, you could buy a house for 300K, rent it out to cover the expenses (including mortgage) and own it clear in 25 years or so. Now, if you buy a house to rent out, you need enough income to pay more than $1000 a month into the property to do the same thing (or 50+ year mortgage but that is playing with fire). As the new system is a constant cashflow draw, the small landlords drop out as they can't afford it. The old way allowed them to save for a downpayment (or leverage existing properties to get a downpayment) and build the empire quickly. For the rich or corporations playing the long game, an asset that returns 5% a year and very rarely goes down (and never gets seized) can be a valuable portion of your portfolio.
 
油井緋色 said:
My parents got our place starting with an average income, before barely hitting 150% vs the average.

My friends that have places who didn't have help (hell even some who did have help lol) are between 300% to 1000% of the national average lol

I think something is gonna hit the fan later.
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In some rural communities the farms are deep and narrow, caused by leaving each kid a share with road frontage. It only works for one or two generations. Money will be the same.

And something will hit the fan. The need for profit to be above inflation rates will continue to put the squeeze on housing, both purchased and rental. It is unlikely that low income earners will suddenly become flush so government assistance will need to expand (Taxes).

The filthy rich will be above the fight. The Karens and Chads will be freaking out over their latte rights and the Poor Lives Matter types will be protesting to have a luxury tax on Karen's latte.

Our powerless politicians will blame their lack of foresight on the previous party in power. We're screwed.
 
MaksTO said:
If Rental Bidding Wars are any sign, then it seems people are making a hell of a lot more money here than I could have ever imagined. No idea who can afford to bid $700 OVER asking price on any apartment... yikes...
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More realtor BS. Asking price is a completely meaningless metric. Hell, it is often worse than meaningless and designed to trigger stupid behaviour. Compare the rent vs similar comps and then we can talk. Real estate agents/orgs purposely avoid almost any discussion framed in those terms as they actually mean something and don't make for headlines that are nearly as exciting. Even year over year rent increase is a crap metric as a year ago we were in a developing pandemic. Look at 2019 rents compared to 2021 and we get a better idea of what is happening.

I do expect rents to keep climbing and some tenants to keep stretching to try to cover. At some point, the smart tenants will stop chasing the dream of renting a detached house with lots of bedrooms and switch to an alternate living arrangement (such as two-bed condo with all kids sharing a room) to save thousands a month. Invest those thousands a month and you have a chance to be stable in the future. If you spend every dime you can get your hands on to survive, you are doomed to circle the drain for eternity.

There was a lady near Barrie that was trying for many months to get a rental house for her and her kids (previous house sold and new landlord wanted huge increase). Sadly, her budget did not allow her to get the house she desired. I give her credit for dedication as she was posting everywhere and asking people and got the paper to do a story, etc but I have my doubts she will be successful. No matter how good the story is, it is hard to find a landlord that is willing to forgo many thousands in income because of the story (and if the landlord bought the house recently, even at top market price they are in a serious cashflow crunch).
 
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GreyGhost said:
More realtor BS. Asking price is a completely meaningless metric. Hell, it is often worse than meaningless and designed to trigger stupid behaviour. Compare the rent vs similar comps and then we can talk. Real estate agents/orgs purposely avoid almost any discussion framed in those terms as they actually mean something and don't make for headlines that are nearly as exciting.
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Just making sure I got it right, are you saying realtors will under-price rental units they are working with the same way they do with houses for sale in order to engage people in bidding wars? I know that's a thing that happens in house sales, but I haven't heard of that happening in the rental market.
 
ifiddles said:
Anyone looking for a job?

www.blogto.com

This Ontario company is giving every employee $20K each to help them buy homes

Health benefits, field trips and free snacks are nice, but the best job perk any employee could ask for is cold hard cash. I mean, you can't pay your…
www.blogto.com www.blogto.com
Click to expand...
I saw that, but compared to base pricing and bidding 10-20% if not more above asking price 20K is a drop in the bucket. The government giving people loans for down payments always cracks me up, first you get a 20-30 year mortgage loan then you get another loan for the down payment itself so that you can afford a loan LOL.
Such an assbackwards system, just loan out your future earnings for 2-3 decades and pay for the privilege with interest on top of that. 0 risk to the bank, they get your house you get screwed if you fail to pay, or you succeed and buy an overinflated asset with interest.
 
MaksTO said:
Just making sure I got it right, are you saying realtors will under-price rental units they are working with the same way they do with houses for sale in order to engage people in bidding wars? I know that's a thing that happens in house sales, but I haven't heard of that happening in the rental market.
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I don't have proof of it but if it works in scenario A and works in scenario B, why not? Get people to emotionally commit and they will spend far more. If it was priced above the desired budget, you have much less interest and fewer people that walk through and get emotionally attached.
 
GreyGhost said:
I don't have proof of it but if it works in scenario A and works in scenario B, why not? Get people to emotionally commit and they will spend far more. If it was priced above the desired budget, you have much less interest and fewer people that walk through and get emotionally attached.
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Emotional commitment is the key.

I was at a boat auction and two guys went after the same boat and prices went crazy. Then they both jumped at the same time and it was a draw. The brief interlude gave them time to rethink and neither would offer another penny to break the tie. The auctioneer moved on and the boat came up again later but sold for thousands less.
 
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