I wonder how long this insanity will last....

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mimico_polak

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http://www.thestar.com/business/rea...ondo_sales_and_prices_keep_rising_in_gta.html

$135k over asking for a semi-detached house in Danforth and Pape area! WTF are people smoking!

Am I completely out to lunch where I think that it's getting ridiculous out there for housing. I mean I understand the whole supply and demand thing, but where exactly are people getting this type of money! I recently tried to buy a home and the bank wanted 80k as a down payment (20%) and I couldn't afford it because it was just too much up front cash. Last I checked salaries were not rising up as fast as house pricing.

I must be absolutely horrible with my money. No debts (except car payments at 0%) and I haven't been able to accumulate 80k for a down payment.

I've also noticed that the MLS website has a lot of double or triple listings for the same property! They have 3 listings for some homes...1 has photos of the house...the other 2 do not but they all have different MLS numbers...when it sells all of a sudden it's 3 homes sold!
 
I don't recommend it but you can put down as low as 5% with a CMHC insured mortgage. They charge you to do this as well a percentage on the total cost of the house. It's gets rolled into your mortgage.
 
It was priced to intentionally cause a bidding war...

Yes, the multiple MLS listing for the same property will count as multiple sales in the CREAs, or other's, numbers. There was some pretty significant adjustments to their numbers a couple of months ago when some things started to be brought up about their numbers. Also for comparison purposes for year over year... I think that you will find that this years numbers include comfree, propertyguys and private listings whereas last years don't. Also... when you see "sold for 99% of asking"... you have to realize that means 99% of the last asking price... not the original asking... in cases where there was price drops along the way.
 
My beef is not so much with the prices (though they don't help), it more to the fact that a lot of the homes in the city need work - roof, windows, electrical upgrade (when I was house hunting a few years ago, every house i looked at needed this), etc. You are basically just bidding on the shell in some cases.
 
Chaos said:
My beef is not so much with the prices (though they don't help), it more to the fact that a lot of the homes in the city need work - roof, windows, electrical upgrade (when I was house hunting a few years ago, every house i looked at needed this), etc. You are basically just bidding on the shell in some cases.
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You'd much rather buy something that needs work and have it done yourself than buy something that has just been reno'd. Way too many people have gotten into flipping fixer-uppers and I wouldn't trust anything that was just reno'd... way too many shoddy jobs out there that were done as cheaply as possible to make as much as possible on the flip. I wouldn't touch a recently reno'd property these days...

I also wouldn't get involved in a bidding war of any kind... Only the seller and agents win in a biddng war... the buyer will have certainly paid too much.
 
What i'm seeing in older neighborhoods is a bungalow or a two story with a wide lot is bought for 600K, the house is demolished and two narro but tall and long houses are build on the lot, and each sell for 600k. No driveway, no backyard, just two houses barely fitting on the land, 3 stories high blocking out all light on one side if you're their neighbour.

Down by brownsline and evans ive seen dozens of houses built like that.

As long as there's a market for it, and people believe the hype that "prices never go down" this craziness will continue.
 
Im glad I live in London.

I seriously think anyone who pays those prices is insane.
 
raginduck said:
You'd much rather buy something that needs work and have it done yourself than buy something that has just been reno'd. Way too many people have gotten into flipping fixer-uppers and I wouldn't trust anything that was just reno'd... way too many shoddy jobs out there that were done as cheaply as possible to make as much as possible on the flip. I wouldn't touch a recently reno'd property these days...

I also wouldn't get involved in a bidding war of any kind... Only the seller and agents win in a biddng war... the buyer will have certainly paid too much.
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While I don't deny that (it's even something I'd welcome), the prices don't always reflect that it's a fixer upper needing to be torn to the studs.
 
raginduck said:
You'd much rather buy something that needs work and have it done yourself than buy something that has just been reno'd. Way too many people have gotten into flipping fixer-uppers and I wouldn't trust anything that was just reno'd... way too many shoddy jobs out there that were done as cheaply as possible to make as much as possible on the flip. I wouldn't touch a recently reno'd property these days...

I also wouldn't get involved in a bidding war of any kind... Only the seller and agents win in a biddng war... the buyer will have certainly paid too much.
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Very true. Be careful, they will push you to do ridicules things. Kind of like putting up 100,000 over asking! That is nuts.

In the end down payments are hard to come up with especially if you are not a home owner. I would go with the 5% down and get into a house if you are renting or living with your parents.

Good luck
 
Red_Liner740 said:
What i'm seeing in older neighborhoods is a bungalow or a two story with a wide lot is bought for 600K, the house is demolished and two narro but tall and long houses are build on the lot, and each sell for 600k. No driveway, no backyard, just two houses barely fitting on the land, 3 stories high blocking out all light on one side if you're their neighbour.

Down by brownsline and evans ive seen dozens of houses built like that.

As long as there's a market for it, and people believe the hype that "prices never go down" this craziness will continue.
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Agreed. I live near that area and frankly what's happening is ridiculous. Houses are sprouting up on wider lots in 2-3 homes on what was previously a single lot. However I have noticed some homes are taking way longer to sell than previously. My father in law works for a firm that buys these wider lots and throws up 2-3 brand new homes in Mississauga and they sell like hot cakes.

My area however (Lakeshore / Islington) is seeing homes with 25 x 115 lots selling for approximately 400-450k with no driveway or garage. These are being bought by normal people that think they can turn it around in 3-4 weeks and flip. I've seen what these flips look like....a dash of paint...****** thin laminate flooring....some new light fixtures....and hide all the wiring/plumbing issues. That's it. Then they try to sell them for over 500k and someone will buy it because they bought into the hype.

I also would prefer to buy a garbage house where I know that no work was done so I can do it myself and at least know it was done properly.
 
While prices are very high for Canada (us and Vancouver battle it out for the top spot...) they are not that high compared to other large cities like NY, London, etc. Does not justify the prices but whenever we start to think there is no way it can go higher, other places are a lot higher...

In the end interest rates will be the deal breaker for the market. When they eventually rise the bubble will be at risk. If they rise slow it will be a slow correction, if they rocket we will see it burst. We might see a small correction in the coming years as the boomers get out of their houses but I do not see that causing a big price delta. Lots of analysts come up with interesting scenarios to try and look smart, in the end interest rates are the major factor, comes down to how much per month...

For flipped houses you have to be very careful. You also have to be careful with new builds, they are poorly inspected and during boom build times they just grab anyone off the street to do the work (as an "apprentice" if it is a licensed trade) or as a labourer if not. I have seen a lot of new houses with electrical and plumbing that comes no where near meeting code, poorly poured foundations, general structural issue that do not meet code. Buyer beware, the builder knows that they are not all inspected, they know the majority of people who buy new do it because they don't have the skills or knowledge, and they know the problems will not show up until well after any warranty period. Some are good some are pretty bad, still not as bad as the worst flips though.
 
Unless you're really close with your real estate agent, they dont give two ***** about you, their job is to get you in a house pronto and for as much money as possible.

I went house browsing with a buddy when he started looking at places. He tells her "my max is 350K", first house she shows him, 400K and probably will go higher.

"Umm, i said 350K...."

"Thats okay, i'm sure you can get the bank to bump up the mortgage another 50k or so", meanwhile the house is nothing like he asked for, NOT a single goddamn thing he said he was interested in.

Then she goes on saying how there's a 20% deposit....i was like "WTF!?" Who has 80 grand to put down with their offer!? Not a down payment, an offer amount to show you are serious with your offer..."

I told him, dude dump that ***** before she pulls out the paper work and makes you sign that "single Agent BS"

muddysixtysix said:
Very true. Be careful, they will push you to do ridicules things. Kind of like putting up 100,000 over asking! That is nuts.

In the end down payments are hard to come up with especially if you are not a home owner. I would go with the 5% down and get into a house if you are renting or living with your parents.

Good luck
Click to expand...
 
This is the consequences of an easy money policy and quantitative easing. House prices go up up up and so does everything else.
Our bubble is making the American housing bubble and even the UK housing bubble look like peanuts.
 
muddysixtysix said:
Very true. Be careful, they will push you to do ridicules things. Kind of like putting up 100,000 over asking! That is nuts.

In the end down payments are hard to come up with especially if you are not a home owner. I would go with the 5% down and get into a house if you are renting or living with your parents.

Good luck
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I would disagree with doing the 5% down thing. IMO... in today's market, I'd take that money and invest it and wait for a while.... stay with the folks if possble, and bareble, or rent. You can rent the same place for cheaper than buying with 5% down.. and you don't have any of the worries of ownership or the uncertainty of today's market... esspecially the condo market... where someone buying their first home with 5% down is probably looking. Buy in a couple of years when you've saved more for the down... You'd probaly get it for near the same price or cheaper than today.
 
BLUE_KAWI said:
This is the consequences of an easy money policy and quantitative easing. House prices go up up up and so does everything else.
Our bubble is making the American housing bubble and even the UK housing bubble look like peanuts.
Click to expand...

But that's the point...this 'bubble' has been rising and rising and rising. The US bubble burst because way too many people got into way too much house...here in Canada I'm seeing a horrible time from the banks in lending money. They actually have halted and pulled back on the strings so it's not as easy to get cash.

Not only that, the government is scared to raise interest rates too fast because they are fully aware of the consequences if they move them too high. I can't quote properly but I think that a large part of the recent home ownership population is 1% raise in interest rate away from being able to keep the house that they have. I can't remember where I read that unfortunately.

The worst part is that people, normal hard working people feel that their ONLY method of getting up in life is to buy these homes and flip them for a profit and now they will become kings and rulers because of one flip. But I personally cannot fathom how you can buy a house for 450k in Mimico (if you're lucky) put in 100k, and sell it for 600k. Then pay the capital gains (of course there's ways around it) and off you go to the next one.

Case in point:

1. This house has been on the market for close to 1 year. Guy started trying to sell private for $1m, then 960, 920, 900, 890, 880...now he went to a realtor. http://www.realtor.ca/propertyDetails.aspx?propertyId=13778617&PidKey=502651693

2. This place is nothing special from the outside I walk by every day: http://www.realtor.ca/propertyDetails.aspx?propertyId=13884270&PidKey=2022446900

3. 27'x113' for close to 500k http://www.realtor.ca/propertyDetails.aspx?propertyId=13888452&PidKey=968525326

4. 5k/month rent it is on the water at least...http://www.realtor.ca/propertyDetails.aspx?propertyId=13548318&PidKey=1662757068
 
In time when the valuations are adjusted for taxes, and actual value assessments occur, the annual cost of living in these houses will put further strain on owners pocketbooks. Where I live, the annual property tax rate is probably around 1.5% +/-against actual value (all taxes in: regional/municipal/and whoever else pulls from this pot)

So when you are sitting with a $600k home, the annual property tax would be about $9000 annually or $750 on top of any mortgage payment you may have.

Not sure where my tax rate sits in comparison to other locations. i am pretty certain our taes may be at ther higher end
 
rbjeepthing said:
I don't recommend it but you can put down as low as 5% with a CMHC insured mortgage. They charge you to do this as well a percentage on the total cost of the house. It's gets rolled into your mortgage.
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Yeah at a cost of almost $16,929 on a 600,000$ house with 5% down!



mimico_polak said:
http://www.thestar.com/business/rea...ondo_sales_and_prices_keep_rising_in_gta.html

$135k over asking for a semi-detached house in Danforth and Pape area! WTF are people smoking!

Am I completely out to lunch where I think that it's getting ridiculous out there for housing. I mean I understand the whole supply and demand thing, but where exactly are people getting this type of money! I recently tried to buy a home and the bank wanted 80k as a down payment (20%) and I couldn't afford it because it was just too much up front cash. Last I checked salaries were not rising up as fast as house pricing.

I must be absolutely horrible with my money. No debts (except car payments at 0%) and I haven't been able to accumulate 80k for a down payment.

I've also noticed that the MLS website has a lot of double or triple listings for the same property! They have 3 listings for some homes...1 has photos of the house...the other 2 do not but they all have different MLS numbers...when it sells all of a sudden it's 3 homes sold!
Click to expand...

This madness will come to an end soon enough.
How can people who on average afford a house thats 600,000$ +?
They cant, and thats why on a regular basis canadians keep getting deeper and deeper into debt. I believe the average canadian is now at 27,000$+ in debt, not counting mortgages.

Now take a look at a 600,000 house with 5% and cmhc in Toronto. If you're a first time home buyer add in $10,475 for the land transfer tax. If its not your first time its $16,200. CMHC is 16,929, then you have odds and ends, home inspection, lawyer fees etc.. Throw in another 2,500. Add it all up and roll it into the mortgage like a good canadian and you're looking at 600,000 $ mortgage with another $30,000 down.

At 3.5% mortgage rate you're looking at $ 2,995.62 monthly for the next 25 years.

Now add in property tax which will be roughly $4,200 a year or $350 a month.

+ hydro $100
+ water $100
+ gas $100
+ cable/phone/internet +100

So thats a cool $3745 a month or 44,940 a year just for the basics. Not included is any sort of maintenance, improvements, furniture you're gonna need. Furnace broken down anyone? How about that ac unit *****ing itself when its 38 degrees outside?

Throw in a couple cars, insurance, maintenance, fuel and you're gonna have to start using that credit card on a monthly basis just to get by...

Meanwhile the average salary in canada is under 40,000$, BEFORE tax :lmao:
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