COVID and the housing market

[ChrisCBR]

That article focusses on the flawed (failed?) premise of median income and home ownership. That ship sailed years ago. I'm not saying that's fair, right or good but that is reality. Sadly, in most of southern ontario (and quickly expanding outwards), the bottom 70% or so are probably stuck as renters (barring a substantial external cash influx) with the top 15% owning most of the properties and the chunk in the middle fighting to pay for one dwelling.

I was talking with a lady on the weekend. She owns and lives in a small two bedroom house (well 2+1) with her husband and two kids and the basement rented out. It requires substantial repairs and she is concerned about paying for them. Not a ton of family income (probably close to median?). She owns a condo that is rented, rent covers expenses and pays mortgage and her husband owns a duplex with his father. Given that they own at least three dwellings, I asked her if she realized she was up ~1M in the last year. She hadn't thought about that. She was just looking at cashflow and lack of living space. Now, the paper gains aren't that helpful for her unless she plans on getting rid of a dwelling. Sure, she could probably access the capital in one or more of them, but paying off that loan would add stress to her life (maybe a lot of stress)

Median income and they own 3 properties, wonder how she can sleep at night, boohoo. She could sell one property.

I kinda disagree about the ship sailing years ago on median income and home ownership. I would say its the last few years.
Our population is small and we have a lot of land, there is no reason why a detached home an hour outside the downtown core can sell for $850K+ (17x median income) in a place like Hamilton.
Artificially low rates, rampant foreign money, lack of transparency in the bidding process, speculation, "primary residence" tax exemption, house flipping, washing money in real estate are all things can be prevented or corrected.

 

[GreyGhost]

Median income and they own 3 properties, wonder how she can sleep at night, boohoo. She could sell one property.

I kinda disagree about the ship sailing years ago on median income and home ownership. I would say its the last few years.
Our population is small and we have a lot of land, there is no reason why a detached home an hour outside the downtown core can sell for $850K+ (17x median income) in a place like Hamilton.
Artificially low rates, rampant foreign money, lack of transparency in the bidding process, speculation, "primary residence" tax exemption, house flipping, washing money in real estate are all things can be prevented or corrected.

I didn't say she deserved tears, it was just interesting that she was thinking she was in kind of a crap situation and in reality she was rocking. It's all about perspective.

I know all of those things contributed to the rocket taking off but disagree that many of them can be corrected. Crushing house price to ~10 years ago to aid affordability will collapse a large portion of the economy and many people will be hopelessly underwater. We may get the rocket to orbit (cap on primary residence exemption, tax flipping as the business it is, real foreign buyer tax that includes students with insufficient canadian income, etc) but I don't see a viable path to get it back down. I doubt there is any political will to do any of these measures yet alone all of them. Trying to increase median salary to catch up with house prices is also a loser as that will move a lot of jobs out of the country.

Also, at this point comparing median income in a city to house prices in that city is a crap argument. You at least need to look at median income within commuting distance compared to house prices. Maybe add in a correction for commuting (100K house price correction for 100km daily commute?). If median hamilton people want to buy, they are being driven out by toronto commuters and they need to look in brantford or caledonia to have a chance (which drives those residents further afield).

 

[mimico_polak]

I remember there was an article last year that a couple from Toronto were ‘struggling’ because they bought 3 or 5 condos at blue mountain and not enough visitors to help them stay afloat….poor them. LoL

We’re struggling because we can’t keep our investments afloat. Everyone told us it’s guaranteed money …. Please help us.

 

[nobbie48]

I didn't say she deserved tears, it was just interesting that she was thinking she was in kind of a crap situation and in reality she was rocking. It's all about perspective.

I know all of those things contributed to the rocket taking off but disagree that many of them can be corrected. Crushing house price to ~10 years ago to aid affordability will collapse a large portion of the economy and many people will be hopelessly underwater. We may get the rocket to orbit (cap on primary residence exemption, tax flipping as the business it is, real foreign buyer tax that includes students with insufficient canadian income, etc) but I don't see a viable path to get it back down. I doubt there is any political will to do any of these measures yet alone all of them. Trying to increase median salary to catch up with house prices is also a loser as that will move a lot of jobs out of the country.

Also, at this point comparing median income in a city to house prices in that city is a crap argument. You at least need to look at median income within commuting distance compared to house prices. Maybe add in a correction for commuting (100K house price correction for 100km daily commute?). If median hamilton people want to buy, they are being driven out by toronto commuters and they need to look in brantford or caledonia to have a chance (which drives those residents further afield).

The ripple effect has a environmental impact. Longer commute times and stresses on a strained system or drive a car into the ground every few years.

Given the choice I'd rather put the money into a mortgage in the city than a car that will be worth little in a few years. That's why people will pay city prices. A thousand a month for a car or TTC it and put the $1,000 into the mortgage and reap the tax free gains.

 

[GreyGhost]

The ripple effect has a environmental impact. Longer commute times and stresses on a strained system or drive a car into the ground every few years.

Given the choice I'd rather put the money into a mortgage in the city than a car that will be worth little in a few years. That's why people will pay city prices. A thousand a month for a car or TTC it and put the $1,000 into the mortgage and reap the tax free gains.

While I agree, part of that goes back to the game being supported by the banks. They are happy to give you 850K for hamilton but if you want 1.05 for etobicoke (somewhat theoretical prices), you get a hard no. The banks calculation doesn't look at the expenses required to commute. Most people are buying right at the top of their range (either approved amount or perceived ability to pay) so although it may make logical sense to buy closer and pay mortgage instead of commute, very often that is not possible.

 

[backmarkerducati]

Lay a blanket on the floor, pick the middle up and start lifting. The middle is Yonge and The Street Formerly Known as Dundas (TSFKaD) the rest of the blanket is goes out from there for the entire GTHA and beyond follows. The more the middle goes up the more the rest does just less so initially. Some areas far enough away they were flat on the floor (say Niagara many years back) but as the middle got high enough they were pulled up as well. Hell even Hamilton was totally reasonable not that long ago....

Priced out of one area means more moving farther out, and then the people there need to move....

 

[mimico_polak]

The ripple effect has a environmental impact. Longer commute times and stresses on a strained system or drive a car into the ground every few years.

Given the choice I'd rather put the money into a mortgage in the city than a car that will be worth little in a few years. That's why people will pay city prices. A thousand a month for a car or TTC it and put the $1,000 into the mortgage and reap the tax free gains.

An old colleague lived in Port Elgin and travelled to Pearson every day. He just bought old German cars with 250-300k on the odometer as he figured at that age they’d have everything replaced by then. Always had 2 of each. One as the daily and one as the part donor. 10 years at least.

We caught him a few times sleeping in the office as he didn’t want to do the drive in the snow.

 

[blackcamaro]

Port Elgin to Pearson is a long one, I commute about 120km one way daily. It's not the end of the world but not for everyone either. I picked up a older Grand Cherokee diesel to haul my dirt bike trailer around and I also use it a couple times a week to keep the mileage down on the daily driver.

I probably wouldn't sleep at my office but worst case scenario I get a hotel room for the 1 or 2 times a year there's a bad snow storm, accident closing the hwy etc.

 

[48Connor]

An old colleague lived in Port Elgin and travelled to Pearson every day. He just bought old German cars with 250-300k on the odometer as he figured at that age they’d have everything replaced by then. Always had 2 of each. One as the daily and one as the part donor. 10 years at least.

We caught him a few times sleeping in the office as he didn’t want to do the drive in the snow.

My condo is in Port so I do the drive from Oshawa to Port Elgin a lot. Not that the drive is particularly bad, its just there is no amount of money worth it to me to drive what would 2.5hrs a day to work, and then another 2.5hrs back. Especially with the snow and whiteouts coming off Lake Huron, it can be an awful drive in the winter.

I'm about 30 mins from work now, but am considering moving to the other side of town to cut 5-8 minutes off of my commute time.

 

[Deleted member 50930]

Even if prices fall, the era of affordable houses in Canada seems to be done

To get back to summer 2019 levels, the national average resale price for a house in Canada would have to fall about 25 per cent — a crash that would likely be packaged with a recession that rivals the pandemic’s economic impact.

www.theglobeandmail.com

 

[Deleted member 50930]

This is KW...

 

[GreyGhost]

This is KW...

Is this good or bad? No idea what student room rental goes for these days. I rented a room in a shared house for a while. Crap environment but saved some money over an apartment.

 

[Robbo]

A newly-renovated 2-bedroom apt with balcony in London near Fanshawe College is $1250 + Hydro. Also, includes one parking space and on-site gym privileges.

A bedroom in a shared house is around $600 so the apartment makes sense.

My son and his buddy take possession Aug 20th.

Sent from my iPhone using Tapatalk

 

[Deleted member 50930]

Crazy

 

[GreyGhost]

Lots of "sold conditional escape clause" recently. It looks like that means sellers accepted an offer but included a fixed time to try to get more money. If they get a better offer, the person signed conditional gets the chance to match or walk. Less sucky than a bidding war but crap for the buyers thinking their search is over but always being on the edge of losing and having to start the search again.

 

[nobbie48]

According to CTV furniture is going nuts in price so after you've gotten to the edge of bankruptcy with the mortgage you sleep on the floor. Apparently the feds have hit Vietnam with 100% tariffs and China 300%.

YouTube:

Why the price of furniture is skyrocketing in Canada​

 

[jc100]

Lots of "sold conditional escape clause" recently. It looks like that means sellers accepted an offer but included a fixed time to try to get more money. If they get a better offer, the person signed conditional gets the chance to match or walk. Less sucky than a bidding war but crap for the buyers thinking their search is over but always being on the edge of losing and having to start the search again.

That sounds a lot like “gazumping” that was frowned upon in the uk. Personally, I feel if you have an agreement to sell/buy that should be honoured without any of this sleazyness.

 

[GreyGhost]

That sounds a lot like “gazumping” that was frowned upon in the uk. Personally, I feel if you have an agreement to sell/buy that should be honoured without any of this sleazyness.

Where I have seen it happen, sellers thought that should be able to sell for X. Somebody came in with an offer six figures below X. Sellers went with the escape clause as they still believed in their price. Buyer could choose to increase price to remove clause, walk away or accept sellers condition. They have options and picked the one they think sucks the least for them.

 

[nobbie48]

That sounds a lot like “gazumping” that was frowned upon in the uk. Personally, I feel if you have an agreement to sell/buy that should be honoured without any of this sleazyness.

In essence: "If I'm not screwing you, you must be screwing me"

 

[mimico_polak]

Lots of "sold conditional escape clause" recently. It looks like that means sellers accepted an offer but included a fixed time to try to get more money. If they get a better offer, the person signed conditional gets the chance to match or walk. Less sucky than a bidding war but crap for the buyers thinking their search is over but always being on the edge of losing and having to start the search again.

How the hell is that legal? I mean as a seller I see the appeal but what buyer in their right mind would do it.

Here’s a higher ‘offer’ so what you going to do?

I’d counter with a lower offer. **** that.