cdr108
Senior Member
Not after this month is through I'm sure
Double whammy on both fronts - equity and RE markets.
|
|
|
Toronto prices decline 15% in mid-October
- Thread starter poppajojo
- Start date
Double whammy on both fronts - equity and RE markets.
yyzer
Senior Member
well, Quant...that was a gracious reply.....
let's hope that both real estate and equities do better than expected over the next little while......
let's hope that both real estate and equities do better than expected over the next little while......
condoboy
Banned
I agree with most of your statements...however if you have the discipline to save while renting, you should also have the same discipline while you are owning. Also most mortgages in the last several years carry for as much as it would cost to rent. With the fear that has cummulated in the real estate market lately you will see prices in rent rise significantly. I just don't see how buying a home with record-low mortgage rates, holding on to fixed 5 year term, and riding out the market can be such a bad thing. To each his own, I guess.
TKTKTK
Senior Member
You may have the same saving dicipline when you own as when you rent, but it's unlikely you'll have the same extra money at the end of the month.
Record low mortgages on record high prices.
Chuck
Senior Member
Thanks for toning down your viewpoint on renting!
I'm sure that I will own some day, but for now I'm sitting tight. I'll buy when I have at least a 25% down payment, and can afford monthly payments on a 10 year mortgage tops.
condoboy
Banned
Good attitude Chuck....all the best! I have nothing against renting when one doesn't have like you said the downpayment, or the means to purchase a home! Your attitude is exactly why we are not in the same mess as the U.S. is in right now! A good old conservative, logical, CANADIAN approach!
Quanttrader
Banned
Have to disagree strongly with you there boy.
The cost of home ownership is probably anywhere from 20%-30% higher than the cost of renting comparable accommodations. Period.
The industry (the big, strong, powerful, rich, manipulative industry) loves to advertise how a mortgage can 'carry' for the same as rent. That's akin to saying that a 2008 mercedes benz costs the same as a 2008 honda- before paying for fuel, insurance, maintenance, parking, etc.
On an apples to apples comparison, (I know you love that expression) renting is always cheaper than owing at today's prices. Always.
And for the record, rents in Toronto are not going up. They will decline as occupancies decline due to massive job layoffs from the financial, construction, auto, film, manufacturing, sectors that are going to get massacred in this deep recession.
You're too young to understand kid but it's gonna get ugly.
It's not a bad thing- at all- it's just something that if done today will result in a big financial loss. If you can handle that then go for it!
condoboy
Banned
Well then we agree to disagree...I have investigated rental properties, did my due dilligence and there wasn't much of a difference between renting a property and owning a property at today's rates...t's not like I'm reciting from memory!
The industry can say whatever it wants...if you work out the numbers, and the tools are all readily available on the net, then you can compare what it will cost to rent a property and what it will cost to own a property!
Renting may be cheaper in some cases than owning, but if a person is willing to sacrifice some aspects of their home (ie. 2 bedroom vs. 3 bedroom) than renting is not always cheaper than owning, it all depends on one's circumstances and what he/she is willing to forsake.
I'm not quite sure I understand your statement that rental fees will decline as occupancies decline? If occupancies decline than rents will increase as the demand for rental properties increases, is that not true? If as you say there are massive layoffs in the many industries that you have mentioned...isn't the demand for rental units going to increase? Especially since there have been hardly any new rental buildings built in the last several years! I can only think of a few off the top of my head.
If one looks long-term as any prudent and dilligent person should do, then there will be no big financial loss with home ownership! If one is looking short-term, then I agree, people may lose money. The important thing to do is do your research, investigate your options, create a plan, and realize your goals.
I don't know if you have the right to call me kid
...I may not be much younger than you TKTKTK
Senior Member
You should run those numbers again. Renting versus Condo ownership is almost a no-brainer; No RE fee, no maintenance, no property taxes. The only time it really evens out, or puts condo ownership ahead, is when you're renting someone's condo
Occupancies declining would hint at decreased demand for rentals. I think you're confusing it with Vacancies.
Cityplace?
Chiggs@mac.com
New Member
This is from a forum on the Toronto Star website. I'm sure prices are coming down a little but not quite 15% across the board. Some interesting numbers reported here... Overall, I think it's an interesting perspective.
On the reported 15% price drop...
"No doubt very upsetting to anyone that has an interest in real estate, but what it illustrates, if anything, is how misleading statistics can be, & how easy it is to manipulate & interpret them to suit one’s need. What the article fails to mention & what the public does not know is that in any given year, monthly statistics can vary greatly, even in very good markets! The stock market meltdown has had a negative impact with the sale of luxury homes. From Oct.1-15/08 there were 37 property sales over $1,000,000. From Oct.1-15/07 there were 114 sales (82 in Toronto). One sold for $18,500,000! Remove these from the equation & the drop (if any) will not even be close to the 15% reported. In the TREB Central Districts, the median Sept./08 price was $356,000, a $1,000 increase from Sept./07, whereas the average price statistic shows a drop from $501,419 to $464,397. The Median in this case is a more reliable statistic to use, but obviously it would not sell as many papers!"
On the reported 15% price drop...
"No doubt very upsetting to anyone that has an interest in real estate, but what it illustrates, if anything, is how misleading statistics can be, & how easy it is to manipulate & interpret them to suit one’s need. What the article fails to mention & what the public does not know is that in any given year, monthly statistics can vary greatly, even in very good markets! The stock market meltdown has had a negative impact with the sale of luxury homes. From Oct.1-15/08 there were 37 property sales over $1,000,000. From Oct.1-15/07 there were 114 sales (82 in Toronto). One sold for $18,500,000! Remove these from the equation & the drop (if any) will not even be close to the 15% reported. In the TREB Central Districts, the median Sept./08 price was $356,000, a $1,000 increase from Sept./07, whereas the average price statistic shows a drop from $501,419 to $464,397. The Median in this case is a more reliable statistic to use, but obviously it would not sell as many papers!"
MBS-Guru
Active Member
Very interesting numbers indeed. Also keep in mind that in the beginning of a downturn it has been well documented that the luxury homes are the first to crash before the more affordable homes as well. Having said that, stats by TREB means nothing!. Talk to a real industry analyst that you are friends with and they'll have a better, honest, reliable, and inside look at the numbers.
Observer Walt
Senior Member
I wouldn't say that "stats by TREB mean nothing". They are real numbers, derived from real sales activity, as opposed to opinion. Having said that, let's wait until we see at least the October month-end numbers before drawing too many conclusions.
Chiggs makes a good point, in that median numbers are more meaningful than average numbers. Even with a large set of data, averages can be too easily influenced by a few "outliers", that is, numbers which are unusually high or low (such as the $18 million sale), which will affect the average considerably but won't affect the median at all.
poppajojo
Active Member
How do we even know there was an 18.5 million dollar sale in October of 07? In July of 07 there was a 15.8 million dollar house sold in Toronto and it was the highest residential sale at the time and it made all the news. There was no mention of a 18.5 million dollar sale in October, the next highest recorded was the 25 million dollar place at 1 Bloor East recently.
Also Chiggs makes no point, he got this post from a Toronto Star forum, from an unsubstantiated post. This info is unreliable and it's irresponsible and foolish of Chiggs to post it whether true or not unless he has the actual info with reliable source available.
Also Chiggs makes no point, he got this post from a Toronto Star forum, from an unsubstantiated post. This info is unreliable and it's irresponsible and foolish of Chiggs to post it whether true or not unless he has the actual info with reliable source available.
Johnzz
Active Member
Why, because it doesn't suit your real estate crash theory?
Common sense tells me fewer luxury homes sold the first half of October as these buyers are much more sensitive to stock market volatility then the average home purchaser. To find out if these luxury home buyers have been permanently "knocked out" of the market, we'll probably have to wait six months.
I think "common sense" can carry someone quite well during times of uncertainty. It has certainly worked for investors like Warren Buffet.
My "common sense" suggests we will have a slow down in Toronto this year and next with prices falling perhaps 10%. However, Toronto fundamentals are still very strong (they haven't collapsed as some posters/renters suggest) and 5-10 years from now, real estate will still be seen as a profitable asset class. And don't forget, you'll still get some well located properties increasing in value next year while the average home price decreases.
If you step back and look at the big picture, you'll see that (1) Toronto never had the big run-up in prices (like Calgary, Saskatoon, etc...), (2) the local economy is still sound (there are negatives like slower US growth but also positives like weaker oil and $C), (3) when inflation kicks in late next year (after the trillions spent globally by governments), I would much rather hold a physical asset then paper money.
I've rarely been wrong over the years, so this might be of some value for anyone interested.
My 2 cents.
poppajojo
Active Member
No, not because it doesn't suit my real estate crash theory. Are you seriously that dense to not understand the importance of having info that is verifiable?
Common sense does not imply that at all and I have no idea how it would. Why would the lessening of peoples net worths across the vast majority of equity investors (both rich and middle-class) affect only the buying decisions of wealthier people? You would think that people who have gained large amounts of wealth through the stock market as their primary occupation would have better decision making and come out unscathed compared to people who didn't look after their own investments and rather kept their money through all the losses in mutual funds or due to the advice of their investment advisor. It would also make more sense that this would affect rich people less because a home tends to be a much larger part of a middle-class persons assets compared to a wealthier person. To what group would the financial impact of purchasing a home affect more? The people with net worths of 5-20 million dollars purchasing homes worth 1-6 million dollars or the people with 100 k saved up with mid-level incomes trying to purchase a 450 k home.
Did you see the original article of this thread? It says prices have fallen 15% already. Even if you did factor in the possibility of a lesser number of expensive homes being sold, a conservative estimate would still probably lead to around 10%. Look at all the monthly TREB reports of the past few years, do you ever see such wild swings as high as 15% or even 10%? No. A quote from the Toronto Star article that Chiggs reffered to:
www.yourhome.ca/homes/article/519655
Toronto never had a huge run-up in prices compared to some of western Canada because our economy at the time wasn't thriving like Western Canada. If Ontario's economy was booming as comparably well to Alberta and prices didn't run up as much than you'd have an argument, unfortunately Ontario's economy has been lagging, and our comparably lesser price gains reflect that.
Canadian consumer confidence is at its lowest point since 1982 with the lowest consumer confidence province being Ontario. And no this does not only indicate the consumer confidence of luxury home buyers, it's indicative of the whole spectrum, especially purchasers of mid-priced homes. Our economic outlook is not so hot right now.
http://www.thestar.com/Business/article/519126
Whether prices do flatline or decrease in the future, one thing is for sure, it would be absolutely irresponsible to recommend someone purchase a home at the current time when prices seem to just be beginning to decrease. Any reasonable person and anyone who did not have their own interests ahead of them would absolutely advise a person to at least wait it out a month or a few to see where prices are going in the near-future.