A rental crunch on the horizon

[cabbagetowner]

If condos are a nice place to live in, then there should be demand (in a neutral market), meaning there's always support, meaning price still go up in the long-term. Plus I don't think anyone buys anything to get "rich". For the average investor in anything (equity markets, RE, etc.), does anyone really buy to get rich? They're just looking to make a profit. Alternatively speaking, can you name investment that can get you "rich"?

my point is that condos are not for suitable for investment. "nice to live" does not mean "good investment".

if you're investing for another reason other than to make money...then i really don't know what to tell you.

re: alternative investments...if i knew i would be writing this as i sit on a beach instead of at my office worrying about my portfolio and job security.

 

[TrickyRicky]

The anecdotal evidence I have seen is that while condos can be excellent investments to reep short-term capital gains they do not hold up well as long-term investments. The worth of a house, even if not kept up well, will tend to at least keep pace with inflation. The same can not be said in general for condos.

 

[cabbagetowner]

real estate investing is a business about income not capital appreciation. it's pretty easy once you figure that out.

 

[Roy G Biv]

real estate investing is a business about income not capital appreciation. it's pretty easy once you figure that out.

Not if you sold before August....

 

[cdr108]

Not if you sold before August....

But that wasn't RE investing - it was RE speculating for capital appreciation.

I'll be glad when this RE cycle settles back down because only then will housing be affordable to the vast majority of the population without having to be indebted for 40 years or settle for a run down shack for $300K.

 

[carturo15]

real estate investing is a business about income not capital appreciation. it's pretty easy once you figure that out.

Real estate investing is a combination of both Income and capital appreciation. Capital appreciation does not mean speculation. If you are investing in a big city with strong economy and income, you are not speculating if you expect capital appreciation, that is totally normal. When Donald Trump bought his first building in the financial district in Manhatan, he was expecting income but he was also expecting capital appreciation, he knew the building was located in an excellent location and nobody believed him, well, he bought the building for $1M and the building today worth $400M.

Sometimes people forget that Toronto is the financial center of Canada and you cannot expect to find cheap housing in this city. If you check the Real estate situation in USA, you will find that the big cities where the most important financial centers are located have been the less affected by the crisis, i.e. manhatan or downtown Chicago. You can never compare Toronto to for instance Miami where there is nothing rather than tourism.

I do not see prices going further down in Toronto, if you want to live in this city you have to pay a premium, that is natural.

I am not speculating if I buy a property right in the financial district of Toronto, it's totally normal that capital appreciation is expected for many reasons

I do not understand why so many people in this forum is so frustated with capital appreciation in Toronto, that is normal and there is nothing wrong with real estate investing expecting both income and appreciation.

 

[DarnDirtyApe]

Some people also forget that unlike some other financial centres and major world cities with high real estate prices, Toronto is located on a vast area of nearly flat land with no significant natural boundaries (like say, being on an island like Manhattan). It also has a laissez-faire approach to high-rise development, relatively little historical building stock preventing redevelopment, and is surrounded by acre upon acre of sprawling suburbs.

To top it off, condos as currently constructed tend to be depreciating assets, as maintenance costs grow over time to cover the cost of facade rehabilitation, roof replacement, etc.

 

[jn_12]

I'm not sure where you can get 1 bedroom for $900, 1 + 1 for $1200; however, that makes a strong argument for renting!

Much cheaper than buying 700 SF 1 bedroom + 1 with parking, which costs about $350K = at least $2300/m to carry for mortgage (with 20% deposit), maintenance fees, property taxes, etc .

my place is on the harbourfront and we pay 1250/m for 1+1. Includes a gym and some other frills. Parking is only like $100/m extra. So these types of prices are certainly realistic

 

[cabbagetowner]

Real estate investing is a combination of both Income and capital appreciation...

try to think of the cap appreciation as the cream. if you buy on income, you'll be able to sleep better in these markets. it's going to be difficult to have any cap apprec. in the next couple of years.

 

[cdr108]

my place is on the harbourfront and we pay 1250/m for 1+1. Includes a gym and some other frills. Parking is only like $100/m extra. So these types of prices are certainly realistic

How big is your unit? Where on the harbourfront?
In cases like yours, then it's definitely much cheaper to rent than buy with still inflated RE prices.

When I hear 1+1, I think of at least 650 SF.
At current market rents ($2.25 PSF/m), that would be $1450+ /m.