For those of you who don’t have the time to watch a 45-minute video, here are the questions covered, and the times at which they appear so you can skip ahead…
Question #6 from Adam @ 0m 15s
Any insights or advice for first time buyers planning on entering the market over the next 12 months? Specifically, any thoughts on down payment amounts (5% vs 20%) and appraisal risks before closing would be appreciated. Love the blog (David) and thanks to you both for all your input!
Question #7 from Professional Shanker @ 4m 43s
What segments of the market will out and under perform on a relative basis for the remainder of 2020 while we work and live under a pandemic?
-Condos – Will we see condo owners (Airbnb, typical rental market) attempt to list driving up supply? What about demand in highly populated areas? What will happen to the demand from the spec-investor over the few years?
-GTA Suburbs – Will a experience an increase in demand/speculation as people give thought to more flexible future working arrangements moving forward?
Question #8 from Derek @ 8m 10s
LG (truly a moniker of endearment): How about a general history lesson? Legends say (Old Testament, I believe) there was once a serial annual decline in Toronto house prices (89/90 onward). What happened and what sustained the downward movement for so many years? Are we now happily immune from such multi-year declines for reasons suggested by “Cal” or maybe other factors?
More specifically, for the foreseeable future, should anyone thinking about a “move-up” even consider buying a new home before selling the existing (detached) home? (answer can be addressed to “Derek’s wife”).
Cheers and thanks gentlemen.
Question #9 from M @ 18m 52s
Assuming nobody has the ability to time the market, what is the purpose of using stats, and how much can they actually tell us about future price? Thanks!
Question #10 from Libertarian @ 22m 42s
Not a specific question, but more a “topic of conversation”, so David, feel free to chime in on this. One of John’s more controversial themes is when he posts about the role of the investor in the market. When did he start looking into that? How much of an impact does he think it has? What’s the ratio of professional investors to mom-and-pop investors? It is condos and houses equally? Where does he see it going from here? Etc.
This came up in the comments on Tuesday, which I unfortunately missed. I believe there’s a large segment of the population that owns more real estate than their principal residence. Others disagree, or at least, think that it does not impact the market. I would love to hear both of your opinions on this.
Question #11 from Christopher @ 30m 20s
Do you foresee a scenario where GTA home prices, adjusted for inflation, never again hit the highs obtained pre-corona virus? If so, what odds do you place on this happening?
Question #12 from Jimbo @ 31m 48s
I think either of you could answer this:
With the government running a $250B deficit and the total debt for the Canadian government not including provinces sitting at $700Bish, soon to be $1T. What are the chances the government starts to psiphoning off real estate gains via tax.
My question is if the government were to tax gains from the Jan 2017 – Dec 2019 tube period, how much would they have brought in from just the GTA alone. The two calculations I would be interested in are straight 34% tax on profit and 34% tax on 50% of the profit. What percentage of properties do not include a previous sale price because it was bought so long ago.
If they do create this tax do you see them allowing us to write off real estate fees and land transfer taxes?
Question #13 from Clive O. @ 35m 47s
What pieces of data or stats are your go to?
Which pieces of data or stats do you think are the most important or most accurate in our market?
Further to this, which pieces of stats or data are the most counterintuitive or prove to be incorrect during a real estate boom?
Bal
at 7:41 am
David – I am unable to review. do we need some kind of access to review this video .
when I clicked on the video the below message display
“if the owner of this video has granted to access, please log in’
David Fleming
at 8:46 am
You should be able to review the video now!
Appraiser
at 9:24 am
Beware of average prices and relatively small data sets.
In April of 2020 there were 69 freehold sales over $2Million. In 2019 there were 231.
In April of 2020 there were 32 condo sales over $1Million. In 2019 there were 152.
J G
at 10:20 am
Beware of catching a falling knife. What is your prediction on how fall 416 condo will fall?
Chris
at 11:00 am
More importantly, appraiser, what’s your guess for our game? When will average price re-attain $910k?
Jimbo
at 11:24 am
April 2022 for me
Chris
at 11:48 am
Got it, Jimbo! That puts you, Derek, and LG JP all betting on April 2022.
J G
at 10:21 am
*how far
Verbal Kint
at 11:08 am
So pricey condo sales are down 80% while pricey freehold sales are only down 70%? 1.5 freehold sales per condo sale in 2019, two freeholds per condo in 2020?
That means the change in reported average price understates the damage, due to a change in sales mix.
It is uncharacteristic of you to spread bad news. Did you post before you thought it through?
Appraiser
at 12:53 pm
Also beware of statistical noise generated by individuals who have to sell during a pandemic.
Since some people here like analogies: let’s say you wanted to know something about the general health of the population, but only surveyed patients in doctors’ waiting rooms. Would that skew the data?
Verbal Kint
at 1:46 pm
You do appraisals, supposedly. Do you appraise for the price a property could achieve in today’s market, or do you have a crystal ball?
Appraiser
at 8:09 am
@Verbal: No problems with appraisals so far. No crystal ball required.
Chris
at 8:57 am
You didn’t answer Verbal’s question. Are you appraising homes at what they can sell for today? Or what they could have sold for in February?
Or maybe it’s a non issue, if you don’t have many appraisals lately, given how slow the market is?
Appraiser
at 10:21 am
@Chris. You are correct, business volumes are down. Another shining example of how rental income is often more reliable than employment income . Glad to have both. Thanks for your concern.
P.S. did you pay your rent this month, or are you still holding out on your mom?
Chris
at 11:11 am
Still haven’t answered Verbal’s question, appraiser. You’re attempting to obfuscate with childish insults.
On the topic of rental income:
“In a single month, the GTA’s condo rental market has reversed directions and will record a 3.5% drop in average rents for the month of April. The collapse in demand for Airbnb rentals may be playing a role in this trend.”
– John Pasalis
https://twitter.com/JohnPasalis/status/1255670536652427264
Pragma
at 2:21 pm
How do you know they “have to”? We might look back in 5 years and say that was such a good trade. In fact I could (and will) say the complete opposite. The people who are selling now are not under pressure, they are the ones saying “hey I’ve had a great run, time to take profits and reduce my risk”. People have only missed ONE (maybe two) mortgage payments. Airbnbs have only been empty for 6 weeks. The real stress will happen when people just can’t carry it anymore. 5 months? 6 months?
Natrx
at 11:07 am
Ok, let’s say you had adjust 231 freeholds to sell in April 2020 (like April 2019). What prices do you think will be required to move that amount? Lower? Higher? The same?
Ed
at 5:31 pm
Shank is a golf term David, I’m surprised you didn’t know that.
def.- Shank- to badly mishit a golf ball directly off target
eg. You shanked that one into the woods.
So by definition there is no such thing as a Professional Shanker.
More so an endearing term for someone who enjoys to pay golf but does so poorly.
David Fleming
at 10:22 pm
@ Ed
True, and I know from playing golf and shanking a few myself.
But after watching the HBO series, “Oz,” I can’t hear that word and not think about somebody getting stabbed in the prison shower with a sharpened toothbrush.
Thomas
at 8:49 am
MOI isnt an effective measure in this particular scenario. If MOI is calculated based on active listings\transactions at the end of last month, wouldn’t it be a bit exaggerated given that last month’s sales were artificially down. The number of active listings have remained steady (declined slightly for freeholds from the beginning of April) too.
The true picture will only emerge after mortgage deferral period is over.
Chris
at 9:01 am
There are different methods of calculating MOI. Some will use trailing three months, some will use past month, etc.
For example, John Pasalis uses both past month and past week when providing his weekly update:
https://twitter.com/johnpasalis/status/1254806122990571520
But I agree with you, once the deferrals end, it will be interesting. Both John and Frances Donald, global chief economist at Manulife, have talked about that in interviews over the past couple days.
Appraiser
at 9:56 am
“Caution as you read the stats this month that due to sales volumes being so low, they’re a lot more prone to wild swings. Especially when you go more granular (e.g. rowhouses had only 37 sales last month, condo towns 71)”
~Scott Ingram CPA, CA
https://twitter.com/areacode416/status/1258188139560087553
Kyle
at 10:41 am
I agree with Scott’s general caution, lower volumes can cause a lot of noise in the signals. It’s similar to how David suggests not to use December reports to draw conclusion from.
Also from my observation, there is always some level of what David has referred to in the past as “dummy inventory” which overstates the Active Listings number. In a normal market this dummy inventory is a much smaller immaterial percentage, but when listings are down as much as they are, the proportion that this dummy inventory represents gets magnified when looking at MOI.
Chris
at 11:14 am
“Google affiliate Sidewalk Labs abandons Toronto smart-city project
“As unprecedented economic uncertainty has set in around the world and in the Toronto real estate market, it has become too difficult to make the 12-acre project financially viable without sacrificing core parts of the plan we had developed,” the company said in a statement.”
https://www.theglobeandmail.com/business/technology/article-google-affiliate-sidewalk-labs-abandons-toronto-smart-city-project/
Mark
at 2:53 pm
@Chris-who cares a high tech slum isn’t coming to Toronto. Big American Tech seeking to poach data, bribe and control a vulnerable demographic soon to be just algorithms, to benefit and serve purposes that I have little doubt will ever give back to the human race in any way. Toronto will do something GREAT with that 12 acres.
I wanted to share a few thoughts on to buy, not to buy
Unless you’re paying cash, a market crash is NOT beneficial to folks that are financing. The banks go with the market.
Let me explain. The risk of waiting is what happens with interest rates. Right now, we are historic low interest rates, allowing you to have LOWER payments. If the price goes down, but the interest rates go up- are you willing to pay MORE for the same level of home? If not, look for a home you love and lock in at a great rate, so you are comfortable with payments, which you’ll be paying over next couple of decades. Isn’t that what’s important to you? Let the renters, rent (Hibernate, lol).If you have a dream of home ownership, this message is meant for you. Cheers.
Chris
at 3:05 pm
“who cares a high tech slum isn’t coming to Toronto.”
Many people. David for one:
“Toronto is not going to be the next Silicon Valley. But I have to think that Toronto turned a major corner when Google (or Alphabet) announced that Sidewalk Labs would be coming to Toronto’s waterfront.”
https://torontorealtyblog.com/blog/is-the-i-t-sector-going-to-drive-real-estate-growth-in-toronto/
Kyle for another:
“In the next 5 years i see a lot of positive right tail factors, like the recently announced increase in immigration levels (25% of immigrants choose to settle in Toronto and 60% of all immigrants are economic immigrants), the recently announced Sidewalk Labs project.”
“If the price goes down, but the interest rates go up”
Are you expecting interest rates to go up? I think you would be in the minority with that opinion.
“Isn’t that what’s important to you? Let the renters, rent (Hibernate, lol).If you have a dream of home ownership, this message is meant for you.”
We’ve talked about rent vs. buy before. Far too many individual variables and considerations to make any broad sweeping statements.
Derek*
at 3:07 pm
I think the significance of the Sidewalk Labs news is that it used to be a positive indicator of high paying technology jobs coming here, to the benefit of real estate prices.
Mark
at 3:42 pm
Goodbye sidewalk labs, yesterdays news. Big Tech Company years ahead, probably scrapping whole concept, moving on to something else,yet to be
announced. Hello to more waterfront condos? How many people will that employ while offering more housing….
Kyle
at 3:48 pm
Correct, in my mind Quayside, was not necessarily going to directly create a bunch of jobs in Toronto, but it would be a positive indicator that draws attention from other tech companies looking for a place to establish a presence. Similar to how high end car manufacturers create “Halo” models that don’t directly generate them any profit, but they do signal to the world what the brand represents.and they draw customers into the dealership.
With all the press and attention that was generated over Quayside, i would say they managed to already fulfill a big part of that halo role. Toronto is now firmly established as a major hub, and i don’t think the abandoning of this project is going to reverse that.
Jimbo
at 5:06 pm
A market crash doesn’t mean you pay a higher interest rate…..
$2,000 a month mortgage to $5,700 a month is not something I would rush into just because…. You may be able to get a little more house for $3,600 a month in the next 9 months when POS homes come on the market. I wouldn’t be interested in the POS homes as they will probably be damaged but the hinges next door that will be priced lower I would go for if I could afford the monthly.
Jimbo
at 5:07 pm
Homes not hinges.
Thomas
at 6:34 pm
Sidewalk labs was used by many projects and RE agents in their marketing emails for pre construction. A lot of it is about marketing. And it did create an impression. And when the project is scrapped that will create an impression too
Mxyzptlk
at 10:10 pm
Sidewalk Labs cancelled the project because of the pandemic, lockdowns, and subsequent worldwide recession and uncertainty (to say the least). The decision had nothing to do with Toronto per se. If it had been planned for New York or Washington or Chicago or London or Paris or Tokyo or anywhere else, it would have been cancelled. The G&M article (see Chris’s link above) details Alphabet’s deep cost-cutting in other areas of their business due to Covid/19.
Thomas
at 10:42 pm
That is most likely true and I agree. It still will have a negative impact on the perceived value of projects which were planned nearby
Chris
at 10:49 pm
“The decision had nothing to do with Toronto per se.”
It’s impossible for any of us to know with certainty exactly why they cancelled the project.
But, they did cite “unprecedented economic uncertainty…in the Toronto real estate market,” specifically as a factor in their statement.
jeanmarc
at 7:05 pm
Here is another stat coming from Home Capital today. They reported this morning.
“loan-loss provisions surged 674.4 per cent to $30.2 million in the first quarter of 2020, compared to the final quarter of 2019. On a year-over-year basis, provisions jumped 397.9 per cent.” Quarter ended March 31, 2020.
Depending on what happens in the coming months, if the lockdown continues. LV may or may not become worse depending on how long the gov’t subsidies will go on for. An indicator of what other large institutions will have to deal with.
The job numbers will be coming out tomorrow morning.