COVID and the housing market

[Mad Mike]

Yes and no. You’re comparing Barrie to a Toronto property where tax is less than half of that amount.

You’re also not losing rent per se as it’s sitting empty so the $5000 is a magic number.

Gardening - do it free yourself

I say holding a house is a much better option than dealing with tenants if you don’t want to.

@Evoex I can be your property manager and deal with the tenants on your behalf. Been a property manager before.

EDIT: my personal opinion is (if you don’t want to be a landlord)…

Let your sister live in it rent free. Except utilities and the property tax, etc
Take out HELOC
Use HELOC money for whatever floats your boat
The interest on the HELOC will easily be outweighed by the capital gain on the property

Obviously there’s the issue of splitting gains with your sister. But that’s between the two of you.

Win-win

I used a random house in Barrie as an example for a $1.2m property, it could be anywhere. An investment thats depreciating with a negative cashflow is always cause for concern.

If it were $1.2m of bank stock that stopped paying 4% dividends, had fees of $1000/mo, and declining in value by $20k/week.... would you sell or hold?

 

[GreyGhost]

I used a random house in Barrie as an example for a $1.2m property, it could be anywhere. An investment thats depreciating with a negative cashflow is always cause for concern.

If it were $1.2m of bank stock that stopped paying 4% dividends, had fees of $1000/mo, and declining in value by $20k/week.... would you sell or hold?

That's when you evaluate whether you think the decline is justified or market panic and whether you expect a recovery in the near term. No reason to lock in the loss on the way down if you expect a recovery.

 

[mimico_polak]

I used a random house in Barrie as an example for a $1.2m property, it could be anywhere. An investment thats depreciating with a negative cashflow is always cause for concern.

If it were $1.2m of bank stock that stopped paying 4% dividends, had fees of $1000/mo, and declining in value by $20k/week.... would you sell or hold?

Well now you're comparing different investment philosophies. Some invest for dividend growth, some for capital, and some for both.

Me personally? I would sell the stock. but keep the house. Especially since the assumed scenario in this case is that the house was given to me free and clear. Plus I would rent it out, because I don't mind being a landlord. Having to pay $1000/month to keep an asset appreciating at (for fun let's say 2%) per year is a no brainer for me. But I would rent it out. Hell if I didn't rent it out I'd take out HELOC money just to keep the property at $12k/year.

Let's say that house is currently 900k....at 2% you're looking at 18k increase the first year....18k another year...and keeps growing. And that's assuming a measly 2% on an inherited asset with no acquisition cost.

I believe that housing will rise again, and I would hold it because a 20k/week value drop is nothing but magic money. I'm not losing anything until I sell, and we all know that the market will stabilize / grow again...just a matter of time.

 

[crankcall]

EDIT: my personal opinion is (if you don’t want to be a landlord)…

Let your sister live in it rent free. Except utilities and the property tax, etc
Take out HELOC
Use HELOC money for whatever floats your boat
The interest on the HELOC will easily be outweighed by the capital gain on the property

Obviously there’s the issue of splitting gains with your sister. But that’s between the two of you.

Win-win

Be very careful with this unless you and the sister get along really well , and even then talk to an actual lawyer with estate planning experience.
There is this obscure law called adult dependant, and your sister could end up with the house , she could also take out a mortgage on the property from a tier two or three lender and lose the house . You could end up holding the bag and upside down.
Trust family like you’d trust that guy living in a van down by the river .
I’m not cynical, just witnessed a few episodes of F the family.



Sent from my iPhone using GTAMotorcycle.com mobile app

 

[mimico_polak]

Be very careful with this unless you and the sister get along really well , and even then talk to an actual lawyer with estate planning experience.
There is this obscure law called adult dependant, and your sister could end up with the house , she could also take out a mortgage on the property from a tier two or three lender and lose the house . You could end up holding the bag and upside down.
Trust family like you’d trust that guy living in a van down by the river .
I’m not cynical, just witnessed a few episodes of F the family.



Sent from my iPhone using GTAMotorcycle.com mobile app

Well said. From what I've seen the relationship here seems good to an outsider, but you're right.

Never mix family and money as bad things can happen.

Worked out for me with the 6-plex buying with my parents. But I learned well that mom likes to change certain agreements according to her memory at the time. I didn't mind because it ended up well in the end, but I really wish I could've found a way to have kept that property.

Alas....it was not meant to be and I'll be sad until the end of life about it. That was my retirement package! LoL

 

[mimico_polak]

Back on topic...this place was listed for 1.6-1.7 a few months ago and de-listed because it didn't sell...

Check out this listing

3281 FLANAGAN Crescent, Mississauga, Ontario L5C2M7

www.realtor.ca

And this is my buddy's brother's house that got listed recently...

Check out this listing

3469 CREDIT HEIGHTS DR, Mississauga, Ontario L5C2M2

www.realtor.ca

Check out this listing

3594 GALLAGER DR, Mississauga, Ontario L5C2N6

www.realtor.ca

And this property I referenced before....

Listed for 1.6, de-listed, then 2.1, de-listed, and then we thought it was sold...but I guess they just re-listed again...

Check out this listing

3594 GALLAGER DR, Mississauga, Ontario L5C2N6

www.realtor.ca

 

[48Connor]

This place has my interest. The ad has the line; "This property is being sold 'AS IS'", which got me intrigued. This is what I got from the realator; "It has been vacant for 2 1/2 years. The water was shut off but has now been turned back on. The electric furnace was on low for the winter. The air conditioning has not been tried. The inground swimming pool has not been used in 5 years." Apparently the guy moved back to the states due to COVID and retired so will never return.

Check out this listing

 

[GreyGhost]

This place has my interest. The ad has the line; "This property is being sold 'AS IS'", which got me intrigued. This is what I got from the realator; "It has been vacant for 2 1/2 years. The water was shut off but has now been turned back on. The electric furnace was on low for the winter. The air conditioning has not been tried. The inground swimming pool has not been used in 5 years." Apparently the guy moved back to the states due to COVID and retired so will never return.

Check out this listing

Looks like a good opportunity. Some surface ugliness to scare away most people. Assuming pool was winterized prior to being left, that should be no big deal. A quick flip through the pictures didnt show anything scary. What would that place be worth after modernizing?

 

[DownUnder]

This place has my interest. The ad has the line; "This property is being sold 'AS IS'", which got me intrigued. This is what I got from the realator; "It has been vacant for 2 1/2 years. The water was shut off but has now been turned back on. The electric furnace was on low for the winter. The air conditioning has not been tried. The inground swimming pool has not been used in 5 years." Apparently the guy moved back to the states due to COVID and retired so will never return.

Check out this listing

I can smell that house through my monitor... buy it, and the property next door and build another of those townhouse complexes imo.

 

[48Connor]

Looks like a good opportunity. Some surface ugliness to scare away most people. Assuming pool was winterized prior to being left, that should be no big deal. A quick flip through the pictures didnt show anything scary. What would that place be worth after modernizing?

In today's market I'd say $700-750k. You'd have to change the layout inside the house tho, add another bathroom at least, and update the outside to get rid of the yellow.

I can smell that house through my monitor... buy it, and the property next door and build another of those townhouse complexes imo.

Peak covid they were selling for like $650k a pop. But I have no money to start getting into that

 

[Mad Mike]

That's when you evaluate whether you think the decline is justified or market panic and whether you expect a recovery in the near term. No reason to lock in the loss on the way down if you expect a recovery.

True. But if you are expecting to ride the escalator down for a while and plan to roll over the asset into the same type of equity (buy another house), it might make sense to switch to cash while both your current and future house are devaluing.

Say the current and new house are worth $1M today.
Hold till you buy: houses devalue to $900K, worth declines to $900K + whatever you lose in carrying costs.
Sell now/buy later: You have 1M cash, you buy the new house at $900K, net worth $1M + whatever you earn on a short-term investment.

I think people sometimes get romantically attached to investment houses , more so than stocks and such. To me, a real estate outside my primary home is just an investment - no romance.

 

[daught]

Thanks for the feedback. A few more details. My dream home is not big or fancy. Ideally it has space do do my own maintenance on cars and build/fix stuff. GF wants a kitchen she can put her awesome cooking skills to use. My maintenance/building/fixing skills and her cooking save us lots of money. Ideally it would be fully detached so I can take care of it without having to deal with the neighbour. Unfortunately fully detached in not feasible at this time. The next best options we saw are duplexes and townhouses. We are looking in Squamish BC, which is an awesome place to suffer short pain for long gain. I am content with the possibility of not taking vacations away from BC for the next few years. Yes this is GTAM, I stuck around this forum for the wealth of smart advice, not the roads.

 

[crankcall]

@daught, friends just came back from kelowna area, the plan is to build a family compound with 4-5 house cabins, the son in law living there is an architect and young and ambitious. They had bought a property up the sunshine coast but it will be on market soon, construction costs have doublerd up there and concrete is imposssible.
I may end up with a "cottage" in Kelowna

 

[mimico_polak]

@daught, friends just came back from kelowna area, the plan is to build a family compound with 4-5 house cabins, the son in law living there is an architect and young and ambitious. They had bought a property up the sunshine coast but it will be on market soon, construction costs have doublerd up there and concrete is imposssible.
I may end up with a "cottage" in Kelowna

The whole market for concrete is horrible right now. Apparently one of the components is in very short supply and suppliers are all scrambling.

 

[Mad Mike]

The whole market for concrete is horrible right now. Apparently one of the components is in very short supply and suppliers are all scrambling.

Sound like some oil execs got jobs in concrete.

 

[crankcall]

And in the news this am the condo builders are bemoaning concrete cost overruns....... and the cycle continues.....

 

[mimico_polak]

And in the news this am the condo builders are bemoaning concrete cost overruns....... and the cycle continues.....

We had days when concrete didn’t ship….and the inevitable claim.

 

[GreyGhost]

CREA has revised their house price index model to reduce the apparent growth and appearance of a bubble. Largest model correction the fed has seen in a developed country ever. It reduced growth percentage by ~16% using the same sales data. Sketchy as. Seems like something that crea has no business calculating. Shouldnt stats can be pumping out these numbers? Or they can't get the data as the crea monopoly wont let anyone access the entire data set?

Canada Eliminated Its Real Estate Bubble By Revising Data. It Hit A New One Already - Better Dwelling

Canada's real estate bubble suddenly disappeared with a new revision to how it measures prices. It hit another bubble with that method too.

betterdwelling.com

 

[nobbie48]

CREA has FUDGED their house price index model to reduce the apparent loss of sales.

Buy now. Inflation will make you rich.

 

[DownUnder]

Wonder if this will impact anything. Seems more political with midterms coming up but cdc should know the science.

CDC loosens recommendations for some Covid-19 control measures

The US Centers for Disease Control and Prevention says the nation should move away from restrictive measures such as quarantines and social distancing and focus on reducing severe disease from Covid-19.

www.cnn.com