Would it surprise you to know that Ben and I are pals?
“Impossible,” you say! A bear and a bull cannot get along. That would be like Appraiser having a tea party with Chris.
Bears and bulls. Yeesh. I reminds me of the movie “Can’t Buy Me Love” from 1987 with a young Patrick Dempsey. He gives a great speech at the end of the movie to one of the “jocks,” talking about the two sides of the cafeteria, which was divided by social castes.
“Cools, nerds. Your side, my side: man, it’s all bullshit!”
Great movie, for those of you who haven’t seen it, although this scene somewhat spoils the ending.
We had a copy of “Can’t Buy Me Love” on Beta-Max in the late-1980’s and my sister made us watch it every time our parents went out for dinner…
The comments section of TRB has been less divided lately, and while I don’t actually want everybody to get along in harmony, because that would be boring, there’s certainly more of a discussion about where the market is, among the bulls and bears, rather than “You’re wrong, and I’m right,” with no explanation.
Ben Rabidoux has been labelled a “bear” among the TRB readers for quite some time, but I know Ben to be something else: a realist. Ben and I have that in common, and while we may interpret data differently, or draw different conclusions, Ben is always armed with the pertinent stats and market metrics. And regardless of his view of where the market could be headed, or what the data would, could, or should say, I’ve never heard him deny where things actually are. The same cannot be said for many of the ardent “bears” out there over the last several years.
For those TRB commenters who have been in constant discussion about the market over the last two weeks – Appraiser, Chris, Condodweller, Kyle, Derek, Bal, Natrx, Libererian, et al., now is your chance to ask Ben a question. Any question.
That goes for the rest of the readers as well.
So I’ll simply end the week here, as I don’t have anything else to add this week, and I would rather spend the time today putting forth questions for Ben.
If you have a question for Ben Rabidoux, please post in the thread at the top of today’s Comments Section.
David Fleming
at 11:06 pm
Questions For Ben Rabidoux – This Thread Please!
Chris
at 8:33 am
I’d be curious about Ben’s opinion on the headwinds and tailwinds he currently perceives for real estate, and where he sees the market going? Bit of a lengthy question, I know.
Oh, also, his guess for our game! When will Feb. 2020 average sales price be re-attained?
Condodweller
at 11:45 pm
If he is willing to play I’d be curious how low we’ll go before the recovery.
Graham
at 8:54 am
Who would win a game of Risk: David, Ben, Hilliard MacBeth, Garth Turner, John Pasalis, or Bo Jackson.
Clifford
at 8:56 am
2 questions:
1) If one has to sell within the next 6 months. When is the best time?
2) How real of a possibility do we see buyers getting into trouble with appraisals coming in lower than the sales price within the next 6-12 months?
Thanks
Cal
at 8:58 am
How important are RE markets for the federal and provincial governments and the related agencies (BoC, OSFI, …)? How much are they willing to do to keep RE prices from falling, or falling too much?
J G
at 9:38 am
Hello, what’s your prediction on the Toronto condo market? The Feb 2020 high was $641k, do you feel it will drop by 20% or more? Thanks,
Derek
at 2:37 am
At least
J G
at 2:00 pm
You’re right, I was thinking at least 25-30%. According to weekly stats, condo prices in Toronto have already given up the gains for the past year ~20%.
https://www.huffingtonpost.ca/entry/home-sales-coronavirus-crisis_ca_5ea08222c5b69150246c77e4?ncid=fcbklnkcahpmg00000001&fbclid=IwAR1pefqDuin3JWrjZSAsjz3LqXeEdZi5N_K77Z5DZD_IQ7ypQo1LFaYCIBQ
Investors who are not over leveraged will not care, except this time rent is coming down too! A lot of them are not sleeping easy these days.
Mike
at 9:50 am
I read Ben’s comments on the rental market last week. Just hoping he can elaborate a little and tell us how much inventory has increased, whether rents have dropped, and what does the trend look like? What’s the impact for the condo market and prices?
Appraiser
at 9:52 am
How do you think you have grown as an analyst over the past 12 years. What are some of the more important lessons that you’ve learned. What would you say to your critics?
Steve
at 10:14 am
Is a hot dog a sandwich?
hoob
at 10:28 am
In a fit of nostalgia, I was looking up house prices in the small rural town I grew up in, 2.5 hours from Montreal. There’s a good selection of completely adequate housing in the 70-90G range. I could live there again: under an hour to the nearest city, high speed internet, and generally NOT a complete crapshow.
I’m not a city person. At what point should a pragmatist seriously start considering cashing out of a $1M home/gains in Toronto, locking in a cheap place to live somewhere, and leveraging other growth options instead of RE?
jeanmarc
at 9:09 pm
RE is like the stock market but way more stable. There were the times in the early 1980s with the high interest rates, the crash in the early 1990s, 2008, 2017 and present. RE will always be a better investment in the long run post virus.
Derek
at 10:33 am
What is your “worst” analysis / prediction, i.e., that did not pan out as you expected?
What is your “best” analysis / prediction, i.e. that panned out as you expected?
In the historical war between housing bears and bulls, what is the worst fallacious attack you see against each side.
Clive O.
at 11:37 am
A question about market data:
Which pieces of data or which stats are your go-to?
Which pieces of data or stats should be the most important and most accurate in our market?
Which pieces of stats or data have been the most counter-intuitive or incorrect during the recent real estate boom?
Thanks so much!
Max
at 6:24 pm
Here’s what I’ve always wanted to ask a real housing analyst:
1) Why do the curves of both appreciation in housing and wage growth continue to diverge for a second or third decade? Is this no longer concerning?
2) Why does the ratio of household debt to income continue to grow every year but real estate prices continue to appreciate? When this ratio hit 150% the alarm bells sounded. Not as much noise was made when the ratio passed 160%. Ditto for 170%. Does this measure matter anymore? Ben, what happens if and when we cross 200%, both in theory and in practice?
Both these questions I’ve learned from reading David’s blog over the years. He’s addressed the meaninglessness of these measures a few times and I want to know is he’s on point.
Cheers!
M
at 10:46 am
Evan Siddall’s term is up this year. Do you have an idea on who could be his successor, and any conclusions we can draw from this appointment with respect to future government RE policy?
Thomas
at 3:40 pm
Is it generally better (economically) for a buyer to make 20% down payment than 10% or 15%? Thanks
Bal
at 8:21 am
Good Morning Ben and David, I am searching for the house, but not sure if I should wait or keep searching. I have been hearing that prices will dip….I am very confused…I also noticed strange trend….Resale house prices are starting to sell under asking but new home builders are raising the prices….why these two are going into the different direction.
Chris
at 10:06 am
Sounds like, as predicted, AirBnB’s support and grants to hosts turned out to be a big nothingburger:
“Airbnb hosts say they’re getting nothing or comically small payments from $250 million relief fund, call it a ‘publicity stunt’”
https://www.cnbc.com/2020/04/22/airbnb-hosts-getting-almost-nothing-from-250-million-relief-fund.html
Natrx
at 12:24 pm
Canada’s credit rating based on comparable market data is seeing negative pressure, with a downgrade more plausible in a very long time. If this happens, would you expect mortgage borrowing costs to fundamentally shift up (somewhat similar happened in the 90s)?
Chris
at 2:07 pm
Bal, I know you’ve mentioned the impact of interest rates on real estate a lot. This tweet touches on that a bit:
“Reading articles about “pent-up demand” and “low interest rates” stimulating the housing market is fun.
Reality check!! You can lower rates to zero, but if consumers don’t have the confidence to borrow or the banks aren’t willing to lend, it’s irrelevant.
Also are mortgage rates “stimulative”? It’s not like they are dropping from 5% to 2.5%. In fact, they really haven’t moved at all in 5 years.”
– Steve Saretsky, April 24, 2020
https://twitter.com/SteveSaretsky/status/1253726345047142405
Ed
at 6:42 pm
Hey Chris, I heard you’re coming out with your own blog.
Can I have the web address please.
Chris
at 7:46 pm
You heard wrong. Sorry, Ed!
Derek
at 8:01 pm
Chris, for fun, let’s invite Kyle to provide the top 5 potential names for your Blog, if you were starting a blog. ????
Chris
at 9:27 pm
Ha I’m sure he could come up with some pretty creative ones!
Condodweller
at 11:28 pm
If you don’t start your own blog David is going to have to start charging you rent ????
Bal
at 9:01 am
:)….
Appraiser
at 10:51 am
Hey @ED: I have an idea for a blog name …
https://www.youtube.com/watch?v=YAjaVXUYrwE
Chris
at 11:07 am
Isn’t that basically just Greater Fool?
Bal
at 9:00 am
Chris – Thank you for the link
Chris
at 11:06 am
No problem Bal! Steve’s a good follow, though more so for the Vancouver market.
Jonny
at 9:25 am
What happens to all the pre-con condo prices if the market drops overall? For instance if a building is half sold. But people just aren’t buying because they can get a better deal on something built already.
Also what tips do you have for a first time home buyer in this market who doesn’t have 20%?
Thomas
at 3:38 pm
I would like to add a follow up question to this. Is it generally better (economically) for a buyer to make 20% down payment than 10% or 15%? Thanks
jeanmarc
at 9:23 pm
Interesting comment made by condodweller below. “Even though you build equity in your home as you pay off your mortgage, strictly speaking a home is not an investment.”
I purchased a property back in late 2013 and sold in June 2017 (approx. 84% price appreciation). Was this not an investment?
condodweller
April 25, 2020 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.
Thomas
at 9:59 pm
I dont want to speak for him but I understood that he was talking about the first home
Condodweller
at 11:44 pm
@jeanmarc. I assumed Thomas was talking about a primary residence. So it depends, was the property you sold your PR or was it an investment property? What was the reason for selling? Most people will not sell their PR due to the price action of their home. That’s why I said I wouldn’t consider it an investment, technically. If you sold your home and bought another one, then really it wasn’t a sale, it was more of a switch to use investment terminology.
In reality, it is an investment as people” invest their down payment in the hope of increasing the equity through price appreciation and the principal portion of their mortgage payments.