There’s a lot less pressure on prices in Canada’s largest real estate markets. Canadian Real Estate Association (CREA) numbers show that 60% of markets saw declines in sales-to-new listings ratios. The ratio, which is used as a relative measure of demand, is declining in the country’s most expensive markets. Meanwhile, markets that underperformed the national average, are starting to see (minor) improvements.
Sales-To-New Listings As A Measure of Demand
The sales-to-new listings ratio is one of the methods used to determine if it’s a buyer’s or seller’s market. The closer the ratio is to 50%, the closer it is to balanced. A higher ratio means the market is moving into seller’s territory, which allows sellers to ask for more. A lower ratio means the market is in buyer’s territory. This means buyers can typically demand lower prices, or more concessions from the seller. There’s a few notes to keep in mind when using this indicator.
Real estate functions on a relative basis. A quick change in the ratio, may result in an over reaction. For example, the ratio declining quickly from the seller’s territory, might result in a decline of prices. This can happen, even if the ratio is still deep into seller’s territory. A quickly rising ratio might cause a panicked buyer to pay a substantial premium. This can be true even if the ratio is still in buyer’s territory. The ratio is important, but the speed of change is often more important. Now here’s the fastest moving markets across Canada.
Largest Changes To Sales-To-New Listings Ratio
The largest increase in sales-to-new listings ratios were in Ottawa, Montreal, and Gatineau. Ottawa saw the ratio climb to 65.5%, a 12.10% increase compared to last year. Montreal followed with a ratio of 64.5%, a 7.8% increase compared to last year. Gatineau came in third with a ratio of 53%, a 7% increase from last year. Worth mentioning that these markets all underperformed the national price average last year.
Source: CREA. Better Dwelling.
The largest declines in sales-to-new listings ratio were in Greater Toronto, Hamilton, and Niagara. Greater Toronto’s ratio reached 49.3%, a 26.2% decline from last year – the largest of any urban centre. Hamilton’s ratio reached 64.3%, a 21.3% decline. Niagara came in third, with a ratio of 68%, a 19.7% decline. Worth remembering that all three of these urban centres are in the same economic region. Look out for a broader impact to these local economies.
Source: CREA. Better Dwelling.
Almost all major Canadian cities were “seller’s markets” despite talk of sales cooling nationally. If you are from Toronto you might have overheard concerns about the real estate market crashing, however it’s actually technically “balanced” at the moment. Which begs the question, if people are panicked about this balanced market what will it be like in a correction or crash?
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Housing market in the Greater Toronto Area – Where are home prices headed?
David Rosenberg: I think the big risk is going to be demand erosion…When I was talking about this, when I was at Merrill, in the last cycle, I just reverted to Bob Farrell’s rule No. 1 which is that markets and ratios revert to the mean over time. Home price-to-rent ratios and I’ve looked at housing valuation-to-income ratios, those charts don’t look like they’ve really mean reverted just yet.”
I don’t think all that many people want a home price crash. If you do, you have no idea what the consequences are for the broader economy. Chances are, if there’s a crash, those that can’t actually afford to buy into this market will likely face economic hardships that would prevent them from buying anyway.
However, it’s ridiculous to think that Toronto can rise 30%, then just stagnate for a few months as a “downturn.” A negative cycle needs to follow something as large as last year’s climb. If it doesn’t, inflation will kill gains.
This is well documented by US Federal Reserve researchers. During the 2006 peak, those with massive asset gains had to start extracting home equity in order to pay for regular consumption. The increase to prices in surrounding areas, as a result of being in the middle of expensive real estate, essentially killed the gains they experienced in wealth.
Excellent point Jim. It’s not in anyone’s interest for prices to crash – we’ll all feel the pinch/shockwave across the larger market, regardless of whether we own in Toronto or not. A gradual price correction or soft-landing is the best case scenario.
A gradual price correction or soft-landing is the best case scenario.
And impossible. The opportunity for a gradual correction was in 2009. Instead we blew another 9 years’ worth of air into the bubble, crowning it with a blow-off top in 2017. There will be nothing gradual or painless about this correction, whatever we might wish for.
Based on what I’m observing with my dumbed down realtor.ca tracking I have a bad feeling we may be facing a crash in some markets. Not all mind you but Brampton could be burning within 3-6 months. There are so many units in the $800K-$1.2M range that are complete shite and are sitting, and sitting and sitting. I mean a cookie cutter house with parquet flooring, flower wallpaper trims, laminate counters, white tiles all over the place, disgusting kitchens basically 90s time machines. Same with Milton and Orangeville. Vaughn, as some have noted seems to be going straight down the toilet. What isn’t stagnant are the listing which keeps rising. there are pricing disparities in these markets that suggest some RE agents have no idea where the market is headed. Some number jockeys are locked in 2016/2017 while others are ‘trying’ to price based on the current market but are still 10-20% too high, some are 30% in my humble opinion. We’ll see what happens. Tick tock.
A balanced market is the lowest you can hope for in a city like Toronto. Major city’s don’t go into buyers markets, because stagnated growth usually leads to a flock of buyers. Prices on detached units may go down, but we won’t see buying decline even further, especially with employment as high as it is.
Thank you for your in-depth analysis, it puts those data geeks to shame.
I’ll take balanced. You know… balanced on the basis of the price to household income fundamentals. It will be a long road from here before we get there. Not sure if the new breed of proud landlords and real estate visionaries will enjoy the journey but we will get there.
It will keep going down I will not be surprised it fall by another 20 percent end of the year. York, Vaughn or Mississauga things are even worse. I know a flipper in Richmond lost 300k in a year.
Agreed. If that happened we’d be in a crash and I get the impression we may not get the soft landing I was hoping for. Something strange is going on and I need to see how Q2 plays out.
I don’t see a crash in the core. However, I think we will see pretty substantial declines in the burbs. My cousin’s house in East Gwillembury required 80k cash upon closing their mortgage to recapitalize the house for price declines. This is just the start in the burbs. There’s no justification for paying 1M+ for homes in locations that are over 1 hr from the city.
Homes in downtown TO will be fine as there’s no room for new SFHs. Condos will continue to be built at breakneck speeds. We’ll see how we consume that supply.
I’m eagerly awaiting the summer figures. If they’re bad. Wooof!
Maybe. people were buying lots in the beaches/leslieville for $500-$750K, pure tear downs. East York has a lot of inventory that hasn’t been tapped as the market is older and more working class so they are holding on for dear life. Don’t forget the demographics and psychographics at play which are being underestimated, in my opinion.
Buyers market does not mean people are giving away houses like bags of oranges in Florida. It means the underlying populous can afford the properties under normal/sustainable market conditions. While there are pockets of appreciation overall housing is stable. Will entry to Toronto ever be $600k? No but at the moment it is close to $1M and higher in some pockets. If you need sub 3% lending, high dual income households and don’t have any money to save or invest, that isn’t healthy. If you think the market is even close to healthy I would be very cautious. Need to see how the next 4-12 monthsplay out.
Vancouver is still at 65, after getting hit repeatedly by regulations. People in Vancouver citing Toronto as an example of a crash are wrong, it’s a completely different place. Just look at a photo of Toronto vs Vancouver. Toronto has plenty of room to develop density. In Vancouver, we don’t.
Vancouver will be worst effected then any where else. With median income one of the lowest in the country Vancouver detached price should be 300k not 1.5 mil…I will love to see that happen which will.
Good luck!
Yes sure buying 500 square feet for 700k cause of good scenery in Vancouver. With Chinese money drying out…new 20 percent tax…another new tax for vacancy…b20…interest rate and Vancouver don’t have a good job market average salary is even lower then Toronto…this correction will hit hard both Toronto and Vancouver like or not..My family been professional land lord in these two city for many years and now you can’t even make any investment cause you can’t recover cost from rent….unless you put 40 or even 50 percent down…this all happen because ametures are getting in to market to make quick money and flipping…
“now you can’t even make any investment cause you can’t recover cost from rent”
That is a surprise at price to income ratios over 35? And who said Vancouver detached prices were $1,500,000. I haven’t seen one of those in many years.
Agreed. This started in BC and will end there. I think the province could completely burn once all of the bad/grey/illegal money is flushed out. there is so much and the tentacles are far reaching that even politicians may try to intervene to prop it up as the fallout could be epic. That’s when we’ll know it is really bad when the local councillors and even provincial politicians attempt to intervene, even more than they already have!
Not to mention the scenery in Vancouver is much more attractive than in Toronto. It’s amazing how being able to see a piece of the lake or the 40+ year old CN Tower constitute a good view and generate price premiums for Downtown Toronto condos.
The new OFSI rules have shifted buyers to lower price points and that has made the sub-$1MM central Toronto market feel more and more similar to last year, just on a smaller scale.
It will look negative in Toronto compared to last year until about June, since we are comparing to an insane record Q1 and Q2. The reality is that some neighbourhoods are rebounding while others are not. Hence the averages for the Greater Toronto Area are not painting an accurate picture of what is really happening on a more specific neighbourhood level. Those hoping to score good deals on prime properties in demand neighbourhoods will be sorely disappointed.
Al, pure drivel. If anything June and Q3 will highlight how bad it is.The money train is over and rates will continue up. Most mortgages will be rolling over in the next 4-16 months. Credit lines are variable so the pain is getting worse. You and I both know once the media latched onto this, say post election when the news cycle needs a refresh, buyer psychology will hit the toilet and it will be a race to the bottom for those who are overleveraged or don’t want to wait 10+ years to recoup their equity. Look at the demo for Ontario, tell a 65 year old they need to be in their 70s before they can sell. Don’t live in the darkness. Tick tock.
I’m honestly not clear on what you are referring to as drivel. I am stating a fact about how macro stats are not representative of all neighbourhoods. Talk to a wide variety of buyers and hear what they are experiencing out there. Depending on where they are looking to buy, their story will vary.
Also true is that OFSI rules pushed buyers to lower price points, so there is more pressure via competition in combination with a lack of “quality” listings. Last year, nearly any piece of crap would sell. It left me and many of my colleagues scratching our heads as to why someone would buy that place, let alone at the price it sold for.
Why? There was a prolonged lack of inventory and definitely some FOMO factored in there, which took root in mid-2016. Now that buyers have more choice, they are more selective and there is a separation of wheat from the chaff. The better properties get bidding wars, while others languish on the market and drop in price.
About mortgages rolling over, there seems to be less concern about where rates are headed now that the BoC has issued a more cautionary outlook for the time being. As with OFSI and all of the other things thrown at us over the past 10 years (Toronto Land Transfer Tax, HST vs GST on new condos, the “Great Recession” and several new mortgage rules), there is one thing that I have seen over and over: people have adapted to those changes relatively quickly following a hiatus in activity. The current hiatus will linger longer in the ‘burbs, but it is pretty much over in the central Toronto.
The media toys with buyer psychology, yet many of these buyers have become numb to the media for being wrong so many times. I recall an April 2001 article stating Toronto being in a real estate bubble poised to burst. This was when I began looking at buying my first condo. I decided to wait and realized in 2003 that the media was wrong for the past 2 years. Imagine sitting out all this time waiting for that correction?
The key thing to understand is that real estate is not best measured in months or even a year. Real estate trends take 6-8 quarters to solidly establish. Anyone expecting to turn a short-term profit in real estate should check those expectations. It was always meant to be a longer-term investment. Comparing 2018 to 2017 is going to look negative one way or another (either sales volume, sold to listings ratio, or even price in some areas). This info will be spun in a negative way because it sensationalizes a story. The reality is that the market is already rebounding in Central Toronto. Will it have the same effect in the ‘burbs? Time will tell.
I FEEL (note, it is via my observations of market data) that the correction to right the rampant price growth of Jan to May 2017 has largely happened last June through to December. Barring any new mortgage rules or government intervention, the market in Toronto (ex-suburbs) is balanced (macro) with a seller’s market in blue chip areas (micro).
So it turns out not the entire Toronto was built on ItAlwaysGoesUp™ land… that’s quite a change of tune. What a difference one year makes. It’s even hard to imagine what discoveries will be made a year from now…
BTW, I can’t help but feel sorry for people who may end up footing the bill because their RE agent FEELS a certain way.
I agree that the media toys with buyer psychology. This time last year there were so many articles about how if you didnt buy a single dettached home then you never would be able to….. Don’t worry we are not in a bubble….. prices could never correct unless interest rates go up, demand and economy is too strong.
Even today, an article with a headline implying bad news will be offset by only quoting RE players that continue to imply that you should buy right now…….. This is the bottom…. last year was too crazy….. yada yada yada….
The thing I find hilarious about today’s spin which you just mimicked perfectly is ” The gains we were seeing at the end of 2016 and early 2017 were completely unsustainable… we were worried about the buyers committing themselves to such large mortgages…… obviously this couldn’t last and its actually a good thing that things have balanced out….. now we can have healthy growth again. As long as there are no further regulatory changes we are good to go.
While I agree with some of that narrative above – growth was unsustainable…….. People who believe that full narrative forget that all of those gains were happening before any rule changes took effect……. Therefor should we not have seen the same correction even if interest rates had not started to go up, as well as B-20 and fair housing plan not been implemented? IE if today’s price would have been the fair price last year prior to any of those changes……. Then shouldn’t the fair price now be lower due to them?
Al, you’v been on this block for a few months. Each month you come in here with some long winded post that is almost entirely conjecture though I will give you credit for busting out some actual data/facts here or there, though they are rebutted quite quickly by the community. Each month you find another spin in the face of reality; there is no more money. That’s it. It is that simple. To suggest the prices in 2016 or 2017 were ever ‘balanced’ is completely naive as market was a fugazi. And I find your comment ‘talk to buyers’ laughable; yes, the sheep’s heading to slaughter will tell each other anything to make them feel better about the situation. Agents like you make me sick; you are intelligent enough to persuade your clients to make bad decisions and then shrug when they’re fucked 6 months later…if there is a crash your entire industry will be under fire and that will be a second blood-letting. Tick tock my friend.
Blue, as much as I would love for your predictions to materialize, I have witnessed myself just in the past month shitty houses in Toronto downtown core being sold on average $100K over asking prices that were in line with last spring’s prices. Those were the rare houses in the affordable price range of $600K-$800K. There are very few of them on the market and it seems like people are prepare to grab whatever is available. I wish the “downturn” and “correction” translated to that segment of the market, but it seems that prices for it are actually higher than a year ago.
The downtown core is your last refuge like Hitler in his bunker in Berlin having given back all of GTA (Europe) but still putting our propaganda.
Sales are going to be 6950 ish this month!
Since last June sales on are on pace for 79,000 sales over a 12 month period.
Message to the propaganda RE agents it’s over…..
Dennis, I’m not a real estate agent and I am not putting out propaganda. I am a regular person waiting for an opportunity to buy in Toronto, not GTA. If you look at the sold prices on the housesigma website for the past several months, you will see that properties are being sold on average $100K over asking. I have made the conclusion for myself that when I’m looking at properties for sale in Toronto, I should be adding $100K to the asking price. I would love to see that change, but I’m getting automatic emails from my RE with properties within my price range only once every other week. I don’t see that there is much out there in the affordable price range, and literally every piece of garbage that comes on the market gets a bidding war. Look at that house of horrors at Rebecca street – it was all over the news for the unreasonable asking price. Well, someone actually bought it for $675K.
These are just my layman observations. Please let me know if you think there is light at the end of the tunnel.
Where are you getting 100K over asking narrative?
https://www.theglobeandmail.com/real-estate/toronto/toronto-row-house-famed-for-its-run-down-condition-sells/article38285424/
“.. 15 Rebecca St. in the downtown Trinity-Bellwoods neighbourhood sold for $675,000, after it had been on the market for more than 100 days.”
“Real estate agent Al Sinclair of Re/Max Hallmark Realty Ltd., initially said the sellers – family members of the late owner – were hoping for a bidding war to net close to $900,000. But not enough bids materialized when it was listed for $679,000 in the fall. The house was relisted in January for $749,000.”
Recap:
They listed for $679,000 hoping for $900,000
When that failed they listed for $749,000 and sold for $675,000. All this took 100 days?
$900,000
-675,000
= -225,000.
P.S. $25,000 will make the place look real good.
$5,000 new kitchen from Kijiji out of a tear down, flooring, paint.
The $100K over asking is my observation.
I actually went to see the Rebecca st place and spoke with the agent. He characterized the seller as a completely insane person who would never get the asking price. There were a lot of people waiting for the seller to get back to his senses and lower the asking price, but someone crazy actually did pay that much for it.
That place cannot be just painted. It has to be gutted and it does not look structurally sound. There’s brick falling out of its walls. And it’s attached on both sides to other row houses. Let alone that it’s the size of a one bedroom condo. It is not worth $675K to any right minded person.
I write a lot when I do post content because I have a very good understanding of the market and try to share what I am seeing happening out there with the community here. I am trying to be helpful to the community in sharing my observations. If you don’t want to believe it, that’s fine by me. I’m always happy to have a civil and respectful dialogue. I’m not here to get into battles of words with members of the community who have wildly differing opinions.
We are all essentially anonymous (less myself than most, since I openly state I am a Realtor and use my real name) in that we are here on the Internet instead of talking face-to-face. We don’t know each other personally or each others’ experiences with real estate and that will shape our opinions differently.
I pride myself on being completely honest and ethical when it comes to the advice I give my clients. I was once a buyer before becoming a Realtor. So I do take offense when someone who doesn’t know me tries to negatively paint me as being otherwise. I explain what the risks are and what kinds of properties I think are worth buying and which ones to avoid.
If I, or anyone else in the world, knew exactly what the future holds for real estate, that person would be rich in timing the market. The same goes for stocks. If one continuously lives in fear a RE or stock market and stands on the sidelines forever, then forget even trying to create future wealth for yourself. That fear will keep you on the sidelines worried about “what if?”. I have invested in both RE and stocks to maintain diversity, yet I wish it was all in real estate in retrospect.
Contrary to what some may believe, Realtors are not evil people set on inflating RE markets. Sure, a seller’s market is great when you are on the listing side. It sucks big time when you are on the buyer side, which is the role Realtors take on more frequently due to the volume of buyers to listings. We WANT to do 1-on-1 negotiations instead of repeatedly making offers and trying to guess what the highest bid will be. We want a balanced market. which our industry has been expecting a soft landing for over 10 years now! I want more people to enjoy the same pride of ownership I felt when I bought and moved into my first home. It makes me sick to my stomach when I see an overinflated sale result, because now it helps set the precedent for the next sale in that area and sellers naturally want to match or beat the last sale, irregardless of what the reality is.
Sorry for my longer than expected post. I had to get this off my chest.
Let’s keep it civil and respectful on these forums.
There is so much bad money in BC. This started there and will end there. They don’t have a handle on any of the grey money. It is a joke.
“This time is different”
– Canadian Realtors
Yu, first of all I’m not sure which statistics this article is using. If we take Zolo’s statistics they report 715 sales and 1,292 new listings for the last 28 days in Vancouver which represent 55 Sales-to-Listings ratio instead of 65.
Official numbers will be out soon and we should be able to compare.
However speaking about Vancouver it’s more interesting to look at months of inventory which is currently about 4 (Toronto has 2 just to compare) and it’s increasing so Vancouver is in much worse shape than Toronto.
Additional regulation is coming to Vancouver soon which will put additional downward pressure on prices.
The only thing Vancouver prices prove is how ridiculous and ugly the housing market can get when our children can’t even dream about having any piece of property in the city without any help from their parents.
I’m glad that government is determined to fix this issue along with central bank which keep raising rates. And there are already significant changes in both Toronto and Vancouver markets so it’s definitely worth waiting to see what will be the end result.
Additional regulation is coming to Vancouver soon …..
what do you mean by that?
Here are the highlights:
1.Tax speculators
2. Increase in foreign buyers tax
3. Increase in school tax rage for homes over $3Mil
4. Increase of the property transfer tax rate
5. Pre-sale condo assignment database
6. Beneficial ownership database
7. Property transfer tax assessment powers
It’s in in 2018 B.C. budget
https://betterdwelling.com/greater-toronto-real-estate-sees-largest-drop-in-demand-across-canada/?utm_source=Better+Dwelling+Website+Signup&utm_campaign=f315bf07bf-fras_jan_112018-3094981&utm_medium=email&utm_term=0_bde8feedee-f315bf07bf-309113997
Sorry, correct link:
http://www.blakesbusinessclass.com/2018-b-c-budget-real-property-implications/?utm_source=Mondaq&utm_medium=syndication&utm_campaign=View-Original
Sales to new listings is just one measure to track a market Yu. Have a look at sales to active listings in Vancouver. You will see that although the sales to new listings have been doing well, the residual unsold listings in any given month have been building up a significant inventory of unsold resale inventory aka. “Active listings”. This is especially pronounced in the single family sector. The poster child for this phenomenon is the West Vancouver SF detached market, which has only seen 14 sales over the past 30 days vs. 435 homes for sale (31 months inventory).. in Vancouver proper, there was only 125 sales vs 1427 active listings (11.4 month inventory). Buyers market technically starts at 8.33 months inventory and gets worse for sellers as the number goes up. Easy to draw a conclusion there.
I’ve been tracking the Vancouver market in detail for quite a while and the single family sector has been in buyers market territory for well over a year in most GVRD communities.
What’s really been happening in Vancouver over that time is significant demand at “affordable” levels within the condo/th sectors, which has led to a run up in sales figures and price points in those sector. Sales results for condos/th have significantly masked the material glut in the detached segment, which the local realtor boards have been smart to emphasize over the weak detached space.
At the face of it based on sales to actives, Vancouver is seems significantly more likely to correct in the short term than Toronto. However, realtors in Ontario seem to enjoy “gaming” the stats by delisting/relisting, which is rare in the Vancouver market, so comparing the 2 markets is near impossible. Also buyers in Toronto are significantly more well informed than Vancouverites thanks to active and objective reporting by the media, which doesn’t exist in Vancouver- so there’s that .
Thanks for your insight!!! I would be curious to see where the “affordable” new condos/th are going with the current “norm” of 1 million for a shoebox…lots of new condo development in the next couple of years on the north shore and all are overpriced or presold to realtors and asian market
The Ottawa sales-to-listings ratio mirrors what I’m seeing on the ground. A FOR SALE sign can’t go up before it’s got a SOLD slapped on it. Pile of garbage condos, which have been unsellable for years, seem to be the hottest item. I assume (only an assumption) that most of those are being purchased by “investors”. Owning a rental in Ottawa has become in vogue. All the kids aspire to it now. Probably explains why rents have been more or less stagnant here, even while prices rise.
Ottawa has lot of new house in the pipeline…you can still buy brand new detached from minto for 400k at kanata or orleans…this is just a media hype and same tactic of scare people to buy as they did in Toronto for few years…some media at Ottawa are bragging they are becoming new Toronto so pathetic….
Yes, apparently specuvestors are descending on Ottawa now (they have been working media really hard lately). Personally I was told a couple of days ago about a middle-class guy from Toronto who just bought a house in Ottawa and went there for a week to rent it out. Hang on Ottawa, wealthy Torontonians are coming. It’s only natural, Ottawa is a world-class city where everyone wants to live now (Toronto is out of vogue apparently) and there is not enough land around it.
Is Canadian real estate the only market left where pump-and-dump is perfectly legal? Do we really need an event on the scale of Great Depression in order to fix it?
Exactly people in Ottawa are too happy to see Toronto investors coming and invest here…Ottawa citizen and Ottawa business journal now bragging there are bidding wars finally at Ottawa on weekly basis…they feel so proud it’s happening…like wtf…plus Ottawa and Gatineau Combine aka national capital region is 10 time bigger then city of toronto by land size…how come there are land shortage? What a joke…I meet this agent at Ottawa two months ago and he was trying to convince me Ottawa will be next Toronto and very few inventory better buy now.
There definitely are some Torontonians buying here – both investors and those who have cashed out of their GTA homes and moved here. Two new neighbours across the street from me are from Toronto.
However, you’re right about the realtor marketing propaganda being repeated uncritically in the media. One prominent realtor was quoted two weeks ago as saying “Half of my sales are from bidding wars now.” That’s total BS and the Citizen should have been ashamed to publish that quote. There are a handful of bidding wars in in-demand areas, but they are a mere fraction of total sales. “Half” my ass.
Yes, there is a trend towards more Toronto investors and buyers in Ottawa. No, it is not a stampede. Yes, the Ottawa market is screaming hot by Ottawa standards. No, we are not the next GTA circa March 2017. Yes, there is definitely increased inflow from Toronto. No, there are not ‘hordes” of Toronto buyers descending on the National Capital Region.
We’re basically getting a bump from Torontonians cashing out, Toronto specuvestors priced out of the GTA, and a free-spending Federal government on a hiring spree. This will pass.
This is all part of a larger global trend seen in major cities across the globe post 2008.
https://www.ft.com/content/cc77babe-2213-11e8-add1-0e8958b189ea?segmentid=acee4131-99c2-09d3-a635-873e61754ec6
So should we expect another global crash?
Here’s a link to the same article but not behind a paywall http://worldinstruggle.blogspot.ca/2018/03/financial-crash-made-our-cities.html?view=sidebar
And so you go from FOMO: Fear of Missing Out to Fear of Catching a Falling Knife
that is why i only buy in the core. great investments and good tenants. everywhere else will be corrected a bit. I doubt a crash maybe 10% correction, then stabilization (2 years) and then slow growth. I rent my units and there is incredible demand.
Yyz, that approach sounds very familiar yet it was specifically Toronto downtown core which plunged the most in 1989 and took almost 22 years to recover.
“Downtown of Toronto was hit the worst with over 50% decline in value of a home.”
Same prime location, same incredible demand. Here is a nice article if you interested in what happened then:
https://www.huffingtonpost.ca/stephen-punwasi/toronto-real-estate_b_15928606.html
I’m not saying similar crash is on horizon, just saying that if you think Toronto is safe, or downtown core is a different(better) market history shows that those perceptions are misleading and in fact downtown core was affected the most back then.
Will it be different this time? We’ll see.
Thanks for the link. The article is about entire city of Toronto not downtown core. I’ll take the risk. I have properties around the city and the downtown area is doing well for me. my downtown properties have incredible rental demand and appreciation. The suburbs still have lots of demand just lower prices for rents (my properties). I’m in it for long time so we will see.
May I ask if you have mortgage on all you properties and whether you calculated if you still have positive cash flow in case interest on all your mortgages hits 5%? This is an absolutely real scenario by the end of 2020 and I’m wondering if it’s still going to be profitable to have rental properties at that level of interest rates especially taking into account rent control in place.
ok. yes i have mortgages but they only account for about 10-30% of the value of the properties (ie. 70-90% equity). my properties are all detached houses with 2 or 3 units in them. I am cash flow positive because i have low mortgage and market rents. i invest in seaton village, christie pits and little italy area. i don’t go west of Ossington, east of spadina, north of dupont or south of college. That is my box of investments and they have gone up big time in value. i’m not planning to sell for a long time. i treat my tenants like family and we have good relationships. I could make more money but tenant stability is important to me. I can’t predict market but i think my area is good investment so far.
Take this person with a grain of salt. They claim millions in property value and put a 20% spread on their remaining balance? BS. GTFO.
Great Work.
Although your claim that a 50% SNLR is a balanced market is incorrect.
Did you know that an average of 13% of all residential resale listings on the MLS end up not selling the first time around in the GTA? The same properties are being re-listed several times over and over again which amounts to a skewed ratio. These relisted properties are being counted by TREB as a new listing. That’s why saying a 50% SNLR is a balanced market (while mathematically true) is technically impossible. Your 50% balanced market could only be a true balance if every single listing uploaded onto the MLS was sold or never relisted and if TREB stats didn’t count a relisted property as a new property listing.
Thanks for your reply. It doesn’t really answer my question but I’m glad you are doing great and you seem like a nice landlord. Good luck with your business.
Some Realtors say this, and it’s partially true. In reality, a property is rarely listed more than once per month. Yes, some of it might be carry over inventory from active listings, but that was factored into the use of SNLRs.
More clients are saying this, due to the lack of knowledge spewed from other Realtors. Precision isn’t necessary for a term that is broadly classified with a 20% margin of error.
If that’s the case, you might as well tell your client that there’s no way to tell if it’s a buyer or sellers market. Active listings are also manipulated by cancelled listings, and ask prices are also manipulated by under-pricing.
Hey everyone, no one trust a Realtor. None of the data they have is useful. It’s just a guessing game.
‘In both the stock market and the housing market, people have only the fuzziest idea what these investments are really worth, what their prices ought to be.
‘They may be able to judge whether one stock is overpriced relative to another, or whether one house is overpriced relative to another, but they just do not know how to judge the overall level of prices.
‘Much more salient in their minds is the rate of increase of the prices, something that they talk and hear about a lot in a time of rapid price change, and that has subtle effects on their demand for speculative assets.’ economist Robert J. Shiller.
Windfalls dwindle; they don’t last forever.
A recession looms…caused by addiction to household credit, rising interest rates and falling asset prices.