Beware The Real Estate Raindance

Opinion

8 minute read

April 22, 2020

“It’s going to rain,” says David, on Monday morning.  “We should say inside.”

The people remain inside, but it doesn’t rain.

“It’s going to rain,” says David, now on Tuesday morning.  “We should say inside.”

Yet again, the people remain inside, but the rain doesn’t come.

“I know it’s going to rain,” says David on Wednesday.  “Let’s remain inside, shall we?”

The rain never comes.

In fact, David continues to usher people inside on Thursday and Friday, each morning, saying “It’s going to rain,” but even as the sun shines, and other people are merrily out and about, the people continue listening to David, and stay inside.

This remains the case through Saturday, and into Sunday afternoon, when David sees the rain begin.

“See?” says an energized David, pointing to the rain outside.  “I told you it was going to rain.”

David believes he is right.

Do you?

“I’m so glad we stayed inside,” David concludes.

So is David correct, in the end?  In response to his claim that it’s going to rain?

And would David be correct, subjectively in his assertion that it was “good to stay inside?”

Personally, I think David is incorrect on both fronts, and while an argument could be made that he was, in fact, correct about the first claim, there is absolutely no way that he could be deemed correct on the second.

The people could have been outside on Monday, enjoying the sunshine, the fresh air, and everything that the outdoors has to offer, and yet, they remained inside.

The people could have enjoyed the outdoors on any or all of Tuesday, Wednesday, Thursday, Friday, Saturday, and even Sunday morning, but David told them to remain inside on all of those days, as he predicted that it was going to rain.

Those people will never get those days back.  They remained inside on all of those days, when they could have been outside.  David will claim that he was correct in his prediction of rain, since it did, eventually rain, and David didn’t say when it would rain, afterall.  But how should the people feel about losing those six days?

Time and time again, when it comes to the real estate market, stock market, or the goddam market for your grandmother’s antique vases, self-described real estate “experts” will make predictions without any end-dates.  I call out these actions any time I can, because I just know that if and when their original prediction comes true, those experts will pop up and start talking.

I’ve never been one to write “takedown” pieces, and that’s not what this is, or at least how this is intended.  This is an attempt to warn people how to view certain types of information and opinions out there, that I feel are misleading.

We all have people that we listen to, or don’t.  Economists, wealth managers, columnists, hosts, talking-heads, and the like.

The same names are quoted in the comments section of this blog over and over.

John Pasalis, Ben Rabidoux, Phil Soper, Steve Saretsky, Doug Porter, Haider & Moranis, Will Dunning, Ron Butler, Rob Carrick, Hilliard MacBeth, Garth Turner, et al.

Some are bears, some are bulls.

Some are more active than others, and some, like Garth Turner, seem to have faded away and slipped comfortably into retirement.

They have different forums, with some active on social media, some publishing data on websites, and some writing in newspapers.

And I’m sure you, the readers, have one or two that you trust and follow, as well as a couple that you oppose and who’s advice you would never heed.

I’ve been writing Toronto Realty Blog since 2007, and my goal was, and remains, to provide honest, transparent opinions on everything in real estate.  Some might feel I have an “agenda,” since I make my living from selling real estate, and while I would maintain that I’ll sell real estate whether the market is up, down, or sideways, some will continue to argue that I will forever be a market bull.

I’d like to think that I’m unbiased and honest.  I’d like to think that, in times like this one, where I’m openly opining that the price of real estate is down, while others refuse to accept this, or that now is not the time to list properties for sale, while other agents are taking listings left, right, and centre, that perhaps my word can be taken at face value.

Whether you decide to trust, listen, or value what I say, or John Pasalis says, or Ben Rabidoux says, is up to you guys.

But one person I currently have a problem with is “financial analyst,” Hilliard MacBeth.

MacBeth’s name has been appearing in the news lately, along with selected quotes, because he is one of, if not the biggest real estate bear in Canada.

Here’s a recent article from April 20th by the CBC’s Don Pitts.

Previously, MacBeth was quoted in a March 18th article as follows:

Hilliard MacBeth, author of “When the Bubble Bursts: Surviving the Canadian Real Estate Crash,” predicts a more prolonged decline.

“It’s been a very long time since we’ve had a nasty recession and the amount of debt that has been allowed to accumulate is nothing like in 2009 and in 1996,” he said.

Great, way to go.

In the middle of a worldwide pandemic, this real estate bear stands up and starts shouting about the “market crash.”

But is this fair?

MacBeth is doing his rain dance after holding up inside the house for a week!

How many of you have short memories?

October 2nd, 2014, the CBC runs a headline reading: “Housing Market A Bubble Set To Burst, Hilliard MacBeth Says”

Click on the link to see the full article, as well as a video with MacBeth where he is described as a “Housing Crash Prophet.”

From the article:

An Edmonton investment manager has a dire warning about the Canadian real estate market: a major correction is coming.

“The more that I researched it and the more I asked questions about it, the more convinced I became that we are in a significant bubble in Canada,” said Hilliard MacBeth, director of wealth management at Richardson GMP, in an interview on CBC’s The Exchange with Amanda Lang.

MacBeth makes that argument in his coming book, When the Bubble Bursts: Surviving the Canadian Real Estate Crash.He says the Canadian real estate market shows all the classic signs of an asset bubble: a rapid rise in prices, feelings of regret expressed by those who feel they missed out on a buying opportunity, intense media coverage, and a broad fixation on the asset in question.

“Clients who have been with me for 30 years, in the last 10 years started to obsess about real estate,” MacBeth said.

If the real estate market does decline, politicians and policymakers are hoping for a “soft landing,” in which prices level off gradually.  MacBeth doesn’t think Canada will be so lucky.

“If we are in a bubble, as I’m convinced we are, then we can’t get out with a soft landing,” MacBeth said. “We have to have a hard landing, and a hard landing means that we have to go back to the trendline that was in place before the bubble started to appear.”

In this case, MacBeth says, a hard landing means prices could decline by between 40 per cent and 50 per cent, causing an economic recession.

“It probably would be a little worse than the early ’90s, depending on how long it takes,” MacBeth said.

 

This really, really bothers me.

And I really, really, really hope that MacBeth is not celebrated as some sort of hero, prophet, or clairvoyant if and when housing prices in Toronto drop a few points, because there’s a goddam date on the article above that says “2014.”

The average home price in Toronto in 2014 was $566,611.

If the market declined “between 40 per cent and 50 per cent” as MacBeth was quoted on October 2nd, 2014, then prices would have soon averaged between $283,306 and $339,967.

Except they didn’t.

In fact, MacBeth made that comment in October of 2014, when the average home price in Toronto would finish the calendar year at $566,611, only to see the price increase in 2015 to $622,116.

Then to $729,924 in 2016.

And to $822,510 in 2017.

Down to $787,842 in 2018 as we all know, which was the first year-over-year decline since 1996.

Then to $819,322 in 2019.

And as has been mentioned quite frequently on this blog in the last couple of months, the average home price in February and March of 2020 was over $900,000.

So now Hilliard MacBeth is going to be quoted in newspaper articles with his bearish view on the real estate market?

I understand that I’m talking about Toronto and he’s talking about Canada, but with Toronto, Vancouver, and Montreal representing the bulk of Canadian real estate, we know he’s talking about ALL of us.

As I said about Garth Turner back in the day, I feel as though people who listened to Hilliard MacBeth in 2014 lost out on a lifetime of tax-free capital gains that they will never make back.  Ever.

But what bothers me even more is the idea that this man will anointed with having been “right.”

After a disastrous prediction, and a laughable book released after his 2014 interview called, “When the Bubble Bursts: Surviving the Canadian Real Estate Crash,” this man should be nowhere near people with assets in today’s confusing world of personal finance.

And it wasn’t just one mention, either.  MacBeth has been writing articles and providing interviews talking about the “crash” since early 2014:

April, 2014, MacLean’s: “When The Housing Bubble Bursts, Their Won’t Be A Soft Landing”

March, 2015, Canadian Real Estate Wealth: “Why Canada’s Housing Market Is About To Crash”

March, 2016, Canadian Business: “Boomer Investors Are Dangerously Overexposed On Real Estate”

October, 2016, MacLean’s: “Changes And Pain Are Headed For Canada’s Housing Market”

October, 2016, Bloomberg: “Is Canada’s Economy On The Verge Of A Financial Crisis?”

August, 2017, CBC: “Is Canada’s Real Estate Bubble About To Burst?”

February, 2018, Financial Times: “Canada’s Housing Market Flirts With Disaster”

August, 2019, BNN: “Nervous Homebuyers Might Want To Sit On Sidelines Says Author Predicting Crash”

For the love of God, how long can this guy call for a crash, while prices continue to increase, and then still be able to stand up with his “I told you so” when prices round down after a worldwide pandemic?

Call me biased because I sell real estate for a living, even though everybody needs a home, and I’ll sell no matter where we are in the market cycle.  But what does Mr. MacBeth do for a living?  He’s in wealth management, for a firm called Richardson GMP MacBeth McLeod Wealth Management.

This is a quote from their website:

We’re an independent, unbiased and leading-edge wealth management firm accountable to a very important group of people – our clients.

Our firm has a history of serving some of the most successful families and entrepreneurs in the country. And there is something distinctly different in the way we do business.

I would hazard a guess that those “successful families” the firm represents all own real estate, and they do so in droves.

There’s a house down the street from me that sold for triple what the average home sells for in my area.  A one-off, meticulously well-built home formerly owned by a real estate agent.  This house was bought last year by a member of one of the wealthiest families in Canada, and it has been sitting empty ever since.

Yep.  An $8,000,000 house, probably with $30,000 property taxes, sitting empty.

That is what “successful families” do.  They sure didn’t sell off their real estate holdings in 2014!

The idea that Mr. MacBeth has been predicting a real estate crash since 2014, while simultaneously soliciting clients for wealth management services is a little contradictory, no?

I never called for the stock market to crash, telling people, “Buy real estate!”

In fact, I’m a believer in an extremely well diversified portfolio.  I’ve invested my capital in real estate, mortgages, mutual funds, equities, bonds, credit instruments, and even my sports memorabilia, while I derive pleasure from it, is something I do consider an “investment.”  Then I keep some money in cash, just for good measure.  That’s diversified.

What does somebody who constantly calls for a market crash, in the face of a continuously-increasing market, stand to gain?

Garth Turner predicted a real estate crash year after year, through books and through his blog, only to direct investors toward his wealth management firm.

Say what you want about the people I named above, and whether to take their insights or not.  I’ve met more than half of them anyways.  And while I’ve never met Hilliard MacBeth, and I can make no comments or assumptions about his character, personality, or shoe size, I never agreed with his take on the real estate market, and it sickens me to see him being quoted in 2020, during a pandemic, when real estate prices are up 50% since he said they would go down 50%.

When I see you guys following John Pasalis and calling him “Lord God,” I get a chuckle.  I wonder what John would think?  He’s pretty unbiased, and for a guy that sells real estate for a living, his sometimes bearish comments must look like a breath of fresh air in an often over-hyped market.

Take what you want from Pasalis, Rabidoux, Porter, Rosenberg, Tal, and the like.  But don’t forget that people have a habit of finding the opinions they shared to begin with.

Be careful not to fall in with the wrong crowd, and that goes for bulls and bears…

Written By David Fleming

David Fleming is the author of Toronto Realty Blog, founded in 2007. He combined his passion for writing and real estate to create a space for honest information and two-way communication in a complex and dynamic market. David is a licensed Broker and the Broker of Record for Bosley – Toronto Realty Group

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110 Comments

  1. Appraiser

    at 6:24 am

    Great article Dave. It’s an old trick. Just keep dancing till it rains!

    TRREB goes back to releasing mid-month stats !

    Just released: GTA resales in the first 17 days of April down ~69% from 2019. New listings down ~64%. Prices down 1.5% year over year to $820,000.

    “Uncertainty about market conditions due to COVID-19 certainly played a role in moderating the pace of year-over-year price growth during the first half of April. The changing composition of home sales also played a role. In the City of Toronto, for example, the number of homes sold for more than two-million dollars declined more than overall sales. This also had an impact on the average selling prices.”

    https://communications.torontomls.net/mlshome/files/pdf/news/2020/nr_market_watch_mid0420.pdf

    1. Chris

      at 8:35 am

      From BNN:

      “However, the average selling price was down approximately 12 per cent from the first half of March when the average was $931,788.”

      Wow, has average price ever fallen anywhere near that much from March into April?

      1. Bal

        at 9:49 am

        Chris- but nothing is moving…everything is standstill…so this was expected. No? I think the true value will be determined once people will start selling and buying….if after two or three months prices began to go up then we will know this did not have much impact

        1. Chris

          at 9:59 am

          “but nothing is moving…everything is standstill”

          Not quite. Sales and listings were obviously down significantly from last year. But, 1,654 homes sold, and 3,843 new listings came to market in the first 17 days of April. So, a bit more than nothing.

          1. Appraiser

            at 10:33 am

            Youa re correct @ Chris.

            A lot more than nothing.

            There will be ~3,000+ firm transactions this month on TRREB.

            During a lock-down pandemic!

            Unstoppable.

          2. Chris

            at 10:36 am

            You’re ever the optimist, I’ll give you that, appraiser!

      2. Derek

        at 10:42 am

        Chris: But, sales mix. It doesn’t mean your (or my) house in Toronto is worth 12% less than it was a month ago. It does seem contrary to predictions along the lines of, prices might not fall quickly because the volume of sales would be too low to have that effect.

        1. Chris

          at 10:54 am

          Oh I know, sales mix still exists, as it always has with the average price figure.

          I just meant that such a fall in average price from March to April seems unprecedented, no? Much about our current situation is unprecedented.

          1. Derek

            at 11:44 am

            Yeah, David’s archive might event contain a chart showing the March to April change for consecutive years. I guess the month ain’t over yet though. Maybe it ultimately will be the largest monthly decline ever? And maybe that would actually bode better than a longer gradual decline?

          2. Chris

            at 1:51 pm

            TRREB’s got data back to 1996 on their website, maybe I’ll take a look and see how average price has moved from March into April in previous years. Unless David wants to do that for a blog post; don’t want to steal his thunder!

        2. Professional Shanker

          at 10:03 am

          It does and everyone’s home is worth less in April than it was in early March. You would not be able to sell your house for the March value. Your estimation of the long term value of house may very well be higher than price you could receive right now. What is the FMV of your home on April 22, what you can sell it for.

      3. tony sbrocchi

        at 9:12 am

        One of the more important stats that’s not being mentioned is the decline in the sales and listing of properties over 1.3 million. Any average would drop if you take out the high end of the table. Product between 500k-1.1mil is still trading, yes not at the rate it was previously but not at a discount either. Biggest change, properties being listed at actual market value rather than 5-8% below to garner multiple offers. We will see a slight decline, but not the bottom falling out. Economists have no clue, been listening to the “sky is falling” from them since 2010.

        1. Natrx

          at 9:32 am

          Economists do not typically predict never seen before levels of government deficit spending (spray billions) and money printing. Really, a whole economics needs to be written on this. So while you look oh so right, it’s like a little child with daddy standing behind you but you don’t know it and think the other kids are scared of you only

          I’m a housing bull too.. have non-condo rental property that’s actually on top of my own, looking to acquire more.. I know in the long-run, it’s inflation that’s needed to de-value all the existing current debt which means asset inflation like housing. I do it precisely knowing the unlimited never recession blow up money supply acceptance of the new economy and therefore a form of hedge.

  2. Dailyreader

    at 7:16 am

    ????????????????????????????????
    (standing O)
    Thank you for this. I’m not a bull… but the opportunistic bears who have cried wolf since the 90’s shouldn’t be taking credits now.

  3. Chris

    at 8:32 am

    “When I see you guys following John Pasalis and calling him “Lord God,” I get a chuckle.”

    I think most of us get a chuckle from that too! I don’t believe anyone is saying it seriously. But John does share a lot of good data and insight, and is usually quite balanced in his assessments.

    With the exceptions of Soper, Turner and MacBeth, all the names you listed are pretty fair in their takes, at least in my opinion.

    1. Derek

      at 10:21 am

      One day the end of the world dooms-dayers will be right too. The sun goes supernova and the last act of human kind will be some guy tweeting from a bunker, “I called it!”.

      C’mon, the “LG” bit was on point! It was really a jest aimed at us posters, collectively, for our frequent citing of his comments, nay, his sermons, to support both RE market denominations;

      David, your post today is the most bearish indicator I’ve seen! If You’re concerned the permabears are on the cusp of being “right”, you must have a bad feeling about this.

      1. David Fleming

        at 11:30 am

        @ Derek

        I’m not bearish, I assure you. I’m trying to be realistic and honest. We’re in a pandemic! Sellers and agents need to see that. I’ve got clients telling me they won’t sell unless they get February’s price, and I’m wondering if they’re trying to sell their shares of TD Bank at February’s price too? No. Of course not. But real estate is different. People “deserve” peak prices.

        Permabears aren’t on the cusp of being right. MacBeth predicted at 40-50% decline when prices were at $566K. Prices are at $900K.

        I do believe that a seller on April 10th got less than he or she would have on February 10th, but I also believe that the same seller will get close to February’s price, come June. Not for every property type, but for many.

        1. David Fleming

          at 11:31 am

          On another note, do you guys want to see an interview with Ben Rabidoux? I’m sure you’ve got questions for LG V2.0

          1. Chris

            at 1:08 pm

            I’d be interested in seeing you and Ben chat! Could make for an interesting debate.

        2. Derek

          at 11:48 am

          You have a loyal readership and following for good reason.

        3. Professional Shanker

          at 10:50 am

          That is some kind of prediction, June values will be equal to Feb values. Our municipal and provincial officials will make this rather impossible.

  4. Elle O'Lell

    at 9:03 am

    David, most people, unlike you, don’t have ocd and warehouse decades worth of articles, stats, date, etc.

    So people can say whatever shit they want and 99.99% of people don’t remember the decades of the past.

    Is this news to you? Everyone has their scam.

  5. Jeff

    at 9:18 am

    Dave, I think you are exactly right about the timing part. But where I tend to have some sympathy with their positions is with regard to being overleveraged, because being overleveraged is not timing dependant. It’s more like a bomb that could go off at any point, just waiting in the background for the right conditions.

    1. Natrx

      at 3:23 pm

      Today’s ‘subprime’ risk are multiple property owners having Airbnb’d them out. Once any stimulus funding dries up, they’re going to be a catalyst. They already are setting the direction. Just a matter of how long can the fortress hold (pretty long here in Toronto for sure).

    2. Professional Shanker

      at 10:53 am

      Correct and Macbeth’s prediction like Turner’s looked foolish in hindsight as they underestimated the ability of our economies to continue to lever up without a crisis for a decade. We are now there (crisis tipping point), can we escape without collapse is the question, markets currently believe we can.

  6. Potato

    at 10:02 am

    I didn’t even make the list of biggest, greyest bears? 🙁

    But the analogy doesn’t quite work your way. If when the rain came, and people rushed for high ground, but only a small portion of those caught out in it could actually get to shelter before they went from being merely uncomfortable to being completely underwater, then it wouldn’t matter that the forecast was off by a few days, the ones saying that it was dangerous to crowd the floodplain after so many unrelenting sunny days would still get to say that they were correct and bask in the schadenfreude.

    And of course, on the other side there were many bulls who took people by the hands and led them outside to the floodplain saying they’d lose their spot on the dance floor if they didn’t go now, no time to grab an umbrella, and it will never rain anyway. The gods wouldn’t allow it — people might get wet!

    Now, to be fair, I’ve also criticized MacBeth and Midani for the timing element of their forecasts, and the focus on prices going down. My message has been a bit different, that people need to understand the risks, to understand leverage and liquidity, that renting isn’t some prison sentence, and that cashflow considerations are also important.

    1. Chris

      at 10:26 am

      Great comment, Potato! Fully agreed on all counts. And nice to have some more voices running counter to the usual bullish commentators.

      As Jeff alluded to, those who warned about the vulnerabilities that high debt brings (like our central bank) are not wrong. Those who said prices will fall imminently, in say 2009, clearly were.

      If you’re a smoker, and your doctor warns you it is dangerous, but ten years later you’re still alive and cancer free, is your doctor wrong? If they told you you’d be dead within a month, then yes, that was incorrect.

    2. Libertarian

      at 10:37 am

      I agree with Chris about your comment – well said. Your last paragraph refers to a different message. That’s one thing I think keeps getting overlooked in all these comments – there are numerous topics being mixed up into one HUGE debate:

      -rent vs. buy as a primary residence
      -real estate as an investment property
      -the use of leverage in investing
      -retirement planning – real estate portfolio or stocks

      To me these are separate questions that should be debated individually, not collectively. So I agree with your last sentence.

      1. Chris

        at 1:48 pm

        Yup, exactly right Libertarian, trying to conflate all as the same debate coming from the same person is foolish.

        Even on this blog post, there are the usual suspects of commenters trying to claim that Hilliard MacBeth and Garth Turner are equivalent to Ben Rabidoux and Rob Carrick.

        MacBeth and Turner have been virulently anti-real estate for many years. Their predictions of imminent collapse were obviously wrong.

        Rabidoux and Carrick have been pointing to vulnerabilities in our economy and our households, and warning about them.

        Trying to paint the two group as equivalent by slapping a label of “Bears!” on all of them is intellectually lazy, and/or purposefully ignorant.

        1. Kyle

          at 2:36 pm

          Nice try, but they’ve all put forward many of the same empty theories over the year (Price to median income, Debt to income, better off renting and investing over buying, etc.) . The only real difference is the tone they use. Don’t recall any of them ever mentioning a global pandemic though.

          1. Kyle

            at 2:43 pm

            …until of course after it happened.

          2. Chris

            at 2:51 pm

            Nope, sorry Kyle, but you’re incorrect.

            Carrick/Rabidoux/Poloz etc. warning about overvaluation and the perils of taking on too much debt are far different from MacBeth/Turner stating prices are about to decline.

            Nobody claims to have foreseen a pandemic, but many of the first group listed warned against economic shocks and the increased vulnerability our debt burdens would cause in such a situation.

            Trying to dismiss all of those named above as “Bears!” is just plain foolish, as Potato, Jeff, and Libertarian alluded to.

          3. Kyle

            at 3:00 pm

            Really if it is our over-leverage and debt that put us at such risk and is what is doing us in, please share some examples of all those Cities that had better debt/income ratios than Canada, who are not being affected by Covid-19. Genuinely curious.

            Trying to distance one set of these guys from the other when they’re making the exact same bunk arguments is foolish. If you follow Carrick’s advice you’d be just as wrong as you would following Turners.

          4. Chris

            at 3:09 pm

            “please share some examples of all those Cities that had better debt/income ratios than Canada”

            Do you mean cities in Canada? Or other countries? Either way, it’s obviously far too early to fully assess the entire economic impact of Covid-19. But I think most would agree that higher debt burdens increase vulnerability to economic shock:

            “High household debt and housing market imbalances, among others, remain important vulnerabilities to the Canadian financial system. These vulnerabilities on their own may not be enough to swing the business cycle, but will worsen outcomes in the event a trigger becomes reality, such as an external shock sending Canada into an economic downturn.”

            – Stephen Poloz, May 16, 2019

            https://www.cbc.ca/news/business/bank-of-canada-financial-review-poloz-update-1.5138301

            And again, no, Carrick’s advice has not been the same as Turner’s. If you can’t, or don’t want to see that, well, I can’t really help you with that. But, as others here have pointed out, warning against over-leveraging yourself is not at all equivalent to warning that home prices are about to crash.

          5. condodweller

            at 3:09 pm

            Medical experts have been predicting a pandemic for decades. I recall seeing a book written during the 60’s warning that something similar to the Spanish flu will occur. Many have said since that it’s not if but when it will occur. They site over population and the everything it comes with as the reason. Bill Gates’s foundation ran a simulation sometime last November predicting something like could happen anytime. There was even a conspiracy theory circulating about intentional release of the virus due to the recent prediction.

            Unfortunately politicians don’t listen to scientists, never mind the general population. Unfortunately it’s a human trait to ignore risk until it bites you in the rear end.

          6. Kyle

            at 5:00 pm

            “But I think most would agree that higher debt burdens increase vulnerability to economic shock:”

            Most bears might think that, but rational people understand it is the amount of payments relative to income that increases risk. As interest rates fall, you can take on more debt with the same amount of payment, so comparing this silly bi-variate relationship over time doesn’t tell the real story. What matters is whether people are borrowing more than they can afford to pay each month, and all of the changes to mortgage qualifications have ensured that people can, which is why arrears rates had been trending lower and where at all time lows. Obviously when there’s a global pandemic that forces people to stop working, that’s a a completely different story, and regardless of whether you had a “high” debt to income or a “low” debt to income ratio, when one’s income goes to 0, their amount of debt becomes utterly moot.

            “Carrick’s advice has not been the same as Turner’s.”

            Exact same advice as Garth Turner, even uses the same vocabulary.

            https://vreaa.wordpress.com/2011/12/22/rob-carrick-gm-dont-drink-the-housing-market-kool-aid/

            Anyone who followed this advice in 2012 would be no better than someone who followed Garth Turner’s.

            Looks like it isn’t me who needs helping out.

          7. Kyle

            at 5:25 pm

            Also, not sure why you’re bringing Poloz into this. A) He’s not a RE bear B) I never mentioned his name, and C) the quote of him you’ve pasted refers to risks to the Financial system, not house prices.

          8. Chris

            at 5:58 pm

            That article you posted is from a very dubious website (Vancouver Real Estate Anecdote Archive…?), with a broken link to the Globe and Mail, and a Google search turns up no results for it from anywhere else. Even if it is legitimate, Carrick is again warning about over leverage, analyzing renting vs. buying, and a potential future price downturn. Quite different from Turner’s prognostications of impending doom.

            But honestly, believe what you want. If you want to paint everyone who questions real estate valuations as “Bears!”, fill your boots. As you can see from the comments here, it seems most would disagree.

            As to including Poloz’s comments, I did so because he a) has also warned about over-leverage and b) has also stated the housing market is overvalued. Frankly, I’m surprised he hasn’t been dismissed as a “bear!”.

            On the topic of household debt increasing vulnerabilities, here’s a take from Manulife’s Global Chief Economist and Head of Macroeconomic Strategy:

            “Now the household debt overhang will make it harder for Canada’s economy to rebound. It’s one of the key differences between how the U.S. and Canada will fare in all this, says Manulife’s Donald. America’s housing crash last decade forced a reckoning that saw households reduce their leverage. As a result U.S. households “are fundamentally economically healthier and able to bounce back more quickly than Canadians,” she says. “The risk here is this pullback in economic activity takes much longer to rebound and creates offshoots of stress in the economy, not the least of which is the Canadian housing market.”

            https://www.macleans.ca/economy/economicanalysis/coronavirus-plunges-canadas-economy-into-the-abyss/

            I suppose this opinion would make her an irrational person in your books?

            “the quote of him you’ve pasted refers to risks to the Financial system, not house prices.”

            Sorry, but are you suggesting that real estate valuations are not linked to the financial system and our overall economy? If you needed any more clarity on the topic, here’s another quote of his:

            “While debt is indispensable for our modern way of life, it has been a growing preoccupation for the Bank of Canada for several years now. That is because high debt levels can make us vulnerable to negative events—individuals as well the entire economy.”

            – Stephen Poloz, May 1, 2018

          9. Kyle

            at 9:23 pm

            Sorry but Garth Turner doesn’t actually shout crash and impending doom either, he actually says the same things as Carrick and vice versa. You clearly haven’t actually read Greater Fool, but yeah keep telling yourself he’s different if that makes you feel less aligned to the likes of him.

            “I suppose this opinion would make her an irrational person in your books?”

            As for Frances Donald, she is entitled to her own takes, but no that doesn’t make her an irrational person. Maybe if she spent hours and hours each week patrolling the comment section of a blog making sure that not one single string be left without adding her own bearish point as the last word, then yes i would consider her irrational.

            “are you suggesting that real estate valuations are not linked to the financial system and our overall economy”

            Linkage isn’t the point, are you suggesting that real estate has the exact same sensitivity to debt as the financial system, such that you can exchange one for the other?

            Let’s review the history of failure that your theory about how Canada’s high debt loads makes its housing market vulnerable to the slightest shock shall we.

            – The housing market is full of unoccupied homes fuelled by debt – Fail
            – Interest rates are going up – no more free money! – Fail
            – Their getting rid of 35 and 40 year amortizations – Fail
            – Tightening of mortgage qualifications – watch all those rejects now – Fail
            – The market is all foreign buyers – this new tax is going to wipe out demand – Fail

            In science and math, when a hypothesis doesn’t hold (like your sad little bivariate fundamentals) you reject them, you don’t keep insisting that your hypothesis is correct and the numerous observations that counter your hypothesis were wrong. And if a single black swan outlier event actually causes a favourable observation that doesn’t suddenly redeem your bunk hypothesis.

          10. Chris

            at 10:17 pm

            No, I don’t read Greater Fool. I’m surprised you do, given how vehemently you slam Turner every time he is brought up. Consider him and Carrick one and the same if you like, but I doubt many would agree, particularly as the only example you could dig up was from a questionable source at best. Even in his original post, David seems to distinguish between Turner/MacBeth, and others like Rabidoux and Carrick. But hey, you’re entitled to your opinion.

            “As for Frances Donald, she is entitled to her own takes, but no that doesn’t make her an irrational person.”

            And yet, in your previous post you stated that “rational people understand it is the amount of payments relative to income that increases risk.”

            “Maybe if she spent hours and hours each week patrolling the comment section of a blog making sure that not one single string be left without adding her own bearish point as the last word, then yes i would consider her irrational.”

            Ah, falling back into ad hominems, Kyle? Too bad, I thought you were growing beyond those. Also a touch hypocritical, as you typically comment here just as much as I do, if not more.

            “are you suggesting that real estate has the exact same sensitivity to debt as the financial system”

            I think most would agree that real estate is linked to the financial system, individuals, and the economy, all of which Poloz explains are at higher vulnerability due to increased debt burdens. The extent of that linkage is tough to predict; its existence less so.

            As for all of those supposed “failed theories” of mine, you seem to be once again conflating all “Bears!”. For example, I believe 35-year amortizations were eliminated in 2011; I first began posting here in 2017. And I’m not quite sure how those, or your final paragraph relate to what we’ve been talking about? Just comes off like an angry rant.

          11. Kyle

            at 9:37 am

            So let’s get this straight, you argue and argue that Garth is different despite never even having read anything by him and you have the gall to call me intellectually lazy. Then further you’re crying that i’m slinging ad hominem attacks.

            “Also a touch hypocritical, as you typically comment here just as much as I do, if not more.”

            Nice try, but wrong. A quick Control-F of the last month’s worth of blog posts show that you’ve posted 294 comments while i’ve posted 31 comments. But worse than the sheer deluge of spam that you post you also have an obsessive habit of immediately (and i mean immediately) burying any point that you don’t agree with, with your own bearish comment. It really, truly is messed up. It’s like you’re the jealous girlfriend from every teen movie who insecurely clings to the arm of her trophy boyfriend, finishing every one of his sentences, in an attempt to control everyone else’s impression. Except this blog seems to be the boyfriend and this is real life not a teen movie.

            “I first began posting here in 2017. And I’m not quite sure how those, or your final paragraph relate to what we’ve been talking about? Just comes off like an angry rant.”

            Again nice try, but wrong. You’ve been posting here since at least 2015: https://torontorealtyblog.com/blog/benjamin-tal-real-estate-bull-or-real-estate-cheerleader/

            i’ll also swap out the 35 year amortizations with another one to match your timeline. Since you always want to make everything about you.

            Let’s review the history of failure that your theory about how Canada’s high debt loads makes its housing market vulnerable to the slightest shock shall we.

            – The housing market is full of unoccupied homes fueled by debt – Fail
            – Interest rates are going up – no more free money! – Fail
            – The number of empty condos is growing – Fail
            – Tightening of mortgage qualifications – watch all those rejects now – Fail
            – The market is all foreign buyers – this new tax is going to wipe out demand – Fail

            Hope you don’t mind if i steal a line from you, “Are you tired of being wrong yet? Oof!”

          12. Chris

            at 10:03 am

            I’ve read Garth’s comments before, but no, I don’t read Greater Fool regularly.

            Somehow my pointing out your ad hominems is crying, huh? Good try deflecting, but maybe try not resorting to that fallacy.

            Yes, I’ve been more active than you in the past month, but from David’s 2019 wrap-up:

            “I’d like to thank my regular readers/commenters: Kyle, Chris, Appraiser, Condodweller,…”

            Hence why I said you typically comment here just as much as I do, if not more.

            I don’t even know what point you’re trying to make with your rambling about trophy boyfriends? Try to stay on topic.

            Good catch on the 2015 post! That does sound like me, doesn’t it? I’m honestly not even sure if it is. Maybe I have been here longer than I thought, though I believe I began posting regularly in 2017. Just took a look through some 2016 blog posts and I don’t seem to have posted then.

            Bit hyperbolic on all those predictions though. I’m sure I’ve expressed concern on most of those topics, but seems you’ve really extrapolated them.

            Oh, and by the way, that was appraiser’s line, which I totted back out when he was wrong about Covid-19. Just like you were when you thought it was improving mid-March, or when you thought April 2017’s average price would be re-attained by the end of the year.

          13. Kyle

            at 10:17 am

            Yes i’ll admit i was wrong about covid cases in March, and i was wrong when i predicted that prices would reach a new peak by end of 2018. But let’s put a little context in place. I made a bold prediction on the direction, magnitude and timing of the market and got 2 out of three, and missed the timing by 14 months. Meanwhile you bears were still arguing that the market hadn’t even bottomed.

            You can dismiss my trophy boyfriend analogy if you want, but you really should start taking the hints from the multiple other commenters who’ve been telling you to dial it way back and to put away your team covid pom-poms.

          14. Chris

            at 10:26 am

            Yep, nobody gets all their calls right!

            Ah, now that’s unfair, Kyle. While I’m bearish on real estate and readily share quotes and stories about the economy, unemployment, and housing market, I am not at all celebrating the human health impact of the pandemic. I’ve had friends who have contracted and been hospitalized for Covid-19, and while thankfully they have all recovered, it is a very serious illness which nobody should take lightly.

            The fact that we’re taking appropriate measures to slow and mitigate the disease, even at the expense of our economy, makes me immensely proud of Canada.

            Now, if you said I was team housing crash, I would agree!

  7. J G

    at 10:34 am

    I personally know realtors who strongly recommended buying into the bubble in spring of 2017 to first time buyers and immigrant families. These are probably the same people you don’t like David. Some of them even asked me for a job in another field when market slowed in 2018.

  8. Kyle

    at 12:45 pm

    Excellent post David.

    Bears like Macbeth, Rabidoux, Carrick and Turner don’t need to ever be right to continue to get play. Just like Trump doesn’t need to tell the truth to get votes. Each has a steadfast base readily lapping up anything they say without the slightest but of critical thinking and media looking for more clicks only to happy to put that content out there.

    And similar to the Trump claiming his achievements, when these permabears claim they called it, their base isn’t going to question that either.

    1. Appraiser

      at 1:39 pm

      Bears ‘kinda remind me a broken clock. But instead of being right twice a day, they’re right about once every 12 years.

      1. Bal

        at 3:52 pm

        Appraiser – you really don’t think that the house prices are way up? I guess you don’t see that all…as you bought your properties when market was down ……if you would have on other side of the fence…buyer like me…then you would have understand the pain….

        Sorry everyone I am bit cranky today….

        1. Bal

          at 3:57 pm

          million dollar for townhouse …..just cannot believe…doesn’t matter how much I save…prices are going up…every year I saved and thought enough for the down payment…prices went higher..i guess I can never save for the downpayment…it is sad story…houses should be for living ….but people are using for flipping and richer are getting richer…..people like me just suffer

    2. Bal

      at 1:42 pm

      Media play huge role…..i hate when media say the price jump 10% and next thing I see all builders raising their price…sellers raising their prices..i saw one semi selling in Jan by builder 820,000 but news started coming that prices are going up and increased by $150,000 and next thing I saw same kinda houses coming in the market for $950,000…how on earth house value jumped like that…

      1. Kyle

        at 1:47 pm

        @Bal

        I don’t think the price jumped based on the media. I would say the price jumped based on the market. If rational buyers could still buy a comparable house elsewhere for $820,000, no one would pay $950,000 regardless of what the media said.

        1. Bal

          at 3:11 pm

          Kyle I have seen all this…how can buyer buy from anywhere else when everyone increase their prices and seller point out that this is now market….what do you think buyer should do. Media play huge role….if Media or Realtor board says price will go up by 100k by end of the year..I saw exact amount price shooting up as soon as news comes out before even before the yearend….my question prices are increased everywhere…where do you want buyers like me to look…

      2. condodweller

        at 2:54 pm

        @Ball Builders will often come on the market with low prices to sell initial lower end units to secure financing. They then continue to raise prices as they get close to 100% in a rising market. When things turn down as they did in 2017 they had no choice but lower prices inline with the market. That’s when all those people started crying foul who paid higher prices in prior years David has written about in the past.

        1. condodweller

          at 2:57 pm

          BTW what would be interesting to see is what builders are doing now and through the pandemic. Are they lowering prices or are they holding them steady if they believe things will go back to normal once we get through this.

          1. Bal

            at 3:15 pm

            They are all holding them steady…..actually one of the builder raised the price by 5k…lol so that mean prices won’t come down

          2. Condodweller

            at 3:23 pm

            Ok, so that would be worth monitoring going forward as an indication.

            The increase may be a psychological ploy to keep FOMO going.

          3. Bal

            at 3:34 pm

            low interest rates are evil and until interest rates move higher…I don’t see prices are coming down and that is my take….nothing impact the house market other than interest rates

          4. Appraiser

            at 4:35 pm

            Most if not all are temporarily closed to human contact.

  9. condodweller

    at 2:09 pm

    David, there are so many facets to this topic that I could write 10 blogs about it. Regarding the main topic of prognosticators, I suspect it would be impossible to find one person who gotten three or more calls correct in the past. It’s one thing to lay out a landscape and make prudent suggestions to deal with what might happen, yet it’s quiet another to call the timing right consistently. Any one who takes binary action based on one persons calls is a fool in my book.

    Your analogy of the weather is good in the sense that we can get 2mm of rain over an entire day or we could get 20mm in one hour and have the rest of the day sunny. In 89 the RE market went down about 50% over 6 years, now it has gone down 12% in half a month if we use Chris’s source. On the other hand it’s not realistic given taking action based on the advice has much lower consequences and cost with forecasting rain vs RE. prices.

    There is very little “cost” to being wrong with the rain and it doesn’t take much to pick up an umbrella on your way out. It’s another matter with RE where it will cost you $100,000 each time you act and you might have hundreds of thousands of $$ at stake with each action you take. If you had to pay $1000 each morning to pickup your umbrella, and if the rain was let’s say acid rain where you burn your skin when you get wet, would that change your behaviour?

    Returning to prognosticating for a moment I would say that any bull that says the market is going up for ever without accurately predicting which year it will go down and by how much is just as wrong as the person who call for a crash prematurely for 10 years. The question then becomes which is worse and which has a higher consequence.

    In this case we are clearly talking about RE investment and not home ownership. Therefore all the issues of investing comes into play i.e. risk tolerance, time horizon, experience, diversification to name a few. Decisions need to be tailor made to each person therefore appropriate action will vary widely based on that person’s circumstances.

    If a person has a plan it’s impossible to judge that person’s action right or wrong based on knowing one fact, let’s say your example of the rich person holding an 8million home empty. First of all rich people make mistakes too, it’s just that often those mistakes have much lower consequences if they own a portfolio of 100 homes vs an average working person who has scraped together a 20% down payment over 15 years and leveraged up 80% to buy a single home where he is dependent on the rental income.

    Unfortunately making RE investment decisions have very high transaction costs and potential consequences.

    1. Natrx

      at 3:28 pm

      I wonder for those that ‘bought’ early February to Mid-March, come closing time in May-June, will banks pull financing, deals fall through, etc. You can look at year over year rate, but when you see a comparable property selling for 300K under what a buyer agreed to in March, I’ve got to think Bank appraisers will get nervous. Or buyer’s remorse (i.e. forgot the deposit and just buy on the spot there).

      That 69% number of sales decline is going to to look like 80+% on a weekly basis for the next little while.

      1. Sirgruper

        at 10:11 pm

        Ask any real estate lawyer. People are doing whatever they can to bail from deals. Not everyone but for certain real estate assets people are defaulting , lenders have dried up and lawyers are busy with problem deals. It’s the rare transaction now that is business as usual. Not fun out there and most investors are sitting on their hands unless something is a fire sale or a strategic purchase.

        1. David Fleming

          at 11:28 am

          @ Sigruper

          This is fake news.

          I had twenty transactions closing post-March-16, and there hasn’t been a single instance of a buyer “trying to bail.”

          No lenders have “dried up.” Did you watch Tony’s interview on Monday?

          Moving on…

          1. Appraiser

            at 6:40 pm

            Touché

          2. Christopher

            at 9:42 pm

            I have one friend who sold their home pre-covid lockdown with a long closing. The buyer has contacted them essentially saying they wouldn’t mind getting out of the deal… My friends said no way so we shall see if the buyer eventually does close. There is at least one buyer out there who tried to bail.

          3. Sirgruper

            at 12:48 am

            David.

            With all due respect you are wrong re fake. I know what I am seeing. True I deal in more commercial real estate where the effects are greater but your 100% batting average is atypical to what I and other real estate lawyers are seeing. Don’t believe at your peril. Before you call it fake try verifying with the real estate bar. Still enjoy your blog notwithstanding the unfair dis.

          4. Sirgruper

            at 1:00 am

            How Trumpistic of you. No lenders have dried up? Do you know how many large mortgage funds have halted redemptions and have stopped lending? Just because you are not experiencing it doesn’t mean it’s not happening.

  10. Muhammad

    at 3:10 pm

    Great Article. I have been listening/ following John pasalis since 2016. Though I own a few pieces of real estate – all were bought before 2016. I like him just because he is so honest, unbiased and always have a logic behind his argument.
    I still listen to him but don’t act on his advise any more as you run into analysis-paralysis phase and never get out of it. I wish I had not listened to him in 2016 and would have added 3-4 more properties to my portfolio.
    Jan 2020, I am back in the market to buy as many properties I can.
    Happy GTA Investing.

    1. Bal

      at 3:41 pm

      Jan2020? isn’t January is gone or you already bought?

      1. Bal

        at 3:58 pm

        Sorry Gang..I am very upset today and venting….really sorry if I am annoying…

        1. Chris

          at 4:13 pm

          It’s all good Bal. You’re usually one of the better natured ones here, so I think you’ve earned some leeway.

          1. Bal

            at 5:25 pm

            Thank you Chris..you are kind as well

    2. Appraiser

      at 4:46 pm

      Many investors with strong balance sheets are licking their chops.

      1. Bal

        at 5:25 pm

        what does that mean? licking their chops? Sorry English is not my first langu…does that mean they are happy

        1. Chris

          at 5:43 pm

          It essentially means awaiting with excitement.

      2. Chris

        at 5:42 pm

        Oh, I’m sure some are. But are there enough of them out their to make up for decreased demand from other sources?

      3. Verbal Kint

        at 10:42 pm

        Doesn’t even rise to the level of an anecdote. Just a bunch of words strung together.

        1. Appraiser

          at 10:47 am

          So much bitterness.

    3. Professional Shanker

      at 12:54 pm

      Let me get this straight, a world wide pandemic is transpiring with no indication that we have a path to a productivity level close to pre crisis levels and 1 month into represents a good opportunity to buy?

      Air bnb owners right now would not share your view of “I wish I had 4 more properties and another $2m of leverage on the balance sheet”.

      1. Appraiser

        at 6:36 pm

        @Shanker. Not today necessarily.

        But if you bears are right and things drop hard.

        Those with the gold will rule.

  11. Chris

    at 6:04 pm

    Yet more evidence that job losses are not contained to lower incomes, as some here had erroneously suggested:

    “A tsunami of job losses, which began among workers in restaurants, hotels and factories, is now reaching the offices of white-collar America — where analysts and engineers find themselves among the rapidly swelling ranks of the unemployed.”

    https://www.bloomberg.com/news/articles/2020-04-22/-scary-time-for-american-middle-class-as-office-jobs-disappear

    1. Ed

      at 6:39 pm

      Chris you sure love to get ‘quotes’ to back your side.
      Like everything that makes it to the internet is gospel.
      I’m sure you could find 100 quotes to back your argument and 100 to contradict it too.

      1. Chris

        at 6:51 pm

        Yes, Ed, like many here, I use media reports in support of my positions.

        However, as I’m sure you’re aware, not everything posted on the internet is of equal value. BNN Bloomberg, the Wall Street Journal, the New York Times, etc., are obviously more reputable sources of information than just “the internet” as a whole.

        Feel free to post articles, quotes, data, etc. in opposition. Preferably from reputable sources.

  12. Christopher Burke

    at 6:34 am

    Omg thank you!! I am sick and tired of people in the wealth management business publishing articles and books with an obvious hidden agenda. They make me sick to my stomach. They are “grifters” or our time. I advise people to take the advice of those with boots on the ground, those on the front line. We understand and see what happens even before the numbers come out. Thank you for a great article. Well said.

    1. Condodweller

      at 10:17 am

      You call members of a competing industry criminals because you don’t agree with their opinions. You don’t have a hidden agenda, right? Classy.

  13. Joel

    at 9:51 am

    Good read. I think everyone is out to promote their own brand. If you’re not making noise, no one can hear you.

    It really doesn’t matter if what you are saying as substance, just that you are saying something.

    Depending on how long this whole things lasts we may see a huge spike in prices as there is so much pent up demand when open houses are a thing again. Add in the 5 serious buyers for a house and the 15 that think they are going to get a house on offer night for under ask, then all of a sudden you have a bidding war with 20 people and new record high prices!

  14. Derek

    at 12:14 pm

    Noticed a cabbagetown ppty that sold yesterday. It sold for $ 2,002,277 in Mar 2017 and it sold again for $1,845,000 yesterday.

  15. Libertarian

    at 2:55 pm

    It’s funny seeing people on here debate about the Turners and Carricks of the world because even David has the same philosophy:

    “In fact, I’m a believer in an extremely well diversified portfolio. I’ve invested my capital in real estate, mortgages, mutual funds, equities, bonds, credit instruments, and even my sports memorabilia, while I derive pleasure from it, is something I do consider an “investment.” Then I keep some money in cash, just for good measure. That’s diversified.”

    That’s all Turner and Carrick have been telling people for the last while. To put it more simply, they tell people being house poor is risky and not worth it. Of course, the cheerleaders who comment on this blog disagree with that because to them Toronto real estate only goes up. So every mom and pop out there should keep buying more and more condos and put them on AirBnB and watch the money roll in. But those days are over, for now. So we’ll see if they ever come back.

    1. Whaaa?

      at 4:15 pm

      Yes, but most of us don’t have anywhere close to sufficient capital to diversify into a half dozen or more asset classes. The mortgage-free house/condo is all most of us can reasonably aspire to, ever. Cue the outrage of offended white-collar workers who think the rest of us are lazy or stupid or both.

      1. Derek

        at 4:41 pm

        Not a financial advisor, but don’t get locked into the idea that there are no options to contribute to a balanced / diversified portfolio without having a large minimum spend. Gotta start somewhere and there are ways to do so.

        1. Whaaa?

          at 5:22 pm

          No, you’re missing my point, which is that saving *anything* is really, really hard for a lot of people, because a lot of people make s*** money (sometimes deservedly, but often not).

  16. Appraiser

    at 4:59 pm

    So I did a litlle digging on the MLS numbers for the GTA from April 1 – 17. TRREB hinted that the sales mix was a factor on averages. This might be why:

    In 2019 between April 1 – 17 there were 144 freehold sales for over $2,000,000. This year there were 33.

    Last year there were 20 condos sold over $2M, this year there were zero.

    1. Derek

      at 5:30 pm

      Nice digging. So the well-to-do people who have not been impacted by the job losses and income reductions have shut down purchases. Seems counter-intuitive.

      1. Appraiser

        at 6:26 pm

        They are not listing for sale because they can.

        1. Chris

          at 6:31 pm

          There are currently 592 listings in the 416 for $2M+. Per realtor.ca

          1. Derek

            at 6:40 pm

            Is that about 8-9 MOI then?

          2. Chris

            at 6:52 pm

            The 592 figure was just for the City of Toronto, whereas appraiser’s sales figures are for the entire GTA.

            For the GTA as a whole, there are currently 1,706 listings for $2M+, again per realtor.ca. This might also be a bit low, because the website’s boundaries for the GTA exclude Burlington and Oshawa.

            So, if we assume 33 sales represents a half month’s worth of demand, extrapolate to 66 for a full month, that equates to 25.8 MOI.

            Sounds like it’s more of a demand issue, than a supply issue, at these higher price points.

          3. Derek

            at 7:37 pm

            Is that a ever a thing that people look at over time i.e. the MOI’s for different price points?

          4. Chris

            at 7:52 pm

            I feel like I’ve seen some people dig into it before, but can’t quite remember for certain. Maybe Scott Ingram? He does a lot of interesting data analysis.

          5. Bal

            at 10:27 pm

            I failed to understand why builders are increasing the prices….lol…who is buying from them….they want to keep the party going…..

      2. Ed

        at 9:55 am

        They well to do have been impacted by a drop in their portfolios.

  17. Clifford

    at 12:24 am

    Good article, David.

    I’m one of those people who bought brand new townhouse last year that’s closing in the Fall (probably later since covid will delay construction a bit)….I have to sell a property to come up with the rest of the DP. Was looking to sell it in the Spring, but Covid happened so now I’m wondering if I sell it now or wait till Summer?

    Property was probably going to sell for $825K. I think now it may be as low as 750K 2 Bed condo downtown. So I have that situation, then having to get a mortgage in a market where the new home probably lost value, which means the appraisal will come in lower. I have the money but will lose on both ends.

    I hope the market recovers quickly but I think I may be screwed. :-/

    Sorry for the long post.

    1. Derek

      at 1:03 am

      Good luck Clifford. Hope it works out. Nd that your new place is great

      1. Clifford

        at 8:52 am

        Thanks. Appreciate it.

  18. Thomas

    at 12:19 am

    The % increase in average house price between 2014 and 2019 would be about 55%, isnt it? A Vanguard ETF during the same period would have fetched a bit more than 60% for the same period. And that too at a very low MER. Now, the real estate would have had other expenses too. So, the advice might not have been so bad afterall. Now, I do agree that a balanced portfolio of investment is required. But adding just one home disturbs that balance for most of the population. Besides that treating residential property as investment also makes it less affordable for the people who are looking for the first home (like me :)) That said, market and economy has little consideration for emotions or basic human needs. And this is where we need government intervention. I am hoping that we agree on the fact that Toronto housing market is out of reach for the average person and that it is not really a sustainable economic model to depend so much on RE. It is not just about being bearish or bullish.

    I have been looking for a home for the last one year and in the search for information, I stumbled upon this wonderful blog and the comments. It has been about three months since I have been a passive reader and enjoy David’s blog and all the active discussions happening here. Newbie here, so please be kind 😉

    1. condodweller

      at 11:00 pm

      @Thomas typically people move on once David releases a new blog and discussions move to the latest blog. I just saw your comment when I opened my browser with the old page.

      Even though you build equity in your home as you pay off your mortgage, strictly speaking a home is not an investment. The only thing you can do to balance things out with your actual investments is to have no RE exposure there.

      Regarding government assistance to make homes affordable you won’t find much sympathy here as commenters tend to agree that it’s simply the case of if you can’t afford it find another location where you can and I would tend to agree for the most part.

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