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COVID and the housing market
- Thread starter mimico_polak
- Start date
A normal house outside of barrie was purchased for 760 summer 2021. Owner has been transferred for work so they are trying to rent it out for 3100 +utilities. As crazy as paying that much rent is, there is a good chance it barely covers expenses (mortgage+tax+maintenance). Location dictates a car to get anywhere.
Couple friends left Oakville for three yrs to work in Nova Scotia ( seriously) and rented out the house knowing they would likely come back . Lucky or they would never got back into this market . In three yrs it went from 950s ish to 1.5 . And I would guess around 1.6 1.8 now .
My daughter in Ft Mac talks about moving here , her 500k house ( which is nice in Mac) would equal 1.2 1.4 here .
We can attract all the emigration we want , unless it’s Asian cash or Indian upper caste , good luck buying here . Even that Ethiopian prince holding millions might have a hard time
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My daughter in Ft Mac talks about moving here , her 500k house ( which is nice in Mac) would equal 1.2 1.4 here .
We can attract all the emigration we want , unless it’s Asian cash or Indian upper caste , good luck buying here . Even that Ethiopian prince holding millions might have a hard time
Sent from my iPhone using GTAMotorcycle.com
Interesting…
This can’t be good for normal families
www.theglobeandmail.com
Blackstone targets Canadian real estate, opens office in Toronto
Blackstone is expanding from significant investments in warehouses into new sectors such as commercial and residential properties
www.theglobeandmail.com
48Connor
Well-known member
Wtf. Without federal grants and with a paid off building, affordable housing is not possible? This guy makes some good points but he's looney tunes. As for his big hate for REITs, I dont know of even one single family home that was bought or sold by a REIT. Again, a bs argument from a politician. If he had confined his remarks to multi-family dwellings, maybe his argument has more weight but he intentionally didnt as that would limit his fear mongering. NDP answer for everything seems to be government grants. Very little discussion on where all that grant money comes from.
Magic fairy dust. Don’t want to make the political thread derail here but I’m shaking my head at some of the promises out there.
Mad Mike
Well-known member
That's NDP sensationalism at it's best. Rents own less than 20% of the highrise buildings in Canada, the acquired most of their stock from commercial landlords that operated buildings and managed rents using the same scheme. Yhe don't touch single family homes.
Without REITs there would be less rental stock, and the existing stock would be a less livable, and finally... the public eould be pumping even more into housing subsidies as supply pressures would rise.
Because I dont have to rent, part of me is intrigued to see the fallout if they got elected and their perpetual rent control came into effect. I suspect landlords would just find a loophole to sidestep it ( eg utilities not included and you have to sign a contract with Usury Inc. for utilities at far above market rates). Alternatively, they could bundle other crap like rental furniture, etc so the controlled rent is legal. If government actually did a good job of fixing rent without loopholes, why would someone be a landlord? I think the rental pool would shrink dramatically (although old school rental buildings resold as condos may be the closest we have seen to affordable ownership. Up front anyway, tons of deferred maintenance would quickly wipe out the new owners).
Sadly, it is not possible to economically detach rent and dwelling price. If you try, you immediately eliminate all new small landlords as they dont have the financial firepower to cover the monthly shortfall. Now, they could play a game where all rentals were subsidized using money drawn from owners to redistribute wealth (logistically complicated as much of the homeowners wealth is locked in the dwelling and not cash the government can collect, could be done as a LTT on the sale but that means govt pays out now and may wait decades to collect). I dont think any politician has the stones to propose that, yet alone get it passed.
Mad Mike
Well-known member
It's a big world and there are lots of people with money and the means to immigrate and buy hones. Probably an endless supply as far as Canada is concerned.
Add to that changing definitions of a family homes - smaller urban, multigeneratuinal in the burbs, and you change the funding models.
In my community, I'm seeing 300sq foot basement apartments and 2500 sq resales listed with multiple kitchens and 6 or more bedrooms.
Things change.
Mad Mike
Well-known member
Rent controls are very unlikely -- they have been implemented in a lot of areas, they benefit a small number of people willing to live for a long period in ever declining conditions.
My feeling is that zoning changes in suburbia could make a huge difference by allowing more units to be built at lower prices on redeveloped lots.
As an example, bylaws in my area allow only 1 suburban home/lot. Most houses were built in the 60s and 70s 1200-2500 sq' single family homes. When redeveloped, these lots get 4500-single 6900sq' monsters as there is no other option. 1000m east of me, the R3 zoning allows a small walkups, if that zoning applied to my area a typical lot fits 6 x 1500sq' units. The monster home would sell for about $4m. Cost of land $2M + $2M to build. The same basic walkup with 6 units would cost $2m for the land + $1.5M for the building - so each 1500sq' unit could be available for $585/unit and the builder would have the same outcome. Now $585 isn't pocket change, but it's in the range that thousands of young families would leap at.
Convert a few thousand single family lots and you start easing supply, this in the long run eases prices.
Now, developers are smart and will know a 1500sq' condo in Markham should fetch >$1M so some rules would be necessary to keep the prices in line AND to keep flippers and investors out of the game. Fix the developer sale prices by limiting each unit to a land+build cost formula, owner occupancy only, and maybe a 10 year limit to tax emption on resale purchase price + inflation.
Was speaking with a neighbour last night and turns out they bought a second cottage. The first one is basically 100% rented out throughout the year, so they bought a second one.
I didn't ask HOW they afforded it, but they told me 'we've got a few shady mortgage brokers we deal with...they can make it happen. Zero chance of us doing it through the traditional channels. Let us know if you want their contacts, they can hook up a mortgage on anything.'
That told me everything I need to know. People buying rental properties without the funds to actually buy them...yet they do. FML.
If you've got connections...it's easy.
I didn't ask HOW they afforded it, but they told me 'we've got a few shady mortgage brokers we deal with...they can make it happen. Zero chance of us doing it through the traditional channels. Let us know if you want their contacts, they can hook up a mortgage on anything.'
That told me everything I need to know. People buying rental properties without the funds to actually buy them...yet they do. FML.
If you've got connections...it's easy.
Works great until it doesn't then what?
This is the group of acquaintances that doesn't believe housing goes down.
They've been living off the rental lifestyle at the cottage (I hazard 30-50k/year in rents) due to COVID...and are just going with more of the same.
Once the rentals of cottage dry up, they just assume the growth will continue...
If it doesn't...the lenders take the property. But that won't happen...always goes up. Always. LOL
Well assuming they hold the property for a few years and it was fully rented out, it can be hard to lose. Even if the property didn't appreciate substantially, you have rental income that should have chipped away at principal. There's never a great reason for cottage rentals to dry up. Even during covid "lock-down" cottage rentals were full if the landlord wanted.
Risk v reward right.
It just opens up my eyes how the whole thing works.
Can't get financing through normal channels? No problem...try this shady mortgage broker instead...easy peasy. Pay 2-3k cash and you get your approval. Then it's your problem if you can't service it.
The broker gets paid, the underwriter gets paid, and the whole chain gets a few hundred $ each in order to make it happen.
Only people that lose are the other buyers that are looking for a family home/cottage.
At the cusp of an earlier recession a colleague bought a new house ($400K) and took a long closing. He figured his old place ($300K) would go up $50K in the closing period. He's get a new house with a $50K mortgage bump up.
Prices crashed but he was committed to the $400K price on the new one and his old place sold for $250K. New mortgage was $150K when that was serious money.
Will history repeat?
Prices crashed but he was committed to the $400K price on the new one and his old place sold for $250K. New mortgage was $150K when that was serious money.
Will history repeat?
It already is. Many people that bought in early 2022 are walking away from their deposits. When they lose the ensuing lawsuit they may realize how dumb that decision was. If it was a first time buyer, they may get away with it as there isn't much to win in the lawsuit. Step up buyers could easily lose all the equity they have in their current house by being *****.
EDIT:
The simple solution to the above is to close on the property you agreed to buy at the price you agreed to pay. If you screwed up, that's your problem. Sell your car, cash out investments, do what it takes to make the deal close. If the market price has gone down, you are losing that delta anyway but one way you end up with a house you paid over market for, the other way you end up with no house and no money.
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And another development bites the dust. But this time they're threatening to hold the deposits unless buyers agree to not sue....and they're blaming the buyers for being in default BEFORE the places are built.
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