are we going to follow the US RE trending in toronto

[Rocky]

Well so US RE market is really busted, my cousin lives in florida and has been told by the bank that his house which was initially worth 300 K is not even worth 70k as of today. Does anyone think we will be following the same pattern here in Toronto !!!

Lets assume for a minute if that happens...what would happen in such a case where the builders are selling pre-con condos. Assuming this happens in 2011, what happens in such a case to the condos that are due for occupancy in 2012 ? Money being hold by the trust for example, would the buyers be able to bail out and get their deposits back ?? just wondering what would be the worst case scenario should TO RE follow US RE

 

[Eug]

Does anyone think we will be following the same pattern here in Toronto !!!

No. You may see some drops, but it's extremely unlikely we'll see anything comparable.

What you're seeing in Florida is foreclosure pricing, not real pricing for most areas. And home prices in the US have finally started to rise this year.

 

[cdr108]

while i think there will be some adjustments for Toronto and Canada, i do not think it would be anything as dramatic as the example you provided.

and as eug stated, the valuation is probably foreclosure pricing ... meaning that most recent sale is your closest comparable.

 

[Shtopor]

Europe( Eastern and Western ) and USA had seen RE prices fall. "Recesion over"
declared by pocket MSM doesn't sound convincing . Wait till those who were on EI will start listing their houses . They will not have a luxury of waiting till spring like was the case last year. Once those who makes laws dump their RE and raise taxes watch out below.

 

[MAU]

It won't be nearly as bad as the US. That doesn't mean it won't be painful. There's a long way to go before Toronto house prices are more in line with incomes and rents. The increased unemployment hasn't hit the market yet either. (It will). Many of today's first home buyers will lose the equity in their house/condo, or end up underwater.

 

[Seesus]

Many of today's first home buyers will lose the equity in their house/condo, or end up underwater.

Cofident specualtion indeed, however i was thinking why are majority of these folks going nuts on buying these condos if that would be the case, Also was wondering - if a builder sells a condo in a pre construction sale to be occupied 4 years form now for instance while the money if held with the trust and the price slides !! what happens to the deposits !? is the buyer chained to buy it on the earlier agreed price, I really think Condos in tornoto particualry the brand new ones are overly priced still (have been since the last 7 years and things dont seem to change shortly even though all have been hearing about correction to happen, yet nohting has been seen though ! just wondering if the new condo prices will may be drop in the next 4 years !!

 

[MAU]

There's no real mystery about it. Interest rates will be heading up in the next two years. Mortgage payments will increase (by around 10% for each 1% interest rate hike). There will be much less competition, especially from first home buyers. Home prices will fall.

 

[simuls]

I can't see there being much of a price correction for houses in Toronto, there's simply no room to build more and the demand is always increasing. As for condo's it really depends on how the rental market absorbs the 1000's of new condo's that will enter the market between 2010/11. Because there is no new rental being made, if it's absorbed - as so far it totally has been - then there won't be a drop in price.

I think some people forget that there already has been a price correction in both the resale and new market for condos. Almost all these resale condo's that have been sold over the past 4 months have been at a reduced price (-5-10% from top price). Also, in the new condo market - tons of incentives and much more flexible downpayments and pricing structures have helped it limp back to life (it's still down 40% compared to 2008). At this point I would expect to see - at most - a 15% correction - completely dependent on neighbourhood. Some on the outer limits of Toronto will see a larger drop, while downtown might escape the full brunt. It really is a just an educated guessing game.

 

[TrickyRicky]

I'm not entirely comfortable with the idea of classifying this type of thing as good or bad, "it won't be as bad here in Toronto etc.". The market here has been subject to the same macro economic factors as all other markets in the world. These factors are at present and will continue in the future to impact the Toronto market. The notion of "bad or good" or "better or worse" tend to imply a boosting of ego, they are bad, we are good, we are better they are worse. However, consider that how this impacts people is entirely individual and we cannot predict the long-term implications of present conditions. For instnace it may end up better in the long run for many people to experience an imploded market that recovers quickly over a market that stagnates for a long duration.

 

[vultur09]

I can't see there being much of a price correction for houses in Toronto, there's simply no room to build more and the demand is always increasing. As for condo's it really depends on how the rental market absorbs the 1000's of new condo's that will enter the market between 2010/11. Because there is no new rental being made, if it's absorbed - as so far it totally has been - then there won't be a drop in price.

Manhattan is an island and prices are imploding from the financial wreckage.
NYC outer boroughs are fully built out (400 year old city) and single family housing prices are imploding
London is incredibly dense and prices are imploding from the financial wreckage.

The point is that local economic conditions determine real estate prices. If Toronto continues to experience alarming drops in employment no housing sector- single family, townhouse, condo, co-op- is immune.

It really is a just an educated guessing game.

I agree. My guess is that the median price drops back to wherever it was around 2005 in the next couple years. There is no justification for the spring turnaround aside from cheap and loose credit.

 

[jacek.mazurek]

Prices

Hello,

This is a dilemna many face. You can jump in now and lock in at a fabulous interest rate for 3 or 5 years or you can wait. I think prices are likely to come down a bit but not large. I think the prices will come down when interest rates go up, which will happen, however, the government will fight as they want housing to keep strong, as it lifts the economy in so many ways.
Some people mentioned NYC and London, and how prices have adjusted. I agree that they have imploded, but keep in mind that the banks and economies there were stricltly financial industry driven, so when the banks, brokerages etc went down, a lot of high paying jobs were lost and there went the real estate. Along with that, the prices there were highly overpriced as is, which was not the case in Toronto. Toronto being one of the larger North American cities, has always been behind price wise and they have only caught up now.
I have seen many wait, only to end up chasing the market. I think there are some great deals out there now and with great interest rates, I would jump in now, rather than hope for a massive correction, which is not likely to happen. Think of all the poplulation growth in Toronto and the GTA strictly from immigration alone. Along with that, as fuel prices go up, traffic being a pain, younger professionals out of school will choose to live in the city rather than commute from the burbs. I really think the market will remain relatively strong and you will not get the correction you are hoping for.

Jack

 

[urbandreamer]

^Although if the next 20 years prove to be the years of the hybrid vehicle, fuel prices could be meaningless, thus increasing the appeal of the 'burbs to future young couples....

 

[AKS]

^Although if the next 20 years prove to be the years of the hybrid vehicle, fuel prices could be meaningless, thus increasing the appeal of the 'burbs to future young couples....

That's if you don't value your time and don't mind being stuck in traffic. You would also have to drive everywhere due to sprawl. In the downtown area, it's just a few minutes walking distance.

 

[Eug]

I agree. My guess is that the median price drops back to wherever it was around 2005 in the next couple years. There is no justification for the spring turnaround aside from cheap and loose credit.

Heh, I've been saying the same thing since 2007 - price drops to 2005 levels. It's now 2009 and it still hasn't happened. I guess I need a new crystal ball.

Give it another year, and maybe it will happen... but then again there might not be a need. With markets improving, a normalization to a reasonable price curve could even be achieved simply by pricing remaining stagnant (or dropping just mildly). That's the optimistic view of things though.

That's if you don't value your time and don't mind being stuck in traffic. You would also have to drive everywhere due to sprawl. In the downtown area, it's just a few minutes walking distance.

I have to admit, I lived downtown, and still drove everywhere. Yes, bad, but nonetheless it's hard to give up the car once you're already used to it.

Well, not everywhere, but if it was more than a few km, I wouldn't usually walk it unless I had a lot of time. I'd either drive, or sometimes I'd take the streetcar. And the way the core of Toronto is setup, a lot of stuff is "more than a few km" from other stuff in the city.

However, when I moved out of downtown, my criterion for the move was less than 30 minutes to work. More than that I'd probably hate living so far away.

 

[AKS]

I don't mind walking a few km. I used to take public transit before I moved down, but now I just walk. If it's within 30-40 min walk, I think it's reasonable? Well, I guess living near the entertainment district, things seem close by. Sobey is downstairs. There's starbucks and tim horton everywhere. There's SDM, baskin robbins, LCBO, pizza stores, etc all nearby. There's restaurants, pubs and theatres nearby as well. The only problem I have is finding cheap grocery stores close by. There's no no frills, superstore, walmart, zellers or price chopper nearby. Closest cheap grocery is china town.