Mad Mike
Well-known member
upward pressure on housing. Cash drawn from stock markets goes somewhere, used to be gold, now it’s real estate.
COVID and the housing market
- Thread starter mimico_polak
- Start date
I don't wish defaults on anyone but if they bought without cash wiggle room that's their fault. If it nets me a lightly used Corvette at a discount price from their garage I won't be upset about it.
While that sounds opportunistic, sacrifice sales are auctions. The seller has to dump debt, even if they have to pay someone to take the boat, Corvette or Harley off their hands. Best offer wins.
They owe $700K on the house, $150K on a toys and can't carry the $850K. They subsidize the toy sales by $50K, end up with $750K debt and hopefully can keep the house until better times. Storage and insurance costs are reduced. Every year the toy sales are delayed the more they depreciate. The house will hopefully appreciate.
It's ugly but reality often is.
You can see it right now , I’m looking for a travel trailer , asks for used is often the price of a new unit . Save the tax ! Well sure until you need to register it ( sure fake invoice) but hard to insure a thirty K unit you paid told the MTO was five K .
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Decades ago a friend bought a new place with a hefty mortgage getting a better than average rate based on him using blue chip stocks as collateral.
Then the market tanked and he had to sign over more stocks. Fortunately he had them.
So many factors.
Then the market tanked and he had to sign over more stocks. Fortunately he had them.
So many factors.
Third- or fourth-hand news but a local development "The Clove" remake of Cloverdale Mall isn't selling well. $400K + for 350 square feet, no parking spot. The mall would be largely demolished to accommodate the condos and the place is half empty now. Shops with long term goals have moved out. The Target store has been empty since they vacated. The Metro store is the only anchor.
Dresden
Well-known member
Condo projects shelved en masse as the math doesn’t work. Since rents are still ok, the new trend is to use the gst rebate and build and then sell to a REIT; thereby allowing the developer to cash out his profit (vs. Retail investors).
I’ve been saying it for a decade. All that talk about foreign money was absolute ********.. it was the municipal workers and teachers driving the condo boom by investing in preconstruction condos.. they had 15 yrs to curb it via disincentivizing taxes on multi-homes but they let it fester and now it’s priced out a generation.
Now we face two realities:
Toronto & Vancouver will be manhattan-ized (rich people’s playground)
Gen Alpha will never own a house unless their parents can hand down $500k
Mad Mike
Well-known member
I think something else will happen.
I’m currently working in a small northern city where modest wartime 1000sq’ homes make up the majority of houses. You can buy a nice one for $200-250k and people raise happy healthy families just fine. More space than an urban condo or townhouse.
I have a modest house here, 50x100’ lot, nice hood, vinyl siding, no granite, no Wolf or JennAir. It’s plain, comfortable and affordable.
I like Carneys idea of bringing back the smaller affordable ‘wartime’ house. They work on small lots, can me mass produced to reduce cost using standard sized building materials creating near zero waste.
Won’t help much in Toronto, but they would be great in rural areas and in places like Halton, Georgina, Vaughan, WC, and Durham who have undeveloped lands outside the Durham.
Also great for small cities like London, KW, Guelph, Belleville, Kingston, Barrie, Greater Ottawa, Sudbury — all suffering affordability issues.
If people were more frugal they’d accept smaller homes. They’d also drive simpler cars, stop going out for meals and vacation locally.
They’d also crash the economy that is dependent on YOLO spending.
AllistonGT
Well-known member
Not have a big house, not have AC, not have a vacation every year, not have a loaded fancy car, not dine out twice a week?! Crazy talk! lol
That was life when I was growing up. Strange thing though. We were happier then many are today.
And here I am considering adding another $1500-2000/month to my mortgage to upsize our home…
99% it won’t happen as I don’t have an additional 200k to bring it to that level.
Currently the increase is $2500/month as a minimum.
Are kids today interested in "starter" homes? It appears the latest generations want everything their parents had right off the hop. They don't seem to realize their parents accquired it over a life time.
And what builder is interested in building smaller homes when there's in more profit in big ones?
No government can solve this with a simple sound bite.
Not to mention land value. Vacant lots near me exceed "affordable" housing. The suburbs Mike mentioned are far far more. Either the houses are land-lease (fundamentally a rental that doesn't appreciate much) or they are not affordable even if tiny and cheaply finished. Something like a four storey walk up is probably the cheapest density for many locations. Even that causes issues as there needs to be a board or agency to deal with common elements. Where they are doing that in TO, each floor is a unit and they are selling for ~$1.3M per unit.
Some of the crazy price comes from the Neverending code creep. Thicker walls, more insulation, ev wiring, etc all.adds up in the bill. For many locations in Southern ontario, air conditioning is mandated so you can't do that later to save money either.
I'm guessing you weren't entitled to your own TV set, 100 channels of cable, your own ensuite, credit card by dad, phone etc. I am also guessing the word "Share" wasn't considered demeaning.
Mad Mike
Well-known member
I think it’s a mix. My kids are just getting into the game, they would like a trendy new build with all the trimmings, but they are separating needs and wants. a few of their friends opted for commutes to get new builds in netherlands like Coburg, Port Perry, Cambridge and Clarington (sadly their equity was murdered in the last 2 years). Some bought small mid century homes without the 9’ ceilings, granite kitchens and spa showers closer in, Keswick, Pickering, Claremont.
The problem is the starter homes I speak of are partially blocked by municipalities who are greeding for McMansion tax dollars, and partially because of builder economics. .
There are countless packages of land around the gta that is zoned for housing but held arms land reserves, paying farm tax till developers can max profits. I say buildable land should be fully taxed often 2 years. Force builders to pay $5000 for each building lot as opposed to the $5000 they pay for 100 vacant lots.
Supply and demand kicks in and the hoard of lots showing up on the market frees land for small builders to build small houses.
Asking the government to solve the problem is like going to an arsonist for advice on fire protection.
If there is any chance of anything going wrong it must be engineered out at any cost. Think of the children.
Put that mindset in the hands of a group that doesn't want to lose their well appointed jobs along with access to the entire income of the country and the "What if" takes over. Every possible problem has to be engineered out at any cost. Those dictates must be supervised out at any cost. The must be maintained at any cost.
The private sector says "Will it last until the warrany expires?"
Mad Mike
Well-known member
I don’t think the economy would suffer if we went to smaller homes. Yolo spending just shifts to other things, I look out my front window in Timmins, every driveway has a pickup, ATV, Sled and boat. Every neighbour goes south each winter. There’s a Trager on every deck, and I get serve/get served Tomahawks and nice Bourbon when dining with friends.
The other thing I really notice, is the smart youngsters here amortize mortgages over 10 or 15 years.
I have a 900 sq ft home that needs gutted and redone I am working on convincing my wife that we should move there and sell the house we live in. Not going so well.
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What is a reasonable ROI for an investor? GICs are ~3%. My "High interest" savings account has been renamed a General checking account because a quarter percent made the name sound ridiculous. Taxes and inflation on the ROI wipes out 5% or more for most small investors.
I was the sole owner of my company and wasn't bound by investors wanting XX% a year and an increase every year. I paid my company and personal bills and set aside a bit for the future. Life is good. However I would have needed more capital to expand and would have to go to one of the Kevin O'Learys of the world to get it. "Show me the money" and I would be in the land of slashed throats.
Blind investors are also often blind to the long term unsustainability of more, more, more.
While a benevolent investor sounds like a saint, their efforts are rarely appreciated. The minute they step aside an O'Leary takes over and reaps the rewards, usually without mercy.
Example: Someone owns a rental condo and the tenent is nice, doesn't cause problems and always pays the rent on time. The owner responds by not raising the rent to the max every year, maybe not at all.
The tenent gets lulled into the status. After ten or fifteen years the owner's situation changes and the unit gets sold to another investor or occupant.The tenent of many years wakes up to the reality of the market and is unprepared. The owner may have health issues and the nice money they left on the table would have come in handy. No one is offering them benevolence in the land of diapers and pablum.
Again, what is a reasonable ROI?
My issue is with socialism. I have no problem with social assistance but I detest social dependency. Dependency stops the thinking process
If someone drops a rock on your foot I have no problem helping out. If you drop a rock on your own foot, sorry dummy, you're on your own.
A lot of greedy billionaires were anti socialism as they grew their empires. When they reached their peaks they became benefactors able to fund large projects. Would society have been better off if they had shared a bit more on their way up?
Our political leaders do not encourage benevolence. Until we learn steet smarts, long term thinking and how brain washing works it's every man for himself.
