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Pre-Construction Homes
- Thread starter black_CG2
- Start date
They won't. Well any people that don't already own will be out. Toronto will become a land of renters like many other large cities. Most people rent, a few uber-rich own almost everything.
That's why I'm applying for H1 visa to 'Murica. Buy land cheap there after I cash out here...
My wife and I bought a new build single in Vaughan in Feb 2016. We take possession next month.
It's now worth $300k more. No exaggeration.
But I would be worried to do it again... a moderate interest rate hike is going to slow things considerably.
That said, my agent agrees that a "correction" or drop in prices is far from likely as the demand is too strong.
But a stalled market is a real possibility.
It's now worth $300k more. No exaggeration.
But I would be worried to do it again... a moderate interest rate hike is going to slow things considerably.
That said, my agent agrees that a "correction" or drop in prices is far from likely as the demand is too strong.
But a stalled market is a real possibility.
Most agents are gonna be bullish (or at least project it) on the market, it's in their interest.
Demand was high in Vancouver too remember? Then it stopped almost overnight. There's nothing intrinsically special about Toronto. Though some may argue that it's still far cheaper than other big cities like NY, London, HK etc. It's a hard one to predict. I certainly can't see more than another 1 or 2 years of these kinds of gains. It's not just about interest rates...
Demand was high in Vancouver too remember? Then it stopped almost overnight. There's nothing intrinsically special about Toronto. Though some may argue that it's still far cheaper than other big cities like NY, London, HK etc. It's a hard one to predict. I certainly can't see more than another 1 or 2 years of these kinds of gains. It's not just about interest rates...
On that same note I also can't foresee a crash in the near term - prices are high but not THAT high. Maybe in some parts of Toronto specifically, but at this point to me the worst case seems a flattening out. If we gain another 20% next year then maybe a rollback of a similar amount is a reasonable expectation. For anyone thinking they're gonna be able to score a million dollar house for 500k like it was 6 years ago, forget it.
This.
Friends bought a new house ~18 months ago. Building delays etc and will hopefully be ready in spring. Went from 2500 sq ft to 4000+ & lot is 2x as large. They will sell current home for more than what they paid for their new one. Un freaking believable.
Just read something quoting Vaughan real estate pro Vivian Risi that basically said that we are in an artificially inflated market. Demand still exceeds supply, but no other factors point to such a large increase in home prices. They actually point the other way. Also frightening to me was that the average price of a new freehold townhome in Vaughan is $1 million.
You know what else is gross? I could never afford to live in my home if I had to buy it today.
Sent from the Purple Zone
Honestly this applies to just about everybody who bought a house even just two years ago.
@LINK666 thanks for that "assignment " explanation. I always wondered how some people were able to do that. You explained it a little more clearly than a real estate agent I was talking to. We had an opportunity to purchase a condo at a VIP event, and was told that for a $5000 fee, we could sell prior to registration. I didn't understand, as I thought that it wasn't allowed.
How west are you talking about? I have a friend that built a mini real estate empire (mini being relative) by refinancing his first 6 plex over and over to fund all the other purchases.
I'm just trying to find a way to fund my purchases the way the builders do it : they wait for purchases to get them seed money and then use the bank for the working capital. Their money stays in the bank. I need to do that.
Sent from the Purple Zone
How west are you talking about? I have a friend that built a mini real estate empire (mini being relative) by refinancing his first 6 plex over and over to fund all the other purchases.
I'm just trying to find a way to fund my purchases the way the builders do it : they wait for purchases to get them seed money and then use the bank for the working capital. Their money stays in the bank. I need to do that.
Sent from the Purple Zone
The $5000 was their assignment fee. Its also worth investigating if the builder allows you to market the property on the MLS. If they don't, then as Link said earlier, it becomes MUUUCH harder to find buyers. You have to use kijiji and other avenues to advertise to 5% of the market, seeing as MLS has the oner 95% cornered.
Builders use those "vip" events to get financing, the deposits are effectively a downpayment and the bank will lend based on that. That's why sometimes you'll see projects in "pre sale" for years before equipment shows up to dig foundations - they need to sell a certain amount of future inventory in order for the deposits to unlock their financing. This is also why subdivisions are built in phases.
I don't see how you could fund your purchases in the same way as an individual. Banks aren't lending money as easily as they used to. People could refinance multiple homes and use equity to get mortgages up to 40 years or more, it was ridiculous. And banks used to just ask for a letter of employment, it was a joke. The rules are much stricter now.
I wonder if this is what those real estate buying "groups" do, to some degree? I always figured they use them to finance their purchases. I'm sure there is a semi legal way to do it on an individual level. Or even just 3 or 4 people pooling their resources to buy a property to sell in the future. Even a return split 4 ways has the *potential * of outpacing a part time second income.
Sent from the Purple Zone
Sent from the Purple Zone
You can buy a house with as many people as you want! The banks will scrutinize it to some degree, and if there are more than lets say 3 individuals (especially unrelated) then they'll really want you to incorporate. As will the CRA. They're focusing on real estate as income, people are being too liberal with the primary residence nonsense.
I'm in! $800k house now can very likely be 950-970k by end of summer or early next spring. Take away 12k LTT, another 25-50k realtor you can easily walk with $100k+ .... $25k each between 4 peeps, for almost doing nothing at all.
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And that's the exact scenario I envisioned. Even with capital gains taxes you still get $12.5k
You ain't getting that pt at Home Depot
Sent from the Purple Zone
Riceburner
Well-known member
So, I don't have to be employed? ...just keep flipping primary residences?
I know people that are mortgage free because of doing that a few times.
Sent from the Purple Zone
If you had enough cash up front to get the ball rolling, abso-friggin-lutely yes you could've been doing that for the better part of a decade now.
Just saying ... watch out for downside risk. I'm no better at predicting that than anyone else. But stuff doesn't go up in a straight line, and it's been going up for a long time.
For the heck of it, I used an online mortgage calculator to figure out what monthly payments would be for the house where I'm living now (been here 14 years) based on prices that the builders are advertising for new houses in the area now, and based on what interest rates are now (2.4%), and compared that to what it would have been for what I paid (about 40% of what they're advertising now) and with interest rates for what they were back then (about 6%). The monthly payments are about 60% higher. If I were buying the same house today, it would be tough but I could do it.
But ... The highest interest rate that I've ever paid on a mortgage was 12% (that was at the place before this one - sometime in the 1990s). Do the math with today's prices based on that sort of interest rate. Ouch. I think a lot of people in today's housing market have never seen what it's like when rates are high. My parents paid off their house just before rates skyrocketed (reaching around 20% if I remember right) in the early 1980s.
I don't foresee interest rates going that high in the foreseeable future, but then, no one foresaw interest rates going as low as what we've seen lately, and it's hard to see it going any direction but up. I doubt if it will be much (it would be a disaster) but it's hard for rates to go much further down, and that downward direction of interest rates is what has allowed people to afford the payments on these properties. If/when interest rates go up ... look out.
For the heck of it, I used an online mortgage calculator to figure out what monthly payments would be for the house where I'm living now (been here 14 years) based on prices that the builders are advertising for new houses in the area now, and based on what interest rates are now (2.4%), and compared that to what it would have been for what I paid (about 40% of what they're advertising now) and with interest rates for what they were back then (about 6%). The monthly payments are about 60% higher. If I were buying the same house today, it would be tough but I could do it.
But ... The highest interest rate that I've ever paid on a mortgage was 12% (that was at the place before this one - sometime in the 1990s). Do the math with today's prices based on that sort of interest rate. Ouch. I think a lot of people in today's housing market have never seen what it's like when rates are high. My parents paid off their house just before rates skyrocketed (reaching around 20% if I remember right) in the early 1980s.
I don't foresee interest rates going that high in the foreseeable future, but then, no one foresaw interest rates going as low as what we've seen lately, and it's hard to see it going any direction but up. I doubt if it will be much (it would be a disaster) but it's hard for rates to go much further down, and that downward direction of interest rates is what has allowed people to afford the payments on these properties. If/when interest rates go up ... look out.
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