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COVID and the housing market

Pre construction condos in Guelph going for 600k - 800k!!! But they are twice as big as the Toronto ones. Parking is another 20k.

Wowowow

Dump my tfsa and buy a 700k 2 bedroom condo?
 
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george__ said:
Pre construction condos in Guelph going for 600k - 800k!!! But they are twice as big as the Toronto ones. Parking is another 20k.

Wowowow

Dump my tfsa and buy a 700k 2 bedroom condo?
Click to expand...
I was laughing. Someone in Barrie is selling an assignment for a townhome. They have 80K down, want >800 and completion is mid 2024. Hopefully nobody is dumb enough to take that deal. Current buyer is trying to extract a lot of profit but there is a reasonable chance the builder either never builds or asks for a lot more and the deal falls apart. There are very few ways for the new buyer to come out ahead and lots of ways for them to lose their shirts.
 
george__ said:
Pre construction condos in Guelph going for 600k - 800k!!! But they are twice as big as the Toronto ones. Parking is another 20k.

Wowowow

Dump my tfsa and buy a 700k 2 bedroom condo?
Click to expand...
Wow...so my buddy got a 4 bedroom condo in Guelph for a 'steal' last year....485k and he's renting out each bedroom as he's still working in BC.
 
Lightcycle said:
There is no such thing as living rent free. Housing costs are housing costs, regardless of if you are renting, paying a mortgage or own a house free and clear.

If you choose to live in your investment, you are foregoing rental income - that is your housing cost.

If you live in a house that you own free and clear, there is an opportunity cost of not being able to invest in stocks which historically yields higher than real estate gains. Yes, there is HELOC, but as mentioned before, any equity can be used as collateral for an asset-backed loan for leverage.

Assets are assets, whether they take the form of liquid stocks or illiquid real estate. There is no free lunch to be had here, only a race between different yielding investments.
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There are lots of arguments either way. Real estate is normally good long term. The problem today is that it is unstable price wise. It is also slow and hard to dump in a panic situation.

With the stock market if you hold a large number of shares that do a short term drop that will recover you can sell a few to get you by. You can't sell a part of your house in a few minutes.
 
blackcamaro said:
Millennial here. 36 so on the older side.

I have no interest in giving the boomers crap. They’ve been through some stuff. Crazy interest rates in the 80’s, dot com bubble, 07-08 financial crisis. If I remember right a lot of people had a rough time in the mid 90’s in Ontario as well.

Lots of boomers in a not so great spot. No need to blame them as a group.
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I'm pleasantly surprised by your comment. Such as yours are few and far between.
I'm one of the late boomers who just turned 63. Yes, we went though some tough times with stagflation of the 70's and a 14% mortgage but not like this. This is worse.
Yield and prices are always inversely proportional. With near UN-realistic 0% bank rate, prices have become UN-realistically high into the stratosphere. I really feel the pain for the X, Y and Z's.
The Bank of Canada has committed financial treason to protect the banks at the expense of the people.
But now, they've painted themselves into a corner. Forty years of declining bond yields has reached the end of the road.
They can protect the value of capital assets or the purchasing power of the currency but they can't save both.
Deflate or inflate? My bet is that they will choose the latter. God help us.
 
crankcall said:
I agree they will inflate they daylights us to sustain the dollar, get used to $5 coffees , at the cheap spots.
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I bought a small Wagyu steak yesterday and we were discussing how often we could afford the delight. The Mrs. BBQ'd it, no seasoning, not even salt or pepper. It melted on the tongue. I guess it won't be a regular menu item.

We're OK but I cry for those trying to get a toe hold on life.
 
DarR said:
I'm pleasantly surprised by your comment. Such as yours are few and far between.
I'm one of the late boomers who just turned 63. Yes, we went though some tough times with stagflation of the 70's and a 14% mortgage but not like this. This is worse.
Yield and prices are always inversely proportional. With near UN-realistic 0% bank rate, prices have become UN-realistically high into the stratosphere. I really feel the pain for the X, Y and Z's.
The Bank of Canada has committed financial treason to protect the banks at the expense of the people.
But now, they've painted themselves into a corner. Forty years of declining bond yields has reached the end of the road.
They can protect the value of capital assets or the purchasing power of the currency but they can't save both.
Deflate or inflate? My bet is that they will choose the latter. God help us.
Click to expand...

When any one or group forms a corporation it is a lot like a birth certificate for a being. The main difference is that it has no conscience and no life expectancy. It is expected to grow indefinitely at above the cost of living.

When the corporation is publicly traded the owners are sheltered from the deeds of the company by only being part owners. The blame for moving a factory to Mexico or China is shared by thousands of shareholders and mutual funds. It isn't like the motorcycle dealership in Etobicoke that bailed, leaving the suppliers and employees cut loose with nothing. All legal.

Expect more.
 
blackcamaro said:
Millennial here. 36 so on the older side.

I have no interest in giving the boomers crap. They’ve been through some stuff. Crazy interest rates in the 80’s, dot com bubble, 07-08 financial crisis. If I remember right a lot of people had a rough time in the mid 90’s in Ontario as well.

Lots of boomers in a not so great spot. No need to blame them as a group.
Click to expand...
I'm late GenX, and I don't give the boomers crap either. They had their ups and downs and as you say they dealt with crushing economic events almost every decade.

I'm not so sure I'm ready to give a free pass to Millennials. They aged into the driver seat around 2015 and were the deciders on the election of the current Federal parties in 2015, 2019, and 2021. Under their leadership the average price of a house in the GTA (and many parts of Canada) has almost doubled.

And then we have the national debt. Milennials will own that deb load soon as they move into the sweetspot for taxation. That's a doozie!

o_canada_fin-forecast-federal-debt
 
Mad Mike said:
I'm late GenX, and I don't give the boomers crap either. They had their ups and downs and as you say they dealt with crushing economic events almost every decade.

I'm not so sure I'm ready to give a free pass to Millennials. They aged into the driver seat around 2015 and were the deciders on the election of the current Federal parties in 2015, 2019, and 2021. Under their leadership the average price of a house in the GTA (and many parts of Canada) has almost doubled.

And then we have the national debt. Milennials will own that deb load soon as they move into the sweetspot for taxation. That's a doozie!
Click to expand...
Canadians voted Liberal, Conservative and NDP. Those parties have been creating inflation for 50 years. Moreover those parties even told us prior to the election that they will continue to run massive inflation creating deficits.
All I can say to the electorate is "Eat the cake that you baked". Written with sadness BTW.
 
JT has come up with another stupid posturing move that will do almost nothing.
  1. Banning foreign buyers doesn't matter much as the vast majority of foreign buyers are international students ime and they aren't considered foreign buyers. It's easier to ostrich while a 19 yo buys millions in real estate than to call it like it is.
  2. Ban blind bidding I think is a reasonable idea but at best it slows the upward momentum, it will do nothing to lower prices.
  3. Anti-flipping tax for 12 months or less just mean flips will sit vacant until 366 days after purchase. That assumes a meaningful percentage in tax. If tax is less than financing through the period, people will still flip, pay the tax and add the tax to the price they want when they sell.
  4. Downpayment on investment properties is already pretty steep, not sure that matters.
  5. Rent-to-own is a complete loser for everyone involved. It is a terrible model.

www.cp24.com

Feds eyeing foreign buyers ban on non-recreational residences, end to blind bidding

Justin Trudeau has tasked Canada's housing minister with implementing a temporary ban on foreign buyers of non-recreational residential properties.
www.cp24.com www.cp24.com

Justin Trudeau has tasked Canada's housing minister with implementing a temporary ban on foreign buyers of non-recreational residential properties.

Trudeau also asked Hussen to ban blind bidding and introduce an anti-flipping tax on residences that requires properties to be held for at least 12 months before they can be sold.

Trudeau wants down payment requirements for investment properties reviewed and a fund created to test, develop and scale up rent-to-own projects.
 
GreyGhost said:
JT has come up with another stupid posturing move that will do almost nothing.
Click to expand...
I agree.
IMO, One way to deflate the housing bubble without the BoC raising the bank rate significantly (which would collapse the rest of the economy) would be to outlaw CMHC's mortgage securitization and insurance program. Moreover, prevent the BoC from purchasing Mortgage Backed Securities.
Banks would have to take the risk on their books and consequently appraise credit risk appropriately.
However, I can't see any political party having the courage to reduce CMHC to simply a statistical agency. Furthermore, the BoC does not take marching orders from our government. They answer solely to the Bank of International Settlement in Basel Switzerland.
 
DarR said:
I agree.
IMO, One way to deflate the housing bubble without the BoC raising the bank rate significantly (which would collapse the rest of the economy) would be to outlaw CMHC's mortgage securitization and insurance program. Moreover, prevent the BoC from purchasing Mortgage Backed Securities.
Banks would have to take the risk on their books and consequently appraise credit risk appropriately.
However, I can't see any political party having the courage to reduce CMHC to simply a statistical agency. Furthermore, the BoC does not take marching orders from our government. They answer solely to the Bank of International Settlement in Basel Switzerland.
Click to expand...
Not sure whether that would deflate prices, and I'm not sure this is a bubble.

The current situation is simple supply and demand economics. The supply in high demand areas is simply too small, and shrinking. Canada's target immigration is 400,000 people a year, it's target immigrant is educated and wealthy - they're not headed to Thunder Bay or Regina.

Raising the bank rate is not a silver bullet, it may not even be part of the solution. BOC prime impacts every part of the economy, every credit product would become more expensive for consumers and business. Consumer credit is at an all time high, it would send the economy into a nosedive.

BOC purchases mortgages to fix it's balance sheet, and so banks the liquidity to issue mortgages. Again, not a solution, if BOC didn't buy CMHC insured high ratio mortgages, it would be near impossible for first time buyers to get into the game - this solution benefits only the rich landlord, and cripple the first time home buyer. Also, the Canadian regulatory framework for lending isn't the same as what caused the US bubble, Canada is quite stable in this sense - CMHC calls very few mortgages.

Affordable housing is a complicated issue - it will involve changes to environmental regulation, freeing up of development lands, and redirecting demand through economic development to places outside Canada's large urban centers.
 
GreyGhost said:
JT has come up with another stupid posturing move that will do almost nothing.
  1. Banning foreign buyers doesn't matter much as the vast majority of foreign buyers are international students ime and they aren't considered foreign buyers. It's easier to ostrich while a 19 yo buys millions in real estate than to call it like it is.
  2. Ban blind bidding I think is a reasonable idea but at best it slows the upward momentum, it will do nothing to lower prices.
  3. Anti-flipping tax for 12 months or less just mean flips will sit vacant until 366 days after purchase. That assumes a meaningful percentage in tax. If tax is less than financing through the period, people will still flip, pay the tax and add the tax to the price they want when they sell.
  4. Downpayment on investment properties is already pretty steep, not sure that matters.
  5. Rent-to-own is a complete loser for everyone involved. It is a terrible model.

www.cp24.com

Feds eyeing foreign buyers ban on non-recreational residences, end to blind bidding

Justin Trudeau has tasked Canada's housing minister with implementing a temporary ban on foreign buyers of non-recreational residential properties.
www.cp24.com www.cp24.com

Justin Trudeau has tasked Canada's housing minister with implementing a temporary ban on foreign buyers of non-recreational residential properties.

Trudeau also asked Hussen to ban blind bidding and introduce an anti-flipping tax on residences that requires properties to be held for at least 12 months before they can be sold.

Trudeau wants down payment requirements for investment properties reviewed and a fund created to test, develop and scale up rent-to-own projects.
Click to expand...
Here's what I would do:

1) Restrict Foreign buyers
  • strengthen the definition to be only those that are permanent residents of Canada.
  • restrict future purchases to legal MDUs of 6 or more units, no single family homes or condos
  • allow municipalities to levy vacancy taxes on empty units and short term rentals of up to $100/day
2) Release crown lands for development as economic incentive outside the major metros. The crown owns 87% of all the lands in Ontario.
  • - Pickering Airport site is 7300 hectares (about 1/10the the size of Toronto, about the same size as Ajax.) This could home 400,000 residential units at 50/hectare.
3) Strengthen CapX exemption rules on primary residence. Occupancy minimum 1 year with proof of occupancy requirement. No more families flipping multiple houses each year tax free.

4) Set time limits on granting plans of subdivision and building permits.

5) Bring back the flowthru tax program to support MURBs.

And a lot mire.
 
Mad Mike said:
Here's what I would do:

1) Restrict Foreign buyers
  • strengthen the definition to be only those that are permanent residents of Canada.
  • restrict future purchases to legal MDUs of 6 or more units, no single family homes or condos
  • allow municipalities to levy vacancy taxes on empty units and short term rentals of up to $100/day
2) Release crown lands for development as economic incentive outside the major metros. The crown owns 87% of all the lands in Ontario.
  • - Pickering Airport site is 7300 hectares (about 1/10the the size of Toronto, about the same size as Ajax.) This could home 400,000 residential units at 50/hectare.
3) Strengthen CapX exemption rules on primary residence. Occupancy minimum 1 year with proof of occupancy requirement. No more families flipping multiple houses each year tax free.

4) Set time limits on granting plans of subdivision and building permits.

5) Bring back the flowthru tax program to support MURBs.

And a lot mire.
Click to expand...
Yes but you want things to actually change. JT wants the appearance of trying to help without actually changing anything (other than driving the federal consulting budget to the moon).

I like most of your ideas, for 1) I would add something along the lines of canadian income to support the purchase. I'm pretty sure international students that come for high school get permanent residency even though they have never paid a dime in income tax (and many never will).

I still think unlimited principal residence tax exemption is a bad policy from almost every angle (other than politically). Setting something up has a lot of intricacies but an ultimate goal of something like the small business exemption of 800K indexed to inflation in perpetuity seems like a reasonable program. Above that, pay capital gains like any other investment.
 
GreyGhost said:
Yes but you want things to actually change. JT wants the appearance of trying to help without actually changing anything (other than driving the federal consulting budget to the moon).

I like most of your ideas, for 1) I would add something along the lines of canadian income to support the purchase. I'm pretty sure international students that come for high school get permanent residency even though they have never paid a dime in income tax (and many never will).

I still think unlimited principal residence tax exemption is a bad policy from almost every angle (other than politically). Setting something up has a lot of intricacies but an ultimate goal of something like the small business exemption of 800K indexed to inflation in perpetuity seems like a reasonable program. Above that, pay capital gains like any other investment.
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The tax free thing is complicated. Its partially there to encourage retirement savings, and if it were not tax free, then the investment costs (interest, insurance, maintenance, capital improvements) would be tax deductible. In the end they might be the same.

I think what is needed most is disincentivising short term speculation. Lengthening or graduating the hold period would do that.
 
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