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Crazy Real Estate market !!!

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  • #46
    Re: Crazy Real Estate market !!!

    Originally posted by richiehack View Post
    Since everyone and their brother is happy that their homes are worth a lot more money compared to a few years ago. What's going to happen when the nice new 2016 MPAC assessments are based on the newer home values??
    My realtor just bought a large house in Brampton and says his property tax is going to be $12K.

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    • #47
      Re: Crazy Real Estate market !!!

      Originally posted by davepratt View Post
      Here you go.
      Based on their taxes it looks like they paid somewhere near 350,000. So they've doubled their money in however long.

      The next person won't be to thrilled when they see their tax bill near 8000 yearly not 3500.

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      • #48
        Re: Crazy Real Estate market !!!

        Originally posted by synergy300 View Post
        My realtor just bought a large house in Brampton and says his property tax is going to be $12K.
        Ouch!

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        • #49
          Re: Crazy Real Estate market !!!

          Originally posted by richiehack View Post
          Since everyone and their brother is happy that their homes are worth a lot more money compared to a few years ago. What's going to happen when the nice new 2016 MPAC assessments are based on the newer home values??
          Beat me to the punch. Heh.

          That's what I always say. No one thinks of that when their 500k house is worth 1 mil, but now you need to buy at 1 mil house to get something similar. And now you have 10k taxes not 5k.

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          • #50
            Re: Crazy Real Estate market !!!

            This market scares the crap out of me. A guy down the street sold his place 2 years ago for 790. No garage, just a car port, but a pool with a nice ravine lot. Just soid again for 1.1M. Makes me want to wade in and sell while the getting is good. However, I dont want to leave the area and could not buy anything to replace to it. In between the claws of a vise. I hate to think about the bubble bursting.

            The idea would be to get the equity while the getting was good, get rid of the mortgage and buy something smaller. But that would impact my lifestyle. Then get the heck out of the city in 8 to 10 years, ideally somewhere north with cheap golf, close to a ski hill and somewhere near a body of water.

            Decisions, decisions.

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            • #51
              Re: Crazy Real Estate market !!!

              Instead of one big bubble, think of it as many bubbles like those bubble wrap.

              Each bubble represents a location, a type of building, a price range. They will burst, but in a localized manner.

              Detached home in the GTA probably simply would not grow as fast but not likely to burst. Houses close to public transportation, in coveted areas, close to city core, in good school districts, etc...might hold on to their value even during down time.

              What would be affected are condos and houses in bedroom communities.

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              • #52
                Re: Crazy Real Estate market !!!

                I don't know the answer for bubble vs catch up to other cities like NYC and SanFran. What is clearer is the approaching impact on vacation properties. Low interest rates and Boomer wealth has driven the price of Muskoka cottages and Collingwood chalets through the roof. As those Boomers get too old to maintain them, their kids are going to be dealing with monster mortgages as well as record consumer debt. Recipe for disaster.
                What's in the Sunmountain 4.5?

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                • #53
                  Re: Crazy Real Estate market !!!

                  I think the crux of the matter is that most people are viewing housing as an investment and lack a proper exit strategy.

                  What I mean by that is, there are many people buying houses and the only thing they can afford is to pay the interest portion of the mortgage. They are hoping for capital appreciation and looking to cash out. The problem is, the exit strategy is only "retirement/down sizing" or rental, and most are years away from retiring and are praying that they can get out while the market is still up. Most people are stuck with "upgrading" their house when they sell their current house (i.e. They have to live somewhere). So, instead of lowering their mortgage, they end up getting a bigger property with even a bigger mortgage.

                  I think what caused the real estate crash in the late 80's was primarily triggered by the high interest rate, but, I think the reality was people were leveraged too much, with many owning multiple real estate properties, having a domino effect.

                  I think the only thing that's going to save us is a cooling/leveling of the market.

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                  • #54
                    Re: Crazy Real Estate market !!!

                    Originally posted by Bern View Post
                    There is no bubble, we are catching up to other major cities on North America. Though I am amazed that a townhouse could fetch 700K in Aurora.
                    I read recently that about 35% of all first time home buyers receive help from their parents in the $150k to $200k range. Incomes aren't raising as fast as property prices. Sure you can say we are catching up to other major cities but we aren't when it comes to income (my opinion only... Don't have any facts). Can the housing market keep going up if first time home buyers can't afford places on their own? If first time home buyers disappear than people looking to upgrade from a starter home disappear, etc. I was discussing this wih a coworker and the median household income in Toronto is $76,000. (Was 72,000 3 years ago http://www.statcan.gc.ca/tables-tabl...il107a-eng.htm). Looking at average condo and house prices coupled with the median household income and I don't see how these high prices can keep going! I personally don't believe these prices are sustainable if people can't afford to buy but I've also been saying this for a couple of years now

                    Edit: just looked up median household income in San Diego and New York City... It's lower than Toronto so I guess my point on income isn't as strong as I thought although I still believe it's a bubble.
                    Last edited by Sportyluis; Apr 20, 2016, 07:17 AM.

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                    • #55
                      Re: Crazy Real Estate market !!!

                      Originally posted by MizunoEd View Post
                      I think the crux of the matter is that most people are viewing housing as an investment and lack a proper exit strategy.

                      What I mean by that is, there are many people buying houses and the only thing they can afford is to pay the interest portion of the mortgage. They are hoping for capital appreciation and looking to cash out. The problem is, the exit strategy is only "retirement/down sizing" or rental, and most are years away from retiring and are praying that they can get out while the market is still up. Most people are stuck with "upgrading" their house when they sell their current house (i.e. They have to live somewhere). So, instead of lowering their mortgage, they end up getting a bigger property with even a bigger mortgage.

                      I think what caused the real estate crash in the late 80's was primarily triggered by the high interest rate, but, I think the reality was people were leveraged too much, with many owning multiple real estate properties, having a domino effect.

                      I think the only thing that's going to save us is a cooling/leveling of the market.
                      Where did you read that? My understanding is that interest-only mortgages are relatively rare in Canada.
                      What's in the Sunmountain 4.5?

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                      • #56
                        Re: Crazy Real Estate market !!!

                        Originally posted by ace in the hazard View Post
                        Where did you read that? My understanding is that interest-only mortgages are relatively rare in Canada.
                        MizunoEd can correct me if I'm wrong but I think it means that people can only afford to put 5% or 10% down so in the first few years they are paying primarily interest.

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                        • #57
                          Re: Crazy Real Estate market !!!

                          Originally posted by Sportyluis View Post
                          MizunoEd can correct me if I'm wrong but I think it means that people can only afford to put 5% or 10% down so in the first few years they are paying primarily interest.
                          Even with only 5% down, on a $500K mortgage at 3%, in the first year you are paying $14,488.66 in interest and $13,457.54 in principal so that's simply not true.
                          What's in the Sunmountain 4.5?

                          10.5 M2 with Speeder 77 Stiff 3 wood shaft
                          TM Rescue 17*
                          TM M2 4-AW
                          TM RAC 52/56 CG15 60
                          Odyssey 2 Ball with Superstroke Fatso

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                          • #58
                            Re: Crazy Real Estate market !!!

                            Originally posted by Sportyluis View Post
                            I read recently that about 35% of all first time home buyers receive help from their parents in the $150k to $200k range. Incomes aren't raising as fast as property prices. Sure you can say we are catching up to other major cities but we aren't when it comes to income (my opinion only... Don't have any facts). Can the housing market keep going up if first time home buyers can't afford places on their own? If first time home buyers disappear than people looking to upgrade from a starter home disappear, etc. I was discussing this wih a coworker and the median household income in Toronto is $76,000. (Was 72,000 3 years ago http://www.statcan.gc.ca/tables-tabl...il107a-eng.htm). Looking at average condo and house prices coupled with the median household income and I don't see how these high prices can keep going! I personally don't believe these prices are sustainable if people can't afford to buy but I've also been saying this for a couple of years now

                            Edit: just looked up median household income in San Diego and New York City... It's lower than Toronto so I guess my point on income isn't as strong as I thought although I still believe it's a bubble.
                            I would think there's still way more renters than owners in TO. Those condos you see are populated by those above the median income line.
                            We may not be good but at least we'll be slow - PB


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                            • #59
                              Re: Crazy Real Estate market !!!

                              Originally posted by Sportyluis View Post
                              MizunoEd can correct me if I'm wrong but I think it means that people can only afford to put 5% or 10% down so in the first few years they are paying primarily interest.
                              Max amortization period used to be 40 years that has been reduced to 25 years as of December 30th. I didn't do an amortization table but I suspect the first 10 years are predominantly interest. The effect is lessened with a 25 year mortgage but those early years are painful WRT to payment of principle.

                              Interesting thoughts on the boon to cities WRT to property taxes. Housing prices seem to be doubling every 6 to 7 years in Toronto which equates to a 10% annual return which far exceeds current inflation rates. If the taxes are keeping up to the property values, that's a huge boon to city coffers. Where are cities spending the extra money?

                              As to the cottages, there are only so many within that magical 2 hour drive people are wiling to endure. With the population in the Toronto area continuing to increase I don't see that big of a problem until the capital gains have to be paid from mom and dad's estate.

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                              • #60
                                Re: Crazy Real Estate market !!!

                                Originally posted by davepratt View Post
                                Here you go.
                                Thanks for the info you sent me Dave very interesting indeed.

                                My confusion is this house around the corner from me in stouffville. While it is larger at 3100sqft vs ours at 2400sqft , it is an inside lot vs. our corner lot and the has an unfinished basement asking over 1 mill.

                                I have a hard time seeing how 700sqft more then ours getting that much. Would be interesting to see what it sells for.

                                Last edited by chrish8; Apr 20, 2016, 08:30 AM.
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