COVID and the housing market

If you pick up this months Toronto Life the article about grifting developments has a few that challenged the developers and didn’t have to pay the extra ask. But I think more got levered than pardoned.
With possibly two more BoC hikes by yr end . Some folks will be wishing they got squeezed out of the deals .


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crankcall said:
If you pick up this months Toronto Life the article about grifting developments has a few that challenged the developers and didn’t have to pay the extra ask. But I think more got levered than pardoned.
With possibly two more BoC hikes by yr end . Some folks will be wishing they got squeezed out of the deals .


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Sadly, a place to live for 535 is probably about as good as it gets for stability. Rent is skyrocketing. Assuming the only down payment they had was their original 40k, they have a mortgage in the ballpark of 500K. At rates from recent history (say ~2.5%), that is ~$2500 a month. That is similar price to a 2 bed apartment but obviously you need to come up with property tax and maintenance as well. At 6%, that is 3200 a month. Starting to hurt but still not grossly out of line with a 2 bed apartment.

For the Stayner house with the inlaw suite in the basement, when mom moves out, rent the basement and cover more than half the mortgage.
 
GreyGhost said:
Sadly, a place to live for 535 is probably about as good as it gets for stability. Rent is skyrocketing. Assuming the only down payment they had was their original 40k, they have a mortgage in the ballpark of 500K. At rates from recent history (say ~2.5%), that is ~$2500 a month. That is similar price to a 2 bed apartment but obviously you need to come up with property tax and maintenance as well. At 6%, that is 3200 a month. Starting to hurt but still not grossly out of line with a 2 bed apartment.

For the Stayner house with the inlaw suite in the basement, when mom moves out, rent the basement and cover more than half the mortgage.
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Bungalows aren’t high on the demand list but the option of a basement apartment is handy if times get tough.
 
GreyGhost said:
If they get really tough, move to the basement and rent the good part. Can probably cover the whole mortgage at that point and live rent-free (you still pay maintenance obviously).
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Friends of ours did this about a decade ago by Humber College south campus. Mind you prices were way less...but they basically paid the house off within a few years as they went stupid hard.

Then they kicked out the tenants once the school term ended, and never bothered to rent again. Moved upstairs from the basement, and as far as I know still enjoying it (lost touch over the years).
 
If you don’t mind some inconvenience for long term gains , there are still opportunities. However there are always going to be 4bdrm 4bths and nothing else will do folks . Life for them may be difficult


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I’m actually interested in getting a rental property again. One of the reasons the HELOC is just sitting there.

Unfortunately with current trends that ship appears to have sailed. But I’m keeping my eyes open.
 
mimico_polak said:
I’m actually interested in getting a rental property again. One of the reasons the HELOC is just sitting there.

Unfortunately with current trends that ship appears to have sailed. But I’m keeping my eyes open.
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I'd be keeping my eyes on auxiliary dwelling unit bylaws. Build a two-storey apartment along your rear property line with access from the side. Cheapest rental dwelling you could get and high rental rate to boot. If you decide to do major renovation or rebuild on the main house in the future, you can move into the adu while construction happens.
 
GreyGhost said:
I'd be keeping my eyes on auxiliary dwelling unit bylaws. Build a two-storey apartment along your rear property line with access from the side. Cheapest rental dwelling you could get and high rental rate to boot. If you decide to do major renovation or rebuild on the main house in the future, you can move into the adu while construction happens.
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Mississauga isn't too keen on allowing these things yet. I'd love to build one for the MIL so we can have an additional room / living area for her.

Plus it would be a great thing for the future. But as it stands...Peel doesn't allow it last I checked.
 
mimico_polak said:
Mississauga isn't too keen on allowing these things yet. I'd love to build one for the MIL so we can have an additional room / living area for her.

Plus it would be a great thing for the future. But as it stands...Peel doesn't allow it last I checked.
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Be ready if it happens. Barrie allowed them as a pilot. Some got built. People freaked out about character of the neighbourhood and barrie paused the program. Now the whiney neighbours have an adu against their backyard and no ability to do the same. Serves them right. I could also see douggie whacking r1 zoning but that may just allow duplex/triplex not an additional building.
 
GreyGhost said:
Be ready if it happens. Barrie allowed them as a pilot. Some got built. People freaked out about character of the neighbourhood and barrie paused the program. Now the whiney neighbours have an adu against their backyard and no ability to do the same. Serves them right. I could also see douggie whacking r1 zoning but that may just allow duplex/triplex not an additional building.
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We're going through the same thing here in Etobicoke near the Mississauga border.

The subdivision is about 60 years old and built when land was cheap. It's mostly single family but there's a townhouse and a few rental apartments. The rental apartments are on large lots.

The rental companies want to sever the spare land and build more high rises. The single family homeowners are fighting the applications but the city has said we need to grow and since there's no more land the only direction is up.

There's a good chance that the only hand the homeowners can play is to limit the heights.

If the existing high rises were condos the additional buildings would be unlikely as a condo corporation is non-profit and selling off the land brings profit into the picture with serious consequences.

Then there are the churches and malls that are under utilizing their spaces. The churches tend to go with adding seniors residences.

Cloverdale Mall is looking at mixed use. The unused ex-Target store has to be part of the impetus.

Anyone remember Don Mills Centre??

Big box stores and on line shopping has decimated traditional malls in some areas. Something has to give.
 
Still some opportunity to buy rentals at affordable per door pricing. 16 Walton st port hope. Old school four storey main st building commercial on ground floor and 9 apartments above. Asking 2.65M. That's a lot of coin but per door is almost unbeatable.
 
nobbie48 said:
We're going through the same thing here in Etobicoke near the Mississauga border.

The subdivision is about 60 years old and built when land was cheap. It's mostly single family but there's a townhouse and a few rental apartments. The rental apartments are on large lots.

The rental companies want to sever the spare land and build more high rises. The single family homeowners are fighting the applications but the city has said we need to grow and since there's no more land the only direction is up.

There's a good chance that the only hand the homeowners can play is to limit the heights.

If the existing high rises were condos the additional buildings would be unlikely as a condo corporation is non-profit and selling off the land brings profit into the picture with serious consequences.

Then there are the churches and malls that are under utilizing their spaces. The churches tend to go with adding seniors residences.

Cloverdale Mall is looking at mixed use. The unused ex-Target store has to be part of the impetus.

Anyone remember Don Mills Centre??

Big box stores and on line shopping has decimated traditional malls in some areas. Something has to give.
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While we cannot of course create new land the entire emergency is mostly man made. In Etobicoke alone there is a crap tonne of land that is owned by developers or other parties and nothing is being built as the developers are fighting height limits, etc, or they are in zoning application limbo....leaving them in purgatory for years. The underused land is former car dealerships, empty two story commercial along roads like Bloor, with evicted businesses, former brownfeild industrial land, etc. Take a drive around and it becomes obvious what is going on.

If the current stuff was just built in a timely manner the shortage would not be such a big problem. Knowingly bought the land beside houses with a six story bylaw, build a six story building instead of fighting for years and years arguing for 20 to end up finally building one or two higher! I really hope high interest rates put these specific developers all out of business.

My concern, is the "strong mayor" crap will just be a rubber stamp for the 20 story+ buildings beside houses.
 
backmarkerducati said:
While we cannot of course create new land the entire emergency is mostly man made. In Etobicoke alone there is a crap tonne of land that is owned by developers or other parties and nothing is being built as the developers are fighting height limits, etc, or they are in zoning application limbo....leaving them in purgatory for years. The underused land is former car dealerships, empty two story commercial along roads like Bloor, with evicted businesses, former brownfeild industrial land, etc. Take a drive around and it becomes obvious what is going on.

If the current stuff was just built in a timely manner the shortage would not be such a big problem. Knowingly bought the land beside houses with a six story bylaw, build a six story building instead of fighting for years and years arguing for 20 to end up finally building one or two higher! I really hope high interest rates put these specific developers all out of business.

My concern, is the "strong mayor" crap will just be a rubber stamp for the 20 story+ buildings beside houses.
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It's hard for interest rate hikes to affect them much on the cashflow side. Many smaller parcels were cash amd bigger ones are optioned (developer pays owner a negotiated rate every year until they are ready to go and then officially buys property). Even where loans exist like for construction they are often 20% or so. Adding a few percent to 20 hurts a lot less than adding a a few percent to one or two.

Obviously their buyers will be hit by rate hikes and that can impact the ability to sell lots of units at a high price.
 
GreyGhost said:
It's hard for interest rate hikes to affect them much on the cashflow side. Many smaller parcels were cash amd bigger ones are optioned (developer pays owner a negotiated rate every year until they are ready to go and then officially buys property). Even where loans exist like for construction they are often 20% or so. Adding a few percent to 20 hurts a lot less than adding a a few percent to one or two.

Obviously their buyers will be hit by rate hikes and that can impact the ability to sell lots of units at a high price.
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At that stage it’s better for the developer to just hold the land and wait for conditions to improve.

Market improves and they can sell for higher.

OR

take deposits, build, cry foul market conditions and they need an an extra 150-200k and if buyers can’t pony up release the funds…oh wait….
 
GreyGhost said:
It's hard for interest rate hikes to affect them much on the cashflow side. Many smaller parcels were cash amd bigger ones are optioned (developer pays owner a negotiated rate every year until they are ready to go and then officially buys property). Even where loans exist like for construction they are often 20% or so. Adding a few percent to 20 hurts a lot less than adding a a few percent to one or two.

Obviously their buyers will be hit by rate hikes and that can impact the ability to sell lots of units at a high price.
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Yes, buyer side is where they will be hit hardest.
 
Newish subdivision house outside of barrie. <2000 sq ft 3+1 bed on 40' lot, two car garage, grass back yard. Last sold four years ago for ~600 (about 100k under asking). Listed in June for 1.2, August for 1.1, sold for 1M. Housesigma estimate was 1.3. Is that a buyers market? Up 100K a year (~17%). Not many recent comps as it may be the smallest house in the subdivision (houses close to 3000 sq ft are going for 1.2-1.4). It's nice to see some dwellings in six figure territory but there aren't many.
 
mimico_polak said:
At that stage it’s better for the developer to just hold the land and wait for conditions to improve.

Market improves and they can sell for higher.

OR

take deposits, build, cry foul market conditions and they need an an extra 150-200k and if buyers can’t pony up release the funds…oh wait….
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Keep in mind that these are huge corporations that live on forever. Unlike a small builder that dissolves when the owner dies or retires the corporation keeps on churning. If they have to wait a person's lifetime or more to make a profit so be it.
 
A relative moved to Canada from New Zealand and part of the reason was he was able to afford a house. In NZ housing is going the same route as Canada but wages are generally lower.

He is very well educated and in demand. I wouldn't be surprised if there were many more like him. How does brain drain do with this, keeping in mind the US housing is often far cheaper and we lose to the US brain drain.
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