As much as I would love to write yet another seemingly-innocuous blog post about a TV show that spawns an all-out war between readers, I think the “fun posts” have gotten so serious, that perhaps a “serious post” will get fun?
I want to mix several items together in today’s blog – the increase in minimum down-payment from 5% to 10%, the “issue” with international buyers in Canada, and the effect that interest-rate-neutral policies will have on markets, real estate and otherwise, across the world.
Let’s try to determine if any, or all, of these items will affect Toronto, and if associated policy changes could help “cool” the market…
Stop me if you’ve heard this story before.
I was getting into real estate in 2003, and a good friend of mine told me at the time, “You’ve chosen just about the worst moment to get into real estate! The market is about to crash!”
He told me that “every market has a cycle, usually 6-7 years,” and while that is often the case with many markets, it clearly wasn’t the case with Toronto real estate.
Since 2003, the average home price has increased every year, for twelve years, and it’s poised to continue that trend this year as well.
I’ve seen literally hundreds of articles, newscasts, magazine features, and magazine covers about the pending market correction and/or crash, but it hasn’t happened yet.
So what has to happen for our market to correct?
Maybe that’s the toughest question of all to answer.
Our government has taken many steps over the last few years in attempts to “cool” the market.
They might not come out and say they want to cool the market. They might suggest that it’s an effort to stop Canadians from taking on debt, or that it’s ensuring financial responsibility among both lenders and borrowers – especially in the wake of the 2008 financial crisis in the United States, but make no mistake, these changes had the expectation or intent of slowing or cooling the real estate market.
A quick refresher:
1) The maximum amortization was changed from 40 years, to 30 years, to 25 years.
2) The minimum down payment required was upped from 0% (or in some cases a negative percentage) to 5%.
3) The minimum down payment required over $1,000,000 was increased to 20%.
4) The minimum down payment for second properties was increased from 5% to 20%.
5) CMHC insurance premiums were increased.
6) Just recently, the minimum down payment for the amount of home price between $500,000 and $999,999 was increased from 5% to 10%.
Those are the major changes implemented by the CMHC and the Finance Minister, and all of them were aimed at either cooling the housing market, reducing debt, or both.
It’s the last change that I want to talk about today, in tandem with the idea that “international investment” is making it less affordable for Canadians to purchase real estate.
Let me say first that I do believe in free markets, I’m a capitalist, and I think that many markets regulate themselves.
But if somebody were to ask me, “Do you think the Canadian government needs to address the amount of international money flowing into Canada and swallowing up real estate?” my answer would be a fully-committed, maybe.
If, for argument’s sake, the Canadian government banned or restricted foreign ownership of Canadian properties, in any downward-market-cycle, people would be screaming, “What is the government thinking? They’ve killed the market by eliminating foreign ownership! There’s demand among international buyers that would help our market!”
But currently, every online article posted about foreign ownership spawns dozens of angry comments from readers, many who blame foreigners for driving up the price of real estate.
Whether those frustrations are warranted or not, there is merit to the claim that “foreign buying is driving up prices.”
Is there any mistaking that?
Excess demand with limited supply puts upward pressure on prices.
Whether that demand is foreign or domestic does not matter.
So let me revert back to my original question – should the Canadian government address the foreign buying?
Your answer all depends on who you are, and perhaps your political beliefs as well.
Consider that the recent policy change that requires the down payment on $500,000 – $999,000 to be increased from 5% to 10% has absolutely ZERO effect on buyers who pay cash.
Which buyers pay cash, for the most part? Foreign buyers.
So at the risk of sounding like a raging-politician here, it could be argued that hard-working, Canadian tax-payers, who dream of owning a home, have had that dream made harder, while foreign buyers with the proverbial suitcase full of cash, remain unaffected.
That’s likely a topic for another day – a good topic, but one that takes the emphasis off the idea of the “cooling market” up for discussion today.
But as for the idea of restricting foreign ownership to some degree, if the government really did want to cool the market, this is something they’d have to consider.
The increase in minimum down-payment from 5% to 10% hasn’t had a massive effect, at least not yet.
Of course, one change that could have the biggest “cooling effect” on the Toronto real estate market is one that I don’t think we’ll see for quite some time: a raise in interest rates.
There was an awesome story this week on BNN about near-zero interest rates, and how they could remain for a decade!
Here’s the story: “Markets Betting On Near Zero Interest Rates For Another Decade.”
And here’s the most important excerpt:
–
The world is entering a peculiarly prolonged period in which structurally low inflation and wage growth – hampered by aging populations and slowing productivity growth – means the inflation-adjusted interest rate needed to stimulate economic demand may be far below zero.
As there’s likely a lower limit to nominal interest rates just below zero – because it’s cheaper to hold physical cash and bank profitability starts to ebb – then even these zero rates do not gain traction on demand.
For all the debate about the accuracy of that view, it’s already playing out in world markets, with long-term projections from the interest rate swaps market showing developed world interest rates stuck near zero for several years.
Take overnight interest rate swaps. They imply European Central Bank policy rates won’t get back above 0.5 percent for around 13 years and aren’t even expected to be much above 1 percent for at least 60 years.
Japan’s main interest rate won’t reach 0.5 percent for at least 30 years, they suggest, and even U.S. and UK rates are set to remain low for years. It will be six years before U.S. rates return to 1 percent, and a decade until UK rates reach that level.
“Although interest rates are low, they’re not accommodative,” said Harvinder Sian, global rates strategist at Citi in London. “The era of zero rates will be with us for years and years, it wouldn’t surprise me if we’re looking at another five to 10 years.”
–
While the article speaks to the world as a whole, I think it’s safe to assume that rates in Canada are not going up any time soon.
This past Wednesday, the Bank of Canada kept the overnight lending rate at 0.5%, and you’ll be hard-pressed to find any article, economist, or so-called expert who is predicting a rise in rates in 2016.
So let’s review the three items that could, conceivably, cool the Toronto real estate market:
1) CMHC policy
2) Restrictions on foreign ownership
3) Interest rate hikes
With the Canadian economy where it is, the Bank of Canada can’t increase interest rates or risk a recession. So they can’t use interest rates as a tool to cool the real estate market, as the unintended consequences would be dire.
I can’t imagine the government restricting foreign ownership, because to be perfectly blunt, I don’t think they’re capable of such a massive undertaking.
Whether or not that needs to be done, is another point entirely.
Australia made huge changes to their foreign-ownership policy in 2015.
Check out this link: https://firb.gov.au/real-estate/established/
It’s right there at the top:
Non-resident foreign persons are generally prohibited from purchasing established dwellings in Australia.
You can’t be any more direct than that!
Maybe there’s a happy medium somewhere. Maybe an outright “ban” on foreign ownership isn’t the way to go, but the open floodgate system isn’t either.
Or maybe this isn’t even on the policy-makers’ radar, and “cooling the market” all has to do with policy coming from the CMHC.
Surely a change in the overall minimum down-payment, from $0 to $999,999, to 10%, would have a massive effect, and thus the “cooling” of the market would be a success.
Interest rates aren’t going up.
Foreign ownership will not be curtailed.
So either the government makes more sweeping changes to minimum down-payment and/or mortgage qualification requirements, or the market continues on its merry way.
And where is that merry way?
It’s up.
Way up.
Just as an aside – did you see the February TREB numbers? They’re shocking!
Forget about the 14.9% increase in home price from February 2015 to February 2016.
I’m looking at the sales going up 21.1%, and the active listings going down 14.8%.
How can sales be up 21.1% and active listings are down 14.8%? That’s insane. And it’s probably why prices are up 14.9%.
The ratio of sales to active listings in February of 2016 was 69.9%. That’s 7,621 sales and 10,902 active listings.
In February of 2015, the ratio was 49.5%. That was 6,338 sales and 12,793 active listings.
In February of 2014, the ratio was 40.9%.
The 2016 market is just crazy.
Demand is at an all time high.
Supply is shrinking.
Just how the hell is this market ever going to “cool”?
Appraiser
at 8:00 am
In a free market supply and demand are impossible to control. Many real estate markets in Canada are not experiencing what Toronto and Vancouver are. Some areas, most notably those affected by the downturn in the oil patch such as Alberta, Saskatchewan and Newfoundland are in retreat, with supply outstripping demand.
Foreign buyer influence is greatly overstated and little more than scapegoating. Controlling it in the hopes of cooling the market has proven to be an exercise in futility in Australia, where prices in Melbourne and Sydney (the equivalent of our T.O and Van) have continued to soar on the heels of domestic demand.
Any thoughts of intentionally cooling the market in general could have devastating effects in regions that do not require it. Any attempts at targeting specific markets that are currently running hot, run the risk of appearing arbitrary and unfair.
Tory To Be Shot for Treason
at 3:03 pm
Not true nor factual. The past 3 year insane Toronto housing price boom has nothing to do with our economy or jobs or Canadian households doing better economically. How many house holds earn enough to be able to afford a detached home in Toronoto? 99.4% do not earn enough.. ENOUGH SAID.. MATH unlike you does not lie…
Taylor
at 5:34 am
What’s your point? 99% can’t ? But somehow a big portion of these 99% are! Aren’t they? These homes are are being sold within days! Aren’t they? People are finding ways. Think outside the box you live in. People are rich. People have savings. People have homes. People have inherited money. People have huge businesses in Toronto. People have multiple properties. I used to think like you but after speaking to people I realize there are people out there that have good jobs and are educated and teamed up with their spouse who also has a good job and together they can purchase their home. If not, they move out of the city and STILL manage to buy. So I’m not sure what 99% you’re speaking about. The NUMBERS and FACTS don’t lie like you do!
Appraiser
at 8:08 am
As a follow up to my previous post, more thorough data on the Australian market:
http://www.globalpropertyguide.com/Pacific/Australia/Price-History
condodweller
at 10:13 am
The biggest problem with foreign ownership is that we have no idea what percentage of sales are by foreigners. One other way to control foreign ownership, other than an outright ban, is to do what some US states are doing which is adding extra tax to foreign buyers. To do this effectively though you’d have to know the numbers. It’s business 101, if you can’t quantify it you can’t manage it. Having said that, the government recently announced that they want to start tracking it. I don’t know how long it’s going to take for them to collect statistically significant data on which to make a decision, but it’s fair to say they are thinking about it. What occupies governments minds most? How to increase revenue. I would bet my last dollar that they are thinking of taxing foreign buyers and it would not surprise me the least bit to see them do it in the coming years. Now, while it should be fairly trivial to start tracking foreign buyers, we know how inefficient our government is so I wouldn’t hold my breath.
Would it have a cooling effect on our markets? That depends on what percentage of buyers are foreign. But even then I think it will be minimal unless the tax is severe enough to drive foreign buyers to other countries or worse, drive them to sell existing properties.
What is going to cool the market? I think there was agreement in previous discussions that job loss is a top driver as evidenced by recent events in Alberta. Do I expect massive job losses in the hottest RE markets anytime soon? I think the job markets in Vancouver and Toronto are diverse enough that we shouldn’t expect anything major to affect those markets.
IMHO what will cause a cooldown is affordability or the lack thereof combined with large price increases. At some point people will decide the prices are just too high and will either be forced out of the market or chose to stay out of the market. Having said that people need to live somewhere therefore as long as one can move downmarket to deal with affordability, the party can continue. Note increased condo prices. Once we get to the point where a 500sqft 3 bedroom condo reaches a million dollars, and the only downmarket move is renting, that’s when we will see a cool down.
If this were to happen, as I said before, it will probably cause a crash due to herd mentality. Once people stop buying, the stats will be reported in the headlines saying the market has dried up, enough people may hit the exits for a significant price drop. I also said before that, the higher prices go, the bigger the crash is going to be. Note the sudden price jumps prior to both crashes in the US and in Canada back in 89. I know, I know today’s market is nothing like 89, but I still say it does not matter. A huge runup will end badly. Again, the million $ question is when this might happen. I have no idea. It could happen in 3 years or 10 years. Notice I didn’t say 1 year or 10 years as recent data leads me to believe it is unlikely to happen during the next few years, though not impossible.
Ed
at 10:18 am
Want to cool the Toronto market? Build a wall!
McBloggert
at 11:12 am
I am not in real estate, not even close to my basis for understanding the market is two fold a) what I see in my neighborhood 2) listings and sales.
I don’t deny that there is a lot of foreign buyers in the GTA; however, I have yet to see one house sold in my west end neighborhood that racks up a huge sales price and then sits vacant w/a foreign owner or is rented out. Same thing with other central Toronto neighborhoods where friends and family live.
I would speculate that a lot of the buying is in pre-construction condos – which may explain the disconnect in value between pre-construction and re-sale (e.g. there is no deal to be found in pre-sale). It makes easy one stop shopping where you can buy 1,2,5, heck 10 “units”. I would also not be surprised if foreign buyers were also buying re-sale condos; then having a firm rent them out or just let them sit there – treating them as commodities.
I also imagine there is a lot of activity in areas where there are ethnic communities tied to the source of foreign capital (e.g. Richmond Hill, Brampton, Markham etc.).
The other bastion for foreign buyers would be the ultra high end. Have you taken a look at the listings in the Bridal Path? The area is filled with ornate, run down houses that look like they haven’t been lived in for a while.
So what would happen if you turned off the foreign buyer tap; I don’t think it would have a huge impact on the broader market. I don’t think there is an oversupply issue – and anticipate that savvy foreign investors will find a way to bring money in. Major condo projects could also move to a rental model if demand was weak. I don’t see there being any lack of demand for single family houses based on our current and growing population.
What will cause a reversal in our booming market? Honestly? A major economic or geo-political shock. I think it would need to be something along those magnitudes to slow it down and unfortunately, historically these things happen. Another 9-11; North Korea blowing up the Pacific; another financial crisis etc. These things undermine investor confidence and cause the type of market chaos that has unpredictable impacts on things like RE.
I do wonder when prices will plateau. At some point, year over year 10%+ increases will eventually outpace how far you can stretch salaries, cheap credit and the bank of Mom and Dad…
Taylor
at 5:42 am
I think prices will plateau in 5 years after people start migrating to Hamilton, Peterborough, Niagara Falls, Orangeville, Barrie, Ajax, Whitby, Cobourg, Oshawa, Bomanville and New Castle etc. There’s still land and homes to be built. Pickering is having a development – it’s called New Seaton. Their plan is to build 20,000 homes in 10 years.
FloridaBuyer
at 12:58 pm
As an American, who recently purchased a million dollar condo in Toronto in January, to take advantage of your depreciated currency in the 1.40’s at the time, and because you have a beautiful city, I find it offensive that national sentiment would lean towards taxing or restricting foreign ownership. We live in the wealthiest town in Southwest Florida where many from Ontario purchased homes in 2011 to take advantage of the sun, and of course at the time, a depreciated US dollar vs the CAD. Those folks do not pay ANY additional taxes to own their homes here. We embrace Canadian’s here and treat them no different than Americans, nor would I ever consider the thought of punishing them financially because they don’t live here all year round. They are the best owner’s. They pay the same tax rates we do, but only stay for 3-4 months and then leave, relieving a strain on the city’s infrastructure. If you want to chase out someone who will come to your town 90 days a year, spend 10’s of thousands of dollars shopping, supporting local merchants, paying taxes to your city, modify one of the greatest reasons we bought in Ontario in the first place-low real estate taxes and reasonable costs of ownership. Chasing out wealth is quick way to destroying a great city. Hopefully the Canadian government does not become protectionist and make an awful mistake punishing a foreign owners, because we would certainly sell and leave if the penalties were brutal enough. Australia made a huge mistake, and in due time, their market will pay dearly for it. Read this post again in 2 years and Sydney prices will have compressed. Use New York City as an example of a town with much wealth, and no restrictions on foreign owners. Many apartments sit vacant waiting for their jetsetting owners to return. Be proud that you have such great cities and a great country that attracts foreign wealth. People should figure out how to profit and benefit from that opportunity and maybe open a business to cater to all of these new people buying in town, rather than trying to tax them out of the city.
Joel
at 3:10 pm
Very well put.If you are paying full property tax and only using a quarter if our services then it is a benefit to our city!
Mike
at 10:18 pm
Couple of counterpoints to your argument.
Florida’s largest industry is not oranges but tourist. So you actually rely on short-term foreign dollars. Whereas Ontario’s largest industry is manufacturing.
Prior to 2008, foreigners were required to pay a higher property tax than Florida residents, sometimes as much as ten times as much as their next door neighbor. Then the great equalizer happened in 2008 and Florida cities realised that they needed outside investors to buy property to stop the crashing real estate prices and repealed the laws allowing for two-tiered taxation. Things haven’t quite returned to 2007 levels but when they do, what’s stopping the great people of FLA from returning to their old practices?
http://www.wsj.com/articles/SB114825883310659142
Mike
at 8:15 am
FloridaBuyer,
This is actual footage from Miami in 2008 when prices were plummeting and State officials stopped the two-tiered taxation system
https://www.youtube.com/watch?v=V1QNIhPB7Ck
AndrewB
at 10:02 pm
Well to speak to the elephant in the room, it’s a group of Canadians’ problem with Chinese ownership not foreign overall.
Marcia
at 11:00 am
Canadians may not be restricted to buy in Florida but are imposed hefty property taxes as non-residents.
New York has a lot of wealth and poverty.
Fro Jo
at 1:16 pm
To paraphrase the Iron Lady: The problem with or a super-hot housing market is that you eventually run out of other people’s money. When the taps stop flowing with foreign or domestic cash, the market will cool.
Appraiser
at 2:37 pm
@ Fro Jo:
I’m afraid I don’t share your views. I believe Margaret Thatcher earned her metallic moniker mainly due to having iron between the ears.
Boris
at 3:41 pm
If that’s what you believe then you are one of many among the uneducated masses that elected not to take economics courses in their tenure ‘earning’ a ;liberal arts degree, which is less useful than toilet paper in a German sheisse porn. Which is possibly forgiveable given the naiivete of youth. What isn’t forgiveable is the mindless parroting of idiotic leftist rhetoric normally reserved for the mentally incapable. y I’ve raised this general topic before with you, specifically with regard to Keynesian economics, which clearly landed in the empty-ish (minus the MSM brainwashing) echo chamber between your ears.
Her moniker was generated by the Soviets, as one of a few world leaders at the time that correctly identified in the public sphere the human cost of the communist experiment. The reference was arguable a reference to Bismarck.
Your comments are continually effective at demonstrating your lack of understanding of how the real world works.
Appraiser
at 3:51 pm
@ Boris. It was a joke. Lighten up. Thanks for the lecture though.
ScottyP
at 12:01 pm
For what it’s worth, I thought the joke was funny.
Boris
at 3:58 pm
The accurate Thatcher quote is “The problem with socialism is that you eventually run out of other people’s money.”
She wasn’t referring to housing. But given we live in a socialist country with government institutions enabling home ownership (BoC, CMHC) and socialization of losses in general (corporate welfare), one could make the case that Canadian housing markets would generally fall under the comments on socialism.
Fro Jo
at 4:16 pm
The quote:
“…and Socialist governments traditionally do make a financial mess. They always run out of other people’s money. It’s quite a characteristic of them.”
http://www.margaretthatcher.org/document/102953
Joel
at 3:18 pm
I don’t think that a lot of these regulations were put in place to cool the market. I truly feel that they were put in place to protect Canadians against themselves.
Should someone have a 40 year mortgage? Be able to buy a house and get money back in return? Have a mortgage for $2 million in a case where the market retracts by 7% that it makes sense to walk away?
All off these are in place to protect Canadians. I don’t think that the Toronto market is going to cool and besides the Vancouver market these rules don’t really effect anyone else. Creating controls to prevent a market collapse is much more important than slightly restricting the buying power of a few.
Appraiser
at 3:47 pm
There is nothing inherently wrong with a 40 year amortization, as long as the buyer is qualified at a 25 or dare I say 30 year (common in the U.S.) amortization. A prudent buyer can put the difference in monthly payments into their TFSA, RRSP or other investments and build up equity in a more diversified manner. We don’t need the nanny state to look after us at every turn.
You completely lost me with the $2M mortgage holder walking away from his / her responsibilities if the market drops 7%?? Strategic default is not an option in most of Canada and no option at all if the mortgage is insured (even in Alberta).
Joel
at 4:23 pm
As you mentioned a 40 year mortgage is fine for a prudent buyer, but many that want a 40 year mortgage aren’t that. The government needs to occasionally make laws that hinder those who are responsible in order to protect those who are irresponsible.
My point was that the regulations are in place to prevent a market collapse not to cool the market. I should have said to go bankrupt, or have a debt that they can not service.
Appraiser
at 4:59 pm
@ Joel:
I fail to see how it it is that you “know” that many people that want a 40 year mortgage aren’t prudent. Your apparent gut feelings or intuition are immaterial and incorrect. The default rates on 40-year amortizations are no different than mortgages with lesser terms.
An employed person with a mortgage who has seen his house drop in value is in the same position to service the mortgage debt as before the house dropped in value. A drop in house value is completely irrelevant to your argument.
Free Country
at 9:49 pm
Another great piece David. My 3 thoughts:
1. Another way to cool prices is to increase supply. Especially more townhouses and semi- and detached houses. Anyone for getting rid of the greenbelt north of Toronto? In Britain, there are greenbelts all over the place and they have had a huge effect restricting the supply of new homes over several decades.
2. Rather than restrict foreign ownership per se, tax unoccupied dwellings in select markets i.e. Toronto and Vancouver. (Wait, I can’t believe I just suggested raising taxes!)
3. As for the February numbers, yes there is no denying the market is still hot. But surely one factor in February was simply the weather. 2016 has been a very mild winter, other than the Valentine’s day weekend. February 2015, as I recall, had average temperatures of -20 celsius, and all I remember doing last February was hibernating.
AndrewB
at 1:07 am
I’ll probably get blasted for it but whatever. The market is hot in Toronto and I understand why houses in areas like Leslieville get snatched up. I don’t understand how houses in the boonies of Scarborough and Etobicoke are expensive and the far out 905 are way too expensive in my opinion even for basic townhomes.
Vic
at 10:31 am
It’s Chinese buyers that are purchasing homes in the 905 area. They are purchasing newly built townhomes in the areas north of Steele & east of Yonge (e.g., Richmond Hill, Markham).
Taylor
at 5:17 am
What do you mean you don’t understand? If you can’t afford a home in Leslieville for 1.2 million but you can find the same house in the 905 area for 800K how can you not understand? People move further out for affordability!!! And you will definitely get a house under 5 years old in the suburbs for that 800K.
Jack Morgan
at 10:20 am
not anymore. Detached houses in newmarket are now priced at 800k, but are going for 1.1M plus. There are internal townhomes in aurora going for $1M!!!! My gf and I make over 200k a year and we can’t buy a detached house here with a 250k down payment. Anybody in real estate knows it’s all foreign and domestic investors that are buying everything based on spectulation. Houses aren’t stocks – the government needs to act NOW!
CHT
at 10:56 am
Do not talk sh*t about German Scheisse porn. Please and thank you! That will not cool the TO housing market.
ScottyP
at 12:03 pm
Very true, CHT. Steaming hot usually fails at cooling steaming hot.
Kyle
at 9:22 pm
Everyone keeps talking about how Toronto real estate is “unaffordable”. Given that the number of sales keep rising and setting fresh records month after month, it would seem there are plenty of people who can afford it. Short of a major recession or unexpected shock, the Toronto real estate market will continue on the same path of rising prices, increasing demand and lower supply…just like every other World class city out there.
The population continues to grow, jobs continue to grow:
http://www1.toronto.ca/City%20Of%20Toronto/Economic%20Development%20&%20Culture/Business%20Pages/Filming%20in%20Toronto/Info%20for%20residents/backgroundfile-90508.pdf
If the Government wanted to get serious about “cooling” prices in Toronto, local Government could look at ways of increasing supply like allowing zoning changes (e.g. laneway houses, flats, sub-dividing, etc), allow for increased density, streamline the planning/approval process.
...
at 4:55 pm
this is crazy and certainly rediculous. older generations cant afford homes in toronto now never mind,younger generations like myself wil be able to afford homes in toronto. all hard working canadians that would love to stay and live in there home city are pushed out because they cant afford living costs in toronto. toronto will soon be owened by all fagriners.
L
at 8:07 am
Toronto’s Real Estate market is still one of the cheapest in the world when considering the wolds top cities (which Toronto is apart of). The market will not correct for those who cant afford, it will keep on going higher and higher as more global wealth is created and that wealth is more or less placed in secure economies like major cities in Canada, America, Australia, and the UK.
Those who can’t afford still have options… Move Farther away. You adjust for the economy not the other way around. Our problem is nowhere near Cities like Bejing, Hong Kong, Singapore, Tokyo, New York, California cities, London, sydney, and alot more. Stop crying people, work harder if you want to live where you want (buy a house and rent every other room if you must) people come here with nothing and in 10 years pay off there house.
aG
at 11:22 am
100% accurate Mr. L. people stop crying,… plan, work hard and save… move a little further out if you have to or start small.
Tory To Be Shot for Treason
at 2:57 pm
you are a troll. Work harder? are you effing retarded? ppl who are in the top 5% of the Canadian income earners and are SUPER STARS cant afford a detached home in Toronto right now….work harder? STFU
Taylor
at 5:13 am
Correct! I couldn’t have said it better myself! Sacrifice!
A Realtor Who is Honest...
at 1:03 am
The idea of working harder or saving is the most retarded and misleading advice an idiot could give a Canadian. Work harder are you effing retarded or unable to do grade 5 math? You work hard and get in the top 2 percent of Canadians ie 200k income, basically working harder and smarter than 98 percent of the country, you then have to pay half to Rat face Tory and keep 100k or 8k, how the eff are you going to save enough to even come close to the chink organ selling 8 dollar a day child labour paying housing hyper inflation creating rats…You are a disgusitng troll. Even if you own a solid business you have to pay labour what a china man who is competing on housing in your own city pays to 35 workers who are willing to work harder, while pay hardly any tax in china on his profits…while in canada CRA is up ur rear….Tory and all canadian politicians need to be SHOT for Treason. Period.
...
at 4:57 pm
***foreigners
...
at 8:50 pm
toronto will be the next new york in about 10 years..
Tory To Be Shot for Treason
at 2:22 pm
No it wont. In NY ppl earn 200 to 400k in jobs that ppl earn 80k in Toronto for. Toronoto is anot even and never will be, NY’s testicle hair. The price increase in Toronto Canada, 70k median household income scam where. 99.4 percent of house holds earn less than what is required to purchase a detached home in the cit, will go back down to what it should be which is where it was 2 years ago….before the pure hype and bubble…Oh i wonder if median house prices unava lable to 99.4 % of households in Canada is Affordable and not a bubble……KILL TORY NOW,.,..o
Tory To Be Shot for Treason
at 2:50 pm
ok not kill but he should resign or put 15% foreign tax TODAY.,
.......
at 4:58 pm
government can’t do shit to stop the Toronto housing market. need to vote for someone else. The Canadian government needs to banned or restricted foreign ownership of Canadian properties like Vancouver or Australia.
Tory To Be Shot for Treason
at 2:48 pm
its called 15% foreign buyer tax.
Patty
at 8:29 pm
Yes I totally agree with you. But there is so much of negative news regarding the housing market. I need to sell my home because I am downsizing into a town home, and I am very worried if I will be able to get the right price when I’m ready to sell.
Pierre
at 8:13 am
I forecast that the market will be strong until interest rates rise. Rates are not expected to increase until late next year or early 2018. I would suggest you sell next spring to get top dollar for your house and then rent temporarily. Invest the money you make and buy in a few years after the bubble bursts. You will pick up a property much much lower than if you buy something right away. Depending on location, values will decrease by up to 50%. The crash will be worst than the US. It will come, but who knows exactly when…
Tory To Be Shot for Treason
at 2:53 pm
2017-18 will be a crash or a drop of 30 to 50 percent..it techlnically will not be a crash because prices have increased by 86 percent in the past 3 years….the past 3 years has been the biggest bubble growth in Toronto RE history and is purely artificial….
Taylor
at 5:09 am
You know I’m sick of hearing there will be a crash. Anyone who knows real estate knows that housing prices have always gone up! Whether it be 1%, 10%, or 20%. Get your heads out of the clouds. There will be no crash unless rates go to 10%!!! The market will stabilize when there’s more supply than demand. The reason why it’s high is because there’s more demand than supply. Economics? Did anyone go to school and learn Economics? The people that keep talking about a crash and are so bitter obviously don’t have homes. Continue to rent and keep quiet then. I have never heard such ridiculous assumptions. The market will cool. Not crash. Toronto is like the UK, New York, Vancouver etc. Canada is a country that accepts 100,000 immigrants yearly. So do tell me how the market is going to crash? The government won’t let that happen. They will control that first. The government can do whatever they want to really “cool” the market but they haven’t. The new rule of 4.64% qualifying rate or “stress test” will only affect 10% of buyers. People like myself who have homes, will still continue to buy especially those with multiple properties and rich parents or people who have inherited money from the death of a loved one. I used to think like many of you but over the last 5 years or more of speaking to people somehow people aren’t as poor as you think or are struggling. Think outside the box. There are millions of people who own multiple companies and have amazing jobs and will be able to still afford homes no matter what rules come into place. Do more research folks! So for those that think there will be this great crash and are waiting for prices to “decrease” keep dreaming. If you can get your hands on a property do so as soon as you can. If not, that’s okay too! There’s absolutely nothing wrong with renting. I think that’s where the speculation comes in. Too many renters are concerned with buying because the pressure is on them because of our sizzling hot market. Some will own, while others will not. If the pressure wasn’t on, and people would come to terms with their situations then maybe the market would cool off a bit, however if 10,000 people want a house to buy but there’s only 3,000 homes to buy then what do you think will happen? The price will go up! Correct? But if 10,000 people want homes and there’s 20,000 homes available then what will happen? Prices will be lower. Some food for thought for 2017! Cheers.
Taylor
at 5:50 am
Pierre, why would you ever tell anyone to rent if they are already in a home paying mortgage? What book did you read that in? Lend it to me please!!! I have consistently on a 3 year basis made $11,000 in the 905 area. If I were to rent for example I’d lose not only my $11,000 profit month to month but I’d also lose the $1,200 that is going towards my mortgage principal! Don’t rent anything if you own. Stay until you’re ready to sell.
John
at 7:44 pm
The big Toronto market!
Long story short, the market will crash within the next 6 months to a year!
Toronto
at 1:11 am
John: how do you know? seriously, why do think so? for me, as long as interest rate stays low and forign money keeps coming in, there is little chance for a crash. Employment is good and Toronto is booming
Tory To Be Shot for Treason
at 2:47 pm
employment is not booming and even if it was, its misleading and deceptive. Unless median household income in toronto increases by 100 percent, its increased by 3% housing has increased by 100% in the past 3 years! Who cares if employment is booming if the incomes are the same or 3% more and housing is proped up by 100 percent????????? DUHHHHHHHHHHH
Dan Balm
at 11:19 am
solid prediction, John.
charlene
at 9:16 am
terrible prediction February 2017 market is still going crazy
Pierre
at 5:39 pm
The market will crash when interest rates rise. Canadians are deep in debt and the increase in payments will impact borrowers significantly.
John
at 7:58 am
I agree 100% with Pierre.
charlene
at 9:15 am
yes but when will that happen? in 12 years from now?
Shay
at 12:30 am
Hi there, came across this blog post now. So, what you said needed to happen just happened this Monday. Qualification rules have dramatically changed with the ‘stress testing’ – effectively making mortgage rate to qualify jump to 4.6%. By Nov 30, ALL mortgages (even with 20% down) will be subject to this ‘stress test’. I would LOVE to hear from you on what you think will happen now. Been trying to buy for a few years, but after being outbid on a few offer presentations – we decided to continue to rent (our rent is dirt cheap) and see what happens. We saved everything we would have otherwise paid into almost twice as high housing cost if we bought and now the savings have dramatically increased (I am talking 50% more than what we had just 3 years ago). Any advice?
Erik
at 4:42 pm
Invest your money in the market and stay liquid. Don’t buy trash for $1million and become a slave to a home that you don’t really want.
http://www.cbc.ca/news/business/house-investment-wealth-1.3716641
Simone
at 1:35 pm
Hello,
I like your post! We are in the same exact position as you. Put in offers just to realize it’s never enough. Always falling short on the dream of home ownership. Continuing I rent and save save save. .
Richard
at 10:11 am
House price in Toronto is still at low level considering the population here. Toronto’s population is still under 3 million. Toronto is a good place to get a job and live, so the population here will keep increasing as in Canada we don’t have many other cities which are like Toronto. With the increasing population and more and more demands for houses,can’t imagine how house price will drop. The house price today here might be just 30% of future price.The root cause for this is government as in Canada, we have big land, we can build more cities like Toronto which will reduce the population of Toronto. Without buyers,how can the house price keep going up ?
Tory To Be Shot for Treason
at 2:15 pm
This is Canada not China, you cant use the same metrics. We pay taxes of 45% on our income here, we pay 15 percent tax on our expenses, we have to pay our employe1es 0 dollars an hour if we are business ppl. The current govt needs to be lined up and all shot in their face for treason.
Tory To Be Shot for Treason
at 2:44 pm
In China, you can bribe, you can exploit labour and make big money, in Canada you Can not. have zero chance to compete with Chinese Buyers, who can and do bribe and exploit labour and then come to Canada and rape housing prices and make everything unafordable for Canadians who live and work here…15% tax foregin buyer tax has to be implemented in Ontario IMMEDIATELY. The current tory govt is treasonous and genocidal….
tom
at 10:40 pm
I hope 2017 1milion house will rise up up to 10 million. I know this only my dream. I wish also to have more Chinese and change my last name for Mr Wong and instead of maple leaf to have honkg kong flower:):):)
Vic
at 1:39 pm
My view is that the Toronto property values won’t stop increasing until Chinese buyers stop purchasing. And that will only happen if: (1) there is some sort of financial crisis in China that leads to a cutoff of the flow of money out of China; or (2) a foreign buyer tax.
Tory To Be Shot for Treason
at 3:22 pm
100% I was in real estate i kept telling everyone the price increases is Pur;ely because of Chinese buyers, because i saw all of the contract!s, they kept buying and flipping for more and more and more. No one said nothing, until 2016!! Where it literally is a human rights catastrophe. and they finally put in the 15% tax….Govt has everything to do with this….
Poor Canadian kids
at 5:27 pm
Canadian Chinese Realtors and Brokers are just at fault. They market Canadian properties directly to mainland Chinese buyers (members of Communist Party of China) with bad human right records. These filthy buyers buy just by looking at Google map, they’ve never been here. They just park these properties
tom
at 10:35 pm
15 percent tax on foreign buyers isnot a TAX THIS is ISINVITATION to still buy. Canadian government is the best jokers on the world.
I remember in 1993 I was in London(UK) . In the store I saw two Walkman’s (thing to listen music) AKAI was made in UK 20 pounds price and SONY made in Japan price 45 pounds. This is Tax not funny 15percent
jimi
at 9:44 am
You are absolutely right..but the worst part is that all the current rules they have added such as having minimum payment go from 5 to 10% or make it harder for people to get home inssurance to make sure they could afford interest rise…all that is only making it harder on the Canadians that are already struggling. ..none of this will have any effect on the foreign buyers who already are rich .ut won’t make them blink. ..not only us canadian will suffer because of this but .the housing market price will go up. Unbelievable
tom
at 11:30 pm
real estate always up up up up up up . never down
human greed
Chinese
government – they do not care about us
inflation bigger than we think FEprinted more from 2008 than from 1945
Tory To Be Shot for Treason
at 3:10 pm
BINGO. When it goes down, i will feel zero compassion for the greedy garbage…..they deserve to suffer hard and they will…..especially the Chinese foreign buyers who have literally ruined hopes and dreams of the cream of the crop Canadian kid’s…out of pure greed and selfishness… as well as the rat politicians who have been in on it. If you earn 4 times the median household income of CANADIANS you cant afford a detached tear down because of these Chinese and the sellout rat politicians….Its treason pure treason….you see Trudea telling kids to study hard at U of T and be innovative in medicine and science……..ya so that they can be in the top 1% and help boost health and science in the country but not be able to a buy a home and raise a family……………………………HANG THE RATs NOW…
Tory To Be Shot for Treason
at 3:15 pm
The only way you can afford a home now in Toronot and to raise a family is. A. Fly to China. B. Open up a factory or business, C. Bribe a few politicians D. Hire 100000 chinese employees and pay them 6 dollars a day to work 14 hours a day 6 days a week. E. Make huge profits, and pay 5% tax on it. F. Bring some of your money to Canada, and Buyer houses…..PERIOD….If you think you can work harder be smarter, educate your self more, get a better job, move up in your company, get a raise, ect in CANADA and be able to afford toronto or Vancouver, you my friend are chasing an economic and mathematical PIE DREAM. Unless of course the Tory implments the long over due 15% tax in ontario……
Poor Canadian kids
at 5:09 pm
100% true about foreign buyers (mainly Chinese). Global exploitation money ruins the home-ownership dreams of Canadian kids. The Chinese do this all over the world – no ethics.
MakeCanadaGreatAgain
at 11:38 am
I once worked alongside a gentleman who was also working as an Assistant to a Chinese Realtor in Toronto. I remember a story he told me that really didn’t hit home as much as it does now. This was probably around 2010 or 11. We were talking about secondary sources of income, and a career to fall back on if our line of work didn’t pan out – we worked in manufacturing. He said that I should consider Real Estate. I asked why. He then went on to tell me that recently he had shown a Chinese investor 12 different homes in the GTA. After about 3 weeks, he hadn’t heard from him and was getting worried. A couple days later, he called back and said he wanted to put a cash offer on the property. When asked which one, the Buyer said all 12 of them.
There will never be a true investigation of how organized these buyers are and they will manipulate the market for their own gains. Buying multiple homes in an area then using the same agent to sell to another foreign buyer for 15 to 20% more is an excellent way to drive up the prices of the properties you already own. This is one big pyramid scheme and the MSM will not touch it.
The Government will not do anything because this is an excellent way of segregating a population without having to build the train tracks. The rich will stay rich.. and the low to mid-class will stay exactly where they are.
Just an opinion.
Al
at 8:09 am
I know everyone is talking about why house prices are rising and who is responsible for it and how to cool it. I’m going to tell you who is responsible for increasing the prices and what they should do about it and no they shouldn’t rase taxes.
The people responsible are the builders, they are raising the prices all the time. If you look in communities that don’t have any new building going on the prices don’t increase that fast. Just do your research and you’ll see how fast they have been raising prices which in turn creap up all the surrounding houses in that area.
Now how to cool it without disturbing the economy and without rasing taxes or interest rates. Control the amount of increase in prices just the same as the rent cap for that year by dictating what percentage you can increase your price that year. That will get rid of short term speculators and slow things down. All these other things that economists and governments want to do are damaging and only fill there own pockets up and hurt the middle class.
Safdar
at 11:46 pm
I agree with you 100 percent. I am seeing this happening in Milton/Oakville area. While there is a watchdog on all other players in the market, the builder segment is just out of control. Builders in some projects have increased prices by the day which is completely unacceptable…
grace allen
at 6:53 am
Toronto is a metropolis that is growing like New York and Chicago. It’s getting recognition and attracting new investment opportunities for both businesses and residence. Toronto is also attracting newcomers as many industries and businesses open and expand here. The condo market is also growing fast and is in demand as well. Overall, Toronto is expanding and there is a genuine investment opportunity here for all.
Tudval
at 1:46 pm
The comments from deplorables are the craziest thing you can see on the internet. Most are xenophobic, racist or speculators who sold to buy cheaper and were left behind. Sure they are angry at everybody.. builders, realtors, foreigners, government, banks, speculators ….everybody against them.. but first time buyers are not. I know when I bought , I went for what I could afford – there’s always something for every budget – I never thought twice about who was buying the more expensive homes in better areas.. it’s capitalism – people have more money than you, but you think you deserve more.. who doesn’t?