Baby, we got a bubble!?

[daveto]

It should have been obvious but since you're feigning ignorance... I'm not responding to a specific quote from 2010. I'm responding to the refrain by the sky-is-falling types in this thread over the years, a refrain you have repeated. You, like this misguided soul, were trying use the US as an example of what to expect for Toronto.

But then why did you refer to Las Vegas and Miami RE as proxies for the entire US RE market? I dunno - its almost as if you wanted to present a weak strawman argument that you could easily defeat (ie Toronto won't see 60% decreases a la Miami/Las Vegas).

I mean, I could understand if you said "hey, I took some poetic license, and of course I realize that you weren't comparing Toronto to specifically Las Vegas and Miami". But to my surprise, you've made no such acknowledgement.

In any event, if I understand you correctly (and please advise if I am mis-stating your position)

1-Las Vegas and Miami RE are suitable proxies for US RE

2-Canadian RE has nothing in common with the US RE.

3-In your personal experience, enduser purchasers of real estate are motivated exclusively by their intention to "consume" (ie live in), and their purchases are wholly unaffected by considerations of future price increases or decreases in the resale value of their property

Ah well, in this case, I guess we'll just agree to disagree.
signed
Dave, the misguided soul

 

[Eug]

Heh.

At first you asked me if given GUARANTEED knowledge of the future, people who recently purchased would have behaved differently. I responded that that's a completely meaningless question, because there are no guarantees in real estate prognostication, and that anyone who claims their real estate opinion is gospel is either a liar or a fool. Fortunately, it seems you've since backed off from such an odd question.

However, I also went on to say that people I knew that bought, carefully considered the pros and cons (including myself, who thought there could be a 5-15% Toronto pullback... from 2007 prices), but then decided to go ahead and buy because the pros outweighed the potential cons.

So now you're trying to falsely claim I'm saying people are exclusively motivated only by the desire for personal shelter and nothing else.

Sorry, but your attempt at misdirection again has fallen flat.

 

[interested]

^^^
Dave and Eug:

Just to put in some data about the Miami or close area. I can tell you that ocean front buildings (at least 1 that i know of) have experienced an approximate 15% increase in the past 3-4 months for comparable units. Product prices on the Ocean are going up rapidly and product is disappearing quickly.
The interesting point is the prime buyers are Canadians but many other nationalities. The locals are having difficulty getting financing and the foreigners consider the prices cheap. The foreigners are bidding up the local real estate.
I point this out as I believe somewhere either an article or perhaps it was one of your posts was suggesting that foreigners bidding up parts of TO was not reasonable and Canadians were angry. And yet, are we Canadians not doing the same (along with other foreigners) now in Miami and surrounding exactly the same way as foreigners are doing to us in TO because we Canadians and others feel the local real estate in and around Miami is now undervalued.
Please understand I am not saying Miami is TO. Not at all. I am just saying that Canadians and others are doing to local Americans here exactly what Canadians are complaining the foreign Chinese and other foreign buyers are doing to us in Toronto.

 

[MadMax]

^^ Interested I agree...from personal experience I know 3 buddies who have all purchased within the last 6 months in Florida. Two were inland but not that far from the beach, one in Sarasota and the other closer to Tampa. The third was closer to the water near Clearwater. The first two bought for 40k and 60k, one a house and the other a kind of typical townhouse complex a la "melrose place". The third closer to the beach was in better shape but not sure about the price. All three needed work done as the places needed updating and were sitting stagnant for a while. These properties were not bought simply as investments but were also bought with the intention of using the properties 2,3, 4 times a year for vacation. So Canadians are scooping up Florida real estate and the prices are still really cheap in certain parts. I'm sure Miami by the waterf has seen much more appreciation in pricing with the positive economic outlook and foreign investment certainly contributing factors.

 

[Eug]

I was in Miami a couple of years ago and was struck by just how "cheap" some of the neighbourhoods were, at least compared to Toronto. And I'm not talking about low end crap stuff, either. I was looking specifically at upscale but non-waterfront neighbourhoods where the upper middle class and lower end of the upper class live.

For a million bucks or so you could get a modern modern home in perfect condition on a very big lot, with an indoor pool, close to well-respected schools. Something like that would have been about three times the price in Toronto at the time. Think Leaside with a double-sized lot, 4000+ sq. ft. home, and indoor pool (not counted in the square footage).

Not sure about the waterfront but I wonder if the waterfront dropped quicker than areas like the above, since a lot of the waterfront properties are luxury vacation properties, not primary homes, so if they rebound quicker that's to be expected. This is very different from Toronto, where the waterfront is where people actually live.

P.S. One thing that really struck me about Miami too... Let's just say that augmented bodies are quite common there.

 

[daveto]

Heh.

At first you asked me if given GUARANTEED knowledge of the future, people who recently purchased would have behaved differently. I responded that that's a completely meaningless question, because there are no guarantees in real estate prognostication, and that anyone who claims their real estate opinion is gospel is either a liar or a fool. Fortunately, it seems you've since backed off from such an odd question.

However, I also went on to say that people I knew that bought, carefully considered the pros and cons (including myself, who thought there could be a 5-15% Toronto pullback... from 2007 prices), but then decided to go ahead and buy because the pros outweighed the potential cons.

So now you're trying to falsely claim I'm saying people are exclusively motivated only by the desire for personal shelter and nothing else.

Sorry, but your attempt at misdirection again has fallen flat.

Here is what I first wrote (a sarcastic reply to another poster)

Agree 100%. GTA real estate has nothing in common with the rest of the world, and especially not with the USA. We're different here!

Agree 100%. The majority of RE buyers are buying shelter, and do not change their behaviour due to actual or anticipated price increases/decrease. That's just crazy talk.

And here is your first reply.

Yes, Toronto is different from the USA. Toronto is of course not immune from a real estate crash, but to use places like Miami or Las Vegas or whatever as a direct model for Toronto is extremely lazy, and foolish. Indeed, I almost feel sorry for those misguided souls who sold their homes in Toronto several years back to move into rentals simply because their aunts' retirement village homes in Palm Beach dropped in value.

FWIW, a family member just bought a condo this month, cuz, well, people generally don't like living on the street... and a lot of people don't like living in rentals either.

I gave you three clear points that I understood from your recent posts, and asked you to clarify if I had mis-stated. You've only responded to one of the three, misquoted it, and accused me of misdirection. It might be best if you were to reread the few posts from us both, and refresh your memory before you reply.

 

[vz64]

Interesting read from cbc news today. Somewhat anecdotal, but still interesting.
http://www.cbc.ca/news/canada/story/2012/03/14/real-estate-overseas-investors.html

Good find, thanks for sharing. Unlike the previous article in G&M, it discussing the purchase in the context of local and global trends (in a nutshell, the G&M's was about a wealthy Chinese student who bought a bungalow in North York for 400K over asking price):

Toronto real estate mogul Brad Lamb said Canadians' home-buying expectations have to change, but he doesn't believe that overseas investors are to blame.

The scarcity of the product — in this case, single detached homes — is key, he said. And as the Toronto population grows and land available for new houses becomes scarce, the competition for these homes will become even more intense.

It is going crazy in Willowdale... A personal anecdote: A few days ago, a detached house at 184 Sheppard W was listed for $1.299m. We bid for 1.5m (my wife needs a bigger office for her small law firm) and lost... The house went for 1.6m, 300K over not so low asking price.

 

[cdr108]

It is going crazy in Willowdale... A personal anecdote: A few days ago, a detached house at 184 Sheppard W was listed for $1.299m. We bid for 1.5m (my wife needs a bigger office for her small law firm) and lost... The house went for 1.6m, 300K over not so low asking price.

80+% probability that was bought by a developer or associated # company for land dvelopment value since it's a large corner lot

 

[Eug]

It is going crazy in Willowdale... A personal anecdote: A few days ago, a detached house at 184 Sheppard W was listed for $1.299m. We bid for 1.5m (my wife needs a bigger office for her small law firm) and lost... The house went for 1.6m, 300K over not so low asking price.

It sounds like you maybe should consider yourself lucky.

Don't get caught up in high bidding wars. It's just not worth it.

 

[vz64]

Who knows.. maybe you are right. It is scary to think that these houses are being bought with ALL conditions waived--no inspection, no approval of financing, with huge deposits. Nevertheless, my previous experience tells me otherwise: two properties (in Willowdale) we bought through the bidding wars have gained so far more than 500K; we also lost around 70K for the house we bought below listed price (in Burlington).

 

[vz64]

80+% probability that was bought by a developer or associated # company for land dvelopment value since it's a large corner lot

No, it wasn't bought by a developer. It was bought by a RE agent. I assume to flip it later...

 

[cdr108]

No, it wasn't bought by a developer. It was bought by a RE agent. I assume to flip it later...

wow, i hate scenarios like that ... possible conflict of interest since you have no idea what the bids are but another re agent might get the heads up.

 

[vz64]

wow, i hate scenarios like that ... possible conflict of interest since you have no idea what the bids are but another re agent might get the heads up.

Happens too often, unfortunately... Still remember good old days when we bought our first house in Kingston back in 1998 for 134K... no bidding wars, inspected twice, and lots of conditions! The house was a bit on expensive side (we also looked at 60-80K houses, all detached), but it had a huge basement with a tenant, so this house was almost free and was close to Queen's..

 

[Eug]

Well, I bought my house in 2007 conditional on financing and inspection. It is a big house, with one part of it being an add-on, and at the inspection we found out that "air conditioned" meant that none of the add-on was air conditioned, just the original portion. For the add-on they had installed a second furnace, but didn't bother with the AC. So I asked for $4000 off our initial offer to cover the cost of a second air conditioner, and got that. My real estate agent was quite nervous when I asked him to ask for that $4000 off that by the way. I guess he was seeing the possibility of his commission disappearing.

I wouldn't buy a detached home without an inspection, either before the offer (in the case of a possible multiple bid situation), or else after the offer with a clause. I have no problem waiving the inspection clause on a new condo though. I wouldn't waive the financing clause either unless I really had the cash or liquid assets to cover it. That's just stupid. I do tend to give big deposits though, because I figure if I'm covered in the other aspects (financing clause, inspection), they're going to be keeping the deposit anyway, so no money lost there. Also, we haven't made any of our purchases conditional on the sale of our existing homes. That's major buzzkill for an offer. Luckily, we haven't needed to do that.

BTW, a friend just put their condo up for sale. The offer they got was conditional on financing, and my friend accepted. The bank denied the buyer financing. Just imagine if the buyers had waived the financing clause. That would have been a major disaster for them.

 

[cdr108]

Yaletown unit gets two offers, sight unseen

http://www.theglobeandmail.com/life...-gets-two-offers-sight-unseen/article2371951/


SELLING PRICE $495,000

WHAT THEY GOT: On one of the lower levels of a nine-year-old high-rise by reputable builder, Polygon, this 741-square-foot suite is a bright, modern space with floor-to-ceiling windows in areas like the combined living and dining area and the solarium off the open, galley-style kitchen.

THE AGENT’S TAKE: “It’s a great unit, a great building and showed well for something that was rented,†says agent Nadia Doucet. “The layout is phenomenal because they made such good use of that space. For something that’s under 800 square feet, it feels a lot bigger.â€

The prime location also appealed to buyers wanting to reside there or rent it out as the sellers had for $3,000 monthly. “The market downtown right now is really hot,†says Ms. Doucet. “From an investor’s point of view, there was good revenue from that suite as well.â€



We all here about how expensive GVR is.
I don't know their prices and rental rates, but if this is a representative example, at least their costs are covered by rent:

741 sq ft for $495,000 = $668 per sq ft
rental rate = 741 sq ft for $3,000 = $48.60 per year


In Toronto, a similar priced product would get a rental rate of $36 per yr.

$1900 rent
http://www.realtor.ca/propertyDetails.aspx?propertyId=11596925&PidKey=685661759

$429,000
http://www.realtor.ca/propertyDetails.aspx?propertyId=11601603&PidKey=1428037561



rental rate - $30 per year, approx $600 per sq ft cost

For Rent: $1,550/Monthly - 639 sq ft
http://www.realtor.ca/propertyDetails.aspx?propertyId=11648700&PidKey=-629313176

For Sale: $364,000
http://www.realtor.ca/propertyDetails.aspx?propertyId=11597669&PidKey=-667655071



rental rate - $36 per year, approx $657 per sq ft cost

For Rent: $2,600/Monthly - 836 sq ft
http://www.realtor.ca/propertyDetails.aspx?propertyId=11597861&PidKey=1705989187

For Sale: $549,000
http://www.realtor.ca/propertyDetails.aspx?propertyId=11644751&PidKey=-642870198



it appears that rents are SUBSTANTIALLY more (34-50%) in GVR to offset their prices/costs compared to Toronto.