Toronto

CMHC: More Than Half of Toronto Real Estate Price Increases Unexplained

CMHC - More Than Half of Toronto Real Estate Price Increases Unexplained

Everyone’s been struggling to explain Toronto real estate prices, and the government thinks it found an answer. The Canada Mortgage And Housing Corporation (CMHC) studied major urban markets, and modeled where they should be. The government owned organization concludes that more than half of Toronto’s real estate price increases can’t be explained.

Models Aren’t Perfect, But They’re Way Better Than Guessing

Models are never 100% accurate, but a well planned model is much better than saying “it always goes up.” Or you know “immigrants.” CMHC analysts breakdown their model into three major characteristics – personal disposable income, young adult population, and mortgage rates. All three of those are “real” measurements, meaning they’re adjusted for inflation.

More Than Half of Toronto Real Estate Price Increases Are “Unexplained”

Greater Toronto real estate prices were soaring, even before the epic run in 2017. Prices increased 40.19% in real terms, from 2010 to 2016 according to the CMHC. Real disposable income accounted for 5.04 of those points. The young adult population (a.k.a. population growth), accounted for 8.09 of those points. Real mortgage rates represented 3.22 points. Yes, that leaves 23.84 points to the unexplained – or almost 59% of the price increases.

That’s before any of the gains in 2017, which reached over 30% at one point. To make that clear, the CMHC believes the compound annual growth rate should have only been 2.56% per year. The city more than doubled that rate during that period.

Source: CMHC. Better Dwelling.

Explaining The Unexplained

More than half of Toronto price gains are unexplained, pretty spooky! The CMHC actually addresses this as unmeasurable demand side factors. To those that don’t deal with assets on a regular basis, this usually means a shortage of supply, perceived shortage of supply, and/or plain ole’ exuberance. Before the developer bros start high fiving about the shortage of supply, and housing activists start crying foul – let’s quickly touch on supply shortage.

Much more homes were built, than households formed during the period the CMHC studied. That’s not a secret. Even old school bank economists like TD’s Brian DePratto, have pointed this out. A shortage of supply doesn’t mean that there wasn’t enough housing for the number of families in the city. It means there wasn’t housing for everyone who wanted to buy at the same time. There are several types of buyers, which range from millennials looking for a starter homes and families looking to upgrade, to speculators and urban landbankers looking to chase yields.

Not all of these buyers are permanent demand. Speculators and yield chasers are only in the market, for as long as the market accepts exuberance, which the US Federal reserve has been quietly observing in Canada. Once exuberance dies down, speculators tend to release a lot of the pricing pressure. Once that pressure is released, we typically see prices “walk” closer to fundamentals. Which in this case, could be a steep a drop. Most of 2017’s price gains have been given up.

Note: There’s a different school of thought on these types of economic models. Many of the world’s most noted economists now link prices to credit expansion and contraction. We’ll touch on that next week.

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92 Comments

  • Reply
    bluetheimpala 1 week ago

    Defenders of perpetual real estate price increases; what say you?

    If the chart doesn’t scare the crap out of you, I suggest you stop reading this site and take the blue pill. Everything will be ok. No more interest rate hikes. 300K+ immigrants a year. No more land. Borrow some more $ to buy another house or condo.
    Shhh…put your head down and relax, mamma’s here. Everything will be ok.

    • Reply
      Im Therious 1 week ago

      I think the defenders of perpetual real estate price increases should put their money where their mouth is and go and buy up some more houses, but making sure they pay over asking.

    • Reply
      Greg Gerner 1 week ago

      Dear Blue, love your comments. I think you should trademark the acronym DPREPI (Defenders of Perpetual Real Estate Price Increases). It’s just got a ring to it, you know? Sort of like Pat Riley of the Miami Heat filing for a patent for 3-peat. You could retire early . . .

  • Reply
    Theresa 1 week ago

    It’s speculation, stupid! Why won’t the government just flat out say it, instead of beating around the bush. Unexplained means you paid a premium, to get your house sooner. It doesn’t mean it’s worth what you paid. Sorry pals. Enjoy your beanie babies. I mean condos.

  • Reply
    Trader Jim 1 week ago

    Reading between the lines, the CMHC just said Toronto real estate needs to come down over 20% for it to be fair value. Since we know a decline never stops at exactly the fair value (it tends to overshoot it), expect a drop even further, before bouncing up.

    This can get real messy, real fast. Hopefully the government is planning additional economic growth sectors, to absorb the decline of employment in the sector.

    • Reply
      vnm 1 week ago

      By bouncing up, you mean the way an egg bounces up off the sidewalk when dropped from a condo roof terrace?

      • Reply
        Tits MeGee 1 week ago

        Vnm, It’s going to bounce right up just like the falling glass windows of Cityplace hitting the ground. At least with these sorts of contruction flaws, you are getting a studio unit for a deal at 650k, with monthly condo fees of 886.13 montly.

        Why is it going for so cheap?……Unexplained

        • Reply
          vnm 1 week ago

          lol … i’ll need a better deal than that. how about 2 of those units for 1.5 mill?

  • Reply
    Rui Amaral 1 week ago

    They needed models to prove this? Seriously? Regardless of intent the fact that alot of it is unexplainable is a consequence of govt agencies being too lax on data collection and giving a pass to easy money (as has been pointed out many times on this blog and others). It is inexcusable as it has consequences to the citizens of this nation (or any nation for that matter that relies on housing for it’s people). And as far as the chart goes… I do believe we are at that Minsky moment now. Speculators be damned.

    • Reply
      GM 1 week ago

      But now we know we have a quantitative figure to explain HOW crazy people are. lol.

  • Reply
    vnm 1 week ago

    One line that jumps out in this story is “there wasn’t housing for everyone who wanted to buy at the same time”.
    Which if not caused by a shortage of real actual household supply vs. demand, is akin to an investor-driven traffic jam.
    Basically swarms of money-drunk idiots going too fast in sports cars, going off the rails and causing a titanic mess.
    The way to curtail it is with appropriate regulation and policing, and handing out massive tickets and fines to those who have created the problem.
    Just because you can afford a Maserati doesn’t mean you have the right to go 200kmh on the DVP and be a danger to society.
    It’s generally agreed we have to do it with cars, why not housing?

    • Reply
      ISS 1 week ago

      Winning comment IMO. The government needs to understand that housing is a right, speculation is not. There should be steep taxes for second homes, and speculators.

  • Reply
    Takei For PM 1 week ago

    Toronto has a well deserved premium, and the CMHC should know that. You can’t compare one of the best cities in the world to live in, with fundamentals that drive markets like the middle-of-nowhere, rural Ontario.

    We need better models that capture quality of life.

    • Reply
      Joe 1 week ago

      Are you paying teachers, firemen, policemen, and other civil servants an equal premium to live in Toronto? Because in addition to the financial and regulatory conditions which may effect real estate prices, an erosion in city’s basic support services, because people can’t afford to live there is, ironically, another way to burst a bubble.

      Or maybe I am wrong, maybe the cops in Toronto all drive Ferrari’s and live in pricey real estate, on lavish salaries.

    • Reply
      Johnny 1 week ago

      Toronto was ranked as the best city in the world by the UN for many years in the 90s. What was the house price then? Less than $300K inflation adjusted.

    • Reply
      Johnny 1 week ago

      Also, if quality of life means living somewhere where your children will never be able to afford to stay, and will be permanently poor, even if they earn high-incomes, than you have a different measurement for quality of life. Toronto does not deserve that title. It’s cold and salty, dirty, and spaced out. It’s impossible to drive anywhere. Home prices are through the roof. The jobs pay far less than other major cities.

    • Reply
      Torontonian 1 week ago

      Torontonians are so blind to the fact that Toronto isn’t that great of a place to live compared to the rest of the world. Terrible transportation system, over priced housing, & winter 6 months of the year. I’m curious to know what about Toronto is so great compared to other cities?

      • Reply
        ISS 1 week ago

        I’ll give Toronto safe, and transportation is good if you’re not using it during peak hours. Unfortunately, it’s resting on its laurels, and most Torontonians are taking any constructive criticism like it’s an attack on their mother. The city is going to rapidly decay if people don’t realize that we need to look to look at the problems if we’re going to continue to improve. It was mostly dumb luck it’s been so good, so far.

    • Reply
      Neo 1 week ago

      This isn’t California. It’s so cold half the year people stay indoors. Scraping off the ice from my windshield this morning, I wasn’t thinking what a great quality of life this is. Driving on the 401 bumper to bumper over potholes doesn’t give me that impression either. Climate and quality infrastructure has a lot more to do with quality of life than you are giving it credit for.

  • Reply
    Tommy 1 week ago

    Why is Manhattan so much more in demand than New Jersey? Therein lies clues.

    Will prices come down after a decade long bull run with unsustainable increases over 2017? Sure, but they won’t come down down to pre-2015 prices nor will they stay down.

    Real estate fluctuates. What else is new?

    • Reply
      Johnny 1 week ago

      You don’t know that. Sorry. You really don’t know.

    • Reply
      ISS 1 week ago

      The island of Toronto is getting cramped, we’re running out of room to build!

      btw, Manhattan prices ARE FALLING, after having just broken even after 17 years. Quit acting like you know the first thing about real estate, because you don’t.

      • Reply
        Torontonian 1 week ago

        There is plenty of room to build. Go to Google Earth and take a look at New York then take a look at Toronto. Anyone who compares Toronto with New York after that is a complete idiot. That’s what it looks like when there is no room to build.

        • Reply
          Tommy 1 week ago

          Zoning and land restrictions dictate what can be built and where.

          Unlike the US which has many points of entry, Canada only has two -Toronto and Vancouver. This has always been the case and will continue to be the case. This is the reason for price growth in both cities. Canada doesn’t have a dozen renowned major cities to settle in. Only two.

    • Reply
      vnm 1 week ago

      In fact NYC is considered to be close to a balanced market based on economic fundamentals. Toronto isn’t, nowhere close. So taking NYC as a model, however justified or not, Toronto would have to be proportionately massively more attractive as a place to live to warrant the stratospheric prices.
      Quite a stretch, and even if that were true, the average salary in NYC is $4350 vs $2575 in Toronto,
      so there is a limit on how much residents can afford to pay for the allure, regardless of how much they might want to.

    • Reply
      Functioning Brain 1 week ago

      Here is the interesting thing though Tommy,

      Manhattan is more expensive then Jersey….and the further you get away from Manhattan the cheaper things get!

      14 miles, the same distance as Mississauga from Toronto in proximity to NYC central is Linden New Jersey one can get a a home for pretty much half of the price of a Mississauga home in Linden.

      Linden you can get a 4 bedroom single detached home for $260K usd ($327K cad)

      https://www.realtor.com/realestateandhomes-detail/1717-Essex-Ave_Linden_NJ_07036_M54132-21590#photo0

      In Linden the average household income is $65,891 usd (83K cad you will see that these median incomes are pretty darn lateral!)

      After tax the Linden $65K becomes $52K so the house is roughly 5x the after tax median income (remember say distance from NYC core as Mississauga to Toronto core)

      In Mississauga the average median income is 84Kcad (see pretty much the same as Linden)In Mississauga a 3 bedroom detached house is currently going for 651k ($516K usd double the price of the Linden one that is the same distance from the core where) ….

      https://www.realtor.ca/Residential/Single-Family/19049097/4044-TEAKWOOD-DR-Mississauga-Ontario-L5C3L5-Creditview

      So after tax for the Mississauga folks is 60K take home so the approx cost of their shitty detached 14 miles from the core is 11x their after tax income

      Gonna do the below in CAD for shits and giggles so BEAR with me:

      Linden NJ:
      14 miles from Manhattan
      $65K cad Median Household after tax income
      $327K cad 3 bedroom detached house
      5X average median post tax income to house cost

      Mississauga
      14 Miles from Toronto
      $60K cad Median Household after tax income
      $651K cad 3 bedroom detached house
      11X average median post tax income to house cost

      This doesn’t change if you are looking at Ajax, Pickering, Kitchener, Friggin Oshawa…the ratios still don’t make any sense and are still not lateral to ones in proximity local to NYC…

      So you know it makes sense that there isn’t a single detached house within a 2 hour drive of the Toronto core for under $600K cause that is the same case with NYC (larger population, NEW YORK, higher incomes)….oh wait, yah no, it doesn’t

      • Reply
        Professor of real estate 1 week ago

        Holy crap! You are a complete idiot. Have you ever lived in the states? You comparing Linden New Jersey to Mississauga based on distance to New York and Toronto? Let me give you an update my clueless friend. All USA cities have ghettos. That is why Bronx is 1/3 price of New York although joined by border. Why South side Chicago is 2 miles from downtown Chicago but worth 1/2 price. Why Sanfrancisco is so expensive but Oakland right beside is worth 1/3 price. Boston extremely expensive but Dorchester (which is part of the city) is 1/2 the price. Ghettos – how USA cities are built. Toronto is not built that way – they did not put a whole collection of poor people on one side of the highway and forget about them.

        • Reply
          Professor of real estate 1 week ago

          Also. There is not a single city in the USA that compares to Toronto in any way.
          In the USA you have freedom of movement and can move anywhere – many big cities to choose from. Why is Dallas booming? because all folks from Northeast, Midwest and expecially California are moving there because of various reasons – mostly expensive housing and taxes. In Canada where are you going to go? Vancouver and Toronto – that is about it. and Toronto is the driver. I cut my teeth in New York city like many others and then leave to go to some other city for a better job or cheaper/less hectic life. You don’t have those options in Canada. Toronto is Canada. ‘Nuff said.

          • Functioning Brain 1 week ago

            so wait, Mississauga, Kitchener, Guelph and Ajax are all world class cities right? because the ratios apply to those as well the distance just disperses farther. There is NO place within 4 hours of Toronto where you can get a property for the amount you can get in Linden, and if they have lateral median incomes you would think they have a similar demographic pull no? So there is NO ghetto within 4 hours Toronto right? Houses in Guelph should logically cost more than ones in LA right?

          • Functioning Brain 1 week ago

            Why is Regant park over a mill? Why is Mimico over a mill? Why is rexdale over a mill…gurrrl I came out of Toronto ghettos, I cut my teeth in the areas that no one wanted to live in…your logic has no grounds!

          • bluetheimpala 1 week ago

            Agreed. Bottom of market for anything in or around toronto will be $1.5M probably by next year. In toronto, shit you’ll have to sell vital organs just for the deposit because money won’t be enough. $3M bottom, prof what do you think?

            You seem like a smart guy…cutting teeth all over the place and been to every US city…I have these beans. they are very exclusive and do amazing things. I also know they will never go down in value because, duh they’re exclusive and the only game in town. Let me know if you’re interested.

            BD4L

          • vnm 1 week ago

            Nuff said indeed. “Vancouver and Toronto, that’s about it”.
            I’m not sure what’s more punishing, the cost of housing or the unfortunate emergence of this kind of repellent attitude in the city.
            No wonder Canadians from coast to coast who have never even visited Toronto have been turned off by the very idea of it.
            The only advantage I can see to having people like you around is that it helps drive and keep people away, increasing vacancies, and reducing traffic.

          • professor of real estate 1 week ago

            nice try bluetheimpala. My opinion is that real estate prices will be flat for awhile. (1-2) years because of all the government intervention and rising interest rates.
            the investment is now in rental units. I make money I don’t make excuses. seems like most folks here are beginners trying to get a toe hold in the market via condos and trying to understand real estate with all these analytics. They need analytics for human psychology especially immigrant home buying psychology – if you understand that then you will make a fortune in Toronto real estate. This is now an immigrant city. word to your mother…

        • Reply
          bluetheimpala 1 week ago

          Go home, you’re drunk…
          1) The Bronx is a borough of NY. You mean Manhattan honey bun.
          2) Not all US cities have what is defined as a ghetto but I assume you’ve gone to every US city a la Quantum Leap…need to save one more soul to get home.
          3) You are comparing South-Chi, one of the most dangerous parts of the US to the downtown? Sweet lord you’re naive.
          4) You then went to Oakland…a different city and comparing to one of if not the most expensive city in the US. Saying Oakland is 1/3 of SanFran doesn’t support your point.
          5) Toronto has a number of economically depressed areas that were always intended to be this way due to a lack of business incentives and a concentration in low income housing. Mississauga also has this.
          6) Go smoke a doobie, get a drink or go knock one out…you have a lot of pent up rage. It’s going to be ok.

          See you again honey bun

          • professor of real estate 1 week ago

            missing the point again. Toronto doesn’t have cheap labor living in crappy housing right beside the downtown 416 core like most US cities. Most big US cities have a huge number of poor people living inside it or right beside the wealthy areas. This keeps inequality high and poor workers doing service jobs in wealthy areas.
            I’m not drunk loser. I’m filthy rich in real estate because I know what I am doing in real estate. You just comment on every article because i suspect you work for this website to draw in people. unlike Toronto the US cities are all about school districts. In toronto poor kids go to school with wealthier kids that is not the case in USA. Get a clue loser. I have lived in 4 major US cities with a PhD from University of Chicago.

      • Reply
        bluetheimpala 1 week ago

        Amazing comment…more please; info like this shouldn’t live in the shadows.

        • Reply
          Functioning Brain 1 week ago

          Mimico, Regant Park, Jane and Finch, Rexdale…Prof even among the Million dollar inflated price tags I will leave in one of those locals alone over night for a week and then you tell me about Toronto having no Ghettos…I can’t come with you to keep you safe or less scared I will be out of the “non-ghettos” in my appropriately priced near million dollar home in Mississauga with my three kids thanking Jesus for university academic scholarships. You say I haven’t lived in the states? You are right, I haven’t. I say you haven’t lived in Toronto if you are blissfully unaware of the fact that we have ghettos….

          • professor of real estate 1 week ago

            You have no idea what a ghetto is unless you lived in a US city ghetto. No comparison – Toronto does not have ghetto’s.

      • Reply
        Joshua McIntyre 1 week ago

        Some food for thought to add to your comment. You haven’t factored in Health insurance. In Canada, our health insurance is baked into our taxes. In the US its often self funded, although some corporations provide it to their employees. However, to better compare, it would be useful to know if those of the median income in Linden have health coverage provide or if they are self funded and what that cost is. Health care is expensive and has a real rising cost (faster then inflation). It’s need also increases with the aging population we are seeing in both Canada and the US.
        So, income net of taxes and healthcare are probably much different and may provide better insight.

        • Reply
          Functioning Brain 1 week ago

          I also haven’t factored in things like the fact the daycare in Mississauga for one toddler is $1400 a month where as in linden they are $150 a week (so $600 a month) I also didn’t factor in the cost of gas, or a car, or groceries, or hell beer and smokes which again are all cheaper…there is legit no ratio analysis that would have their cost of living anywhere close to those within 2 hours of Toronto. Also I was dainty with the Mississauga income tax we all know that we get taxed way harder than that!

          If I did a direct variable analysis I am still confident the cost of a house in Mississauga, Guelph, Grimsby would not be supported.

          • Joshua McIntyre 1 week ago

            I agree with you… I think the fundamentals do not support the current market prices. I was simply pointing out that it is difficult to do a comparison of strictly incomes to house prices, there are fallacies. But, as you have pointed to, it would be a difficult/time consuming task as there are multiple variables…

            Non the less, the fundamentals, as far as I can tell do not support these asset prices. My point, or rather my thought… was that it would be interesting to see how it would shake out if we had more data.

        • Reply
          Functioning Brain 1 week ago

          LOL you are officially 22, male, bored, from an upper middle class family in a burb out of Toronto, I am going for like Oakville or Burlington, You don’t know ANYTHING about Toronto.

          • Functioning Brain 1 week ago

            not you john my friend the professor! he is my new best-friend. I am getting some gimp out now to make him a friendship bracelet!! you john seem like a sound thinking level headed adult!

      • Reply
        Tommy 1 week ago

        Another factor to consider is that property taxes in these US cities is about triple was it is in Toronto. This adds up year after year, likely reducing any difference in initial price tag.

  • Reply
    Justin Thyme 1 week ago

    There were more houses built than new families formed.

    That would seem to indicate that there were a lot of ‘families’ that owned more than one house.

    What is conspicuously missing from the chart is a category ‘unoccupied house’.

    • Reply
      ISS 1 week ago

      Speculative demand. Few people would own a second home if the value appreciated close to inflation (even if they use it as a convenience to downtown). Unfortunately, the government is never going to acknowledge that’s a problem.

    • Reply
      Functioning Brain 1 week ago

      Why is Regant park over a mill? Why is Mimico over a mill? Why is rexdale over a mill…gurrrl I came out of Toronto ghettos…you logic has no grounds!

      • Reply
        Justin Thyme 1 week ago

        Looks like a certain Professor of Agitation has gotten to you. you are all befuddled.

        • Reply
          Functioning Brain 1 week ago

          LOL I am cooking my toddler lunch and commenting at the same time, I have fallen on troll sword…

    • Reply
      Functioning Brain 1 week ago

      It would be interesting and if my OCD spikes up high enough I may undertake it at some point! lol

      The fundamentals make no sense, and my obsession with this bubble is 100% based on that. I can’t stop rolling it around in my head because no matter which way I do the math never works. I have no pony in this game my fixation is purely on the lack of logic.

      • Reply
        professor of real estate 1 week ago

        I provide the logic baby. Why you resisting me?

        • Reply
          Functioning Brain 1 week ago

          You better comment fast before your mom comes and takes your iphone away from you!Phd from the university of chicago, lol, filthy rich, lol live in 4 whole places in the states!!! I’m almost done your friendship bracelet kiddo! it is “swaggy”!!! Also again when I drop you off next week at Jane and Finch I can’t stay but I can leave you my diaper bag…for you when you, you know!

          • professor of real estate 1 week ago

            This is killing me. I’m actually sitting in a class right now while my students are taking an exam. I actually am a professor. I am just having fun on this site.

  • Reply
    Johnny 1 week ago

    Honestly I haven’t seen any major price decreases. Prices soared last year but outside Toronto they’ve stayed there. I’ve seen more million dollar homes come for sale in Guelph.

    Also, it’s not immigrants, it’s immigration. The policy. Not the people. Let’s not turn it into a racial divided argument. The science is in. Populations that grow experience far more pressure on housing prices. One can look to Detroit to see the other extreme when populations decrease. Canada’s demographic population isn’t growing, but non-homeowners who were born and raised in Vancouver and Toronto will need to bussed out and dumped to make room for those who are willing to do so. It’s quite the country, Canada, to set up the next generation so poorly. No finger pointing at the greed anywhere else in the world, we only need to look internally of how to f over the next gen with greed. We are the worst in the world.

    • Reply
      ISS 1 week ago

      You aren’t looking then. TREB reported almost all of 2017’s price increases were wiped out. If you bought in May 2017, you lost about 10% already.

      Look for the flyers, or even on the forum here, and you’ll see a bunch of flyers for discounted new developments in the GTA. Prices are falling, but the industry will do it’s best to make sure you don’t hear about it, until they’ve positioned themselves.

      • Reply
        Condox 1 week ago

        The drop in prices was for Freehold. Condos have not come down and are gaining more than last year. New condo developments are still flying off the shelf. Theatre District is pretty much sold out at over $1000 per sqft. One Yonge is selling at $1200 per sqft and it’s selling like crazy. Speculation is still crazy in the condo market.

        • Reply
          ISS 1 week ago

          New condo developments are being hawked overseas with huge incentives like guaranteed cap rates above normal (basically subsidizing rent). Quit spreading fake BS.

          • Condox 1 week ago

            You don’t have a clue about what you’re talking about. I’ve been working in this industry for the past 15 years. I’m in the trenching seeing all of the sales unfold before my eyes with real people. This is reality. Speculation is still going on in the Condo market at an alarmingly scary rate. By the way what’s a guaranteed cap above normal rates means? Are you referring to the capitalization rate? Do you know what the Cap Rate is for residential condos?

        • Reply
          Tits MeGee 1 week ago

          Condox, You are a Salesman in real estate, and sales is what puts food on your plate so why the hell should anyone take your biased comments about the real estate market with any seriousness. It seems you assume nobody ever asks further questions to wonder if a real estate agent would ever tell you its a bad time to buy.

          However, It would make sense since all your clients are the buyers and failed to ask further questions based on the state of the market right now, or even bother to play devils advocate or listen to what many economists would have to say about Canada’s Real estate Market in many other parts of the globe.

          Even though they are selling like crazy, I think you said it best that its all “speculation”. That does not take out the Risk factors that are present in the market today. People like you don’t bother to mention that to your clients because you got a raging hard on for your 5% commission rate on overheated prices melting the thin ice they stand on. You have yet to experience in your 15 year career what a significant pullback looks like, No markets go up forever but I guess Canadas real estate will be the first exception in history.

          • Condox 1 week ago

            Tits, you don’t know me so just because I’m a real estate sales person does not mean I’m like all of my other peers. Also, I don’t really care for the money I have enough of it already to live a comfortable life, I do this work because I really love what I do. If you read my comments carefully you’ll see that I said “speculate” not “invest” because I don’t consider anything to be an investment these days. I make millions in commissions because I’m a good sales person but also because I tell my clients exactly how it is so they keep coming back because they trust me. My business partners and I have already sold many of our personal investment properties in the last few months and have advised my clients to do the same. I’m glad the majority of my peers are undereducated, egotistical and have no clue what they’re doing. I need them to advise their clients to buy my overpriced real estate that I’m selling. I send all my clients to this blog to get educated because I think Better Dwelling is one of the best things that happened to our business. If everyone understood the numbers and the facts, prices wouldn’t be so inflated. However, without the ebs and flows there would be no opportunities. So don’t hate on me I’m on your side!

        • Reply
          carlton 1 week ago

          Your right again! everyone else is wrong, Your condo will never come down in price. As a matter of fact you should probably buy two more to maximize profit when you sell back in a year. Go for it!

    • Reply
      EO 1 week ago

      Look at Vaughan/Maple. As recently as this morning a house that was listed for 2.5mil has now been reduced to 1.98 mil. The last house that sold on that street was sold in November for 2mil. That’s a 20% drop assuming they sell at that price and at peak that house would’ve sold easily for greater then 2.5mil.

      Another one, Richmond Hill. House was sold in December of 2016 for 1.55mil. At peak in March, the same house a few doors down sold for 1.8mil. Today the house from December is back on the market for 1.65mil. IF they sell at current listing, after commission and carrying costs for the year he held on to it he would be even and the price drop is just about 20%.

      These are not made up stories. These are facts.

      The real estate bubble that burst in the 90s took 5 years to play out and by the time all was said and done prices dropped approx. 50% from peak. Based on the numbers above and where the market is today we are almost a year into what looks like by all measures a burst bubble. For anyone that thinks it wont go down, go study history.

      HISTORY ALWAYS REPEATS ITSELF.

      • Reply
        Neo 1 week ago

        Prices from 1990-1996 in the GTA dropped 30% from the highs not 50%. I expect them to drop at least 30% this time around over the same period of time.

        • Reply
          Tommy 1 week ago

          Will it take 6 years this time too, to hit bottom? Buyers are looking at 2024 before they can jump in? haha. We’re not here for a long time, just a good time, so have a good time, the sun can’t shine every day.

    • Reply
      Functioning Brain 1 week ago

      Of course you are, cause all us grown-ups here know there are professors of real estate in the real world and that university professors sit around with their students a lot like high school teachers commenting on blogs!!! Oh kiddo I am dipping out cause this is starting to feel mean! Have fun teaching your classes pumpkin! with your filthy rich money and your PHD from the Chicago place.

  • Reply
    Professor of real estate 1 week ago

    All Fools! The real reason for massive increase is ‘undeclared income’. there are an unbelievable amount of folks out there that own small businesses that say they make $40K when they earn $200K+. You know these folks, they charge you HST but pocket it from the government. How many cash businesses are there in TO? You can’t get one job done in your house without the guy asking for cash so you can save HST and he does not have to declare. All of these people jumped into real estate as speculators and homeowners. The government bases all the projections on ‘declared income’ T4 slips. 80% of the people I know cheat taxes like crazy. The guy who owns a one man driving school lives in $1.5-2M house while a high paying government job could still not afford it.

    • Reply
      Condox 1 week ago

      So low interest rates, speculation, increase population, etc doesn’t have anything to do with it? Don’t know where you find those people but the real people I deal with are nothing like what you’ve described.

      • Reply
        Professor of real estate 1 week ago

        Fool! your list is well known. the article is about how your list does not explain why demand is so high. answer = undeclared income/assets. I don’t know about your ‘real’ people. The folks I know are multi-millionaire real estate investors. Fool. Go back to your condo rental bro and pay down your landlords mortgage. Your crowd are entrly level dudes with bachelors degrees in pyschology/accounting who hang out at craft breweries complaining about crap all day.

        • Reply
          carlton 1 week ago

          Bought my home at interest rate of 5.5 percent -330k , rates went down to 1.9 percent my home price went to 849k. I wonder who needs an explanation? Should be pretty obvious, people pay what they can afford.

          Too much Cheap money B.O.C. Interest rates went as low as 0.5 and banks were lending as low as 1.89 variable rate.
          In 1991 BOC rate was 13 percent and homes were approx. a fifth of the cost now. Fast forward 24 years later and interest rates went as low as 0.5 in 2015, allowing everyone and there grandmother to qualify for a loan they cant pay for when interest rates go up.
          https://tradingeconomics.com/canada/interest-rate

        • Reply
          Condox 1 week ago

          Actually I’m a landlord many times over and my clients are pretty much all millionaires. I really don’t believe your make belief internet persona you’ve created because you’re obviously uninformed. If you’re so smart tell me what the cap rate is for residential condos in the downtown core of Toronto?

          • professor of real estate 1 week ago

            I don’t invest in condos. I hate condo fees. I invest in detached houses and small apartment buildings. I don’t waste my time on condos. I used to live in and own a nice one in boston when i was a postdoc. Just before I was to move out /sell they slapped a ridiculous special assessment. after that I said forget condos.
            why your fronting? there is money to be made in real estate. Are you an agent? real estate agents are straight scumbags.

    • Reply
      Functioning Brain 1 week ago

      LOL you really drank the Lib DOWN WITH THE DEMON SMALL BUSINESS TAX CHEATS koolaid earlier this year didn’t yah?

      • Reply
        Professor of real estate 1 week ago

        Fool! You have a reading comprehension problem. The long list of variables for real estate demand is well known. I provide the ‘undeclared income’ as a major part of the equation that is overlooked. how many folks own $1M+ homes but earn under $80K/year? Fool! I guess you are the backbone that pays taxes with your weak entry level salary that keep the engine greased while the ‘undeclared income’ folks buy up everything.

        • Reply
          Functioning Brain 1 week ago

          Nope, I am a dreaded tax evading DEMON of a small business owner…living in my now 845K home in Mississauga that was purchased in 2011 for 320K….FOOL! Lol….you remind me of the 90s, #troll

          • professor of real estate 1 week ago

            845K house in Mississauga? You are not worthy of my comments. You are a crappy business owner then. take home is $90K? Dude you are in the minor leagues.

        • Reply
          Functioning Brain 1 week ago

          REPLY
          Functioning Brain
          1 MIN AGO
          My company grosses about 280K a year, after employees (not family) warehousing, margin, advertising, consignment, procurement, operations and legit write offs (I don’t income split) I declare and am taxed on my 90K. Not sure what people think constitutes small business but we aren’t all making 500K a year and what your company grosses and you net after operations are two very very very different stories!

          • bluetheimpala 1 week ago

            Don’t feed the trolls

          • Functioning Brain 1 week ago

            No 90K is MY BEFORE TAX I make even less than that! Also when I bought my house it was in the LOW 300’s 5 years ago!!! and at peak bit about 1 mil and now down to 845K less than a year later!!!…yes I am a SMALL business owner. What you are talking about is NOT small business, and hold your panties my husdand owns a contracting company!!!

            Let me know when you need me to drop you off in a Toronto “no-such-thing-as-a-ghetto” for the week, I can drive you in my tripped out mom suv!!!

      • Reply
        Justin Thyme 1 week ago

        Don’t feed the trolls.

    • Reply
      Jones sacks 1 week ago

      I personally know at least half a dozen contractors who do this. They are immmigrants who know only one investment opprotunity: purchasing property.

      They have been riding the boom.

      Indeed, they declare a very low income while in reality making more than double.

      • Reply
        Functioning Brain 1 week ago

        My company grosses about 280K a year, after employees (not family) warehousing, margin, advertising, consignment, procurement, operations and legit write offs (I don’t income split) I declare and am taxed on my 90K. Not sure what people think constitutes small business but we aren’t all making 500K a year and what your company grosses and you net after operations are two very very very different stories!

    • Reply
      bluetheimpala 1 week ago

      Easy there puddin’, deep breath…it’s going to be ok. You understand that the goal of having undeclared income is to…not declare the income. Some home reno guy isn’t creating shell companies to wash the funds and once he puts it into the palace the clock starts ticking for an audit that will push his shit in like a 25-Lifer all hot an bothered after some toilet hooch.

      So what’s your point…that in the next 5-10 year everything is going to come crashing down after ‘Joe McHandyMan’ gets audited and loses his $2M house.

      80% of the people you know are self employed pieces of shit who don’t feel the need to contribute to society…hmmm, well the friends you keep right?

      • Reply
        professor of real estate 1 week ago

        hard working Canadians. better than the 100% pieces of shit friends that I am sure you keep.
        you guys are just missing the point. the point is there is a lot of undeclared income that is being used for speculation and also to purchase homes. This undeclared income does not make it into any government housing models. These folks put down huge sums of money as down payments.

        • Reply
          Condox 1 week ago

          You’re missing the point. We don’t believe anything you say… so go away.

        • Reply
          Tommy 1 week ago

          The Prof is right and you guys are too blinded by emotion to listen.

    • Reply
      vnm 1 week ago

      Not hard to believe that 80% of the people you know are shysters.
      So Toronto has a monopoly on undeclared income,
      Quite the insight.
      I’d keep that under your hat. You wouldn’t want to corrupt all those
      innocent New Yorkers who would blanche at the very thought.

      • Reply
        professor of real estate 1 week ago

        who do you hang out with bro? I know – guys who don’t know shit about real estate or making money. Call me when you need a loan. Make sure you don’t fill out the application in crayon Fredo.

        • Reply
          vnm 1 week ago

          Thanks for the tip about the crayon. I continue to learn from your mistakes.

        • Reply
          Condox 1 week ago

          Do all your millionaire sophisticated real estate friends who are the coolest people in the world to hang out with because they hang out with you call each other “bro”, bro?

          • professor of real estate 1 week ago

            Let me make it clear mr. scumbag real estate agent. No one wants your tainted opinion or advice. keep mailing out those flyers with that huge creepy grin to get clients. When you put yourself in a position where you earned money from clean work then come and chat with me not off the backs of ‘clients’. Loser agent. Foff

  • Reply
    RM 1 week ago

    My opinions tend to side with those who are commenting here daily but I’ll suspend my disbelief at some of the counter arguments for just a moment.

    I’m born and raised in Toronto and have grown up around tons of European families running cash deals – perhaps not the high-level scandal that’s been implied here – but even still I don’t see how this could account for hundreds of millions of dollars. The vast majority of people that I meet are salaried, earning approximately the national average. Further to that, making undeclared cash-money is not a new phenomenon. How can that possibly explain a surge in pricing in the last 5-10 years? I’m not looking to be slanderous here but I don’t see how the numbers could work and to completely dismiss the highly documented increase in household debt, the lack of growth in wages and ultra low interest rates is just a poor counter-argument.

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